Taiwan and Post-Communist States: Shopping Allies (Routledge Contemporary Asia)

Taiwan and ­Post-­Communist Europe

Taiwan and ­ Post-­Communist Europe examines Taiwan’s economic diplomacy towards ­ post-­communist states in Central and Eastern Europe. The media, and occasionally academia, have often suggested that Taipei resorts to costly aid, trade and investment diplomacy to facilitate its foreign relations, whilst China engages in equally costly ­ counter-­economic diplomacy to keep Taiwan iso-­ lated. Czeslaw Tubilewicz argues conversely that Beijing’s diplomacy in ­ post­communist Europe has demonstrated China’s reluctance to employ economic instruments against states violating the ‘­one-­China’ principle when cheaper (diplomatic) alternatives are available. Taipei, for its part, has demonstrated that promises of economic assistance are sufficient to induce target states’ short-term compliance, whilst in the medium to long term Taiwanese economic assistance, conditional upon meeting political criteria, has proved inconsequential due to Taipei’s refusal to follow up aid commitments. This book examines the efficacy and limitations of Taipei’s frugal economic diplomacy in furthering its broader diplomatic objectives, looking at both Tai-­ pei’s failure to establish a lasting diplomatic presence in ­post-­communist Europe and its success in securing ‘substantive’ relations with a number of major ­post­communist states, and thus opening transition economies for its exports and investments. The first ­in-­depth study into Taiwan’s economic diplomacy toward ­post-­communist Europe, this book will appeal to readers interested in Taiwan and China studies, diplomacy, Asian studies and international relations. Czeslaw Tubilewicz is Lecturer at the School of History and Politics at the Uni-­ versity of Adelaide, former ­co-­programme leader of China Studies at the Open University of Hong Kong, and editor of Critical Issues in Contemporary China (Routledge, 2006)

Routledge contemporary Asia series

1 Taiwan and Post-Communist Europe Shopping for allies Czeslaw Tubilewicz

Taiwan and ­Post-­Communist Europe Shopping for allies

Czeslaw Tubilewicz

First published 2007 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 2007 Czeslaw Tubilewicz All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-94697-9 Master e-book ISBN

ISBN10: 0-415-42252-3 (hbk) ISBN10: 0-203-94697-9 (ebk) ISBN13: 978-0-415-42252-9 (hbk) ISBN13: 978-0-203-94697-8 (ebk)

To my Parents

Contents



List of illustrations Acknowledgements List of abbreviations Glossary of Chinese names

viii ix x xii

1 Taiwan’s economic diplomacy

1

2 Closing the Cold War chapter

26

3 Central European focus

46

4 The Latvian model

76

5 The Russian offensive

95

6 China’s Balkan fortress

124

7 Macedonian breakthrough

134

8 Fair-­weather friends

156

9 Taiwan’s economical diplomacy

173



190 224 236

Notes Bibliography Index

Illustrations

Figures 1.1 1.2 1.3 2.1 3.1 3.2 5.1 7.1 7.2

ROC’s and PRC’s diplomatic allies, 1972–1979 ROC’s and PRC’s diplomatic allies, 1980–1988 Map of post-communist Europe, 2006 Taiwan’s trade with communist and post-communist states, 1984 and 1988–1991 Cumulated Taiwanese investments in Europe, end 2004 Central Europe’s share in Taiwan’s foreign trade, 1989–2005 Russia’s share in ROC total foreign trade, 1992–2005 The PRC’s trade with Macedonia Taiwan’s trade with Macedonia

7 9 21 43 71 72 104 135 147

Tables 1.1 3.1 3.2 3.3 3.4 3.5 4.1 5.1 5.2 6.1 8.1 9.1

Sino-Taiwanese competition for allies since 1989 Taiwanese offices in Central Europe Central European offices in Taiwan Proposed Taiwanese industrial zones in Central Europe Taiwan’s trade with Central Europe, 1990–2005 Taiwan’s largest investors in the Czech Republic, 2006 Taiwan’s trade with the Baltic states, 1992–2005 Taiwanese offices in Russia and the Russian office in Taiwan Taiwan’s trade with the Soviet Union and Russia Taiwan’s trade with the Balkan states, 1988–1998 Taiwan’s trade with Belarus and Ukraine Taiwan’s diplomatic objectives

11 48 56 57 67 70 83 97 104 126 168 174–175

Acknowledgements

First and foremost, my thanks go to Ms Gillian Kew, who has provided her unsurpassed editorial assistance from the beginning of this project. I would also like to acknowledge the assistance provided by the library staff of the Institute of International Relations at the National Chengchi University in Taipei, who expe-­ ditiously navigated me thorough the library’s rich periodicals collection. What a pity that the recent budget cuts have deprived the library of its capacity to assist researchers in their quest to unravel the arcanes of Taiwanese diplomacy in the 2000s! My thanks also go to numerous diplomats and other government offi-­ cials, interviews with whom deepened my understanding of Taiwan’s relations with ­ post-­communist Europe. Unfortunately, reflecting the sensitive nature of relations with China’s rebel island, many discussions were off the record and the names of some of my interlocutors cannot be listed. They know who they are. This research has benefited from a research grant, extended by the School of Arts and Social Sciences at the Open University of Hong Kong. Earlier versions of some of the material incorporated in this book have appeared in ‘The Little Dragon and the Bear: Russian–Taiwanese Relations in the ­Post-­Cold War Period’, The Russian Review, 61, 2, April 2002, pp. 276–297; ‘The Baltic States in Taiwan’s ­ Post-­Cold War “Flexible Diplomacy” ’, ­ Europe– ­Asia Studies, 54, 5, July 2002, pp. 791–810; ‘Taiwan’s “Macedonian Project”, 1999–2001’, The China Quarterly (Cambridge University Press), No. 179, Sep-­ tember 2004, pp. 782–803; ‘Breaking the Ice: the Origins of Taiwan’s Economic Diplomacy towards the Soviet Union and its European Allies’, Europe–Asia Studies, 56, 6, September 2004, pp. 892–906; and ‘The Scrooge Effect: Taiwan’s Economic Diplomacy towards Central Europe, 1988–2005’, Issues and Studies, 41, 4, December 2005, pp. 209–249.

Abbreviations

AIDC APEC ­ BOFT CCI CETRA CIECA CIS CITC DA DAC DPP EBRD EU GATT GIO GNI ICDF IEAT IECDF KMT LDPR ­ LNNK MFN MOEA MOFA MTC NATO OA ODA

Aerospace Industrial Development Corporation (Taiwan) Asia-­Pacific Economic Cooperation forum Board of Foreign Trade (Taiwan) Chamber of Commerce and Industry (Russia) China External Trade Development Council (Taiwan) Chinese International Economic Cooperation Association (Taiwan) Commonwealth of Independent States Committee of International Technical Cooperation (Taiwan) Democratic Alternatives (Macedonia) Development Assistance Committee Democratic Progressive Party (Taiwan) European Bank for Reconstruction and Development European Union General Agreement on Tariffs and Trade Government Information Office (Taiwan) gross national income International Cooperation and Development Fund (Taiwan) Import–Export Association of Taiwan International Economic Cooperation and Development Fund (Taiwan) Kuomintang (Chinese Nationalist Party) Liberal-­Democratic Party of Russia Latvian National Independence Movement Most Favoured Nation Ministry of Economic Affairs (Taiwan) Ministry of Foreign Affairs (Taiwan) Moscow–Taipei Economic and Cultural Coordination Commission North Atlantic Treaty Organization official assistance official development assistance

Abbreviations   xi OECDF

Overseas Economic Cooperation and Development Fund (Taiwan) PiS Prawo i Sprawiedliwosc (Law and Justice party, Poland) PRC People’s Republic of China ROC Republic of China on Taiwan SDSM Socijaldemokratski Sojuz na Makedonija (Social Democratic Union of Macedonia Party) SME small and medium-sized enterprise TIER Taiwan Institute of Economic Research TMC Taipei–Moscow Economic and Cultural Coordination Commission TAITRA Taiwan External Trade Development Council TRA Taiwan–Russia Association UK United Kingdom UN United Nations UNPREDEP UN Preventive Deployment Force in Macedonia USA United States of America USSR Soviet Union WHO World Health Organization WLFD World League of Freedom and Democracy WTO World Trade Organization ­VMRO-­DPMNE Vnatresna Makedonska Revoluciona ­Organizacija­Demokratska Partija za Makedonsko Nacionalno Edinstvo (Internal Macedonian Revolutionary ­Organization­Democratic Party for Macedonian National Unity)

Glossary of Chinese names

Chang, ­Chun-­hsiung Chang, ­Chun-­hung Chang, ­Hsiao-­yen, John Chang, K.H., Keenan Chang, ­Shih-­liang Chang, ­Wen-­chung Chao, ­Tze-­chi Chen, ­Che-­nan Chen, ­Chien-­jen Chen, Chu Chen, ­Li-­an Chen, ­Rong-­jye Chen, ­Sheng-­hung Chen, ­Shui-­bian Chen, ­Tan-­sun, Mark Chen, ­Wu-­hsiung Cheng, P. C., Peter Chi, Haotian Chiang, ­Ching-­kuo Chiang, ­Chung-­ling Chiang, ­Fang-­liang, Faina Chiang, ­Kai-­shek Chiang, ­Pin-­kung Chien, Fu Chien, ­Yu-­hsin Chiou, ­Jong-­Nan Chou, ­Shu-­kai Dai, Bingguo Deng, Xiaoping Hau, ­Pei-­tsun Ho, ­Mei-­yueh Hsieh, ­Hsin-­ping Hsu, ­Hsin-­liang

張俊雄 張俊宏 章孝嚴 (蔣孝嚴) 張貴祥 張世良 張文中 趙自齊 陳哲男 程建人 陳菊 陳履安 陳榮傑 陳勝宏 陳水扁 陳唐山 陳武雄 鄭博久 遲浩田 蔣經國 蔣仲苓 蔣方良 蔣介石 江丙坤 錢復 簡又新 邱榮男 周書楷 戴秉國 鄧小平 郝柏村 何美玥 謝新平 許信良

Glossary of Chinese names   xiii Hsu, ­Li-­teh Hu, ­Chih-­chiang, Jason Hu, Jintao Huang, Chih-fang, James Jiang, Zemin King, ­Shu-­chi, Charles Koo, ­Chen-­fu Koo, Jeffrey Jr. Koo, Yen ­Cho-­yun, Cecilia Ku, ­Chung-­lien Lee, ­Ta-­wei Lee, ­Teng-­hui Li, Huan Li, Lanqing Li, Peng Li, Tieying Li, Zhaoxing Lien, Chan Lin, ­Ling-­san Lin, ­Shou-­shan Liu, Binyan Liu, Guchang Liu, ­Tai-­ying Lo, ­Chih-­cheng Loh, ­I-­cheng Lu, ­Hsiu-­lien, Annette Mao, Zedong Pan, Zhanlin Peng, Guangqian Peng, ­Ming-­min Qian, Qichen Shieh, C., Samuel Siew, ­Wan-­chang, Vincent Sun, Yuxi Tang, Jiaxuan Tian, Zengpei Tien, ­Hung-­mao Tseng, ­Wen-­fui Wan, Runnan Wang, ­Chih-­kang Wang, ­Jin-­pyng (­Chin-­ping) Wang, Jinqing Wen, Jiabao Wu, Bangguo Wu, ­Ching-­tang

徐立德 胡志強 胡錦濤 黃志芳 江澤民 金樹基 辜振甫 辜濂松 辜嚴倬雲 顧崇廉 李大維 李登輝 李煥 李嵐清 李鵬 李鐵映 李肇星 連戰 林陵三 林壽山 刘宾雁 劉古昌 劉泰英 羅致政 陸以正 呂秀蓮 毛澤東 潘占林 彭光謙 彭明敏 钱其琛 謝森中 蕭萬長 孫玉璽 唐家璇 田曾佩 田弘茂 曾文惠 萬潤南 王志剛 王金平 王藎卿 溫家寶 吳邦國 吳慶堂

xiv   Glossary of Chinese names Wu, ­Rong-­I Wu, ­Shu-­chen Wu, Yi Wuer, Kaixi Xu, Yuehe Yang, Shangkun Yin, ­Tsung-­wen Zhang, Qiyue Zhu, Rongji

吳榮義 吳淑珍 吳儀 吾爾開希 許月荷 楊尚昆 殷宗文 章啟月 朱鎔基

1 Taiwan’s economic diplomacy

Diplomacy of the Republic of China (ROC) on Taiwan has often been described as ‘unorthodox’ or ‘unconventional’. Its unorthodox nature stems from the ­non­recognition of the ROC as a sovereign state by the majority of states, resulting in Taipei’s inability to enter most international organizations and to conduct ­inter­state communications through conventional diplomatic channels. Struggling to find an international space in the face of international isolation, imposed and enforced by the People’s Republic of China (PRC), Taipei has developed creative forms of diplomacy, such as ‘holiday diplomacy’ (渡假外交) or academic diplomacy (學術之旅), where Taiwanese leaders use ostensibly private vacations abroad or acceptance of honorary degrees from foreign academic institutions to engineer ‘chance meetings’ with their counterparts in an outwardly social milieu. On a more regular basis, however, Taipei relies upon other diplomatic techniques, such as the use of intermediaries, representative or trade offices (which act as disguised embassies or consulates), special envoys, missions at ­ inter­governmental organizations that allow Taiwanese membership (e.g. the World Trade Organization, WTO) and regular dialogue with the diplomatic corps of states that recognize Taiwan. Despite its contested international status, Taipei can and does resort to four foreign policy tools utilized by sovereign states, classified by Harold Lasswell as: diplomatic negotiations, military statecraft, economic statecraft and propaganda.1 Taiwan conducts open diplomatic dialogue with its 25 current allies (known in Taiwan as state diplomacy, 元首外交), in addition to covert diplomatic communication via special envoys, intermediaries or representative and trade offices. It retains armed forces, although the survival imperative prevents it from diverting military capacity towards any objective other than ­ self-­defence. It engages in economic exchanges with the whole world, and boasts robust foreign propaganda machinery. Unlike most sovereign states, however, Taiwan has become exceedingly reliant upon economic diplomacy to sustain its claim to sovereignty amid ­China-­imposed diplomatic isolation. Attempting to trade economic favours in exchange for diplomatic support, Taipei offers economic incentives and/or rewards to those states that cannot gain any political or expressive (symbolic) benefits from supporting Taiwan, but cannot resist the economic rewards stemming from such support.

