Fri, May 09, 2008 - Page 8 News List

Is dollar diplomacy even worth it?

By Huang Su-Jen 黃樹仁

Since the Papua New Guinea (PNG) diplomatic fund scandal broke, criticism from both the ruling and opposition parties has focused on the gullibility of the people involved or their alleged corrupt practices rather than the nation’s dollar diplomacy strategy. In other words, if checkbook diplomacy could really help the nation forge diplomatic ties, many people would not oppose it.

This unscrupulous way of maintaining diplomatic relations is the result of China’s obstruction of Taiwan’s diplomatic efforts, which has caused Taipei to lose diplomatic ties with many countries and forced its envoys to maintain the remaining diplomatic relations with small countries through money and deceit.

Taiwanese have thus been under the impression that their country has won its international space by standing up to China or through checkbook diplomacy.

But is this the truth?

Amid this diplomatic struggle, people seem to have overlooked conspicuous blind spot: Given China’s wealth, why hasn’t Beijing simply bought all Taiwan’s diplomatic allies? China holds foreign currency reserves in excess of US$1 trillion while Taiwan only has about US$200 billion. If the success of diplomatic ties depended on financial aid and political bribes, then why wouldn’t China simply treat these small countries more generously than Taiwan?

Some have argued that China has so many diplomatic allies that it cannot afford to provide financial aid to all at the same time — especially if those countries were to start competing for its money. On the other hand, Taiwan can concentrate its budget on a few small countries, each of which will receive more financial assistance from Taiwan than China. This argument seems reasonable, but it doesn’t take into consideration the political realities of these small countries.

Taiwan’s diplomatic allies are small countries that are still in the early stages of political development. Furthermore, corruption isn’t news to any of them. In order to co-opt these countries, it is far more useful to bribe politicians than to provide aid. While this is the root cause of the PNG fund scandal, it is also what has restricted Taiwan’s dollar diplomacy.

As Taiwan is a democratic country, its diplomatic budget is supervised by the legislature and the public, and it cannot be used to openly bribe foreign politicians. Even if bribery were attempted, the title of the account would have to be changed and the amount would be limited. The missing US$30 million in the PNG scandal has landed the former minister of foreign affairs into hot water.

China, on the other hand, is not only far wealthier than Taiwan, but does not have anyone monitoring the way it uses its government budget. For an authoritarian one-party state with more than US$1 trillion in foreign reserves, spending several billions US dollars to bribe presidents or premiers of 20 small countries would be very simple.

Taiwan’s diplomatic allies are in general small and poor, and even if their presidents served for life, they wouldn’t necessarily be able to put away even US$10 million.

Thus it shouldn’t be too expensive to buy the political leader of such small countries. Even if we make a rough estimate — let’s say about US$100 million to buy diplomatic relations with one of these countries — it would still only take between US$2 billion and US$3 billion to buy relations with two dozen countries, and that is just small change for Beijing these days.

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