The men brushed aside immigration officers and headed directly to a special banquet hosted by the minister of Trade and Tourism. Their promises to bring tens of millions of dollars in mainland Chinese aid, investment and tourism seemed to make everybody happy–except for the bespectacled Taiwanese diplomat lurking in the shadow of a nearby palm tree. “This is a provocation,” he fumed later. “Beijing is trying to buy this country’s allegiance.”
It wouldn’t be the first time. Beijing and Taipei have often accused each other of the most cynical–and laughable–acts of “checkbook diplomacy,” and they have both been right. But the diplomatic war over the world’s tiniest countries has swung in favor of mainland China. And recession-weary Taiwan–a “renegade province,” in the eyes of Beijing–is wondering whether it is worth fighting anymore. Only 27 countries still have full diplomatic relations with Taiwan, most of them small developing-world nations whose principal value is a vote–and a voice–in the United Nations. But in September, Taiwan failed once again in its increasingly futile bid to become a member of the world body. And it had one vote fewer than last year: Nauru, Tuvalu’s bankrupt South Pacific neighbor, switched allegiance in July after Taipei declined to increase its aid–and Beijing promised a $60 million grant and much more. The People’s Daily trumpeted the island’s defection on the front page as a “milestone in the history of bilateral ties.”
With each defection, the price of loyalty gets steeper for Taiwan. Since Nauru flipped, Taiwanese officials say several allies have approached them looking for more money. Critics say Taiwan is only sowing what it has reaped. In 1997 it spent tens of millions of dollars winning over the African nations of Chad, Liberia and So Tome and Principe. The next year China returned the favor by luring back Guinea-Bissau, the Central African Republic and South Africa. In 1998 Taiwan donated $300 million to refugees from Kosovo as part of an effort to establish ties with the newly formed state of Macedonia. The strategy worked, but when Macedonia’s leadership changed last year, so did its allegiance. “It’s a vicious cycle,” says Thomas B. Lee, the former dean of Tamkang University’s College of International Studies in Taipei. “We’re waging a war with Beijing that in the long run we can’t win.”
“Dollar diplomacy” has become something of a dirty phrase in Taipei. “It’s about time to abandon the myth that more allies are better,” says Taiwanese legislator Sunny Sun, urging the government to stop wasting its dwindling resources on small countries like Nauru. Officials insist they no longer engage in dollar diplomacy. “What we do is [offer] humanitarian assistance and economic trade,” says Foreign Ministry spokeswoman Chang Siao-yue. “We will not be caught in ‘money competition’ with China.” Still, President Chen Shui-bian saw fit to bring along a bloated 100-member entourage on his four-country swing through Africa last July. And in early August, two weeks after Nauru’s defection, Taiwanese Prime Minister Yu Shyi-kun did some hasty damage control, visiting four allies in Central America and the Caribbean, including the country considered most likely to bolt next, Panama. Beijing has not only invested $200 million in Panama over the past five years, it has set up a commercial office there that acts as a de facto embassy.
But Beijing is just as keen to court the tiny islands of the South Pacific. Over the past decade it has lured Fiji, Kiribati, Tonga and now Nauru into its fold. The ongoing battle over Tuvalu didn’t begin until 2000, when Taiwan backed the nation’s successful bid to become a member of the United Nations. Suddenly, mainland Chinese started showing up bearing plans to build outlandish new hotels, satellite systems, even a new airstrip to accommodate 747s carrying hordes of Chinese tourists. Tuvaluan leaders are slightly bewildered by the attention. “It is a big dilemma,” says Koloa Talake, a former prime minister. “Taiwan is an old friend, but mainland China has huge cash reserves.” Still, who wouldn’t be pleased by such a dilemma? So long as Beijing and Taipei battle it out diplomatically, even the tiniest countries in the world can keep the money flowing.
