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C O N F I D E N T I A L SECTION 01 OF 05 TAIPEI 001575 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 03/30/2015 
TAGS: PREL PGOV TW
SUBJECT: TAIWAN LACKS DIPLOMATIC STRATEGY TO COUNTER BEIJING 
 
REF: A. TAIPEI 03667 
     ¶B. TAIPEI 00315 
     ¶C. TAIPEI 00372 
     ¶D. TAIPEI 03430 
 
Classified By: AIT Director Douglas Paal; Reasons: 1.4 (B/D) 
 
  ¶1. (C) Summary.  Taiwan lacks a viable foreign policy 
strategy to counter Beijing's growing international clout and 
global campaign to isolate Taipei.  Taiwan foreign policy 
experts anticipate that a domestic crisis could be brewing as 
Taipei becomes diplomatically marginalized around the world 
and Taiwan government officials refuse to face this reality. 
Growing legislative and media scrutiny, as well as Beijing's 
economic power, are making it increasingly difficult for 
Taipei to match Beijing's "check book diplomacy" campaign. 
Taipei officials privately acknowledge that Taipei's 
international position is worsening at the hands of Beijing, 
but they have been slow to develop new ideas or a long term 
strategy to combat the PRC and maintain international 
diplomatic space for Taiwan or even to position themselves 
for a negative outcome.  There are some new initiatives aimed 
at the 25 countries that still recognize Taiwan, including 
encouraging closer business ties, using NGOs to advance 
diplomacy, and highlighting Taipei's democracy and 
humanitarian aid expertise to distinguish Taiwan from the 
PRC.  However, these efforts will have only limited 
effectiveness, because most of Taiwan's diplomatic partners 
are less concerned about democracy than about long-term 
development projects.  On the larger international stage, 
Taipei has done little to counter Beijing's momentum, and 
most Taiwan officials appear content to rely on the U.S. as 
Taipei's primary foreign policy bulwark.  End summary. 
 
A Domestic Crisis? 
------------------ 
 
¶2. (C) Taiwan foreign policy watchers tell AIT that a 
domestic crisis is brewing in Taipei as a result of Beijing's 
global campaign to isolate Taiwan (ref Taipei 03667). 
Beijing's efforts have become increasingly coordinated, 
organized, and creative, as evidenced by Taiwan's loss of 
Vanuatu in Fall 2004 and Grenada in January 2005 to the PRC 
(ref Taipei 00315).  According to Lin Cheng-yi, Director of 
the Institute of International Relations (IIR) at National 
Chengchi University, Taiwan now has 25 diplomatic partners, 
compared to 29 in 2000, when the Democratic Progressive Party 
(DPP) came to power.  Lin speculated that if the DPP 
government lost 3-4 more countries to the PRC, this could 
have domestic repercussions.  However, Lin continued, most of 
the Taiwan public does not see a big difference between 29 or 
25 nations as long as the status quo of around 25 nations is 
maintained.  (Note: Taipei's nadir of diplomatic partners was 
22 in the 1970s after Taiwan withdrew from the UN.  End 
note).  Lin said if the number dropped below 20, however, the 
government would almost certainly face a major domestic 
political backlash.  He personally believed such a 
development was likely to happen relatively soon and that the 
government was not prepared for the domestic fallout. 
 
¶3. (C) Former National Security Council (NSC) official and 
DPP International Department Deputy Director Hsieh Huai-hui 
separately concurred with Lin, stating that losing even a few 
more countries to the PRC would be politically devastating. 
This would have a tremendous psychological effect on the 
island's population, she explained, since diplomatic 
recognition is an important component of Taiwan's 
self-identity and confidence.  Hsieh told AIT that she was 
not certain Taiwan would be able to maintain its diplomatic 
partners in the future and that the government must be 
prepared to face the prospect of being diplomatically 
isolated.  Lai I-chung, Foreign Policy Director at the 
pro-Green Taiwan Think Tank went even further, telling AIT 
that Taipei was on a path to diplomatic disaster.  Taiwan, he 
said, was finished if it lost many more of its diplomatic 
partners.  The PRC would then have sufficient political and 
economic leverage to isolate Taiwan, which would compromise 
Taiwan's global economic competitiveness and force its 
corporations to relocate to the PRC to survive. 
Government Officials in Denial 
------------------------------ 
 
¶4. (C) Taiwan's foreign policy officials, however, appear to 
be in denial over Taiwan's growing diplomatic isolation and 
the potential domestic fall-out of losing a significant 
number of formal relationships.  In contrast to the bleak 
assessments given by outside foreign policy experts, 
officials from the NSC and the Ministry of Foreign Affairs 
(MOFA) told AIT that it was inconceivable Taiwan would lose 
all, or even most, of its diplomatic partners.  MOFA Section 
Chief for Eastern Caribbean Affairs Luis Yang and NSC former 
Deputy Secretary General Antonio Chang separately told AIT 
that Taipei might lose "a few here and there," but that there 
would always be at least 15 or 20 nations that would 
recognize Taiwan, which was, they thought, "enough." When AIT 
asked current NSC Deputy Secretary Parris Chang about the 
recognition issue, he dodged the question and changed the 
subject.  Chang also refused to speculate if there were a 
minimum number of nations that must recognize Taipei for 
Taiwan's government to remain legitimate.  Victor Chin, 
MOFA's Director General for North American Affairs simply 
insisted to AIT that formal diplomatic partners are essential 
and that Taiwan would do whatever were necessary to retain 
them. 
 
