Wednesday, May 7, 2008

Dude, where's my $30 million?

Taiwan foreign minister resigns over diplomatic blunder

By Jonathan Adams
International Herald Tribune and New York Times, May 7, 2008

TAIPEI: The foreign minister of Taiwan and two other top officials resigned Tuesday over a botched attempt to win diplomatic recognition from Papua New Guinea, a scandal that has stirred public outrage against the outgoing government just two weeks before it is to step down.

Taipei was embarrassed by the public disclosure that about $30 million, which had been intended for Papua New Guinea in exchange for its switching diplomatic allegiance from Beijing, had disappeared.

Foreign Minister James Huang tendered his resignation over the case Tuesday. Vice Premier Chiou I-jen also resigned from the cabinet, a day after he left the Democratic Progressive Party and said that he would retire from politics. Vice Defense Minister Ko Cheng-heng resigned later Tuesday, The Associated Press reported.

In 2006, the government wired the $30 million to an account in Singapore that was controlled by two middlemen who had been enlisted by Taipei for the secret diplomatic gambit. After negotiations with Papua New Guinea foundered, Taiwan requested the money back, but to no avail.

Now, one of the middlemen - Ching Chi-ju - is on the run. The government says it does not know what became of Ching or the money.

The diplomatic scandal is the latest in a series of blows to the government of President Chen Shui-bian, which has been deeply unpopular for its perceived mismanagement of the economy and a string of corruption cases. Chen's Democratic Progressive Party was badly beaten in elections in January and March.

"People feel humiliated by the government's incompetence," said George Tsai, a political analyst at Chinese Culture University in Taipei. "It's a joke to the outside world - how could the government be cheated like this? It's proof to many that they're a bunch of Boy Scouts and amateurs."

Chiou, the vice premier, had been one of the key players in the overture to Papua New Guinea. He insisted Tuesday that he had not pocketed any money in the affair, amid reports in The United Evening News and other news media outlets that some of the $30 million may have been earmarked as kickbacks for Taiwan officials.

Chiou is widely viewed as one of the key architects of the rise to power in 2000 of the pro-independence Democratic Progressive Party. His fall from grace is therefore a sharp blow for a party whose morale had already been low.

Taiwan and China have long engaged in so-called checkbook diplomacy to lure diplomatic allies to their sides. Taiwan and China both refuse 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.

In recent years, the growing clout of China has given it an edge in this contest. Now, only 23 countries - mostly small, marginal ones - recognize Taiwan, compared with 30 when the pro-independence party took power in 2000.

Original site, IHT
Original site, NYT

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