For Taiwanese aid, a search for its place and purpose

When Taiwan applied to become a founding member of the Asian Infrastructure Investment Bank, it was not only rebuffed by mainland China, but also criticized at home. The mainland’s response — that Taiwan could still apply to be an ordinary member, but only under what Beijing deems the “appropriate” name — left Taiwan with a diplomatic dilemma: While it doesn’t want to be left out of AIIB for fear of being isolated from the international community, it also wants to protect its sovereignty. The issue of which name to use for official membership at multilateral banks is nothing new for Taiwan. Taipei is the largest economy that is not a member of the World Bank, which has been referring to Taiwan as a province of China since Beijing joined the Washington-led financial institution in April 1980. At the Japan-led Asian Development Bank, Taiwan represented both Taipei and Beijing until mainland China became an official member in 1986, when it was forced to change its name from “Republic of China” to “Taipei, China” — a name that it continues to protest. As a member of the World Trade Organization, Taiwan uses the China-approved but unwieldy “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.” Meanwhile, to participate in international activities like the Asia-Pacific Economic Cooperation and the Olympics, Taiwan uses the name “Chinese Taipei” — a label that China rejects. Excluding the name controversies, however, “Taiwan is a solid AIIB candidate. It has one of the world’s largest foreign exchange reserves — $414 billion at last count, more than neighbor and accepted [AIIB] founding member South Korea,” reporter Nikhil Sonnad wrote in an analysis. The comparison with South Korea, however, has its limitations. Like South Korea, Taiwan was a major recipient of U.S. development assistance during the postwar period. Both eventually graduated from aid and became donors themselves. But unlike South Korea, Taiwan, whose bilateral official development assistance declined from a high of nearly $572 million in 2006 to almost $232 million in 2013 — its lowest level in a decade — has lately been seen as a waning donor, one that would be unlikely to rival South Korea, let alone Beijing, even if it wanted to. Taiwan’s multilateral aid, meanwhile, has also grown at a sluggish pace. In 2013, Taiwan’s combined bilateral and multilateral assistance amounted to just $271.8 million, or a mere 0.05 percent of its gross national income. Taiwan has not yet released its preliminary 2014 data for the Organization for Economic Cooperation and Development, which recognizes Taiwan as “Chinese Taipei”. From ‘checkbook diplomacy’ to aid aloofness Chen Shui-bian was widely seen as a president who aggressively engaged in what has come to be known as “checkbook diplomacy” as he tried to woo — sometimes carelessly — allies through aid. When former Kuomintang Chairman Ma Ying-jeou came to power in 2008, he sought to put a stop to this practice by simply refusing to participate in what retired Taiwanese diplomat Loh I-cheng has called “open blackmail.” “Ma has rejected some leaders’ requests for additional funding,” Czes Tubilewicz, a senior lecturer at the University of Adelaide specializing in mainland China’s and Taiwan’s foreign relations, told Devex. “Hence, for example, Gambia President [Yahya Jammeh] decided to derecognize [Taiwan] because Taipei rejected his demand for $10 million.” But even as Ma used Chen’s allegedly expensive aid diplomacy to justify Taiwan’s “diplomatic truce” with China, this claim against the former president has been disputed by several experts, including by Tubilewicz himself and Alain Guilloux, author of “Taiwan, Humanitarianism and Global Governance.” “The reduction of cross-Strait tensions has lessened the necessity for Taiwan to conduct dollar diplomacy,” Wei-chin Lee, a professor at Wake Forest University and author of a paper on Taiwan’s foreign aid policy, told Devex. Instead, it was Chen’s stinginess with aid, rather than his supposed generosity, that led to diplomatic failures during that period, Tubilewicz and Guilloux concluded. In recent years, a reconfiguration of budget priorities, which channeled more resources toward various domestic constituencies, might have also contributed to the decline in assistance, according to Lee. “[Ma’s] policy did not necessarily strengthen Taiwan’s relations with ‘allies’ and aid recipients as Taipei’s decreased aid spending did not generate enthusiasm there and contrasted strongly with China’s rising aid budgets,” Tubilewicz said. A different focus Currently, Taiwan is recognized by 21 U.N. member countries, as well as the Vatican City. The number has dwindled through the years — in 2000, Taiwan counted 30 allies — and Taiwan’s presence in Africa, previously the “primary battleground … between Beijing and Taipei over international legitimacy, recognition and status,” as well as in the Pacific, has been overshadowed by China. “Taiwan is unable to compete with China's rapid rise in financial wealth and immense scale of foreign aid projects,” Lee said, who noted that dollar diplomacy is practiced by every donor. “At the same time, democratic governance in Taiwan requires careful allocation of financial resources and close scrutiny of ODA policy design and implementation.” In the meantime, Taiwan has raised its profile through nongovernmental organizations doing humanitarian work abroad. The growth of these groups, according to Lee, has helped shed Taiwan’s old image as a donor largely interested in winning allies. Perhaps one of the most visible Taiwanese groups operating outside Taiwan is the Buddhist Tzu Chi Foundation, a small group that has been active in post-earthquake Haiti, for example. Taipei has also emphasized that humanitarian assistance, which it sees as a way to more deeply integrate itself into the international community, is an important component of its aid efforts. Tubilewicz has said that emergency assistance from Beijing and Taipei, donors that are outside the Development Assistance Committee of the OECD, “was comparable with DAC donorship in terms of its declaratory commitment to altruism and the pursuit of strategic objectives.” As Taiwan prepares for a presidential election in 2016, the competing parties’ focus would likely be on China policies and not on foreign aid. Nonetheless, both the Kuomintang and the Democratic Progressive Party would likely have an altered view of aid diplomacy. “The fact that the DPP did not attack the KMT when Gambia derecognized [Taiwan] indicates that both political parties share the view that the number of allies does not matter that much,” Tubilewicz said. “Aid would continue regardless of who wins power, but it might never return to its central position it enjoyed before 2008.” Check out more insights and analysis for global development leaders like you, and sign up as an Executive Member to receive the information you need for your organization to thrive.