. . . And Lacking a Strategy 
---------------------------- 
 
¶5. (C) MOFA and NSC officials have been slow to adopt, or 
even face the need for a new long-term diplomatic strategy 
and have been content to rely on outdated policies to counter 
Beijing.  As IIR's Lin put it, MOFA has been in crisis 
management mode for years -- racing to save countries, but 
not developing any long-term strategy.  This reactive mode, 
he said, was ineffective and alternative strategies must be 
adopted.  Taiwan Think Tank's Lai assessed Taiwan's foreign 
policy simply and pessimistically as incoherent and "complete 
chaos." The DPP's Hsieh remarked that MOFA must encourage new 
ideas and be more flexible in its diplomatic strategy.  She 
added that the government should be more proactive, 
culturally aware, and show its partners that they are very 
important. 
 
Concern Over Domino Effect 
-------------------------- 
 
¶6. (C) Taiwan government officials do admit that Taipei's 
international position is worsening and expressed concern 
that the loss of additional diplomatic partners in the 
Caribbean and Central America could signal the beginning of a 
domino effect.  Lamenting that Taipei could not match 
Beijing's incentive packages, MOFA's Yang noted that St. 
Vincent and the Grenadines and other Caribbean nations could 
soon follow on the heels of Grenada.  MOFA Central America 
Branch Chief Hsie Miao-hung told AIT that if Taiwan lost 
Panama, then other nations in Central America, arguably 
Taiwan's most important region, would likely follow, causing 
a chain reaction that would change the strategic landscape 
for Taiwan. 
 
Government Beginning to Wake Up 
------------------------------- 
 
¶7. (C) MOFA and NSC officials are beginning to adopt some new 
strategies to try to slow Beijing's relentless advance. 
MOFA's Hsie told AIT that Taiwan was working to distinguish 
itself from Beijing.  She believed that Taipei should 
highlight the fact that for several decades Taiwan had been a 
stable partner and dependable supporter for many nations. 
Hsie also said Taipei was trying to highlight Taiwan's 
democratic values and its generosity in providing 
humanitarian aid.  The PRC, she noted, often promised a lot, 
but did not deliver in the long run.  NSC's Chang argued that 
the PRC was an unreliable partner and, noting that Taiwan has 
a growing image problem abroad, said that Taipei must do more 
on the public diplomacy front.  To that end, he said, Taiwan 
was planning a new public diplomacy campaign in the U.S. and 
elsewhere to undergird Taipei's sagging reputation abroad. 
 
Forced to Use NGOs 
------------------ 
 
¶8. (C) Taipei is also increasingly seeking out NGO partners 
to act as intermediaries for its activities abroad.  Taiwan 
diplomats believe that increasing cooperation with NGOs is a 
possible avenue for multilateral diplomacy and will help 
Taipei circumvent Beijing's campaign to isolate Taiwan in the 
international community.  For example, Taiwan is working 
through the NGO Mercy Corps in provide aid to Iraq (ref 
Taipei 00372).  MOFA NGO Affairs Committee Chairman Michel Lu 
explained to AIT that using NGOs was Taipei's only viable 
option to establish a presence in Iraq and that they were 
pleased with their Mercy Corps partnership and viewed it as a 
model for future Taiwan diplomacy.  In addition, he said, the 
Chen administration was eager to enhance its relations with 
international organizations and Taipei was reaching out to 
NGOs because it had been unsuccessful in its efforts to join 
international organizations, largely because of PRC 
influence. 
 
ICDF Playing a More Visible Role 
-------------------------------- 
 
¶9. (C) Taiwan's international aid organization, the 
International Cooperation Development Fund (ICDF), is playing 
an increasingly central role in Taiwan's diplomatic strategy 
to counter Beijing.  Given a growing backlash at home and 
abroad over less ethically acceptable forms of foreign 
assistance, the ICDF is a visible and legitimate aid 
organization.  Taipei views the ICDF as a possible avenue for 
diplomacy and works hard to promote the organization as a 
global humanitarian organization via international 
conferences, glossy brochures, and professional video 
productions.  The foundation is self-financed from 
investments of its USD $1 billion endowment from government 
coffers since it was established in 1996.  The ICDF serves 
nations that continue to recognize Taipei with humanitarian 
assistance projects similar to USAID.  According to the 
ICDF's Deputy Secretary General Carlos Liao, the ICDF will 
play an increasingly central role in Taiwan's diplomatic 
strategy to enhance relations with its partners.  The 
organization operates in close accord with MOFA directives 
and targets its aid on nations that recognize Taipei.  In 
2003, approximately $57 million was approved for direct 
assistance. 
 