   Taiwan’s economic diplomacy

Economic diplomacy defined Defined as governmental attempts to influence other state and ­non-­state international actors, relying primarily on resources, which have a reasonable semblance of a market price in terms of money, economic diplomacy has been practised for centuries by all states, while the past 100 years in particular have witnessed a significant growth in its use.2 Although considered less effective in the deterrence situation than military force, economic diplomacy is valued for its inherent credibility due to its higher cost, compared to conventional or expressive diplomacy and lower cost than the alternative, military conflict. David Baldwin concludes that it represents an appealing combination of costs that are high enough to be effective and low enough to be bearable.3 Falling into two categories – positive (promising or granting specific rights and privileges) and negative (threatening, withholding or ending specific privileges or relations or the imposition of particular constraints) – economic diplomacy broadly aims at accomplishing two – often interrelated – goals: 1 2

to enhance domestic economic growth through international economic transactions (economic means used for economic ends); and to advance foreign policy objectives, be they diplomatic, military or expressive (economic tools used for ­non-­economic ends).4

Although states resort to both positive and negative instruments, it is the latter that attract most attention in the media and academia.5 The focus of political scientists on coercive instruments of economic diplomacy led Baldwin to remark that ‘it is not that political scientists have said wrong things about the effectiveness of positive economic diplomacy; it is just that they have said little’.6 A few years later, he accused political scientists of ‘paint[ing] themselves into a conceptual corner which left little room for ­non-­military factors, positive sanctions, and promise systems’.7 Since the late 1960s–early 1970s, when the massive aid programmes took off and the United Nations (UN) urged economically advanced states to increase their foreign aid budgets to at least 0.7 per cent of their gross national income (GNI),8 the positive instruments of economic diplomacy have been attracting more academic attention. They are of particular importance in Taiwan’s case because Taipei relies primarily upon positive economic diplomacy to attain its foreign policy objectives, resorting to negative instruments only when the positive ones fail. Positive economic diplomacy can be summed up – to follow Diane Kunz’s suggestion – in the phrase ‘trade and aid’. The subheading of trade includes such benefits as favourable tariff discrimination, granting Most Favoured Nation (MFN) treatment, tariff reductions, direct purchases, subsidies to exports or imports, granting export or import licences or credits or promises of the above. (Most of the ­ trade-­related instruments are no longer available for the WTO member states.) Foreign aid – defined as a concessionary transfer of economic resources from one government to another – may take the form of cash grants,

Taiwan’s economic diplomacy   soft loans, encouragement of private capital exports (investments), technical assistance, humanitarian (relief) assistance, bribery or promises of the above.9 The major aid donors, grouped in the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development, define aid more narrowly as official development assistance (ODA; targeting developing states) or official assistance (OA; targeting ­post-­communist states). ODA/OA refers to transfers of resources, either in cash or in the form of commodities or services, at highly concessional rates, provided by government agencies and administered with the promotion of the economic development and welfare of recipient states as the main objective. Apart from grants and loans, ODA/OA includes technical assistance, food aid, support of cultural institutions, assistance to refugees, costs of education and training provided to developing state nationals in the donor state, subsidies to ­non-­government organizations and the administrative costs of ODA programmes.10

Economic diplomacy and asymmetrical interdependence To achieve ­ non-­economic ends, positive economic diplomacy is expected to transform economic instruments (trade or aid) into tools inducing the target state’s foreign policy compliance. As early as 1945, Albert Hirschman – having examined Nazi Germany’s successful attempts at influencing its southeastern neighbours through the manipulation of trade relations – isolated foreign trade as an effective means of influencing economically weaker states.11 In the 1960s, Robert Keohane agreed that economic and security instruments, such as foreign aid, trade and protection could be used to extract political compliance from other states.12 Subsequently, Keohane and Joseph Nye elaborated upon the concept of asymmetrical interdependence, which they defined as ‘asymmetries in dependence that are most likely to provide sources of influence for actors in their dealings with one another’.13 While Keohane and Nye did not focus exclusively on the economic dimension of asymmetrical interdependence, James A. Caporaso conceptualized asymmetrical interdependence strictly in economic terms as actor A’s dependence on actor B to the extent that ‘A relies on B for large quantities (expressed as proportions of total consumption) of important goods which cannot be easily replaced at sufferable costs while B acquires small quantities of unimportant goods from A which it can easily replace’.14 Thus, B can terminate the relationship with A at little or no cost, while A can do so only at considerable cost.15 Having established an asymmetrical interdependence, positive economic diplomacy places the dominant state in a position to influence the dependent state’s policies so that these become compliant with the dominant state’s policy preferences. For Neil Richardson, the concept of bargaining (quid pro quo or a favour for a favour) remains central to the analysis of the asymmetrical relationship, in which the economically dependent state complies with the explicit or implicit expectations of the donor as ‘partial payment in exchange for the maintenance of benefits [it] derives from [its] economic ties to the dominant country’.16 Richardson

   Taiwan’s economic diplomacy also notes the limits of asymmetrical interdependence, suggesting that the dependent state’s compliance could diminish if the dominant state’s demands become too incompatible with the dependent’s wishes.17 Bruce Moon reminds us that the bargaining concept assumes a dependent state having the choice of a different policy option in the absence of influence attempt, while Kenneth Menkhaus and Charles Kegley suggest that the compliance could result from voluntary alignment or ­ co-­optation, rather than the influence attempt.18 Exceptionally, some argue that the dominant state could derive benefits even when its economic diplomacy fails to establish a dependent relationship, as such attempts alone create an access to the target state’s decision-makers and provide the dominant state with an opportunity to exert its influence.19 James Caporaso proposed three conditions of positive economic diplomacy that could facilitate the formation of a dependent relationship: size of the reliance relationship, importance of the goods on which one relies, and ease, availability and cost of the replacement alternatives.20 Adrienne Armstrong focused on trade and investment as compliance-inducing factors: the higher the degree of a state’s investment controlled by another state, the greater the difficulty of finding a substitute for a commodity or a trading partner; and the more intense demand for a commodity, the greater the possibility of establishing an asymmetrical interdependence.21 David Baldwin suggested eight criteria to estimate the efficacy of an influence attempt based on foreign aid alone. These include fungibility, forms of aid, transparency of donor’s objectives, degree of conflicting interests between donor and recipient’s goals, credibility of threats, size of aid package, future of aid provision and difficulty in providing aid.22 More recently, Eileen Crumm concluded that the dominant and target states’ political and economic characteristics, features of goods and services provided and world market conditions affected the value of economic incentives as instruments inducing foreign policy compliance.23

Aid and trade as instruments of positive economic diplomacy Two broad sets of motivations have been identified as relevant in examining the objectives of foreign aid: one set refers to states pursuing humanitarian objectives (to promote economic growth or reduce poverty) and the other to the states pursuing their own interests, defined as economic interests (e.g. aid tied to the donor’s exports), security interests, military–strategic interests or political interests. While some states aim primarily at promoting humanitarian objectives, other states are more ­ self-­interest driven, while yet others take the middle ground, where the pursuit of aid diplomacy reflects both their interests and recipient needs. Most scholars of positive economic diplomacy argue that humanitarian needs of the recipient states are usually of lesser importance to the majority of donor states when allocating economic assistance than the donors’ interests.24 With the end of the Cold War, however, the donors might have paid a greater attention to the objectives of alleviating poverty and supporting good governance or democracy. And indeed, human concerns began playing a greater role in aid

Taiwan’s economic diplomacy   allocation in the 1990s and beyond.25 Yet, some analysts maintain that ­ self­interest still dominates the donors’ aid policies.26 Empirical studies – whether quantitative or qualitative – confirm some donors’ success (particularly, Japan’s) at converting foreign aid into promotion of their own economic development.27 However, they yield no consistent conclusions confirming or denying the donors’ ability to transform aid into the recipient’s foreign policy compliance. Comparing the United States’ (USA) and the US aid recipients’ voting at the UN, Samuel Bernstein and Eugene Alpern, Eugene Wittkopf, Kul Rai, Per Lundborg and T.Y. Wang, for example, found a correlation between the two.28 Charles Kegley and Steven Hook, however, found no such association despite President Ronald Reagan’s explicit tying of aid to UN votes, and concluded that neither the economic need of the top recipients of US assistance nor the size of US aid as a proportion of their GNI predicted changes in the aid dependent states’ voting coincidence with the United States.29 Armstrong found that US economic aid had a negative effect on compliance, although Soviet aid (particularly in the 1950s) was the ‘single most important predictor of compliance’.30 Philip Roeder, however, disagreed, claiming that ‘the offer or threatened loss of Soviet economic assistance has not directly increased compliant behaviour among recipients’.31 Randall Newnham identified a strong relationship between German economic aid to the Soviet Union and Russia, and Moscow’s compliance with German diplomatic objectives.32 He was also optimistic regarding Japan’s use of aid towards Russia in order to recover the Kurile Islands.33 Yet, scholars of Japanese foreign aid are divided over the effectiveness of Tokyo’s aid to induce foreign-policy compliance of aid recipients. Tsukasa Takamine and Steven Hook and Guang Zhang found no such correlation with regards to Japan’s efforts to influence China, India or Pakistan, while Dennis Yasutomo, David Arase, Akatoshi Miyashita and Howard Lehman conceded that Japanese foreign aid helped Tokyo to re-establish friendly relations with Asian states, symbolize friendship with the US and promote its influence in Africa.34 Similar inconsistencies also plague the studies testing the linkage between trade and foreign-policy compliance. Hirschman’s belief in the power of trade as an influence instrument has already been noted. Having examined the US voting at the UN with that of the states whose exports depended on the US market, Richardson and Kegley found that US dependencies exhibited greater compliance with US foreign-policy preferences than ­ non-­dependencies.35 While Armstrong agreed with Richardson’s thesis, and Menkhaus and Kegley found ‘the extremely high rate of compliance by Somalia towards its primary export market [during the Cold War]’, Moon begged to disagree, claiming that trade flows are of a ‘radically different type: they are neither well controlled by dominant states nor viewed by any of the parties as involving a return measured primarily in terms of political compliance’.36 Richardson’s later study led him to conclude that ‘agreement with the US position [at the UN] is not a positive function of the extent of a country’s dependence’, while Latin American states’ compliance with US foreign policy should not be attributed to their economic dependence on the USA.37 Ray’s analysis produced conflicting results, demonstrating a greater level

   Taiwan’s economic diplomacy of compliance among the Soviet Union’s ­ export-­dependent allies in Eastern Europe than among the US trade dependencies in Latin America.38 Crumm and Michael Mastanduno qualified their endorsement of concessionary terms of trade as capable of inducing the target’s compliance. Crumm found that to be true only if highly desirable goods (such as oil or military hardware) were traded. Mastanduno noted the successful manipulation of trade relations by Germany, Britain and the USA to achieve foreign-policy objectives in the first half of the twentieth century, but concluded that trade instruments could only complement security policies to ensure other powers’ willingness to accept a ­ US-­centred world order.39

Taiwan’s early economic diplomacy The scholarship, testing the relationship between positive economic diplomacy and target states’ compliance with the dominant states’ policy positions, ignores Taiwan as the island does not belong to the DAC and does not provide the DAC with comprehensive aid data. Yet, Taiwan should be of great interest to those striving to validate or refute the asymmetrical interdependence approach to the study of economic diplomacy. First, the ROC on Taiwan relies exceedingly upon positive economic instruments to sustain its claim to sovereignty. The stakes in Taipei’s diplomatic contest with its ­ arch-­rival, the PRC, are, therefore, significantly higher than, for example, in Washington’s attempts to gain a few extra votes at the UN General Assembly. Second, Taiwanese economic diplomacy embraces the whole range of economic instruments, including trade, aid, investment and bribery, as well as sanctions and embargoes (particularly against the communist states, including China). Third, as a trading (contested) state,40 Taipei’s economic diplomacy must also promote the island’s economic growth through ensuring a supply of key economic resources, access to the major markets and stability of international economic transactions. Finally, the combination of political and economic factors renders Taiwan’s economic diplomacy an exciting case study to test the relevance of positive and negative economic instruments in states’ pursuit of wider political and economic objectives. From the outset, Taipei’s pursuit of economic diplomacy was stimulated by ­self-­interest, rather than humanitarian considerations (although these were publicly emphasized). Facing diplomatic competition with Beijing for the support of the international community, the ROC leadership embarked upon the ‘one China’ policy, i.e. it reserved exclusive rights to represent China internationally and rejected relations with any state that recognized the PRC. Seeking to isolate the PRC and gain the developing world’s support at the UN, Taipei initiated positive economic diplomacy, despite its own reliance on US aid.41 In 1959, it dispatched its first agricultural technical team to Vietnam, while two years later, witnessing a rapid wave of decolonization and the ­post-­colonial states’ inclination to favour Beijing’s admission to the UN, Taiwan targeted Africa (and, since 1963, Latin America as well) with agricultural and technical assistance.42 It is not certain whether Taiwanese aid programmes expanded the island’s influence in the devel-

Taiwan’s economic diplomacy   oping world. ­ Cheng-­wen Tsai and ­ Chu-­cheng Ming and Tuan Y. Cheng argue that aid helped to increase the number of Taipei’s allies in Latin America from 11 in 1960 to 21 in 1970, and in Africa from eight in 1960 to 24 in 1969, as well as inducing greater African support for the ROC at the UN, increasing the number of African states voting for the ROC from two in 1960 to 21 in 1969 and 15 in the fateful October 1971.43 Yet, Chiao Chiao Hsieh remains unconvinced, demonstrating that foreign aid was only partially effective in supporting the ROC’s legitimacy struggle at the UN, while Bernstein and Alpert argue that it was the United States’ aid, rather than Taipei’s, that helped the ROC to maintain its UN seat until the late 1960s.44 When the resolution to seat the PRC was accepted by the UN General Assembly by a vote of 75 to 35 in 1971, neither Taiwanese nor US aid made a difference to the voting outcome. Taking their cue from the Nixon administration’s rapprochement with Beijing – conditioned by Washington’s hopes to enlist Beijing’s partnership in its global containment of Soviet communism – the developed and developing states voted in favour of the PRC’s UN membership.45 Following its exit from the UN in 1971, and insistent upon the continued relevance of the ‘one China’ principle, Taipei began rapidly losing the ­zero-­sum diplomatic game with Beijing. Between 1971 and 1979, its pool of diplomatic partners shrank from 42 to 22, while the PRC’s allies increased from 85 to 120 (see Figure 1.1). In order to address its increasing international isolation, in 1973, Premier Chiang ­Ching-­kuo (蔣經國) initiated ‘total diplomacy’ or ‘­all-­out diplomacy’ (總體外交) to shore up the island’s shrinking diplomatic space, as well as to sustain economic ties with states that had established diplomatic ties with China.46 ‘Total diplomacy’ translated into continued economic assistance to the ROC’s existing allies, as well as the strengthening of Taiwan’s economic ties and, in the process, development of overall relations – be they bilateral or multilateral, official or unofficial, direct or indirect, actual or implied – with China’s 120 100

97

89

85

106

116

114

111

120

80 R CO allies PRC allies

60 40

42

38

32

27

26

23

1975

1976

1977 1978

20 0

1972

1973

1974

22

22

1979

Figure 1.1 ROC’s and PRC’s diplomatic allies, 1972–1979 (source: Gao Lang, Zhonghua Minguo waijiao guanxi zhi yanbian, 1972–1992 [An Evolution of Foreign Relations of the Republic of China, 1972–1992] (Taipei: Wunan Tushu Chuban, 1994), p. 58).

