Devious diplomacy

In battle with China for allies, Taiwan resorts to riskier tactics

By Jonathan Adams
International Herald Tribune, May 8, 2008

TAIPEI: A scandal here over a bungled Taiwan attempt to forge official ties with Papua New Guinea has thrown a spotlight on the long-running, shadowy war between China and Taiwan for allies.

Each refuses to establish official ties with countries that maintain ties with the other. All the major powers recognize Beijing, but the two sides have long competed for the allegiances of smaller countries, using promises of aid.

China has gained a distinct edge in that global contest as its booming economy has swelled state coffers and its diplomacy has grown more sophisticated, experts say.

Proof of that is in the dwindling list of allies of Taiwan. In 2000, 30 countries recognized Taiwan; now it counts only 23 small, marginal nations.

Faced with that trend, an increasingly desperate Taiwan is being forced to adopt more devious tactics, analysts say. The latest flap provides just one example.

"It used to be Taiwan was seen as a more prosperous donor and better ally, while the P.R.C. didn't have very many resources," Anthony Van Fossen, an expert on the political economy of the South Pacific at Griffith University in Australia, said by telephone, using the abbreviation of the mainland government's formal name, the People's Republic of China.

"That's all changed," he added. "Now, Pacific nations are quite rightly seeing the P.R.C. as a rising power with huge reserves, and see huge economic benefit in aligning themselves with the P.R.C."

The pro-independence government of Taiwan has been embarrassed by disclosures that it enlisted two middlemen in 2006 in a secret attempt to lure Papua New Guinea to its side with cash. To that end, the Taiwan Foreign Ministry wired about $30 million to an account in Singapore controlled by the intermediaries.

After talks with Papua New Guinea broke down, Taipei demanded the money back from the middlemen, but to no avail. Now, the authorities are trying to determine what happened to one of the men and the cash.

Three top officials, including the foreign minister, resigned Tuesday over the case. Prosecutors raided their homes on suspicion that some of the money may have been earmarked as kickbacks for Taiwan officials. The Taiwan Foreign Ministry denied that any of its officials had received kickbacks, as did former Vice Prime Minister Chiou I-jen, a central figure in the affair.

Analysts point to a similar effort by Taiwan to lure Papua New Guinea to its side in 1999. Media reports at that time said a $2.35 billion aid package had been assembled for the country if it switched its diplomatic ties from Beijing to Taiwan. That effort failed, in part because of Australian pressure on the Papua New Guinea government, said Van Fossen and Susan Windybank, of The Center for Independent Studies in St. Leonards, Australia.

Van Fossen said the most recent attempt to lure Papua New Guinea shows a change in tactics. The much smaller amount this time around suggests the money was probably targeted at influential individuals, he said, using Singapore to make low-tax, low-profile transfers. The Taiwan Foreign Ministry says the money was intended for aid projects.

"Taiwan has to resort to increasingly covert methods to bribe politicians, because they don't have the lure they had in the past of being more prosperous than China," Van Fossen said.

In Taiwan, the diplomatic blunder has renewed calls for a reconsideration of the island's diplomatic strategy, as the public increasingly questions the utility of spending hundreds of millions on obscure countries of dubious reliability.

Ma Ying-jeou, who leads the Kuomintang government that takes power May 20, has said he wants to call a "truce" in the dollar-diplomacy warfare. In an interview in February, his aide Su Chi - now slated to become the head of the National Security Council in the new government - said Ma would push for talks with Beijing over the issue.

"It's in the P.R.C.'s interest to reach a compromise on international space," Su said. "These issues have been alienating Taiwanese for a long time."

Some analysts are optimistic that a compromise could be found, saying that Beijing wants to engage Ma on a range of economic and political issues. Huang Kwei-bo, a professor of diplomacy at National Chengchi University in Taipei, says that an unofficial truce may already be at hand.

"China has gained more leverage against Taiwan in diplomatic struggles," Huang said. "But Beijing will restrain itself from wooing more countries away from Taiwan, because they want more stable cross-strait relations when Ma Ying-jeou goes into office."

Dialogue has been frozen since 1999, in part because of Beijing's distaste for the pro-independence party, which took office in 2000.

But analysts who lean toward independence say the Kuomintang is too optimistic. Lai I-chung, an executive board member of the Taiwan Thinktank, which has close ties with the pro-independence government, said dollar diplomacy would end only if Taiwan gave up its legal claim to statehood, or if Beijing took away all the island's allies.

"Su Chi is too naïve," Lai said. "He's begging for Beijing's mercy, asking them not to isolate Taiwan."

The South Pacific has long been a key battleground; six of Taiwan's allies are there now. Critics say the battle has worsened political instability in many fragile nations and complicated Australian-led efforts to improve governance in the region.

A former Australian foreign minister, Alexander Downer, recently criticized Taiwan's interference in the Solomon Islands. "There are clearly bribes that are being paid to members of Parliament" by Taiwan, Downer said in an interview with Radio Australia. "That has been undermining the work that we have been doing."

The Pacific nations themselves have grown adept at playing China against Taiwan, selling their allegiances to the highest bidder. By design or not, many funds from Taiwan and China end up going to specific politicians, rather than aid projects that benefit the country's people.

In many South Pacific nations, political candidates look to Taiwan or China to help build huge campaign war chests, Van Fossen and Windybank said.

"There's often a sense that Pacific nations are helpless victims in this global struggle, but they're not," Windybank added. "They've become very adept at fleecing both China and Taiwan to suit their interests."

China's foreign financing is opaque, and experts say it is hard even to estimate how much Chinese cash is going to the region. Like the Taipei government, Beijing officially insists it does not "buy" allies.

Since 2000, Taiwan's foreign aid has become somewhat more transparent, with more aid distributed through the International Cooperation and Development Fund and third parties. The Taiwan Foreign Ministry says the island's total annual aid budget for its 23 allies is about $500 million.

But the recent, failed gambit over Papua New Guinea shows that much financing remains secret - budgeted, managed and brokered by only a few high-ranking, in-the-know Taiwanese officials and their representatives.

Barring a breakthrough by Ma's government in talks with Beijing, many observers expect the diplomatic battle to rage on, as China and Taiwan spend millions to secure the allegiances of obscure states like Kiribati. In the high-stakes political races in many South Pacific countries, Chinese and Taiwanese money is too tempting to resist.

"Either Pacific states have to lift their game and decide some things aren't for sale - which is very unlikely," Windybank said, "or there has to be a happy ending between China and Taiwan."


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