Taiwan leader eyes allies in Central America visit

TEGUCIGALPA, Aug 22 (Reuters) Taiwanese President Chen Shui-bian started a weeklong visit to Central America in Honduras, hoping to shore up Taiwan's dwindling list of allies in the region after Costa Rica switched allegiances to China in June.

Chen met with President Manuel Zelaya yesterday in Honduras' presidential palace -- built with Taiwanese funds -- and was due to attend a sumptuous dinner. Chen will lead a Taiwan-Central America summit on Thursday with the leaders from Guatemala, El Salvador, Nicaragua, Panama and Belize.

Chen is expected to consider funding an oil refinery in Guatemala, a hydro-electric plant in Honduras and to help solve a power crisis in Nicaragua, which suffers from nearly daily blackouts in the capital Managua.

The visit follows a tour of Guatemala and Panama by Taiwanese Vice President Annette Lu in July, the first by a top official since Costa Rica restored relations with China in June after 63 years of ties with Taipei, bowing to Beijing's greater economic might.

China and Taiwan have faced off since defeated Nationalist forces fled to the island at the end of a civil war in 1949.

Beijing considers Taiwan part of its territory, rather than a country, and seeks to quash its diplomacy.

''Costa Rica's decision was a huge blow for us,'' Taiwan's ambassador to Guatemala, Francisco Ou, told Reuters in July.

Taiwan has 24 diplomatic allies left, mostly impoverished countries, compared with China's 170.

Reuters CS VP0750