Paraguay President Peña signs three agreements with Taiwan, including a 1-gigawatt sovereign AI data centre MOU, on a May state visit

Summary

Paraguay President Santiago Peña made a state visit to Taiwan from 7-10 May 2026, meeting Taiwan President Lai Ching-te on 8 May and signing three formal instruments: a Treaty on Mutual Legal Assistance in Criminal Matters (with Taiwan Justice Minister Cheng Ming-chien), an MOU on Cybersecurity Cooperation (with Digital Affairs Minister Lin Yi-jing), and a headline MOU on Sovereign AI and Computing Infrastructure Investment (with Foreign Minister Lin Chia-lung). The AI MOU envisages three phases: 10 megawatts of computing capacity in Phase 1, 100 megawatts in Phase 2, and a final phase targeting 1 gigawatt, which would represent one of the world's largest computing campuses. Separately, Taiwan agreed to open its market to Paraguayan poultry (chicken) exports, a trade gain Asunción had been seeking for years. The visit was attended by a delegation of more than 40 Paraguayan business representatives led by Industry and Commerce Minister Marco Riquelme, and was Peña's fourth state visit to Taiwan as president. Taiwan's President Lai conferred a state decoration on Peña. China's Foreign Ministry on 12 May accused Paraguay of acting as "pawns" of Taiwan. Paraguay is one of approximately 12 countries that formally recognise Taiwan over the People's Republic of China.

The split

Peña and his government framed the agreements as concrete economic returns on Paraguay's diplomatic recognition of Taiwan, which Beijing has repeatedly pressured Asunción to reverse. Taiwan presented the visit as validation of its diplomatic position in Latin America and highlighted the AI investment MOU as a model for how recognition can generate technology transfers. China's Foreign Ministry response was standard, accusing both parties of interference in China's internal affairs. Within Paraguay, expert commentary noted aspects of the AI MOU that were considered contentious, including ambiguities about who would operate the data centres and what data sovereignty guarantees would apply. The mutual legal assistance treaty has practical significance for extradition cooperation on criminal matters.

By the numbers

• 3, formal instruments signed during the May 8 bilateral meeting
• 1 GW, target computing capacity in Phase 3 of the Sovereign AI MOU
• 40+, Paraguayan business delegates accompanying the president
• 4th, number of Peña's state visits to Taiwan as president since 2023
• ~12, total countries worldwide that formally recognise Taiwan over the PRC

Why it matters

The AI data centre MOU is the most substantive economic commitment yet made between Taiwan and Paraguay within the diplomatic relationship. If Phase 3 is realised, a 1-gigawatt compute campus would represent a transformative infrastructure investment for a country with Paraguay's economic scale. It also signals a Taiwanese strategy of using technology investment as a diplomatic tool to anchor relationships with remaining recognition partners. For Paraguay, the deals reduce the economic arguments for switching to Beijing. The criminal justice treaty has near-term practical value for narco-trafficking prosecution cooperation.

What to watch

• Whether Phase 1 of the AI data centre MOU progresses from signature to actual construction and commissioning.
• Whether Taiwan's poultry market opening translates into measurable Paraguayan export volumes.
• Whether China increases diplomatic pressure on Paraguay in response to the visit and the computing MOU.
• Whether the mutual legal assistance treaty is ratified by both parliaments and used in any concrete extradition or evidence-sharing request.