The Grenada government is warning that Taiwan’s aggressive effort to collect a US$28 million judgment will hurt the tourism-dependent economy of the Caribbean island.
Cruise lines and airlines may halt operations in Grenada after receiving legal documents filed by American lawyers working for Taiwan in the United States compelling them to turn over any money they owe Grenada in fees or other payments, Minister of Finance Nazim Burke said.
Already one cruise line has threatened to cancel its 20 stops in 2011-12 in Grenada as result of the effort to seize port fees, Burke said.
“If this was to happen, we stand to lose millions,” he said.
The dispute centers on loans provided by Taiwan’s Export-Import Bank for a variety of infrastructure projects in Grenada in the l990s.
Grenada officials have said they could no longer pay the loans because several shocks to its economy, including the devastation from Hurricane Ivan in 2004 and the drop in tourism following the Sept. 11, 2001, terrorist attacks in the United States.
Officials in the Caribbean nation have said Taiwanese officials refused to renegotiate the loans because Grenada had severed diplomatic relations in favor of rival China.
Taiwan filed suit in a U.S. District Court for the Southern District of New York and won a summary judgment in 2007 that has grown to about $28 million with interest and penalties. That is a huge sum for Grenada, nearly the total value of its exports of goods in 2009.
Grenada has not paid any part of the principal or interest on the judgment, according to Paul Summit, a lawyer for the Export-Import Bank.
Officials have previous argued that the previous government took out the loans and decided to stop paying on them so it should be given more leeway to work out a payment plan.