Looking to Business For Help 
---------------------------- 
 
¶10. (C) Taipei is also seeking to use its business expertise 
and corporate prowess to its diplomatic advantage.  During 
Vice President Annette Lu's March 2005 visit to Central 
America, she highlighted Taiwan's commercial benefits and 
expertise in technology to Central American nations. 
According to MOFA's Chin, the Vice President's delegation of 
153 members included a large Taiwan business contingent. 
Chin told AIT that Taipei is promoting the construction of a 
technology park in Honduras and is encouraging business 
leaders to invest and promote commercial ties in Central 
America.  Taipei is also promoting free trade agreements with 
some of its diplomatic allies.  However, it is not certain 
how willing Taiwanese businesses are to go along with the 
government's plan, particularly since many of the nations 
targeted by the government have little economically to offer 
Taiwanese companies. 
 
But No Bidding War 
------------------ 
 
¶11. (C) Officials at both the NSC and MOFA say that they are 
adamant that Taiwan cannot and will not engage in "check-book 
diplomacy." Long the mainstay of Taiwan's diplomatic 
strategy, growing LY and media scrutiny as well as Beijing's 
economic power are making it increasingly difficult for 
Taipei to match Beijing's campaign around the globe with 
under-the-table payments to political parties and foreign 
leaders (ref Taipei 03430).  The NSC's Chang told AIT that 
recent Taiwan aid scandals involving Nicaragua, Costa Rica, 
and Panama have had an impact on Taipei's aid approach.  He 
added that there is more oversight in the aid process and 
that lump sums are not given out as freely to leaders as 
before.  Rather, Taiwan's future foreign aid system will be 
more focused on real aid projects that can make a 
developmental difference in the country.  Chang added what is 
probably the main reason for the change in the policy -- that 
Beijing has more resources than Taiwan and Taipei simply 
can't compete anymore. 
 
Content to Rely On The U.S. 
--------------------------- 
 
¶12. (C) Taipei's core foreign policy is still to rely on the 
U.S. for support.  Despite some new policies, MOFA appears 
content to follow this well-hewn approach, accept its 
international fate, and look to the U.S. to save Taiwan in 
the wake of Beijing's growing power.  The NSC's Chang said 
that Taipei hoped for increased cooperation with the U.S. in 
Latin America and the South Pacific.  In Europe, MOFA and NSC 
officials have largely ignored new EU members in Eastern 
Europe in their lobbying efforts and are content to let the 
U.S. take the lead in opposing the EU arms embargo.  Even 
Taiwan Think Tank's Lai argued that Taipei's diplomacy is not 
going to work on its own and that increased U.S. support 
would have a dramatic impact on Taiwan's diplomatic survival. 
 
Comment: Reality is Against Them 
-------------------------------- 
 
¶13. (C) Taiwan officials seem to have concluded that there is 
little they can do in the wake of the PRC's growing 
international influence.  It is clear Taipei does not have an 
effective plan for how to deal with the quandary it faces. 
Practically every MOFA official AIT met with pleaded for 
increased U.S. support.  Few are confident that Taiwan can 
keep its 25 formal diplomatic relationships for long in the 
face of Beijing's money diplomacy and pressure tactics.  Yet 
no one in government seems willing to contemplate what would 
happen if Taiwan lost even the minimal international space it 
has carved out for itself. 
 
¶14. (C) Taipei's emerging strategy of portraying Beijing as 
an unreliable partner, emphasizing Taiwan's democratic 
attributes, and utilizing NGOs will not meet the challenge 
from Beijing.  Taiwan does have much to offer in the 
technical and financial assistance arena, but new strategies 
that promote this experience are not likely to be effective 
with its diplomatic partners.  The majority of nations that 
recognize Taiwan are not concerned about technical assistance 
or Taiwan's democratic values.  More often than not, the 
biggest factor in the recognition game is simply money and 
how much of it flows into leaders' pockets, a reality that 
gives Beijing the upper hand.  As long as Taipei continues to 
rely on a policy of focusing on nations that are typically 
poor and corrupt, it will continue to lose the check-book 
diplomacy battle, country by country, because Beijing has the 
resources and the strategy to outbid Taipei. 
 
¶15. (C) This trend and Taiwan's inability thus far to adopt a 
realistic strategy to cope with the risks poses a significant 
challenge both to Taiwan and to U.S. efforts to support 
Taiwan.  We will explore these risks and possible response 
strategies in subsequent cables. 
PAAL