   Taiwan’s economic diplomacy allies. With more and more African states defecting to the China camp – by the ­mid-­1970s, Taiwan maintained diplomatic ties with only eight African states and this number had dropped to five by 1979 – Taipei scaled down its technical assistance programme to Africa and shifted its economic assistance to Latin America, where many of its allies were located (13 out of 27 by the ­mid-­1970s). Yet, the levels of economic assistance to Latin America in the 1970s were not nearly as substantial as the aid previously offered to Africa.47 Taipei considered aid diplomacy only as a supplementary measure to consolidate relations with select states, but relied primarily upon US support to maintain its claim to internationally recognized statehood. With the end of US support in 1979, it realized that it had to make a greater effort to expand its own international space. It resorted increasingly to economic diplomacy to strengthen ties with existing allies, expand its pool of allies and counter ­Beijing-­enforced isolation on various intergovernmental organizations. By then, Taiwan could afford costly economic diplomacy due to its spectacular economic growth: its GNI grew an average of 10 per cent annually throughout the 1970s, while its exports increased 19 per cent per year on average, surpassing imports since the ­ mid­1970s.48 Since 1980, soft loans replaced technical assistance as the main component of Taiwan’s foreign aid.49 A large portion of aid continued to be channelled to Central America. Taipei also encouraged the private sector to invest in the region, or designated ­state-­owned enterprises to make such investments.50 While failing to arrest the loss of diplomatic partners, ‘total diplomacy’ proved more effective in supporting Taiwanese economic development. Having embarked upon ­ export-­oriented economic development in the early 1960s, Taiwan could hardly afford to lose links with, and investment flows from, the states that defected to the Beijing camp. In the context of ‘total diplomacy’, Taipei not only maintained economic relations with its major trading partners and investors (the USA and Japan) but also expanded economic ties with Western Europe, Australia, Canada, Southeast Asia and the Middle East, becoming recognized by the late 1970s as one of the world’s top 20 trading states.51 While demonstrating the economic benefits of cooperating with Taiwan, ‘total diplomacy’ facilitated the development of ‘substantive’ relations (實質關係) with China’s allies: nominally ­non-­governmental ties, featuring exchanges of formally unofficial offices (some of which performed consular functions), reciprocal (and nominally unofficial) visits by government officials, agreements on economic, scientific and cultural matters, all of which were intended to strengthen economic collaboration with the island. Vice-Premier Lien Chan’s (連戰) nominally unofficial visit to France in 1987 – the first visit at this level since 1964, when Paris had extended diplomatic recognition to Beijing – symbolized the effectiveness of ­ economics-­driven ‘total diplomacy’ in promoting ‘substantive’ relations.52 However, ‘substantive’ relations, while helping the Taiwanese economy survive the diplomatic ­de-­recognition and raising Taiwan’s visibility in international affairs, hardly compensated for increasing diplomatic isolation. Between 1979 and 1987, the ROC lost six allies and gained the recognition of seven, ending up with 23 in 1987 and 22 a year later (see Figure 1.2). Taipei

Taiwan’s economic diplomacy   140 124

120

129

125

124

130

133

133

133

136

100 80

R CsO allies PRCs allies

60 40 20 0

22

23

23

24

25

23

23

23

22

1980 1981 1982 1983 1984 1985 1986 1987 1988

Figure 1.2 ROC’s and PRC’s diplomatic allies, 1980–1988 (source: Gao Lang, Zhonghua Minguo waijiao guanxi zhi yanbian, 1972–1992, p. 59).

certainly needed a new diplomatic strategy if it wished to expand its international space through the de jure recognition of its statehood by other sovereign states.

‘Flexible diplomacy’ The fundamental shift in Taiwan’s foreign policy came with the death of President Chiang ­Ching-­kuo in January 1988 and the accession to the presidency of Taiwan native, Lee ­Teng-­hui (李登輝). In his address to the ruling Nationalist Party (Kuomintang, KMT, 中國國民黨) Congress in July 1988, President Lee declared a new course of Taipei’s foreign policy: ‘flexible diplomacy’ (彈性外 交) or ‘pragmatic diplomacy’ (務實外交), with objectives that included: 1 2 3

consolidation of existing diplomatic ties and winning new allies primarily through economic cooperation; development of ‘substantive’ ties with China’s allies; and participation or resumption of participation in intergovernmental organizations.53

Under the umbrella of ‘flexible diplomacy’, Taipei accepted (first implicitly and, since 1991, explicitly) the idea of dual recognition, under which Taipei and Beijing could simultaneously maintain diplomatic ties with other states. The abandonment of the ‘one China’ principle and more determined use of economic instruments to gain wider international support distinguished ‘flexible diplomacy’ from its ‘total’ predecessor. The end of the Cold War facilitated the execution of ‘flexible diplomacy’, as the disappearance of the Soviet empire devalued the ‘China card’, reducing the PRC’s leverage in world affairs.54 The expectation that the PRC would soon follow the Soviet Union (USSR) and collapse gave Taipei another advantage in

10   Taiwan’s economic diplomacy its diplomatic competition with China. Having lifted martial law in 1987, Taiwan entered a phase of democratic development, which contrasted favourably with the clampdown on civic freedoms by Beijing, in the aftermath of Beijing Spring of 1989. The June 4th tragedy influenced a shift in international opinion against China and encouraged the perception of Taiwan as a democratic part of the divided China. At the same time, Taiwan’s booming free-market economy accentuated its economic success against the background of China’s economic retrenchment in 1989–1991.55 Finally, given the international isolation of China after the Tiananmen event, Beijing’s diplomacy prioritized regaining respectability in the international community and temporarily appeared less effective in obstructing Taiwanese diplomatic activities. ‘Flexible diplomacy’ was to play on the ROC’s strengths, namely, to take advantage of Taiwan’s growing international status as a trading power, major investor and aid donor. By 1991–1992, Taiwan ranked second in foreign exchange reserves holdings, was the world’s fourteenth largest trading nation, the ninth largest investor and seventh largest aid donor. Taiwan’s GNI per capita exceeded US$10,000, placing it at the twenty-fifth position in the world.56 The establishment of the Overseas (renamed ‘International’ in 1991) Economic Cooperation and Development Fund (OECDF/IECDF, 海外經濟合作發展基金/ 國際經濟合作發展基金) in 1988, designed to allocate US$1.1 billion in aid within five years, signalled Taipei’s determination to economically assist states with strong ‘diplomatic significance’: the ROC’s existing or prospective allies.57 Other existing aid funds included a Humanitarian Fund for International Disaster Relief (administered by the Ministry of Foreign Affairs, MOFA), the Committee of International Technical Cooperation (CITC, which grew from ‘Operation Vanguard’) and the Chiang ­ Ching-­kuo Foundation for International Scholarly Exchange, which promoted cultural exchange and research. (In 1996, the IECDF was restructured into the International Cooperation and Development Fund, ICDF, 國際合作發展基金, which a year later was merged with CITC.) Aid was also channelled through the Central Bank of China (中央銀行), the Ministry of Economic Affairs (MOEA), the Ministry of Finance and the Council of Agriculture.58 MOFA was a coordination centre of Taiwanese economic diplomacy, strengthening its control over foreign-aid allocation in 1996, when it formally assumed authority over the ICDF. It guided other state agencies, including the China External Trade Development Council (CETRA, 中華民國對外貿易發展 協會), established by MOEA in 1970, which – alongside promoting Taiwan’s foreign trade – acted as MOFA’s front for sensitive diplomatic communication with China’s allies. Having interpreted ‘flexible diplomacy’ based on foreign aid as ‘dollar diplomacy’ (金錢外交) or ‘silver bullet diplomacy’, which aimed at creating ‘two Chinas’ or ‘one China, one Taiwan’, Beijing requested its allies to resist Taipei’s diplomatic overtures and forced some of them to reject Taiwanese aid offers.59 The PRC’s efforts, however, proved only partially successful. In 1989–1990, Taiwan gained seven new allies in exchange for millions of US dollars, mainly in soft loans (see Table 1.1).60 To expand its relations with international organiza-

Taiwan’s economic diplomacy   11 Table 1.1 ­ Sino-­Taiwanese competition for allies since 1989 Year Taiwan’s diplomatic gains

Taiwan’s diplomatic losses Number of ROC allies

1989 Bahamas 1 Oct. Grenada 20 Jul. Liberia 2 Oct. Belize 13 Oct. 1990 Lesotho 5 Apr. Saudi Arabia 22 Jul. Nicaragua 6 Nov. ­ Guinea-­Bissau 26 May 1991 Central African 8 Jul.   Republic 1992 Niger 19 Jun. South Korea 24 Aug. 1994 Burkina Faso 2 Feb. Lesotho 12 Jan. 1995 Gambia 13 Jul. 1996 Senegal 3 Jan. Niger 19 Aug. 1997 Sao Tome and Principe 6 May Bahamas 18 May Chad 12 Aug St Lucia 29 Aug. South Africa 31 Dec. 1998 Marshall Islands 20 Nov. Central African 29 Jan.   Republic ­ Guinea-­Bissau 24 Apr. Tonga 2 Nov. 1999 Macedonia 27 Jan. Papua New Guinea 21 Jul. Papua New Guinea 5 Jul. Palau 29 Dec. 2001 Macedonia 18 Jun. 2002 Nauru 21 Jul. 2003 Kiribati 7 Nov. Liberia 12 Oct. 2004 Dominica 30 Mar. 2005 Nauru 24 May Grenada 20 Jan. Senegal 25 Oct. 2006 Chad 6 Aug. 2007 St Lucia 1 May

26

28 29 29 29 30 30 29 27

29 28 27 27 26 25 24 25

tions, Taipei also donated funds to major development banks. Despite expanded foreign aid, Taiwanese positive economic diplomacy proved rather affordable: officially Taipei spent only US$35 million annually on foreign aid, which represented 0.02 per cent of its GNI in 1990.61 Independent estimates in the early 1990s put the figure at 0.1–0.16 per cent.62 Apart from winning new allies and establishing ties with international organizations, Taipei also directed economic diplomacy at seeking or strengthening ‘substantive’ relations with ­non-­allies. In the early 1990s, stimulated by the prospects of participating in large construction projects, envisaged in Taiwan’s US$300 billion ­Six-­Year National Development Plan (1991–1996), ­high-­ranking officials from Western Europe, Australia and the USA visited the island to ‘consolidate friendship’, while most West European trade or representative offices assumed consular functions.63 The West found the courage to sell arms to Taiwan, of which the French sale of Mirage 2000-5 jet fighters (worth US$4 billion) and

12   Taiwan’s economic diplomacy US sale of ­F-­16s (worth US$6 billion) in 1992–1993 stole the world’s headlines. Between 1991 and 1993, Taiwan established direct air services to Austria, Great Britain, Germany and France.64 In Southeast Asia, Taipei’s ‘go south policy’ (南 向政策), launched in 1993 and consisting of encouragement of Taiwanese investments, import of migrant labour and developmental assistance, consolidated Taiwan’s position as a leading investor and trade partner in the region, and helped it to conduct ‘holiday diplomacy’ and conclude intergovernmental agreements with the majority of Southeast Asian nations.65 By the ­mid-­1990s, Taipei maintained diplomatic relations with 30 states and unofficial relations with 150 states. By 1999, it had established 98 offices in 63 states that did not officially recognize Taiwan.66 Shortly after ‘flexible diplomacy’ took off, mainland commentators admitted that Taiwan’s diplomatic achievements relied upon a ‘­financial-­aid offensive’ towards those states that faced economic difficulties. They alleged that Taipei took advantage of the mainland’s ‘temporary difficulties’ and utilized foreign exchange reserves to buy off countries in need. The Beijing Review warned that the mainland’s difficulties would ‘soon be overcome’.67 In the aftermath of Deng Xiaoping’s (鄧小平) trip to Southern China in early 1992, the Chinese economy did gradually regain its momentum, temporarily lost due to the administrative measures applied in the late 1980s to cool off the overheated economy. By the ­mid-­1990s, China had emerged as an undisputed economic powerhouse, developing at an average of 9 per cent annually, amassing the world’s second largest foreign currency reserves (surpassing Taiwan in this regard), becoming a magnet for foreign investments and dramatically expanding trading relations with the world, particularly the West. Although Taipei appeared committed to continuing economic diplomacy, an increasing number of states seeking economic advantages in China chose to toe Beijing’s line on the Taiwan issue. To facilitate its allies’ loyalty to its version of the ‘one China’ principle – that is, to recognize the government of the PRC as the sole legitimate government of China, consider Taiwan as a part of China and resist developing any official ties with Taipei – Beijing did not shy away from using its newly found economic muscle to woo Taiwan’s diplomatic partners. Utilizing a mixture of economic incentives and diplomatic pressure, Beijing managed to poach six states from the Taiwan camp in 1997 and 1998 alone, while Taiwan gained diplomatic recognition of only three. All in all, in the 1990s, China enticed Taiwan’s most significant allies (Saudi Arabia, South Korea and South Africa), leaving Taiwan with a group of states considered small, impoverished and relatively insignificant in global affairs (the Vatican excepting).

Economic diplomacy in the DPP era Among the most vocal domestic critics of ‘money diplomacy’ was Taiwan’s largest opposition party, the ­ pro-­independence Democratic Progressive Party (DPP, 民進黨). It considered economic diplomacy to be a waste of taxpayers’ money and the obstacle to Taiwan fulfilling its destiny of becoming sovereign.

Taiwan’s economic diplomacy   13 Rather than using hard currency to sustain the myth of a Republic of China, the DPP felt that Taipei should declare independence first. Only then could it offer genuine economic assistance responsive to the recipients’ economic needs, rather than use aid as a tool to counter ­ China-­imposed international isolation.68 The DPP also criticized the secretive nature of economic diplomacy, since – fearful of the competitive bidding among its allies – Taipei kept the aid allocations secret, even from the ROC legislature (the Legislative Yuan, 立法院). The Legislative Yuan could only decide on the total foreign aid budget, treated as a lump sum within the budget of MOFA.69 In the White Paper on Foreign Policy for the 21st Century, issued in November 1999, the DPP argued that Taiwan should rethink its use of foreign aid as a tool to promote ­short-­term political goals (presumably, diplomatic alliances). Instead, Taiwanese diplomacy should focus on promoting Taiwan’s participation in international affairs through intergovernmental and ­ non-­governmental organizations, support for the development of democracy ‘in every corner of the world’, and engagement in dialogue with China, the USA, East and Southeast Asia and Europe. Although the use of foreign aid and humanitarian relief assistance were not ruled out, the White Paper made no mention of the necessity for Taiwan to maintain (or expand) a pool of diplomatic allies. What was certain, however, was that the DPP would like to see the end of ‘money diplomacy’ or ‘spendthrift diplomacy’.70 Following the DDP’s victory in the presidential elections of March 2000, Vice-President elect, Annette Lu ­Hsiu-­lien (呂秀蓮) called for an end to the country’s pursuit of formal diplomatic ties based on economic aid. In her view, ‘dollar diplomacy’ created corruption, while foreign relations should be ‘spiritual, as much as essential and pragmatic’.71 And yet, President Chen ­ Shui-­bian’s (陳水扁) inaugural speech on 20 May 2000 declared ‘strengthening [of] the existing relations with friendly nations’ as one of the diplomatic objectives of the new administration. It also mentioned ‘humanitarian care, economic cooperation, cultural exchanges and various other ways’ through which Taipei would ‘expand Taiwan’s room for survival in the international arena’.72 To some observers, Chen’s speech implied a new direction for Taiwanese diplomacy that stressed human rights, but ­ de-­emphasized the importance of seeking new allies and the utility of foreign aid in expanding Taiwan’s international space.73 President Chen’s Foreign Minister, Tien ­ Hung-­mao (田弘茂), partially lent credence to such a conclusion by pledging economic assistance to Taiwan’s existing allies.74 The Chen administration indeed honoured the commitments made by its predecessor, and launched new economic programmes to strengthen ties with existing allies.75 However, having failed to demonstrate the effectiveness of human rights diplomacy in building international support for the island, it also resorted to its predecessor’s practice of wooing new allies with aid commitments, although with lesser success. By ­ mid-­2007, Taipei had lost seven allies to China, while winning one and regaining two (see Table 1.1).

