Alarms Go Off in Taiwan

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

The Greater Caribbean has not been quiet this week, but our main article today focuses on a question that, while not immediately, will have great consequences for the continent, especially for the United States: Taiwan. The small island of Formosa has been at risk for a long time now, but Iran has turned the alarms on imminent mode. While the U.S. is thinking of its homeland security with Venezuela and Cuba, as well as trying to neutralize an existential threat in Iran, Xi can move on Taiwan knowing that the U.S. response will be weak.

But the region is still important, and Iran has had a disproportionate impact on the Americas compared to most of the world, except for East Asia. The political implications of fuel prices are well-documented, and countries like the United States will almost definitely suffer the effects. Honduras, on the other hand, is one of the few good regional news stories Trump has gotten in a while; a coming out for fresh air that was much-needed.

In this issue, you will find:

• A Unique Window of Opportunity for China on Taiwan

• The War in Iran and Its Impact on the Americas

• Asfura’s Dismantling of LIBRE’s Hegemony in Honduras

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The Chinese blockade over Taiwan has been a real possibility for a while now, but a window of opportunity has opened for Xi, and it will likely be hard to repeat.

In perspective. China does not need to invade Taiwan to test the island’s survival. It can begin with a blockade, the most likely possibility. That is the scenario Beijing has been rehearsing with increasing frequency around the island, including recent live-fire exercises simulating the closure of key ports. The timing matters. As Washington concentrates resources on Iran and the Strait of Hormuz, China has again increased military pressure around Taiwan, with Taipei reporting dozens of Chinese aircraft and several vessels operating near its airspace and waters.

• The message is not necessarily that Xi Jinping has decided to move now, but that Beijing understands the pressure points.

• Taiwan’s weakness is not food, it is energy. A blockade would not have to starve the island; it would simply have to turn the lights off.

• The geographic vulnerability of the island of Formosa leaves them at the mercy of China, without the protection shield that America provides.

How it works. CSIS ran 26 wargames on a Chinese blockade of Taiwan and found that China could impose serious hardship, particularly by targeting Taiwan’s energy sector. The report also found that without U.S. action, Taiwan would face intense pressure either to accept Chinese demands or watch its economy and basic services collapse. In one scenario, natural gas inventories fell quickly, coal ran out by week six, and electricity production stabilized by week eight at only 24 percent of demand, barely enough to sustain emergency services.

• MIT’s summary of the same project notes that China has conducted multiple blockade-simulation exercises since 2022 and that a blockade creates escalation risks that could quickly become a large-scale war.

Between the lines. China’s claim over Taiwan is older than the current crisis. Since the Nationalists retreated to Formosa in 1949, Beijing has treated the island as unfinished business from the Chinese civil war. For the Communist Party, reunification is part of the regime’s historical narrative, and they have stated the intention of unifying the island and the mainland before the 100-year anniversary of the end of the civil war: before 2049. Taiwan also blocks China’s direct breakout into the Pacific, sitting inside the first island chain alongside Japan and the Philippines.

• Taking it, or forcing it into submission, would alter the balance of power in East Asia, and the industrial asymmetry between them reinforces Beijing’s confidence.

• China has the world’s largest manufacturing base, a rapidly expanding navy, massive missile inventories, and the ability to sustain production at a scale Taiwan cannot match.

• Taiwan, on the other hand, has geography, technology, reserves, and U.S. backing, but without that last element, the balance becomes much harder to sustain.

Timing matters. This last point is why the risk is now so high. The Iran war has not emptied American arsenals, but it has exposed the limits of fighting multiple high-intensity crises at once. JINSA reported that the United States has already expended more than 1,000 JASSM-series missiles in the first four weeks of the Iran war and is redeploying over 65 percent of its overall JASSM stockpile to Middle East bases or alongside stealth bombers in the United Kingdom. The same report notes that the U.S. has drawn heavily from a pre-war stockpile of roughly 4,000 Tomahawk cruise missiles, while Lockheed Martin is scheduled to produce only 396 JASSM-ER missiles in 2026, with capacity to scale later.

• Even if production increases, replenishment takes time. A missile fired over Iran is not available for the Taiwan Strait.

• Hormuz adds another layer. The Strait carries roughly 20 percent of global oil consumption, and Iran’s disruption has already caused a near halt in commercial shipping through one of the world’s critical energy corridors.

• The U.S. has destroyed major Iranian naval assets, but it has not fully prevented attacks on neutral shipping. That means American naval attention, air-defense capacity, intelligence assets, and diplomatic energy are being consumed by the Middle East at the same time Taiwan may need them most.

