Taiwan, International Aid, and the Challenge of Official Recognition

The Tsai administration should downplay the role of foreign aid in diplomatic relations and repackage efforts at maintaining diplomatic relations based on the need to stand up to Chinese efforts to isolate Taiwan internationally.

Sovereign states remain the cornerstone of international relations, reinforced by the extension of diplomatic recognition among states, a tacit agreement acknowledging the other’s right to exist and, in theory, to be treated as an equal. Despite meeting the conventional definitions of a state often used to guide decisions on diplomatic recognition (see the Montevideo Convention), Taiwan is currently recognized officially (as the Republic of China) by only 19 countries. Due to the “one China” framework, countries must choose between recognizing China or Taiwan and cannot recognize both. The conventional wisdom as to why a country would choose Taiwan over China generally focuses either on political incentives (e.g. anticommunism during the Cold War, democratic similarities after the Cold War and Taiwan’s own democratization) or economic incentives, the latter often derisively labeled “dollar diplomacy” which includes aid and investments.

In previous research, we outlined the challenges the Tsai Ing-wen administration faces in maintaining and expanding formal diplomatic relations, especially now that China has resumed the battle for recognition after a truce from 2008 until Tsai’s election in 2016. Three countries have now dropped official recognition in favor of Beijing since 2016: Sao Tome and Principe, Panama, and the Dominican Republic.

As China provides additional economic incentives to lure Taiwan’s remaining official diplomatic partners, the Tsai administration must avoid creating a bidding war that only encourages interested countries to increase their economic demands. At the same time, the administration faces pressure to respond to the perceived challenge to Taiwan’s external sovereignty. We have also warned of overselling the explicit benefits of formal relations and what diplomatic partnerships can and cannot do for Taiwan’s broader political and economic interests.

As China provides additional economic incentives to lure Taiwan’s remaining official diplomatic partners, the Tsai administration must avoid creating a bidding war that only encourages interested countries to increase their economic demands.

However, the vast majority of existing research, ours included, focuses on state-to-state actions and tries to identify what factors explain Taiwan’s diplomatic successes and failures. Yet, this in part ignores the two-level game of diplomatic relations: the international context and the domestic context. Surprisingly, little attention is placed on whether the Taiwanese public considers diplomatic recognition important, and analysis of public perceptions has led to conflicting claims (for example, see here and here). Survey data on the topic also remain rare and often compare enhancing formal relations with improving cross-Strait relations (see here).

One would assume that previous efforts to maintain and expand Taiwan’s formal relations were in part for domestic consumption in order to improve the image of the administration. Emphasizing diplomatic relations and Taiwan’s sovereignty in spite of China’s attempts to minimize its international space logically should be received well by a population regardless of partisan identification and especially as Taiwanese citizens increasingly identify as Taiwanese rather than Chinese (or both). Meanwhile, with few exceptions (e.g. the Vatican), diplomatic recognition coincides with the economic costs of international aid. International assistance through the International Cooperation and Development Fund (ICDF) only provides a partial picture of Taiwanese efforts, while less transparent efforts which implicitly tie assistance to diplomatic relations frequently are derided as “dollar diplomacy.” Although such efforts to maintain or increase formal diplomatic relations must contend with a China that is increasingly willing to offer larger packages, they also generate potential political costs with the Taiwanese public.

We wanted to know to what extent the Taiwanese public sees value in maintaining diplomatic relations and whether Taiwanese think of such relations in the context of a potential Chinese backlash or international aid requests. We conducted an experimental web survey through PollcracyLab at National Chengchi University’s (NCCU) Election Study Center in late March. Six hundred Taiwanese respondents received one of four prompts about support for Taiwan’s efforts at formal diplomatic relations and then asked to evaluate the statement on a five-point scale (strongly disagree to strongly agree). The versions intended to capture two distinct challenges to Taiwan’s diplomatic efforts: exacerbating tensions with China and increasing costs if partners request additional international aid (note that the questions were asked prior to the Dominican Republic’s decision to establish official ties with China).

The versions are as follows:

Version 1: Currently twenty countries recognize Taiwan. It is important for Taiwan to maintain these formal diplomatic relations.

Version 2: Currently twenty countries recognize Taiwan. It is important for Taiwan to maintain these formal diplomatic relations, even if this hurts relations with China.

Version 3: Currently twenty countries recognize Taiwan. It is important for Taiwan to maintain these formal diplomatic relations, even if this encourages these countries to ask for more international aid from Taiwan.