14   Taiwan’s economic diplomacy

The effectiveness of Taiwan’s economic diplomacy Any analysis of the effectiveness of economic diplomacy (or any foreign policy) must start with an identification of foreign policy objectives. In the case of Taiwan since the early 1970s, the overriding foreign policy goal was to break out from ­China-­imposed diplomatic isolation, through maintaining and gaining diplomatic partners among the states where Taiwan’s economic instruments could induce the recipients’ compliance with Taiwanese diplomatic objectives. Taipei believes – whether under the KMT or DPP leaderships – that a stable pool of allies is necessary to support the island’s claim to sovereignty. Alongside this ­well-­known, publicly stated, ­ long-­term goal, however, there is also a myriad of intermediate objectives or even undeclared objectives that need to be taken into account when evaluating Taiwan’s economic diplomacy. These include developing informal, ‘substantive’ ties with states that maintain diplomatic relations with China, entering intergovernmental organizations, reaching agreements on investment protection or avoidance of double taxation, or making symbolic gestures, such as exchanging bilateral visits with states that follow the ‘one China’ policy. Thus, to view the use of Taiwan’s economic diplomacy strictly in terms of securing compliance with the overriding publicly stated objective (i.e. maintaining or expanding the pool of allies) might prove misleading. Secondary goals and undeclared objectives are just as likely to be significant components of Taipei’s economic diplomacy as the officially sanctioned ones. Taking into account primary and secondary objectives of Taiwanese economic diplomacy, scholarly analyses of Taiwanese diplomatic efforts based on economic instruments note the effectiveness of positive economic diplomacy at saving the island from total international isolation, raising its international status and helping it to compete with China peacefully.76 Lee ­Wei-­chin, Bernard Joei, Linjun Wu, Kay Moeller, Lin ­Teh-­chang and Hsieh credit economic diplomacy with expanding Taiwan’s diplomatic and ‘substantive’ relations.77 Chen Jie and Michael Yahuda argue that, through positive economic diplomacy, Taiwan significantly raised the level of its diplomatic recognition and the international awareness of its profile as a sovereign political entity. In the process, it achieved at least fragmented recognition from many states through a multitude of ­ semi­official relations, and reduced its economic dependence on the United States, Japan and China.78 Samuel Kim concurs that foreign aid played a decisive role in helping Taiwan to gain diplomatic allies in the early phase of ‘flexible diplomacy’.79 He Li credits Taiwanese trade and investments in Latin America with Taipei’s ability to maintain its diplomatic presence there, while Ian Taylor considers Taiwanese economic diplomacy largely effective in Africa.80 Students of Taiwanese foreign policy also acknowledge the contribution of positive economic diplomacy to the development of strong, ‘substantive’ ties with states that adhere to the ‘one China’ principle. According to Samuel Ku, for example, the Southeast Asian states improved their unofficial relations with Taiwan because of the latter’s increasing trade and investment relations with Southeast Asia.81 Francoise Mengin – and Tsai and Ming and Ralph Clough

Taiwan’s economic diplomacy   15 before her – believes that growing economic exchanges with Western Europe necessitated institutionalization of relations with Taiwan as Western Europe recognized Taiwan as an important market for its key industries.82 Yet, students of Taiwanese economic diplomacy are unlikely to lightly dismiss Klaus Knorr’s argument that foreign aid has only uncertain effectiveness and low utility when used for purposes of coercing other states or establishing a position of unequal influence over them.83 Foremost, they notice the ineffectiveness of positive economic diplomacy in keeping allies firmly in the Taiwan camp, as many defect to Beijing. A frequently touted example is Liberia, which accepted help from both Taiwan and China. Having recognized Taiwan in 1957, it switched sides in 1977, resumed official relations with Taipei in 1989, suspending them again in 2003. The Central African Republic established official ties with Taiwan in 1962, 1968 and 1991, but switched recognition to Beijing in 1964, 1976 and 1998. Senegal first established ties with Taiwan in 1960, but these were severed in 1964. In 1996, the two states restored relations, which lasted until 2005, when Senegal switched its diplomatic allegiance to Beijing. In addition to African states, the South Pacific Islands were also noted for their attempts to play the PRC and the ROC off against each other. Lee, Mengin, Steve Tsang, Taylor and Carlos Pheysey share Deon Geldenhuys’s observation that giving aid does not provide immunity from ­de-­recognition and ostracism.84 Apart from criticism that economic diplomacy to secure allies is based on ­ short­termism, since such ­client-­states are willing to offer their diplomatic recognition to the highest bidder, analysts also note the irrelevance of these small states in international politics and the low political returns alliances with such states offer.85 With regards to ‘substantive’ relations, Ku and Michael Leifer note the failure of the ‘go south policy’ to induce Southeast Asian states to recognize Taiwan’s de facto independence, support for Taiwan’s UN bid or facilitate Taiwan’s participation in regional intergovernmental organizations.86 Ku and Shueiling Shin agree that positive economic diplomacy was unable to upgrade Taiwan’s relations with Southeast Asia or Europe to an official level.87 Hsieh charges that economic diplomacy cannot work miracles: it failed to stop Taiwan’s most significant allies from switching sides, significant Asian states from formalizing relations with the PRC, transforming ‘substantive’ relations into official, or helping Taiwan to enter intergovernmental organizations (especially the UN). He also predicted that Taiwan may ‘slowly lose its economic advantage over the mainland in the conduct of foreign affairs’ if its economy encounters negative growth.88 Wu, He, Taylor, Lee and Moeller, among others, note Taiwan’s loss of economic advantage due to China’s increasing willingness to use economic resources to pressure Taiwan’s allies to switch sides.89

Analytical framework At the conceptual level, the study of Taiwan’s economic diplomacy resembles the PRC foreign-policy studies in the 1970s, which – suffering from the absence of

16   Taiwan’s economic diplomacy ‘systematic analysis that map policy situations, identify behaviour patterns or estimate the parameters of international interactions’ – were almost exclusively concerned with ‘what’, ‘where’, ‘when’ and ‘how’, but rarely with ‘why’.90 Dealing with the ‘why’ necessitates a consideration of conceptual frameworks. Analyses focused on media reports counting the number of states willing to trade their diplomatic recognition in exchange for Taipei’s promises of economic assistance fail to register the debate on asymmetrical interdependence and to explain Taiwan’s diplomatic achievements or failures in terms of interdependence between Taiwan as a potentially dominant state and the recipients of Taiwan’s economic favours.91 Although analyses of Taiwanese economic diplomacy may or may not lead to a clearer assessment of the asymmetrical interdependence as a useful conceptual framework, the concept itself should at least be considered when studying Taipei’s diplomatic efforts to translate economic means into political ends. Most students of Taiwanese economic diplomacy also do not reflect upon the bargaining process, through which Taipei seeks to influence the target state(s)’ foreign policy. Therefore, unsurprisingly, they rarely categorize Taiwanese economic instruments as inducements or rewards for foreign policy compliance. Furthermore, while noting the variety of economic tools utilized by the Taiwanese diplomacy to woo prospective allies (foreign aid, trade and investments being the most often referred to) – thus, avoiding falling into a reductionist trap, where only one instrument is scrutinized – they do not establish the relative salience of various economic instruments in promoting Taiwanese foreign-policy objectives.92 Little effort has been also made to identify the characteristics of Taiwanese economic assistance, particularly in terms of its concessionality and conditionality. Finally, analysts of Taiwanese economic diplomacy refuse to discuss the extent to which Taipei’s success – particularly with regards to ‘substantive’ relations – relies upon Taiwanese economic inducements as opposed to the target state(s)’ voluntary alignment to further mutually beneficial economic cooperation with Taiwan that evolved largely independently of the Taiwanese authorities’ manipulation. Most of the shortcomings of the studies of Taiwanese economic diplomacy result from the secrecy of Taipei’s aid policies. Locked in diplomatic competition with the PRC and fearful of competitive bidding by its allies and prospective allies, the Taiwanese government – unlike its counterparts in the DAC – neither publishes detailed figures of aid packages nor discloses their composition and characteristics. As a result, analysts have no choice but to rely on media reports, which are more interested in sensationalizing the ‘scandalous’ amounts allegedly involved in Taiwanese aid offers than in the details of such offers, which render them a lot less attractive than the total sums involved would have otherwise suggested. Thus, the secrecy of Taiwanese economic diplomacy sets the studies of its efficiency apart from those examining the American, Soviet, British, French, German or Japanese attempts to transform economic instruments into effective tools to further foreign-policy objectives.

Taiwan’s economic diplomacy   17 The dependent relationship Bearing in mind the limitations of the data available, any study of ROC positive economic diplomacy should consider the conditions that would enable Taipei to translate economic means into political ends, particularly with regards to Taiwan’s primary diplomatic objectives, i.e. to break out from ­China-­imposed and enforced diplomatic isolation through maintaining official relations and gaining new diplomatic allies. Therefore, the effectiveness of Taiwanese diplomacy should be judged against Taipei’s ability to establish these conditions. The critical condition is Taipei’s capacity to form a relationship with the target state that is characterized by some degree of the target’s economic vulnerability with regards to Taiwan, whether in terms of trade, aid or investment (if investment decisions are found to be linked to the governmental policies rather than the free market). If a relationship of asymmetrical interdependence is successfully established, Taiwan, as the more dominant partner, may credibly attempt to exploit that relationship by resorting to economic penalties or manipulation of economic instruments in order to ‘persuade’ a target to recognize Taiwan’s sovereignty and, thereafter, maintain diplomatic relations. This study, therefore, considers the extent to which Taipei attempted to form, or successfully formed, an asymmetrical interdependence with the target state(s). It assumes that, in the absence of Taiwan’s influence attempt, states targeted by Taiwanese economic diplomacy would orient their political allegiance to China rather than Taiwan.

Generosity Assuming that greater generosity is more likely to achieve policy goals, Taipei – in order to establish and maintain diplomatic relations through asymmetrical interdependence – would need to provide a target state with attractive economic incentives and/or rewards. Attractiveness of economic instruments could be determined upon their composition, concessionality and conditionality. Fungible grants or soft loans are more likely to appeal to target states than, for example, aid tied to Taiwanese exports or granted for specific projects. Grants are preferred to soft loans, while soft loans with larger grant elements are preferred to those with smaller concessionality degrees. Above all, however, the size of an economic package (as the proportion of GNI or total aid or trade) matters. The greater the largesse, the greater economic loss to the recipient should aid or trade cease, and the greater motivation for the recipient to continue receiving economic benefits. Central to this condition is Taipei’s determination to deliberately employ economic instruments to modify the behaviour of the target state, i.e. to seek the target state’s diplomatic recognition; otherwise, as Zeev Maoz reminds us, ‘actors who possess relevant resources may, because they do not wish to spend them, fail to obtain favourable outcomes’.93 Attractiveness of the economic package also matters in the Taiwanese attempts to influence states to comply with its secondary objective, namely to bestow upon the ROC de facto recognition of its sovereignty through the

18   Taiwan’s economic diplomacy exchanges of ­ quasi-­diplomatic missions, intergovernmental agreements and bilateral visits by ­high-­ranking dignitaries. Without substantial economic stimuli, not only compensating for Beijing’s diplomatic or economic retributions, but also significantly contributing to their economic development, China’s allies would have no reason to test the limits of the ‘one China’ principle in order to meet Taiwan’s demands for greater international space. Disbursements This book considers both commitments and actual disbursements, even though donors are believed to have greater control over the former than the latter, which to a large extent depend on the recipients’ ability to utilize the economic assistance granted.94 Disbursements, however, are important to the analysis of Taiwanese economic diplomacy because their absence might compel states to terminate a diplomatic partnership or downgrade ‘substantive’ relations with Taipei, irrespective of the attractiveness of the initial commitment or because of the glaring disparity between the commitments and disbursements. Economic effectiveness of assistance Berthelemy and Tichit suggest that, if economic assistance is provided to further strategic or political objectives, there is no need for it to be effective in promoting growth or reducing poverty.95 Ann Krueger et al. add that, although donors’ pursuits of multiple foreign-policy objectives through economic assistance undermine the effectiveness of aid, such practices should be tolerated as they result in a higher volume of economic assistance than would be forthcoming if the economic rationale were the sole reason for aid.96 Yet, the impact of Taiwanese economic assistance on the recipient states’ economies should not be ignored. The weak correlation between economic assistance and the visible improvements for the recipient economy might force the recipient state to redefine its relationship (whether official or ‘substantive’) with Taiwan. This is particularly true for democratic states, where governments need to demonstrate to their electorate the economic value of relations with Taiwan.97 Economic cooperation In terms of foreign trade as a foreign policy instrument, it is assumed – after Armstrong, Menkhaus and Kegley and others – that the greater the percentage of exports to the dominant market, the more difficult it is to find export substitutes (and foreign exchange earnings), and the ­export-­dependent state is more likely to comply with the dominant state’s wishes.98 Therefore, dependence on Taiwan as an export market, rather than an import market, is more likely to condition compliance with Taiwanese foreign-policy objectives. Conversely, Taiwanese trade surplus should play no role in inducing foreign-policy compliance unless the island’s exports are of strategic importance or exported goods are in short supply

Taiwan’s economic diplomacy   19 on world markets. Target states’ trade surplus with Taiwan alone, even if their export dependence on the Taiwanese market is not established, should predispose them favourably towards meeting, if not all, then at least some of Taiwan’s political demands. Access to the Taiwanese public infrastructure projects, the transparency of tendering processes, as well as the ROC government’s capacity to direct Taiwanese investors to states with diplomatic significance could also facilitate some states’ readiness to bestow diplomatic favours upon Taipei. Domestic politics Explicit in all the above conditions is Taipei’s determination to utilize economic instruments in the pursuit of foreign-policy goals. If Taiwanese governing elites appear disunited on the merits, objectives, direction and scale of economic diplomacy, Taipei would find it difficult to demonstrate its ­long-­term commitment to assist diplomatic allies’ economic development or bestow economic favours upon its ‘substantive’ partners. Failing to achieve consensus on diplomatic strategy, Taipei would also find it difficult to demonstrate transparency of its intentions towards states targeted for either official or ‘substantive’ partnership, which would affect the target states’ readiness to comply with the Taiwanese foreignpolicy objectives. Similarly, regardless of the target states’ economic predicaments, their domestic politics matter as well. States with governing parties leaning to the left would be more likely to treasure friendship with communist China than states where the ruling elites are oriented towards the right of centre in the ideological spectrum. State leaders prioritizing human rights and democratic values as important principles that should inform their foreign policies would more likely lend support to Taiwan’s diplomatic efforts than ‘pragmatic’ leaders who disregard such values, considering them as obstacles to securing China’s diplomatic support and access to its vast market. Finally, the state elites’ consensus on the merits of pursuing diplomatic relations or elevating a ‘substantive’ dialogue with Taiwan to the unmistakably ­government-­to-government level would also facilitate their compliance with Taiwanese diplomatic objectives. Feasibility of diplomatic objectives Any attempt to determine the effectiveness of economic diplomacy should consider the feasibility of the diplomatic goals. If the goals are judged to be low in feasibility, then it is unwise to attribute low utility to economic diplomacy’s failure to approximate such goals. In such circumstances, even a small degree of goal approximation should be considered as a high degree of the diplomacy’s effectiveness. Consequently, this study contrasts the feasibility of diplomatic objectives (whether primary or secondary) against the degree of their approximation.

20   Taiwan’s economic diplomacy The China factor Among the strengths of positive economic diplomacy, two are generally considered as very significant: • •

the limited availability of donor substitutes places the donor in a preferential bargaining position; and a positive incentive, representing the donor’s often costly concession to a target, provides other donors with no reason to outbid the initiator by offering a similar (or greater) concession to a target.99

However, in the context of Taiwan’s economic diplomacy, China’s policy to isolate Taiwan internationally compels it to derail Taipei’s economic offensive by offering the target states promises of larger aid, trade or investment prospects (as well as political benefits) in return for their commitment to the ‘one China’ principle. Such offers provide a recipient with greater bargaining power than might otherwise be available to an economically weaker state negotiating with an economically stronger one.100 Moreover, Taiwan’s desperation to break away from ­China-­enforced international isolation creates a major structural impediment to the effectiveness of its economic diplomacy. Whereas a potential beneficiary may seek aid or consider offers of aid and trade packages from various quarters (China included), Taipei’s strong interest in developing an alliance with potential aid recipients may work to diminish its bargaining power. As a result, Taipei might find it hard to construct a credible asymmetrical interdependence, as the strength of its interest creates its own dependence upon a target and equalizes that relationship.101 Finally, the diplomatic and/or economic pressure that China exerts on Taiwan’s allies, prospective allies and ‘substantive’ partners might lead them to consider the political and economic cost of partnership with Taipei as too high to be balanced by economic gains from the ROC. Therefore, it is important to consider not only the cost Taiwan bears to extract foreign policy compliance, but also the cost to the target state of complying with or defying Taiwan’s influence attempt.