Yes, but. None of this means Xi Jinping will move now. Challenging Trump directly could be a catastrophic mistake, especially if Washington decides to treat Taiwan as the place where Chinese expansion must be stopped. But the blockade scenario is real, rehearsed, and structurally attractive to Beijing. China does not need to launch the most difficult amphibious invasion in modern history on day one. It can test maritime access, energy flows, and American resolve.

• The window may not repeat itself at this scale. And the question of Taiwan is not a matter of “if,” but of “when,” and it will remain so as long as the CCP is still in power.

• Washington is thinking about Iran, Hormuz, Venezuela, and Cuba at the same time, and Beijing knows that.

• The question is whether Xi sees a distracted America as an opportunity, or as a dangerous trap.

The Americas are feeling the shock of the war in Iran in a disproportionate manner to most of the world.

In perspective. The Western Hemisphere was not supposed to be at the center of the oil shock triggered by the Iran war. That distinction belongs to Asia, where dependence on Gulf shipping lanes is structural. Yet the data shows that the Americas—particularly Latin America—have absorbed a surprisingly large share of the price shock, in many cases more than Europe and even parts of the Middle East and Africa.

• The pattern is clear. Panama (+38.5%), Guatemala (+37.7%), Peru (+35.6%), and the United States (+35.1%) sit among the most affected globally. Even mid-tier economies like Chile (+24.7%) and Argentina (+21.4%) have seen significant increases.

• Only a handful of countries—Brazil (+7.5%), Costa Rica (+0.8%), Bolivia (0%), and Colombia (-0.7%)—have managed to contain or avoid the spike.

• The question is not whether the Americas were affected, but why they were hit this hard.

How it works. The answer starts with geography, but not in the way it is often assumed. The closure—or disruption—of the Strait of Hormuz does not only affect countries that import oil directly from the Gulf. The Hormuz crisis reshapes global flows entirely. When Asia scrambles to secure alternative supplies, it bids up cargoes from the Atlantic Basin, including those destined for the Americas. The result is a competition effect: Latin America is not completely cut off from supply, but it is priced out of cheaper barrels. It is a matter of supply and demand, and Asia demands way more from the usual supply chain for the Americas.

• This dynamic is compounded by refining and import structures. Many countries in Central America and the Caribbean lack significant refining capacity and depend heavily on imported refined products, not crude.

• That makes them particularly vulnerable to price spikes in gasoline and diesel markets, which tend to react faster and more sharply than crude benchmarks.

• Panama and Guatemala’s near-40% increases are less about oil scarcity and more about exposure to refined product markets under stress.

Between the lines. The United States presents a different case. As a major producer, it is less exposed to supply disruption, but not immune to price formation. American gasoline prices are still tied to global benchmarks, and when those benchmarks rise, domestic prices follow. The 35% increase reflects not a shortage, but integration into a global pricing system that transmits shocks regardless of energy independence narratives.

• South America, on the other hand, sits somewhere in between. Countries like Peru and Chile, with high import dependence and limited buffering mechanisms, have seen sharp increases.

• Others, like Brazil, have been partially shielded by domestic production and state influence over fuel pricing: in other words, subsidies that shield gas prices, but generate inflation in the long run.

• Colombia’s slight decline is an outlier, likely explained by internal pricing controls or timing effects rather than insulation from global markets. What emerges is a hemisphere divided by energy structure. Those with domestic production, refining capacity, or policy buffers have managed to contain the shock. Those without have absorbed it almost completely.

What follows. Fuel prices are politically sensitive across the Americas, particularly in countries with fragile fiscal positions and limited subsidy capacity. Sustained increases at this level risk feeding inflation, straining public finances, and triggering social unrest—especially in Central America, where energy costs have immediate effects on transportation and food prices.

• The broader takeaway is that proximity to the United States does not guarantee insulation from global shocks.

• If anything, integration into its economic orbit amplifies exposure to global pricing dynamics.

• The Iran war has reinforced a structural reality: in a globalized energy market, the Americas are not on the sidelines. They are well within the system, and when it tightens, they feel it.

The Honduran political landscape under the administration of Xiomara Castro was characterized by aggressive institutional instability before and during the 2025 electoral cycle. While the government framed its maneuvers as a necessary refoundation to dismantle the remnants of previous corruption, the methods employed suggest a strategic transition toward institutional left-wing hegemony.

• This shift has placed the country’s democratic stability at a crossroads, where the independence of oversight bodies is consolidating under Asfura’s government.

