Although it might be tempting to restart ‘dollar diplomacy,’ Taiwan will be better served by deepening unofficial relations with regional and global powers.
In December Sao Tome and Principe broke diplomatic relations with Taiwan in favor of China after Taipei reportedly rejected a US$215 million aid request, leaving Taiwan with formal diplomatic relations with only 21 countries. This follows claims by China and Nigeria that Taiwan is operating a diplomatic mission in Abuja, leading the African country to reaffirm its “one China” policy in lieu of potentially losing a US$29 billion loan from Beijing. Both instances highlight not only the precarious nature of Taiwan’s diplomatic relations and cross-strait diplomatic competition, but also the fact that many states have a vested interest in provoking diplomatic competition between Taiwan and China.
Despite losing its seat in the United Nations in 1971 and formal recognition from most countries by the end of the decade, the Republic of China (ROC) on Taiwan has maintained limited diplomatic representation in part due to what has labeled pejoratively as “dollar diplomacy.” A handful of poor countries, minor players in international affairs, could effectively dangle the lure of formal recognition in exchange for financial assistance. China’s economic rise led to similar efforts to sway countries, with several countries switching recognition multiple times.
A diplomatic truce under the Ma Ying-jeou administration attempted to end this practice, as “dollar diplomacy” ostensibly discourages cross-strait stability. However, not only is the truce contingent on Beijing’s interpretation of cordial cross-strait relations, the policy ignores the agency of states eager to restart such competition. We saw this clearly in 2013 when The Gambia unilaterally broke relations with Taiwan, as leaders expected China to jump on the opportunity. Beijing’s acceptance finally came in March 2016 in the wake of Tsai Ing-wen’s election. China rejected Panamanian overtures to switch in 2010 as part of the diplomatic truce, with a similar response to El Salvador. Even when China did not directly court countries recognizing Taiwan, recognizing countries were willing the test the limits of the truce.
Now that China shows little interest in a diplomatic truce, Taiwan’s long-lasting diplomatic partnerships are at risk, regardless of whether “dollar diplomacy” reemerges. Former director of the American Institute in Taiwan (AIT) Douglas Paal suggests that China may attempt to sway one of Taiwan’s Central American diplomatic partners before or during President Tsai’s state visits to the region. Panama, for example, appears vulnerable to Chinese incentives, yet Tsai is not slated to visit the country during her Central American visit. The on again off again discussions between Chinese and Vatican officials suggest the latter’s willingness to consider switching recognition.
Furthermore, my previous work suggests limited ideological motives remain for many of Taiwan’s diplomatic partners who are more interested in economic incentives. Democratization, for example, has done little to aid Taiwan’s formal diplomatic efforts, while authoritarian holdouts like Swaziland, the last absolute monarchy in African and the only African country to have never recognized China, benefit from Taiwanese aid (see here and here). China has also deviated from standard operating procedures, offering assistance to non-recognizing countries such as Haiti following the 2008 earthquake. Such offers in the absence of a diplomatic truce could increase and entice others to switch recognition.
Diplomatic recognition remains a defining element of state sovereignty, but this should not lead Taiwan to focus myopically on formal recognition. My interviews with scholars and Taiwanese officials in the past suggested that if Taiwan’s formal relations fell below 10 countries that this could create a sense of urgency in Taiwan and promote rash actions. Each diplomatic relation lost also frees up aid money potentially to be used to lure a country away from China, perpetuating a game of “dollar diplomacy.” Meanwhile, news outlets — both Taiwanese and elsewhere — repeatedly frame formal relations as “diplomatic allies,” phraseology rarely used elsewhere that belies what often is often a lack of deeper substantive relations. Taiwan’s formal relations provide limited economic or security benefits, and many fail to support Taiwanese interests such as Taiwan’s petition to reenter the United Nations from 2001-2007.
The aftermath of “the call” and president-elect Donald Trump’s claims about reevaluating U.S.-Taiwan relations reiterate the importance of informal relations in meeting Taiwan’s short-term and long-term goals. While incentives to restart “dollar diplomacy” will likely emerge in 2017, Taiwan would be better served by deepening unofficial relations with regional and global powers.