The case study: Taiwan and ­post-­communist Europe The examination that follows focuses on Taipei’s diplomatic strategies towards ­post-­communist Europe for a number of reasons. First, the ­ post-­communist states seemed ideal targets for Taiwanese positive economic diplomacy, particularly in the early ­ post-­Cold War period. Their often small economies, ­ anti­communist sentiments and economic predicaments – featuring economic recession, high inflation, large foreign debts and rising unemployment – made them receptive to the Taiwanese promises of loans, grants, investments and politically-motivated imports. Second, since most of these states enjoyed 50 years of diplomatic relations with the PRC, while others lacked the tradition of diplomatic ties with Beijing, their responses to the Taiwanese economic diplomacy

Taiwan’s economic diplomacy   21 demonstrate the salience or irrelevance of the China factor in the formulation of the Taiwan policies by states with a ­ long-­established pattern of relations with China and those that were yet to decide on that pattern. Finally, some of the ­post­communist states entered the Western military, political and economic structures. Their evolving policies towards Taiwan, therefore, exemplify the opportunities and challenges faced by the Taiwanese positive economic diplomacy in relation to states anchored in organizations that remain cautious about political dialogue with Taipei in any form. For the purpose of this study, ­post-­communist Europe is defined as composed of Central and Eastern Europe, as well as the ­post-­Soviet area (see Figure 1.3). The former is further subdivided into Central Europe (Czech Republic, Hungary, Poland and Slovakia) and the Balkans (Albania, Bulgaria, Romania and ­ post­Yugoslav states: ­ Bosnia-­Herzegovina, Croatia, Macedonia, Montenegro, Serbia and Slovenia). The latter includes the Baltic region (Estonia, Latvia and

Figure 1.3  Map of post-communist Europe, 2006.

22   Taiwan’s economic diplomacy Lithuania) and the European part of the Commonwealth of Independent States (CIS, particularly Belarus, Russia and Ukraine). For geopolitical and ideological reasons, Taipei maintained no contacts – be they political, economic or cultural – with any member state of the Soviet bloc. With the fall of communism and the new democracies’ intense need for economic assistance, the Taiwanese connived to use economic assistance, such as soft loans, cash grants, investments and politically-motivated imports, to seek rapprochement with the ­post-­communist nations. Against the background of Taipei’s reinvigorated economic diplomacy and ­ post-­communist Europe’s costly economic restructuring, the Taiwanese objective of trading developmental assistance in exchange for diplomatic, or at least, ‘substantive’ relations, seemed feasible. China’s diplomatic isolation in the aftermath of the Beijing Spring and the ­anti-­communist euphoria sweeping across the ­ post-­Soviet region created a favourable political climate for Taiwanese diplomatic efforts in Central and Eastern Europe. Taipei’s attempts to pluck official partners from the ruins of Soviet communism succeeded for the first time in 1992, when Latvia signed a consular agreement with the ROC, thereafter maintaining official relations with both Chinas. The second and more significant achievement came in 1999, when Macedonia recognized Taiwan’s sovereignty. In both cases, Taipei pledged to contribute substantially to the economic development of ­ post-­communist states through humanitarian aid, grants, soft loans and massive investment projects. Taiwan’s apparent readiness to provide developmental assistance also facilitated Budapest, Minsk, Moscow, Prague, Riga and Warsaw’s decisions to sign accords on the exchange of trade or representative offices with Taipei. Promises of grants, loans or investments brought some ­ post-­communist regimes to the negotiating table to discuss intergovernmental agreements and facilitated the exchange of ­high-­level, official or ­quasi-­official visits. Moreover, Taipei managed to gain support among some ­post-­communist regimes and political parties for its struggle to ­re-­enter intergovernmental organizations and, by doing so, mounted a further challenge to the diplomatic isolation imposed by China. By the ­mid-­1990s, facing China’s phenomenal economic growth and its rising diplomatic stature, Taipei’s economic diplomacy seemingly lost its trump card. For states wishing to play a greater role in international affairs, seeking the UN solution to their problems or attempting to benefit from Chinese economic growth, loyalty to the ‘one China’ principle was necessary to ensure China’s positive engagement. Not all states in ­ post-­communist Europe, however, attached equally great significance to China’s political influence or its fast-expanding economy. Macedonia appeared ready to forgo China’s friendship in return for Taiwan’s economic assistance. Other states, particularly the Czech Republic, showed a remarkable flexibility when applying the ‘one China’ principle to relations with the ROC. Although the China factor influenced ­post-­communist states’ policy choices regarding Taiwan, it did not necessarily predetermine their decisions on the direction, content and dynamics of relations with Taipei. Therefore, Beijing cannot be held fully accountable for the Taiwanese failure to maintain

Taiwan’s economic diplomacy   23 consular relations with Latvia (terminated in 1994) and diplomatic ties with Macedonia (ended in 2001). It also cannot be held fully responsible – although China certainly made sure its position was known – for the ­ post-­communist nations’ suspension of explicit support for the ROC’s efforts to internationalize its conflict with the PRC. Taipei’s failure to forge lasting diplomatic partnerships or upgrade ‘substantive’ relations with the ­post-­communist nations to the stage, where – the absence of formal diplomatic relations notwithstanding – visits by ministers, intergovernmental agreements and ­ inter-­parliamentarian cooperation define bilateral ties, resulted from Taipei’s choice to rely on aid commitments, often in hundreds of millions or even billions of US dollars, as a vehicle to either induce the target state into official relations or open ­ government-­to-government communication channels in the context of ‘substantive’ ties. Making actual disbursements conditional upon the target state’s fulfilment of the political conditions, the quid pro quo strategy put a ceiling on Taipei’s generosity. Only a few states appeared sufficiently blinded by the Taiwanese aid offers to bear the diplomatic and economic cost – exacted by Beijing – of complying with the Taiwanese demands. However, even states that met the preconditions for economic assistance were left with more aid commitments than disbursements. Whatever aid did arrive, its concessionality level was low as Taipei preferred to dispense loans, rather than grants. Whether unwilling to offer substantial aid to the nations whose ­long-­term allegiance to Taiwan was yet to be proven, financially unable to meet their vast needs, or fearful of stirring domestic opposition against ‘money diplomacy’, Taipei made only a symbolic contribution to the economic development of Latvia and a token contribution to Macedonia. Its promises to facilitate Taiwanese investments in the states that pursued a maverick policy on the ‘one China’ question proved fallacious as well. Taiwanese investors that eventually arrived in the region were driven by the attractive investment climate of the transition economies and the economic opportunities created by the enlarged European Union (EU), rather than by the ROC government’s ­half-­hearted encouragement. Taipei blamed China for most of its failures, as Beijing imposed diplomatic sanctions and threatened punitive economic measures against states violating the ‘one China’ principle, and, by doing so, raised the cost of compliance with Taiwanese expectations. Moreover, the very presence of the China factor made Taiwanese efforts at constructing asymmetrical interdependence difficult as the target states’ awareness of the importance Taiwan attached to their policy choices prevented Taipei from credibly exploiting the dependent relationship, had such been established. Yet, there is no evidence that Taipei, at any point, attempted to construct an asymmetrical interdependence – whether in terms of aid or trade – with any ­ post-­communist state. Despite possessing the necessary economic resources, it chose not to spend them and failed to obtain desired outcomes, as parsimonious economic diplomacy rendered the threats of aid suspension (and actual suspension in the Macedonian case) inconsequential for the target economies due to the insignificant levels of Taiwanese economic assistance. Threats of trade suspension (if feasible at all) would have been equally unimpressive given

24   Taiwan’s economic diplomacy Taiwan’s consistent trade surplus with the majority of ­ post-­communist nations since the ­mid-­1990s and its hunger for raw materials. In sum, this study refutes the commonly held beliefs in the media and occasionally in academia102 that Taipei resorts to costly economic diplomacy to facilitate its foreign relations, while China engages in an equally costly ­counter-­economic diplomacy to keep Taiwan isolated. Beijing has demonstrated its reluctance to employ economic instruments against states violating the ‘one China’ principle, when cheaper (diplomatic) alternatives are available. Taipei, for its part, has demonstrated that promises of economic assistance are sufficient to induce a target state’s ­ short-­term compliance. In the ­ medium-­to-long term, however, Taiwanese actual economic assistance, conditional upon meeting political criteria, has proved inconsequential, more due to Taipei’s refusal to follow up aid commitments with the corresponding aid disbursement than to the cost of compliance imposed by Beijing upon Taiwanese aid recipients. Yet, while failing to achieve its primary goal of establishing a lasting diplomatic presence, Taipei has approximated its secondary objective of securing ‘substantive’ partners and opening new export markets. Its diplomatic effort in ­ post-­communist Europe has, thus, demonstrated the effectiveness and limitations of Taiwan’s parsimonious economic diplomacy in furthering its broader diplomatic objectives.

The road ahead This book is organized thematically, rather than chronologically. Chapter 2 seeks to establish the historical background of Taiwanese diplomacy in ­post-­communist Europe by drawing attention to Taipei’s ­anti-­Soviet policies, pursued since 1949, which rendered its rapprochement with the communist regimes in the 1980s difficult. After a protracted struggle with ­anti-­communist dogmas, however, Taipei’s ­anti-­communist zeal appeared to be fading in the wake of President Lee’s ‘flexible diplomacy’, while the ­post-­communist states’ previously exclusive friendship with the PRC was about to be extended to include Taiwan. Chapter 3 explores Taiwan’s economic diplomacy employed to entice Central Europe into a closer – preferably official – partnership. It scrutinizes the evolving aims and strategies of Taiwan towards Central Europe, as well as the diversified Central European responses. Parallel to its effort to induce Central European states into a political partnership, Taipei also embarked upon a campaign to befriend ­ post-­Soviet Baltic states in the early 1990s. The Baltic region made for a rather unlikely stage for a diplomatic ­stand-­off between China and Taiwan, as the newly independent states were small, distant and hardly known in East Asia. Yet, it was the Baltic region where Taiwan celebrated its first undisputed diplomatic success. Chapter 4 assesses the Taiwanese diplomatic offensive in the Baltic region, explaining its failure to maintain consular relations with Latvia. If the systemic transformations in Central Europe raised premature hopes in Taipei that diplomatic ties could be established with ­ post-­communist states, Latvian consular agreement with Taiwan demonstrated that it was the collapse of the Soviet Union in 1991 that offered the greatest opportunity for Taiwan’s eco-

Taiwan’s economic diplomacy   25 nomic diplomacy. Among the 15 ­post-­Soviet states, Russia was the most important in terms of its economic and military potential, as well as its diplomatic influence. Chapter 5 discusses Taiwan’s relations with Russia during the Yeltsin and Putin eras, and evaluates the KMT and DPP’s strategies to strengthen ‘substantive’ ties with Moscow. Taipei’s focus on Central Europe was, to a large extent, conditioned by the Balkan states’ reluctance to enter any form of dialogue with Taiwan. Responding in kind to the Balkans’ loyalty to the PRC, Taiwan showed little interest in the Balkans, limiting itself to occasional trade visits and sporadic communication with opposition parties. Chapter 6 examines this ­ low-­key approach, which in 1999 unexpectedly led to Taiwan’s first diplomatic coup in ­ post-­communist Europe: official relations with Macedonia (examined in Chapter 7). For years Taipei argued that its reluctance to offer sizeable aid to ­ post-­communist states was conditioned by their refusal to enter into official partnership. Chapter 7 tests this claim by analysing the scope of Taiwan’s economic assistance to its new ally. Having secured independence, ­ post-­Soviet Belarus and Ukraine refused to follow the path taken by Latvia, but they did express an interest in ‘substantive’ ties with Taiwan. Chapter 8 discusses the extent to which Taipei successfully established ‘substantive’ partnership with Minsk and Kiev (Kyiv). Finally, Chapter 9 reflects upon the achievements and failures of Taiwanese economic diplomacy in ­post-­communist Europe in the context of the theoretical concepts and methodology developed in this chapter.

2 Closing the Cold War chapter

Following his defeat in the civil war in China in 1949, KMT leader Chiang ­Kai­shek (蔣介石) relocated the Republic of China to Taiwan, which he transformed into an unsinkable aircraft carrier of the ­ anti-­Soviet forces in East Asia. The Soviet Union, for its part, threw diplomatic, economic and military support behind communist China and abstained from any contacts with Taiwan. Soviet– ROC enmity reached its zenith in 1954, when the Taiwanese navy intercepted the Soviet tanker, Tuapse, and refused to free all of its crew. The ­ Sino-­Soviet conflict in the 1960s did nothing to diminish the Chiang regime’s perception of the Soviets as treacherous, hostile and determined to subjugate China. Yet, in the late 1960s, emerging doubts about the ­long-­term prospects of American support for Taiwan forced the ROC leadership to reconsider its Soviet policy. At the same time, the ­anti-­China faction in the Soviet leadership initiated the first direct contacts with Taipei to assess the feasibility of an ROC– USSR joint action against the PRC. Although nothing – save the ­ short-­lived cooperation between Soviet and ROC intelligence agencies in the early 1970s – resulted from the secret contacts with Soviet agent Victor Louis in 1968–1970, Taipei publicized its communication with the Soviets to remind the Americans that its loyalty could evaporate, should the US seek rapprochement with the PRC or abandon its commitment to the defence of the island.1 The ‘Soviet card’ was ­re-­played in 1971–1972, when Taipei lost its seat at the United Nations and threatened to restore trade, economic and ‘other relations’ with the Soviet Union. However, ROC Foreign Minister Chou ­Shu-­kai’s (周書楷) prediction of trading relations with ‘­non-­hostile’ communist states2 and the Taiwanese media reports on the likely establishment of official or ­ semi-­official relations with the Soviet Union3 proved incorrect as Taipei maintained a ban on all sorts of contacts (including trade) with the Soviet bloc. Once Washington – striving to enlist the PRC’s support for its efforts to contain Soviet communism – established diplomatic relations with Beijing and ­de-­recognized Taipei in 1979, Taiwan resorted again to the ‘Soviet card’. In late 1979, it lifted trade restrictions with the selected ‘­non-­hostile’ communist states (非敵對國家), albeit retaining all embargos on direct trade and communication with the Soviet Union (and Albania). This gesture proved, however, largely symbolic, as the ROC government’s ­anti­communist prejudice left all restrictions on contacts with the communists intact,

Closing the Cold War chapter   27 preventing direct economic cooperation with the Soviet allies, hostile or ­ non­hostile. Chiang ­ Kai-­shek and his son and successor, Chiang ­ Ching-­kuo, were aware that cordial relations with Moscow would adversely affect US determination to defend the island and support its economic development, accelerate emerging ­Sino-­US rapprochement and possibly provoke Chinese military action. Thus, the ‘Soviet card’ proved no more than a bargaining chip in Taipei’s game to secure the best possible terms for the island’s security at the time of Washington’s major ­ re-­evaluation of its Asian strategy. Until the late 1980s, the ROC leadership remained hostile to the Soviet Union in particular and the Soviet bloc in general, and the Americans were aware of it. The Soviet Union followed the ‘one China’ principle in its domestic and foreign policies. It supported Beijing’s territorial claims to the island, opposed the ROC’s UN membership, rejected the ROC’s participation in any international meetings held in the USSR and abstained from all contacts with the ROC. The Kremlin’s ‘Taiwan option’ in the late 1960s was both a reflection of the policy debates on China within the Soviet leadership and an element in Soviet coercive diplomacy designed to pressure the PRC into normalizing relations with the USSR. However, Moscow sought to avoid facing, over the long run, an unfriendly China while it was preoccupied with managing its European allies and sustaining strategic competition with the USA. An unambiguous embrace of the ‘one China’ principle was to demonstrate to the Chinese leadership the earnestness of Moscow’s desire to mend fences with its neighbour.4 In the ­mid-­1980s, a group of political scientists at the National Chengchi University (國立政治大學) in Taipei called on the ROC government, the Executive Yuan (行政院), to end its ­ anti-­communist foreign policy. They argued that an ideologically inspired foreign policy failed to expand Taiwan’s international space. Reaching out to the communist states, they claimed, could have helped Taiwan to break out from international isolation and achieve the goal of foreign trade diversification.5 The Executive Yuan, however, did not agree. In late 1984, while reiterating the policy of separating politics from economics (政經分離), it reserved the right to approve any direct contacts between the Taiwanese businesses and their communist counterparts, and restated the policy of not allowing visitors from the communist states.6 A year later, the ROC government categorically ruled out any contacts with any communist state.7 In 1986, its Ministry of Defence reminded the United States of Taipei’s readiness to participate in an ­anti-­Soviet military defence system in East Asia.8 In early 1987, Taipei no longer opposed cultural contacts with the communist states other than China. However, each direct contact would need the government’s approval.9 The death of President Chiang ­ Ching-­kuo in January 1988, and the subsequent emergence of the ­Taiwan-­born leader Lee ­Teng-­hui, created a possibility for Taipei’s opening to the communist world. Lee’s ‘flexible diplomacy’ implied Taiwanese readiness to adopt flexible means to seek international support, whether in official or ‘substantive’ form, no longer burdened by ideological preconceptions. President Lee’s new diplomatic policy was, thus, well suited to revise Taipei’s foreign policy towards the communist states, by facilitating

28   Closing the Cold War chapter economic relations and establishing ‘substantive’ – if not diplomatic – ties. But was Taiwanese diplomacy under President Lee’s stewardship flexible enough to spot a diplomatic opportunity in the reforms pursued in the Soviet bloc?

