If the Nauru debacle last week proved anything, it is that Taiwan's dollar diplomacy has run its course. Buying the support of impoverished specks on the map with aid and development grants was only feasible as long as there wasn't anybody else with deeper pockets in the market. It made sense, in other words, while China was too poor to do anything about it. That is no longer the case.
Nevertheless, Beijing's leadership is too busy with its game of musical chairs to sanction a pro-active buying spree as official policy. What happened with Nauru was largely a case of reactive opportunism. Nauru had time and again asked Taiwan for money which the government, cash-strapped as it is as a result of swinging cuts in its budget courtesy of the pro-China "pan-blue" camp, couldn't provide. As a result Nauru went to China. This, if anything, is the reason why there will be no domino effect among Taiwan's allies, because China is not on a pro-active buying spree. Some Chinese officials will of course try to earn kudos by provoking a change in relations -- the recent pressure on Panama is an example, in which Panamanian officials were told that further investment by China was unlikely in the absence of formal diplomatic relations. The Panamanians quite rightly judged this to be a low-level provocation rather than a real overture from Beijing, a pitiful attempt to score a diplomatic success on the cheap.
Nevertheless, Taiwan has to take such adventurism seriously, hence Premier Yu Shyi-kun's rushing off to Central America with US$45 million for Panama and US$55 million in largesse for benighted Haiti.
Dollar diplomacy has always been a strategy adopted for lack of any feasible alternative as long as Taiwan's governments have thought it needed "allies" to retain some sort of international legitimacy. There has long seemed to be a fear that lack of formal relations with anyone would consign Taiwan to the status of a breakaway enclave like Transnistria or Abkhazia. This is of course nonsense. Taiwan is not an enclave of gangsters fallen off the disintegrating Soviet empire but an international manufacturing and trading powerhouse. Given the countries with which Taiwan maintains so-called unofficial relations -- more than 60 including the US, Japan and the leading countries of Europe -- it is hard to see what is to be gained by formal relations with Nauru. Some might say that at least the maintenance of formal relations with some nations allows for the internationalization of any potential conflict with China. To which one can only say that if conflict with China is to engage the international community it will be through the concern of the US and Japan, not the formal protests in the UN of Nauru, or any of Taiwan's other allies.
All of which suggest that the direction we see the Presidential Office pursuing -- not, take note, the Ministry of Foreign Affairs -- is the right one. With National Security Council officials doing most of the running, Taiwan has made overtures to both Mongolia and Russia in recent weeks. It is not unlikely that Mongolia might start contributing overseas contract workers to Taiwan in the near future, while the opening of direct air links with Russia to be accomplished later this year will constitute a link with that country of a basic but valuable kind. What is needed is aggressive encouragement of Taiwan's business community to get involved with the Russian market, leading eventually to the opening of trade offices between the two countries. The fact is that, while formal ties with places like Nauru might be an excuse for ostrich feathers and honor guards, Taiwan should be making more informal ties with more powerful countries its priority.
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