Grenada's Finance Minister Nazim Burke has accused Taiwan of trying to cripple the island's economy as it attempts to recover EC$76 million (US$28.1 million) in loans to Grenada before it broke off diplomatic relations in 2005.
His comments in a radio interview come amid reports that Taiwan has sought to seize Grenadian properties in the United States in an attempt to collect the outstanding money.
"It has nothing really to do with getting the money per say from what we can tell," Burke said, adding, "what we have observed is that every time something happens that points in the direction of an improved relationship with China, Taiwan flares up".
Burke said Taiwan had refused proposals for a negotiated settlement to the problem, instead insisting on payments of the entire loan. He said Grenada cannot pay all the outstanding money immediately.
Burke said that Taiwan has now filed injunctions with cruise ships and airlines servicing Grenada, demanding that whatever money due to Grenada should be paid to a special account in the United States.
"They went as far as to issue subpoenas in September of this year to all of the airlines that we are doing business with. They issued to Carnival Cruise lines ... Princess Cruise lines, Continental Airlines, Delta Airlines, American Airlines (and) Caribbean Airlines, saying any money you have for Grenada we are going to seize it," Burke said.
"They continue to just press and press and no matter what we said or what we did, it is quite clear that they were not prepared to work with us."
Taiwan claims the loan made through an export bank in Taipei was negotiated by the former administration of Keith Mitchell between 1997 and 2000 before it suddenly broke off diplomatic relations in favour of Beijing.
The Grenada finance minister said because of the impasse, some cruise ships have now served noticed they may be forced to drop Grenada from their itinerary.
"None of these companies wish to get themselves embroiled in any law suit involved in Grenada and have any dispute as to who should get money, who should not get money or who they should pay to," Burke said.
"And they are indications from two of the cruise lines that unless they can get a satisfactory resolution on this issue in a timely way they would not come to Grenada."
However, former Finance Minister Anthony Boatswain said that the Mitchell-led administration should not be blamed for Taiwan's sub-poenaing these institutions.
"The administration I was part of should not be blamed for the latest development with regards to that loan," said Boatswain.
"We started to negotiate a repayment plan but it was not complete because of the 2008 general elections. What happened is that this Tillman Thomas administration did not continue with the negotiations," he said.
Diplomatic relations between the People's Republic of China and Grenada were established on October 1, 1985. But in 1989, the island established ties with the Republic of China promoting Beijing to sever diplomatic ties with Grenada. The position was later reversed under the Mitchell administration.
Informed sources said that Grenada plans to seek the intervention of St Kitts-Nevis, St Lucia and St Vincent and the Grenadines - countries with diplomatic relations with Taipei - to help mediate a settlement.