Separating trade from politics It was the increasing pressure from private businesses, which anxiously watched South Korea’s successful entry into the communist markets, that forced the ROC government to reconsider its policy towards Soviet European allies. In ­mid-­1987, the ROC MOFA began relaxing visa restrictions for visitors from Central and Eastern Europe. By late September 1987, MOFA – for the first time in its history – approved visa applications for two Polish academics. Soon after, the ROC Council for Economic Planning and Development (行政院經濟建設委員會) proposed ‘The Main Points of Trade Measures towards Eastern Europe’ (對東歐 貿易事實要點), according to which direct trade with communist Europe (except Albania and the USSR) would be allowed, the application procedures by the Taiwanese traders eager to organize trade tours (考察團) simplified, and the visa formalities for communist traders explicitly formulated.10 Before the government’s preliminary approval of ‘The Main Points’ in January 1988, the ROC businessmen rushed the first trade tour of Central and Eastern Europe in ­ mid­October 1987. Grouped in the North East European Trade and Manufacturing Association (東北歐貿易廠商友誼會), they visited Hungary, Poland and Yugoslavia. Although ostensibly private, the tour was led by Chiang ­ Pin-­kung (江丙坤), the Secretary General of CETRA, the leading member of the KMT and future Vice Minister and Minister of Economic Affairs. Upon their return, the businessmen compiled the ‘Investigation Report of East European Markets’ (東歐市場調查研究報告), which postulated that the government should lift all restrictions on trade with the communist nations.11 The prospects of entering a market of 135 million consumers convinced the ROC government to adopt the suggestions made by the Taiwanese businessmen. On 9 March 1988, the Executive Yuan formally relaxed trade restrictions on the Soviet allies (except Albania).12 Yet, it emphasized the continuity of its ­ anti­communist foreign policy and the principle of separating trade from politics. When CETRA suggested the establishment of a trade centre in Budapest, the Taiwanese government reposted that CETRA should make use of its office in Vienna to coordinate economic cooperation with the Soviet bloc, rather than plan an office in Hungary.13 Taiwanese firms eager to enter the communist markets continued to face numerous obstacles, including difficulties in obtaining visas, undeveloped shipping links with the Soviet bloc and the absence of banking cooperation.14 In early 1988, determined to address some of these predicaments, Taipei opened direct dialling with Central and Eastern Europe minus Albania and allowed direct postal links. In February 1989, it drafted a plan, which envisaged the establishment of trade or exhibition centres, participation in trade fairs in Hungary, Poland and Yugoslavia, assistance in organizing trade visits to communist

Closing the Cold War chapter   29 nations, facilitating communist business visits to Taiwan and inviting prominent personalities to attend conferences on the island. The ultimate purpose of such measures was to establish ‘bilateral substantive friendship’ (雙方實質友誼) between the ROC and the communist states.15 MOFA, however, was not altogether pleased with an excessive relaxation of the ­ anti-­communist strategy, emphasizing that communist visitors could attend only ­non-­governmental activities held in Taiwan.16 Although the communist traders were no longer barred from visiting the island, the visa application procedures remained as cumbersome as ever.

Responses from the Soviet bloc Relations with Asia rarely featured high on the agendas of the communist regimes. The Soviet allies’ foreign policies towards Asia followed Soviet directives. Among the communist states, only Albania, Romania and Yugoslavia pursued policies in Asia that were largely free of Soviet interference, and which focused primarily on cultivating friendly cooperation with China (Albania suspended friendly ties with Beijing after the 1978 ideological rift). When Moscow under Mikhail Gorbachev’s leadership showed determination to restore friendship with Beijing, its European allies followed suit. By 1988, all Central and East European states restored friendly relations with Beijing. In the context of their intensified ­ party-­state interaction with China, their lack of enthusiasm for undoing their achievement in exchange for partnership with Taiwan, of which they knew little (if anything), is not altogether surprising. As a result, they ignored Taipei’s economic opening. Only Hungary noticed Taiwan’s proffered economic opportunities. By the late 1980s, while courting Beijing, Budapest appreciated the economic potential of the four Little Dragons, including South Korea (which Hungary recognized in February 1989, becoming the first communist state to do so) and Taiwan. In Taiwan, the Hungarians recognized a strong trading power (then the world’s thirteenth largest) and a source of potential investments. Hoping to establish trading ties with the island and to attract Taiwanese investments, Budapest launched a quiet offensive to befriend China’s rebel province. In September 1987, the Hungarian Commercial Bank signed a cooperative agreement with the ­state-­owned banking corporation, the Central Trust of China (中央信託局), the first economic agreement ever between a Taiwanese company and its communist counterpart.17 In 1987, visiting General Secretary of CETRA Chiang reportedly met Hungarian Minister of Industry, Laszlo Kapolyt, with whom he agreed to exchange bilateral visits, establish telecommunication links and banking cooperation, simplify visa procedures and set up trade offices.18 Although the Taiwanese might have exaggerated the official nature and the extensive content of these agreements, the Hungarians were genuinely committed to establishing economic cooperation with Taiwan. In late January 1988, they led the first ever delegation from any communist state to the island. Including Chairman of the Hungarian Chamber of Commerce Peter Lorinche, President of the Hungarian Commercial

30   Closing the Cold War chapter Bank Sandor Demjan and 11 representatives from ­ state-­owned trading companies, the delegation called on the ROC Ministry of Finance, where it discussed bilateral trade, direct banking links and joint investment ventures in Soviet Siberia.19 Other Central and East Europeans followed the Hungarians, but with much greater caution. Taipei acted to capitalize on the communist nations’ emerging interest. When CETRA’s delegation visited Yugoslavia, Bulgaria and Hungary in March 1989, it not only signed a cooperation agreement with the Yugoslav Chamber of Economy, but also obtained a promise from Sofia on the opening of direct air links and an agreement from Budapest to a Taiwanese trade office in Hungary.20 In response to the tariff reduction on Taiwanese products by Hungary, East Germany and Yugoslavia, Taipei introduced corresponding preferential tariff treatment in April 1989. Finally, it allowed CETRA to establish trade offices in Budapest and Belgrade.

Beyond the Velvet Revolutions The political changes that swept Central and Eastern Europe in 1989 caught MOFA ­ off-­guard. At first, the Taiwanese government opted to continue incrementalism, which emphasized gradual relaxation of regulations regarding economic cooperation, but saw no point in seeking political dialogue. Unlike the government, the Taiwanese media were quick to grasp the opportunities presented by the fall of communist regimes. Shortly after the Polish communists failed to gain a majority in the parliamentary elections in June 1989, the daily Ziyou shibao (自由時報) appealed to the Taiwanese government to offer Poland grain and loans to initiate political relations, suggesting that Polish criticism of the June 4th massacre in Beijing created a positive atmosphere for Taiwan’s diplomatic offensive in Warsaw.21 In ­mid-­November 1989, the economic daily Jingji ribao (經濟日報) published a series of four articles analysing the political and economic situation in the Soviet bloc, proposing measures to exploit the systemic changes to Taipei’s benefit. The daily advised the government to facilitate cooperation between the island’s small and ­ medium-­sized enterprises and their communist counterparts, relax visa regulations for communist visitors and provide loans to communist firms.22 The Hungarian interest in establishing relations with Taiwan lent credence to those voices in Taiwan arguing for a diplomatic blitzkrieg in ­ post-­communist Europe. In late August 1989, Governor of the Hungarian National Bank Ferenc Bartha secretly met ROC Minister of Economic Affairs Chen ­Li-­an (陳履安) in Vienna, where both reached an understanding on the exchange of trade offices, the first ever between Taiwan and any communist state. Details of the agreement that followed were worked out by the diplomats on both sides, and finalized in November, when an ROC delegation – composed of officials from MOFA, Board of Foreign Trade (BOFT) of MOEA and CETRA – arrived in Budapest. The Hungarian side sought financial rewards from Taiwan for agreeing to exchange trade offices in line with those secured from South Korea following Budapest’s

Closing the Cold War chapter   31 diplomatic recognition of Seoul in February 1989.23 Coinciding with the ROC– Hungarian negotiations, the Taiwanese press reported on MOFA’s request that the Export–Import Bank of the ROC (中國輸出入銀行) offer a commercial soft loan of US$100 million for an unspecified Hungarian ­ state-­owned ‘trading group’. According to the Taiwanese media, MOFA pledged to subsidize the difference between the interest offered and the interest normally charged by the bank. Since Hungary was not Taiwan’s diplomatic partner, the loan could not be officially offered to the Hungarian government.24 MOFA immediately denied reports on any politically motivated loans for Hungary, claiming not to have ‘considered covering the East Bloc in our financial aid now’.25 Hungarian diplomats also denied the report, although they confirm Budapest’s 1990 request for a soft loan of US$90 million.26 The agreement on the exchange of trade offices – China being fully informed of the developments – was fronted by CETRA and the Hungarian Chamber of Commerce. The Taipei Trade Office, the status and functions of which were left largely undefined, was to become operational in Budapest in early 1990. Hungary was expected to open a reciprocal office in Taipei soon after. By September 1989, the ROC government had lifted the ban on all forms of exchange visits with the Soviet allies, allowed its flag carriers to serve the region directly, permitted reciprocal investments and establishment of representative offices. In October, ROC Foreign Minister Lien Chan for the first time spoke of Taipei providing Soviet allies with aid and instructed Taiwanese diplomats to open political communication with their Central and East European counterparts.27 In November, Taipei lifted all restrictions on merchant ships arriving from Central and Eastern Europe, simplified visa regulations, agreed to tourist exchanges and allowed citizens of communist states to seek ­long-­term residence in Taiwan (except Albania and the USSR). The Taiwanese government also permitted its ­high-­level officials to visit the communist region, reversing past regulations, which permitted only ­non-­governmental organizations (e.g. CETRA) to do so. In December, Lien Chan reiterated Taipei’s readiness to provide ­ post­communist Europe with economic assistance if such were deemed necessary. He also stressed Taipei’s willingness to develop ‘substantive’ relations with the Soviet allies, setting up official trade offices in the region and alluded to the possibility of establishing diplomatic relations with the ­ post-­communist states in some unspecified future.28 In late December 1989, against the background of the fall of the Ceausescu regime in Romania, Lien declared Taipei’s expectation to develop ‘substantive’ relations with all ­ post-­communist states in such areas as economy, sport, science/education and culture, and reiterated the plan to open trade offices in Hungary and Yugoslavia.29 He also alluded to the establishment of ‘friendly relations’ (友好的關係), which would ‘obviously’ include official ties (當然包括官方關係在內). A translation of Lien’s announcement by Taiwan’s official Central News Agency referred to Taipei’s eagerness to establish diplomatic relations ‘on the basis of mutual agreement’.30 Lien also pledged to provide Romania with humanitarian aid through its Fund for International Disaster and Humanitarian Assistance (國際災難人道救援資金). The money was to

32   Closing the Cold War chapter be granted either directly or through the International Red Cross.31 Meanwhile, MOEA decided that the OECDF could extend assistance to the communist states, particularly ‘­pro-­Taiwan’ Hungary and Yugoslavia, and Poland, then Taiwan’s largest trade partner in the region. By early 1990, Taiwan had abandoned its Cold War hostility towards Central and Eastern Europe. In February, Premier Li Huan (李煥) instructed MOFA to strengthen relations with the ­post-­communist states. In March, Taipei ended its hostility towards Tirana by lifting its ban on both direct trade and Taiwanese investments in Albania and authorizing Albanian companies to bid for contracts tendered by Taiwanese ­ state-­owned companies.32 In May, Czechoslovakia, Hungary, Poland, Yugoslavia and Romania were allowed to tender for Taiwan’s government and public enterprise purchases, worth US$4 billion annually. By late 1990, Albania, Romania and Bulgaria had joined the group of states eligible to apply for loans from the OECDF. The scene was set for Taiwan’s economic diplomacy in ­post-­communist Europe.

Soviet fever Gorbachev’s domestic reforms and new thinking on foreign policy did not affect Taiwanese Soviet strategy, save the consent given to the ROC women’s basketball team to participate in the Women’s World Cup in Moscow in August 1986.33 The spirit of separating politics from sport (政治與體育分開), however, did not extent to trade, which continued to be guided by politics. Thus when, in early 1988, the Executive Yuan announced Taipei’s policy to trade directly with the Soviet allies, it emphasized that its ‘present indirect policy with the Soviet Union remains unchanged’.34 According to MOFA, Moscow remained Taiwan’s ‘bitter enemy’ (世仇) because of its ‘aggressive ambitions’ (野心) against China.35 Soviet philosopher Pavlov became a victim of continued ­ anti-­Sovietism, as his visa application to participate in an academic conference in Taiwan was rejected in November 1988. Yet, in order to indicate its ­ non-­militant attitude towards Moscow, Taipei decided to repatriate the three remaining sailors of the Soviet oil tanker Tuapse, whom the Taiwanese had arrested in the ­mid-­1950s for violating the trade embargo on the PRC. The sailors left Taiwan for the Soviet Union in August 1988.36 The demand for ‘new thinking’ on relations with Moscow originated from within Taiwan’s business circles. Anxious about lagging behind South Korea in Soviet trade and shrinking exports to the West, the ROC traders – grouped in the Import–Export Association of Taiwan (IEAT, 台灣省進出口公會) – demanded direct access to the potentially lucrative Soviet market. While objecting to the Association’s visit to the Soviet Union, the ROC government stipulated that the IEAT’s application would be reconsidered if the Association attached the Soviet letter of invitation, the full list of participants and the detailed itinerary. Once these conditions were met, the government not only consented to the visit, but even approved the participation of two civil servants (from MOEA and BOFT).37 The ­first-­ever officially sanctioned ROC trade visit to the Soviet Union amounted

Closing the Cold War chapter   33 to the implicit reversal of ­decades-­long ­anti-­Soviet policy. The Executive Yuan, however, maintained that the policy banning direct trade with the USSR continued. For 19 days in October 1988, the IEAT toured Moscow, Leningrad, Kiev and Minsk. The 58-strong delegation included executives from companies dealing in steel, lumber products, electronic home appliances and chemical engineering. During the visit, the Taiwanese traders pressed for direct trade. However, the Soviet officials – anxious not to upset Beijing before the official normalization of relations – refused. In any case, the Taiwanese–Soviet trade statistics (in 1987, a meagre US$7.5 million) were not overwhelming. While failing to generate a breakthrough in the Soviet Union, the IEAT stirred quite a debate in Taiwan. Amounting to a de facto reversal of Taipei’s ­ anti-­Soviet policy, the Soviet visit drew criticism from the guardians of the ROC’s anticommunism, who questioned the desirability of relaxing policies towards the Soviet enemy. Following stormy disputes, the leadership of the ruling KMT resolved to endorse the trade delegation as a private business initiative, but to continue trading with Moscow indirectly.38 Taipei reaffirmed its opposition to any direct contacts with the USSR, be they cultural, academic or economic. It could be said that 1989 marked the beginning of the Soviet trade tours frenzy. In August, the IEAT visited Siberia, while in November, CETRA organized a delegation to Moscow and Minsk. The increasing familiarity with the Soviet reality helped the Taiwanese traders to appreciate the difficulties of entering the Soviet market. Ignorance of Soviet laws, shortage of ­ Russian-­speaking professionals and fierce competition from Japanese firms did not augur well for Taipei’s economic conquest of the Soviet Union. Furthermore, the absence of communication channels and ­ visa-­issuing offices hindered Taiwan’s economic rapprochement. To address the shortage of Russian-language specialists, the Taiwan Broadcasting Corporation (中國廣播公司) planned to introduce radio lessons in Russian by August 1989, as the existing institutions teaching Russian (National Chengchi University, Culture University [中國文化大學], the Language Centres of the Ministry of Defence and MOFA) seemed unable to educate a sufficient number of Russian speakers. Two months later, the privately funded Tamkang University (淡江大學) established the ­ post-­graduate Institute of Soviet Studies (蘇聯研究所) to train experts in the Russian language and Soviet affairs. In addition, Moscow and Leningrad Universities began recruiting Taiwanese students for language classes. The civic organizations, the growth of which was neither obstructed by the Soviet ‘one China’ policy nor by the ROC government’s lingering ­ anti-­Soviet prejudice, were to fill the void left by the absence of the established channels of communication between Taipei and Moscow. Thus, in May 1989, the Association for Trade with Socialist Countries (對社會主義國家貿易協進會) was established to facilitate Taiwan’s relations with the Soviet bloc.

