Taiwan needs to urgently re-evaluate its approach to its provision of foreign assistance. There have been calls for years for Taiwan to spend more on its military, but Taiwan also needs to spend a lot more on its soft power.
The US is looking for all of its partners to shoulder more of the burden, and yes, this includes Taiwan. Taiwan should see the foreign assistance it provides as self defense and strategic diplomacy.
These expenditures currently reward diplomatic allies — about a dozen economically disadvantaged countries. However, these monies should be used to build support for the Taiwan cause, its strategic goals and multilateral fora that can enable the nation to maintain its diplomatic space.
In a quickly changing world, Taiwan needs a new doctrine for its soft power. Taiwan should use its assistance to demonstrate that it is a constructive alternative to the Chinese model, a standing rebuke to the authoritarian system across the Taiwan Strait.
Taiwan should set a target of at least US$2.5 billion a year — about five times what is spent on foreign aid today.
Taiwan plans to release a new strategy for its foreign assistance later this year after a 15-year pause. This is an obvious sign that foreign aid has not been considered as strategically important for the nation.
Taiwan can use its foreign assistance to create a global constituency of support for its cause. This should be done through increased interpersonal exchanges, far more ambitious scholarships for long training and education (especially for non-ally countries), support for investments in regions and issues critical to Taiwan’s future, and big investments in global challenges that China would never support — such as the Ukrainian cause, women’s empowerment and human rights.
Taiwan should also work far more closely with friends such as Australia on Pacific island issues, and the US on Central American and Caribbean causes.
By international standards, Taiwan has badly underspent on foreign aid.
For a country with a GDP about the size of the Netherlands and Switzerland — each spent more than US$3.5 billion last year — Taiwan only spent about US$500 million on foreign assistance, which is about 0.07 percent of its economy.
To reach the so-called “international standard” (an aspirational goal) of committing 0.7 percent of gross national income to official development assistance, Taiwan would need to increase its spending by 1,000 percent.
Taiwan could use its foreign assistance to pursue other foreign policy goals, such as accelerating its New Southbound Policy through the use of foreign aid for trade capacity building and trade facilitation to shift trade flows away from China and toward new economic partners.
Taiwan must invest its aid in long-term education and training to attract foreign students. In 2018, Taiwan hosted 50,000 degree and non-degree students. Taiwan should aim to host 100,000 to 150,000 students each year.
Taiwan must also make a major commitment to Ukraine. For example, Taiwan could commit to spending US$1 billion over the next three years on Ukraine reconstruction efforts.
This commitment could be a major bilateral educational partnership, offering displaced Ukrainian students the opportunity to continue their studies in Taiwan.
Similarly, Taiwan could support emergency response, humanitarian assistance and the creation of new “smart cities” in Ukraine.
In addition, Taiwan has an opportunity to make a US$1 billion commitment over the next three years to Haiti. This, along with an offer to send 500 to 1,000 troops for a multinational peacekeeping force in Haiti along with a major aid package, would establish its influence in the Caribbean Sea.
Soft power can expand Taiwan’s diplomatic presence in international organizations. It is a member of the Asian Development Bank and the WTO under the name “Taipei, China.”
Taiwan should seek observer status in the Development Assistance Committee of the Organisation for Economic Co-operation and Development, along with all of the organization’s other committees — the club of market democracies.
Similarly, Taiwan should join the European Bank of Reconstruction and Development. The bank is going to be a central player in rebuilding Ukraine, and China is not a member.
The Inter-American Development Bank is another organization to join, as the Americas is the region with the largest number of Taiwanese allies.
To remain a viable and valuable partner to its friends, Taiwan must expand its foreign aid budget. The nation’s soft power is an extension of its self defense and should be treated as such.
Daniel Runde is senior vice president and William A. Schreyer Chair in Global Analysis at the Washington-based Center for Strategic and International Studies. He is the author of the upcoming book The American Imperative: Reclaiming Global Leadership Through Soft Power (Bombardier Books, Jan. 17, 2023).
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