In perspective. The integrity of the recent electoral process was significantly shaped by the strategic positioning of LIBRE loyalists within the National Electoral Council (CNE) and the Public Ministry. Marlon Ochoa, leveraging his seat within the CNE, transitioned from a fiscal enforcer to a political strategist, frequently utilizing inflammatory rhetoric and absences at key votings to preemptively delegitimize opposition gains while framing LIBRE’s internal logistics as the only valid metric of success. Parallel to this, Attorney General Johel Zelaya utilized the prosecutorial weight of the state to exert undue pressure on the electoral board, pushing for late-stage rule changes and audits to favor the ruling party’s structural advantages. Together, these actors transformed the electoral framework into a battlefield where the primary objective was the administrative assurance of political continuity through the destabilization of the opposition’s procedural standing.

• Ochoa’s recurring assertions regarding “systemic sabotage” provided a preemptive narrative justification for the administration to contest or delay unfavorable tallies, effectively eroding public trust in the neutrality of the CNE’s data transmission.

• Zelaya’s office initiated urgent investigations against members of the CNE from rival parties—a tool of political discipline rather than genuine legal oversight.

• The systematic pressure to modify vote-counting protocols and digital transmission rules in the final weeks of the contest created a climate of legal uncertainty that complicated the work of technical missions and consolidated the preambles for post-electoral unrest.

Institutional weaponization. The Castro administration repurposed state institutions to shield the ruling family’s inner circle while simultaneously bypassing legislative checks to consolidate partisan control. This pattern of behavior reached a critical inflection point following the exposure of high-level ties to organized crime, which triggered a defensive dismantling of international judicial cooperation tools. By prioritizing the protection of the political vanguard over institutional transparency, the Executive has effectively signaled that the refoundation of the state includes the creation of a legal and administrative fortress designed to insulate the LIBRE party from both domestic opposition and foreign indictment.

• The administration’s decision to terminate the extradition treaty with the United States, following the leaked video of Carlos Zelaya—her brother-in-law, a trustworthy political operator of her husband, coup-ousted Manuel Zelaya—negotiating with drug traffickers, represents a strategic move to eliminate the most potent check on narco-political influence within the ruling elite.

• The proliferation of new administrative entities and special programs has functioned as a parallel bureaucracy, allowing the government to divert state resources toward party proselytism and the maintenance of its territorial activist base, often bypassing standard fiscal oversight.

• The unilateral installation of a Permanent Commission within the National Congress enabled the ruling party to make high-level appointments, including the Attorney General, while the legislature was in recess, effectively nullifying the constitutional requirement for a weighted majority and marginalizing the opposition’s voting power.

Between the lines. Following the inauguration of the Asfura administration, the National Congress, under the leadership of Tomás Zambrano, initiated a rapid institutional cleansing designed to dismantle the partisan architecture left behind by the previous LIBRE-led government. This process, facilitated by a rare bipartisan consensus between the National and Liberal parties, focused on the immediate administrative removal of figures like Marlon Ochoa and his network of political operators within the CNE, as well as the replacement of Attorney General Johel Zelaya. By framing these oustings as a necessary restoration of checks and balances rather than a political purge, the new legislative majority sought to signal a return to procedural normalcy and the restitution of public trust in oversight bodies that had been deeply polarized.

• To hedge against a repetition of the 2025 electoral crisis, the Asfura government prioritized the early consolidation of a new electoral body, aiming to institutionalize transparency well before the next mid-term or general contests.

• The swift, bipartisan removal of Ochoa and his associates from the electoral council was presented as a move to depoliticize the technical aspects of voting, effectively neutralizing the destabilization tactics that had characterized the prior cycle.

• The appointment of a new Attorney General—a jurist with an extensive background in corporate law and business arbitration—marked a pivot away from aggressive criminal prosecution toward a rule-of-law approach intended to provide the legal certainty required for foreign investment and economic stability.

In conclusion. The Asfura administration faces the daunting task of correcting a severe fiscal disaster characterized by a bloated public sector and systemic mismanagement inherited from the Castro era, necessitating a regime of strict fiscal prudence and aggressive budget reductions. This internal restructuring is mirrored by a decisive geopolitical pivot toward the United States, Israel, and Japan, signaling a return to traditional security alliances and a likely reversal of the diplomatic recognition of mainland China in favor of Taiwan.

• Ultimately, the success of this transition depends on whether the current institutional cleansing can foster genuine rule of law for economic growth and institutional stability.