34   Closing the Cold War chapter

Cold War ended In the context of the democratization of Taiwanese politics (symbolized by the lifting of marital law in 1987 and the emergence of opposition parties, which challenged the KMT in local and ­island-­wide elections), the lifting of restrictions on trade with and investments in the PRC (1985–1987), the peaceful collapse of communist regimes in Europe and Gorbachev’s domestic political reforms, Taipei’s continued ­anti-­Sovietism looked increasingly anachronistic. It was also out of touch with Taiwanese public opinion; the Taiwanese Red Cross donation of NT$800,000 (US$32,000) to the victims of the earthquake in Armenia indicated the growing public sympathy for the Soviet Union.39 In 1989, while still considering the USSR as a hostile state (對我不友好國家), MOFA for the first time – but not without serious deliberations – granted visas in March to the Russian and Estonian contestants attending the Miss World pageant, who became the first Soviet visitors to Taiwan since 1949, and two trade specialists attending the Pacific Basin Economic Council in May.40 Still, MOFA felt it necessary to declare that its decision to grant visas to a handful of Soviet citizens did not indicate any changes in Taipei’s general ­ anti-­Soviet foreign policy and the government’s stand on prohibiting direct trade with the Soviet Union.41 Towards the end of 1989, however, the Executive Yuan no longer vetoed visa applications from Soviet officials. As a result, a group of five Soviet journalists wishing to study Taiwan’s economic success and a Soviet medical delegation were granted visas. By early 1990, the calls for a policy reversal on the trade ban with the Soviet Union grew louder. The Taiwanese traders pointed to the economic and political reforms pursued by Gorbachev, the peaceful collapse of the communist regimes in Europe and the sizeable Soviet GNI per capita (believed to exceed US$8,000). Disregarding the ban on direct Soviet trade, the ROC businesses went ahead with their plans for trade exhibitions in the Soviet Union and planned to establish the ­Sino-­Soviet Economic Development Association (中蘇經濟發展協會).42 MOEA seconded calls for the relaxation of Soviet trade restrictions, identifying the Soviet Union and its former allies as Taiwan’s new export markets. On 14 February 1990, the Executive Yuan succumbed to pressure and passed a resolution allowing direct trade with the Soviet Union, as well as Taiwanese investments in the USSR (provided that such did not endanger the ROC’s security and were not related to any government projects).43 The Soviet firms were allowed to bid for contracts tendered by Taiwanese ­ state-­owned companies. At the same time, Taipei relaxed visa regulations for the Soviet visitors and opened direct dialling with the USSR. Amid reports of Soviet food shortages, Taiwan set up a ­cabinet-­level task force to consider food aid to its former Cold War enemy. Plans to send rice were put on hold, however, when Soviet troops intervened in the Baltic republics.44 Through media and academic channels, the Kremlin expressed its interest in commercial relations with Taiwan. In March 1988, the representative of the economic section of the Tass News Agency office in New York, Anatoly Belousov, welcomed Taiwanese traders to the Soviet Union. Under Gorbachev’s economic

Closing the Cold War chapter   35 reforms, he claimed, Moscow was ready to establish commercial ties with Taipei, as the Soviet market needed not only Taiwanese investments, but also electronics and consumer products made in Taiwan.45 Soviet academics agreed that Gorbachev’s perestroika effectively separated politics from economics and, thus, created conditions for the development of Taiwanese–Soviet commercial relations.46 Aleksandr Yakovlev, of the Institute of Far Eastern Studies, for example, maintained that the ‘one China’ principle did not clash with Soviet ­non-­political interaction with Taiwan. Recognizing Taiwan as a part of China, Moscow was free to establish commercial, cultural and sports ties with Taipei.47 Similarly, Mikhail L. Titarenko, Director of the Institute of Far Eastern Studies, did not rule out ­ non-­political relations with Taipei.48 The Soviet diplomacy supported trade with Taiwan as well. The Soviet embassy in Bangkok, for example, not only assisted the IEAT in organizing trade delegations to the Soviet Union, but also took the initiative in September 1989 to foster Taiwanese–Soviet–Thai joint ventures in foreign trade, which was to circumvent the ban on Taiwanese–Soviet direct trade.49 Soviet diplomats in Japan also actively encouraged Soviet–Taiwanese communication, providing visa services, market information and even the venue for Soviet–Taiwanese dialogue. The Soviet Foreign Ministry Spokesman, Gennady Gerasimov, in an interview with the Zhongguo shibao (中國時報) expressed his personal view of having no objections against a Taipei trade office in Moscow as trade relations were separate from political ties.50 The Soviet Red Cross and the Soviet embassy in Bangkok sent public notes expressing gratitude for the Taiwanese donations to Armenian earthquake victims. In the Soviet Union itself, Beijing’s objections to contacts between Moscow and Taipei notwithstanding, the Taiwanese tourists and business-people were warmly welcomed. The Soviet trading companies looked forward to Taiwanese investments, primarily in ­hi-­tech areas (such as computers). The chairman of the Soviet–Chinese Friendship Association, in an interview with the Taiwanese daily Zili zaobao (自立早報), invited the Taiwanese investors to Siberia.51 In January 1991, the newly appointed Soviet Prime Minister, Valentin Pavlov, hoped for the development of economic relations with Taiwan, while noting ‘political obstacles’.52 The Soviet press began publishing articles either friendly to Taiwan or discussing Taiwanese history, politics, economy and ­ cross-­Strait relations in a neutral, analytical manner.53 And yet, Moscow prioritized diplomatic ties with China to the detriment of an economic partnership with Taiwan. It rejected the possibility of official contacts and direct trading with Taipei. On the eve of Gorbachev’s historic visit to Beijing in May 1989, Evgeny M. Primakov, Director of the Institute of World Economy and International Relations, reminded Taipei that Soviet–Taiwanese rapprochement was possible only in the context of the ‘one China’ policy, which recognized Taiwan as the PRC’s province.54 Predictably, the communiqué issued at the end of Gorbachev’s visit restated Moscow’s ‘one China’ principle. In order to demonstrate its loyalty to ‘one China’, in October 1989, Moscow forbade Soviet journalists to make what would have been the Soviet media’s first visit to the ROC. The Chairman of the USSR Supreme Soviet Council on International

36   Closing the Cold War chapter Relations, Aleksandr Dzasokhov, during the press conference in Tokyo, declared that the Taiwan visits of Soviet officials at the ministerial level or members of the Supreme Soviet were illegal.55 At the same time, the Trade Counsellor at the Soviet Embassy in Washington, Yevgeny V. Afanas’ev, reminded Taipei that the official Soviet policy on trade with Taiwan remained unchanged: Moscow opposed direct commercial relations with Taipei.56

Taiwan’s fan club Following the dismantling of the one-party system in early 1990, the Kremlin no longer vetoed unofficial visits to Taiwan. The first Soviet journalist, Boris Pilistskine, Mozambique correspondent for the Soviet daily Izvestia, arrived in Taipei in April 1990.57 In May, a member of the Moscow Municipal Council, Alexander Lukin (Sinologist and former diplomat), visited Taipei at the invitation of the daily Zhongguo shibao. Upon his return, Lukin’s article in the New Times highlighted Taiwan’s economic prosperity and democratization, and called for friendship between Moscow and Taipei.58 The first delegation of Soviet bankers from the Bank for Foreign Economic Affairs of the USSR arrived in Taipei in early July 1990. In July, six delegates from various Soviet republics (including the Russian Minister of Industry) went to Taiwan on what appeared to be a holiday. By ­mid-­August, the ROC office in Singapore revealed that, within a year, more than 100 visas had been issued to Soviet citizens visiting Taiwan.59 At the same time, Taiwan studies in the USSR were revived, presenting the history and contemporary development of the ROC without an ideological bias.60 The most significant visit to Taipei was the one by Gavril Popov, the democratically elected Mayor of Moscow, who visited Taipei from 27 to 28 October 1990. During his ‘private’ visit, he met Foreign Minister Chien Fu (錢復) and Wuer Kaixi (吾爾開希), one of the leaders of the Beijing Spring. While meeting the latter, Popov condemned China for its dismal human rights record and suggested the need for Russia’s closer ties with the ROC. He also called for an exchange of offices between the two cities.61 Popov’s visit to Taipei accelerated the communication between Moscow and Taipei municipalities. In the following January, Lukin revisited Taipei together with eight members of the Moscow Municipal Council. The Moscow councillors conceded that Beijing was displeased with the ­people-­to-people exchanges between the USSR and Taiwan, but claimed that China’s displeasure should not affect unofficial Soviet–Taiwanese communication.62 Given the Kremlin’s principled rejection of any ­ government-­to-government relations with Taipei, the Taiwanese authorities neither could openly invite Soviet guests nor visit the USSR. Instead, they took advantage of contacts established by Taiwanese commercial companies, non-official organizations, trade associations, municipal councils, civic and media groups. ROC officials readily met Soviet visitors, irrespective of the stated purpose of their visits or the host organizations.63 Such an unofficial diplomacy was advantageous to both sides as the Soviet Union could deny Chinese accusations of communicating with ROC

Closing the Cold War chapter   37 authorities, while the ROC leadership could feign disinterest in seeking contacts with the Soviet communists. Thus, despite the ban on official visits to the ROC, a number of Soviet party and government officials travelled to the island on ‘private holidays’ (e.g. Soviet Electric Industry Vice-Minister Ivanov in March 1991). Some Soviet holiday-makers sought to exploit the potential of emerging Soviet–Taiwanese relations for their own benefit. Alexander Vladislavlev, a member of the USSR Supreme Soviet and one of the leaders of the Soviet Scientific–Industrial Union, appeared to be particularly active in this respect. He visited Taiwan in early January 1991 with an expressed goal of encouraging Taiwanese investments in the Soviet Union. According to Peter Ivanov, Vladislavlev was a proxy of an influential group of party cadres associated with Arkadi Volsky, a ­well-­known Soviet Communist Party Central Committee activist supporting Gorbachev’s economic reforms as long as these did not harm the interest of the large ­state-­owned enterprises. When in Taipei, Vladislavlev – together with CETRA and MOEA – floated the idea of establishing a ­Sino-­Soviet Foundation of Economic Exchanges (中蘇經濟交流資金會), to strengthen Taiwanese– Soviet economic cooperation by providing market information and facilitating contacts between Soviet and Taiwanese firms.64 The Volsky group, enjoying an influential position in the Soviet hierarchy, allegedly hoped to monopolize Moscow’s relations with Taiwan, to gain authority to process visas, using the proposed foundation as its vehicle.65 During his second trip to Taipei in July 1991, the Foundation of Soviet–Far Eastern Exchanges (蘇聯遠東交流資金會) was indeed established (one of the signatories being Vladislavlev himself). There were meant to be two branches of the foundation, one in Taiwan and one in the USSR. The Soviet one was to be headed by the former Foreign Minister, Eduard Shevardnadze, who was considered a key member of the Foundation. Although the project received much publicity in Taiwan, CETRA eventually veered away as it was not sanctioned by the Soviet authorities.66 In March 1991, the Taiwanese government created a ‘Working Group on Relations with the Soviet Union’ (對蘇工作小組), headed by Vice Foreign Minister John Chang ­Hsiao-­yen (章孝嚴 or 蔣孝嚴) and composed of officials from the major governmental departments.67 Its major objective was to further unofficial relations with the USSR, primarily in the economic area. Its most immediate tasks were to conclude a fishery agreement with the Soviet Union (in order to resolve the problem of Taiwanese fishing boats operating in Soviet territorial waters) and establish a trade office in Moscow.68 There is no evidence that Taipei sought to win Soviet diplomatic recognition. Although in April 1990, Foreign Minister Lien did not rule out the possibility of diplomatic relations with the Soviet Union in some unspecified future (‘建交不 是沒有可能’), he acknowledged, however, that even the modest goal of establishing direct trade ties had not yet been achieved.69 In November, ROC Prime Minister Hau ­Pei-­tsun (郝柏村) publicly ruled out diplomatic relations, claiming that such a development would not conform to Taiwan’s national interests.70 While launching an economic offensive in Central Europe (see Chapter 3), where

38   Closing the Cold War chapter Taipei promised investments, financial assistance and greater trade in exchange for closer political relations, the ROC government pursued an opposite policy towards the USSR. Until ­mid-­1991, there were no promises of aid. Although, in ­mid-­December 1990, MOFA requested its representatives stationed abroad to study the Soviet food needs, a year later, Foreign Minister Chien Fu disqualified the Soviet Union as a recipient of Taiwan’s economic assistance due to insufficient progress in political and economic reforms. Only in ­ mid-­1991, following the G7 decision to aid the Soviet economy, did MOEA appear ready to consider providing assistance, but via the World Bank, rather than directly. Yet no specific directives followed. Taiwan was keener on establishing official contacts with the Soviet republican governments, which were not sovereign states and were less constrained by the ‘one China’ principle. The Soviet republics proved more receptive to the prospects of economic cooperation with Taiwan than the Soviet central authorities. The Foreign Minister of the Russian Federation, Andrei Kozyrev, for example, noted that Russia’s interest in commercial relations with Taiwan did not violate the ‘one China’ policy.71 In February 1991, President of the Russian Federation Boris Yeltsin, in an interview with the Taiwanese media, confirmed Russia’s interest in expanding trade relations with Taiwan.72 In the Baltic region, Taiwanese success was more tangible. In March 1991, two Latvian government officials visited Taiwan, where they allegedly proposed a reciprocal establishment of trade offices and requested Taiwanese financial assistance to strengthen Latvia’s budget and support its educational system and ­small-­size enterprises. In return, Taipei offered capital investments, while dismissing criticism that promoting economic ties with Latvia would affect nascent Taiwanese–Soviet cooperation (see Chapter 4). Minsk’s communication with Taiwan led to Vice-Prime-Minister Piljubo’s visit to Taipei in summer 1991. In July 1991, a little-known Taiwanese trading company reportedly secured from Belarusian Premier Viacheslav F. Kebich exclusive rights to operate cargo and passenger air services between Taipei and Minsk, via Tokyo. Beijing was concerned that Belarusian officials’ contacts with Taiwanese business-people could pave the way to diplomatic relations between Minsk and Taipei. Kebich admitted later that ‘the Taiwan problem was a stumbling block during negotiations on the diplomatic recognition agreement with China’.73

Beijing’s concerns Beijing was anxious about Taiwan’s encroachment on what it considered to be its zone of exclusive geopolitical influence. In response to CETRA’s announcement on the opening of a trade office in Budapest (March 1989), China’s Foreign Ministry commented that China, in principle, did not mind ­ non-­governmental contacts between China’s allies and Taiwan. Unofficially, however, Beijing strongly opposed Budapest’s plans to allow a Taiwanese trade office.74 For geopolitical and propaganda reasons, Beijing’s greatest concern was the possibility of Soviet– Taiwanese rapprochement.