Version 4: Currently twenty countries recognize Taiwan. It is important for Taiwan to maintain these formal diplomatic relations, even if this hurts relations with China and encourages these countries to ask for more international aid from Taiwan.

Overall, 55.33% of respondents who received the first version agreed or strongly agreed with maintaining these relations, compared to 68%, 31.34% and 40.67% for latter versions, which suggests sensitivity to aid requests. For greater insight, the figure below shows the change in support for Taiwan’s diplomatic efforts compared to the baseline (Version 1) for the entire survey sample. Additionally, the figure parses out support by partisanship (Democratic Progressive Party supporters versus Kuomintang supporters) and based on who respondents voted for in the 2016 presidential election (Tsai Ing-wen vs. Eric Chu). Other parties and voting for James Soong in 2016 were not tested due to sample sizes within the survey.

Several clear patterns emerge. First, among all groups, respondents were more likely to support Taiwan’s efforts when framed as “might hurt relations with China.” However, suggesting that diplomatic efforts would lead countries to ask for more international aid results in large drops in support. This is particularly evident among DPP supporters and Tsai voters, with a decline of over 20 percent. Meanwhile the version which included both additional pieces of information results in a noticeably smaller drop, suggesting that the mention of additional aid requests is more salient to Taiwanese than China’s continued opposition to Taiwan’s diplomatic recognition, regardless of partisan leanings.

Regression analysis provides additional insights. Even after controlling for demographic factors such as age, gender, income, and education levels, as well as partisan factors, national identity variables and preference on Taiwan’s status (e.g. unification, status quo, independence), respondents were more supportive of maintaining relations even if it damaged relations with China and less supportive when international aid was mentioned.

What does it mean?

These results should have policy implications for the Tsai administration, especially as the administration faces additional pressures to respond to the end of the “diplomatic truce” that existed under former president Ma Ying-jeou. While several countries seem content with remaining with Taiwan, the administration could feel, perhaps reluctantly, that it must provide additional aid packages to counter the lure of China. However, even if such offers are made, our findings suggest that the administration should downplay the role of such assistance, or should find new ways to frame this assistance as being in the national interest. The results also suggest that emphasizing that Taiwan’s limited formal diplomatic relations are a result of China’s actions may boost support for further efforts to maintain or expand ties with formal allies.

This data are especially important due to the Dominican Republic’s recent switch in diplomatic recognition from Taiwan to China. China reportedly offered the Dominican Republic US$3.1 billion in loans and investments to precipitate the switch. While Taiwan can offer aid and investment packages to its diplomatic partners, it is unrealistic to think that in the long run Taiwanese aid could match or exceed that of China. This is especially true when considering the lack of domestic popularity for giving such aid, as shown by the survey.

As a country’s exports as a share of GDP increase it is more likely to recognize China; some Taiwanese aid may thus hasten the loss of diplomatic relations.

Unfortunately, the Dominican Republic’s switch had led some to question the future of other Taiwanese diplomatic partners in the Central American region, which currently contains Taiwan’s largest concentration of partners. Panama switched recognition in June 2017, which led to increased trade relations with as well as aid and investment packages from China. When a former diplomatic partner switches recognition, Taiwan earmarks previously reserved aid for other remaining allies. However, following Panama’s switch, this led other allies to request additional aid amounts which exceeded Taiwan’s previously budgeted funds (for example, see Guatemala and Belize.) Following Panama and the Dominican Republic, other countries in Central America and the Caribbean may soon also consider switching recognition, adding additional pressure on the Tsai administration to respond, although it remains highly unlikely that these losses will result in a sudden departure of many of Taiwan’s remaining official diplomatic partners in the short term.

Admittedly this survey cannot identify how important diplomatic relations matter alongside other domestic and international challenges, especially as Taiwanese may struggle to name which countries are diplomatic partners. Additionally, the survey does not measure Taiwanese citizens’ perceptions of the countries which have most recently switched. However, Taiwan’s strategy can no longer focus on international aid as a primary method in maintaining allies. This has become increasingly expensive, unreliable, and, as our findings suggest, domestically unpopular. Furthermore, previous research suggests that as a country’s exports as a share of GDP increase it is more likely to recognize China; some Taiwanese aid may thus hasten the loss of diplomatic relations.

In future, the Tsai administration may wish to downplay the role of foreign aid in diplomatic relations, at least with a domestic audience, and repackage efforts at maintaining diplomatic relations based on standing up to Chinese efforts to isolate Taiwan internationally.

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