Closing the Cold War chapter   39 As early as 1989, the leader of the Chinese Communist Party, Jiang Zemin (江澤民), wrote a secret letter to Gorbachev, expressing concern that the Taiwan problem would become an obstacle to ­Sino-­Soviet relations.75 During a visit to Moscow in April 1990, PRC Premier Li Peng (李鵬) raised the Taiwan question, soliciting from Moscow a firm commitment to the ‘one China’ principle. In November, the PRC weekly, Liaowang (瞭望), published an article exposing Taipei’s scheme to upgrade relations with Moscow by shifting from the policy of ‘separating politics from the economy’ (政經分離) to the policy of ‘giving equal significance to politics and the economy’ (政經並重). The weekly identified four ­inter-­related goals of Taipei’s Soviet strategy: 1 2 3 4

to establish official relations and upgrade the level of bilateral delegations (the visit by Popov was cited as an example); to convince Moscow to simplify visa regulations for ROC visitors; to facilitate communication with Moscow via direct telephone and fax links and direct flight connections; and to strengthen economic cooperation with the Soviet Union.

Liaowang agreed that the Soviet Union provided an opportunity for Taiwan to diversify its export and investment markets, but also warned against Taipei’s politically motivated activities in the USSR.76 Fearing that economic interaction could evolve into diplomatic rapprochement, Beijing appeared determined to obstruct any form of Soviet–Taiwanese ties, including trade and commerce. This became obvious at the end of Jiang Zemin’s visit to Moscow in May 1991, when the Chinese rejected the Soviet version of a communiqué that included a phrase about economic and cultural ties with Taiwan. The final version made no mention of Soviet–Taiwanese relations, confirmed the Soviet support of the ‘one China’ principle and voiced criticism of ‘flexible diplomacy’.77 The Soviets must have been surprised as Beijing had raised no objections when this idea was originally floated. Facing the wave of Taiwanese ‘trade’ visits to the USSR, Beijing applied pressure on the Soviet Foreign Ministry to not only keep the commercial contacts between the Soviet Union and Taiwan on the unofficial level, but also to cancel visits by higher-ranking ROC officials. Thus, for example, succumbing to such pressure, Moscow invalidated ROC Vice Minister of Economic Affairs Chiang ­Pin-­kung’s visa shortly before he was to leave Bulgaria for Moscow to lead CETRA’s trade and investment delegation. Were he allowed to enter, he would have been the ­highest-­ranking Taiwanese official ever to visit the Soviet Union. Chiang had no problems visiting Poland, Czechoslovakia, Bulgaria and Hungary.78 Finally, Beijing condemned the ‘private’ visits by Soviet dignitaries to Taiwan and retaliated against them whenever possible. In response to Popov’s trip, Beijing protested to the Soviet Foreign Ministry, reminding Moscow of its continued objection to ‘any development of relations or exchanges of official nature between Taiwan and those countries having diplomatic relations with China’, and

40   Closing the Cold War chapter cancelled Popov’s planned July trip to Beijing.79 Soviet Foreign Ministry reassurance of its unchanged position on the Taiwan issue and Popov’s article in Pravda explaining that his Taiwan visit did not amount to Soviet reversal of the ‘one China’ principle failed to appease Beijing.

After the coup d’état Taipei did not feel overly distressed over the ­ anti-­Gorbachev coup in August 1991. The Working Group on the Soviet Union merely issued a travel advisory, while the ROC authorities showed some concern over the possibility of the coup leaders uniting with the Chinese communists, which could potentially destabilize East Asia. MOFA refrained from making any public statement on the coup, awaiting further developments.80 Gorbachev’s ­ post-­coup ban on the Soviet Communist Party and his resignation from the Communist Party leadership convinced Taipei that the time was right to strengthen relations with Moscow. Although in early September, the ROC press speculated that Taipei had set its eyes on diplomatic or, at least, ­quasi­diplomatic relations with Moscow, Taipei first focused on expanding economic partnership with the USSR.81 Shortly after the coup, Minister of Economic Affairs Vincent Siew ­Wan-­chang (蕭萬長) pledged that once the situation in the Soviet Union stabilized and the economic reforms progressed, the OECDF would consider granting developmental assistance to the Soviet Union.82 CETRA expected to establish its trade office in Moscow by late 1991 and to sign a transport agreement. Its personnel were already stationed in Moscow on a ­long-­term basis. Such an office, the Taipei World Trade Centre Moscow Branch Office, was indeed established on 16 December 1991.83 CETRA planned to set up similar offices in Ukraine and Belarus. Taipei also initiated contacts with the Soviet Central Bank. In October 1991, President of the Central Bank Viktor Gerashchenko visited Taiwan, becoming the most senior Soviet official to do so in over four decades. Gerashchenko confirmed Moscow’s interest in expanding commercial ties with Taiwan on a ‘­semi­official basis’ and did not exclude the possibility of Moscow accepting the ROC’s economic assistance.84 The ROC authorities asked him to relay four requests to the Kremlin: the exchange of trade offices, establishment of direct sea and air links, creation of banking cooperation and adoption of preferential tariff treatment by Moscow. As early as March 1991, Taipei set its eyes on developing closer ties with the Russian Federation, Ukraine and Belarus. Russia was undisputedly the primary candidate for intensified economic cooperation, due to its size, industrial and military potential. Ukraine and Belarus were also considered economically attractive. The former was the second largest Soviet republic, rich in natural and human resources, with a nuclear capacity. The latter – the third largest republic – produced one-fifth of the Soviet cars, one-tenth of its refrigerators and one-sixth of its electricity.85 Once the three republics declared their independence, Taipei hoped to gain not only new ‘substantive’ partners, but – luck permitting –

Closing the Cold War chapter   41 diplomatic allies. Their greatest asset was their membership of the United Nations and other ­ inter-­governmental organizations. China’s inability to veto their membership in international organizations gave them, therefore, greater freedom than other Soviet republics when considering relations with Taiwan. The ROC leadership was too keenly aware of the geopolitical importance of China in Russia’s diplomatic strategy to hope for diplomatic ties with Moscow. It did not, however, give up on communicating with Russia. Given China’s support for the coup, the wave of ­anti-­communist sentiments across Russian society and expectations of the imminent collapse of the Chinese communist regime, ­ post­coup Russia appeared friendly to Taiwan. The Foundation of Soviet–Far Eastern Exchanges planned to play a greater role in Taipei–Moscow communication once the Soviet Union was buried. Its leader, Lin ­ Shou-­shan (林壽山), claimed to have signed a memorandum in Moscow permitting the Foundation to issue Soviet visas in Taiwan. The Foundation was also to be made responsible for all ­non-­official cooperation between Russia and Taiwan in trade, culture and tourism. Lin and other members of the delegation, which visited the Russian Federation in late November–early December (Taiwan’s first large delegation after the coup), were allegedly scheduled to meet Yeltsin. Although the meeting never took place (possibly due to Chinese protests), the delegation was received by Yury V. Petrov, Director of the Russian Federation Presidential Office, who was Yeltsin’s close associate and a very influential figure in Russian politics at the time.86 The Taiwanese hoped to achieve more in Ukraine. Following Ukraine’s declaration of independence on 24 August 1991, Taipei publicly toyed with the idea of extending its diplomatic recognition to Kiev. Official contacts were already established: the Ukrainian Minister of Light Industry and Vice Minister of Culture visited Taiwan. Kiev’s ambassador to the UN, Gennadi Oudovenko, when interviewed by the Zhongguo shibao, attempted to cool down Taipei’s enthusiasm regarding potential diplomatic ties with Ukraine, making it clear that Kiev was interested purely in economic, ­non-­official relations and would adhere to the ‘one China’ principle.87 Having little, if any, proof of Ukrainian willingness to reciprocate diplomatic recognition, MOFA decided to await the Western response towards the Ukrainian declaration of independence. A referendum in Ukraine on 1 December 1991, which resulted in a majority of over 90 per cent in favour of a fully independent state, reignited Taiwanese debate on the merits of making Kiev an ally. However, despite calls from the ROC Legislative Yuan, urging MOFA to send officials to Ukraine to lobby for the inauguration of diplomatic ties, Taipei eventually opted against seeking Kiev’s diplomatic recognition, fearing potentially embarrassing rejection. Publicly and privately, Kiev communicated to Taipei its resolve to expand commercial ties with Taiwan and pleaded for financial assistance. It steered clear, nonetheless, of offending Beijing with a ­pro-­Taiwan foreign policy. Despite prioritizing relations with Russia, Ukraine and Belarus, Taiwan’s greatest success occurred in the Baltic region. Following China’s recognition of the Baltic states in early September 1991, ROC Foreign Minister Chien declared

42   Closing the Cold War chapter a ­ pro-­active strategy towards the Baltic states, aimed at ‘­all-­round diplomatic relations’ (全面外交關係).88 In early November 1991, Vice Foreign Minister John Chang visited the Baltic states. Armed with promises of aiding the Baltic economies, he tried to convince his hosts of the advantages of establishing reciprocal offices. Keen on attracting Taiwan’s aid, Latvia became the first ­ post­communist state to enter into an official (consular) partnership with Taiwan in January 1992 (see Chapter 4).

A long-term strategy Taiwan’s anticipation of winning diplomatic allies on the ruins of the USSR proved premature. The PRC, as a permanent member of the UN Security Council with the right to veto the Baltic states’ membership in the UN, enjoyed a natural advantage over Taiwan. The Balts welcomed China’s diplomatic recognition and pledged not to develop official ties with Taiwan. On 27 December 1991, China also formally recognized the Russian Federation and 11 other former Soviet republics. ‘Recognizing the Commonwealth of Independent States is not currently a top priority for the Ministry of Foreign Affairs’ reposted MOFA. ‘Instead, emphasis will be placed on pursuing “substantive” relations with individual republics such as Russia, Ukraine and Belarus.’89 Foreign Minister Chien noted that the immediate task was to establish direct communication channels with the ­post-­communist leaderships of Belarus, Russia and Ukraine.90 The Working Group on the Soviet Union resolved that grain aid (糧援) could be utilized to establish such channels. In his January 1992 report to the Legislative Yuan, Foreign Minister Chien revealed the ROC diplomatic strategy towards the CIS, in ten points, including: 1 2 3 4

5

6

7

Russia, Ukraine and Belarus remained Taipei’s primary targets for economic and ­semi-­official relations. The ROC authorities aimed at an establishment of representative offices in these republics and active exchanges of official visits. Taipei pledged to support economic explorations of these three republics’ markets, mainly via study tours. Governmental departments were obliged to seek accords with their CIS counterparts in such areas as direct air links, postal, telecommunications and banking services. The government was to support academic, cultural and sports exchanges with the CIS member states, as well as to further simplify visa procedures for the visitors from the CIS. The Ministry of Education was to provide 20 scholarships for students from ­post-­communist Europe to study Chinese in Taiwan, while MOFA was to coordinate the dispatch of the Taiwanese students to study Russian in the CIS. Taipei was to launch a propaganda campaign to publicize Taiwanese culture via exhibitions, publications and cultural centres.

Closing the Cold War chapter   43 Chien realistically noted the difficulty in establishing diplomatic ties with any of the priority states of the CIS. He expressed hope, however, that some CIS ­member-­states would either follow the ‘Latvian model’ and establish consular ties with the ROC or the ‘Hungarian model’ and agree to the establishment of trade offices.91

Economic relations The fast pace of bilateral trading, reported to jump from US$120 million in 1986 to US$250 million in 1987 despite the lack of official encouragement, convinced the ROC government of the potential of trade with the communist nations. New regulations relaxing trade restrictions led to a further increase in bilateral trade to over US$300 million in 1988. Taiwan’s main exports to communist states consisted of computers and textiles, while imports included agricultural products, raw materials (iron) and some machinery.92 Within the Soviet bloc, Poland was Taiwan’s major trading partner, maintaining its lead even after Taipei ended its ban on direct trade with the USSR (see Figure 2.1). The removal of restrictions on trade with the Soviet Union was believed to induce faster development of Taiwanese–Soviet trade as both economies were complementary: Taiwan offered consumer products and new technologies, while the Soviet Union provided raw materials. In the aftermath of Taipei’s decision to allow direct trade with Moscow in 1990, the first Soviet trade mission to the ROC (November 1990) placed orders worth US$100 million to purchase Taiwanese

US dollars (millions)

300 150 200 150 100 50

av ia

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Y gou sl

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1991

Figure 2.1 Taiwan’s trade with communist and post-communist states, 1984 and 1988– 1991 (in millions of US dollars) (source: Bi and Zhao, Dongou guoqing fenxi yu woguo duiwai guanxi, p. 275 (for 1984 figures); Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao [Monthly Statistics of Exports and Imports, Taiwan Area, The Republic of China] (Taipei: Department of Statistics, Ministry of Finance, April 1996) (for 1988–1991 figures).

44   Closing the Cold War chapter consumer goods. It soon transpired, however, that the Russians lacked hard currency to finalize the contracts. However, Russia’s shortage of foreign exchange did not discourage Taipei, as a barter trade system offered a solution. In ­ mid­1991, Taipei allowed ten large enterprises to barter trade with the Soviet Union. Taipei tried to expand economic cooperation with the Soviet Union on many fronts. One such area was fishing. In August 1989, the Soviet navy intercepted a Taiwanese boat allegedly fishing in the Soviet territorial waters and demanded US$2 million for the boat’s release. The ship and the crew were released only after the intervention of the PRC authorities. To avoid such incidents, Taipei wanted to sign a fishery agreement as soon as possible. The Soviet Fishing Industry Company and the ROC Association for Overseas Fishing Cooperation (對外漁業合作發展協會) signed a memorandum on fishing in August 1991. However, the Soviet officials did not recognize its legality and fishing disputes continued. Another area of desired cooperation concerned direct shipping links. Although the ROC Ministry of Transportation and Communications allowed direct transport links with the Soviet Union in June 1990, only after the collapse of the Soviet Union did Moscow permit the ROC vessels – recognized as Chinese ships – to access Russian ports. The Moscow–Taipei maritime transportation agreement had to wait until 1998. Finally, Taipei attempted to seek an aviation agreement with the Soviet Union: to establish direct air links and to gain fifth freedom rights, so that Taiwanese airlines could pick up passengers in Moscow and fly them to other European destinations. The Soviet aviation delegation visited Taiwan in February 1991, but the agreement is yet to be finalized.

Conclusion In the late 1980s, Taipei neigher followed, nor appeared to have developed any master plan regarding the communist states. The shift in Taipei’s policies towards the Soviet bloc was forced by the ROC’s business community, which sought access to the communist markets. Due to lingering ideological prejudices – President Lee’s ‘flexible diplomacy’ notwithstanding – the Taiwanese government consented to economic ties with Soviet allies, while making sure that economics and politics were separate and the ­anti-­communist and ­anti-­Soviet course of ROC diplomacy continued. Only when the communist regimes floundered did Taipei contemplate political dialogue with Central and Eastern Europe. Similarly, desire to establish political ties with the ­post-­Soviet states came after the disintegration of the Soviet Union. For two decades, the Soviet bloc made a concerted effort to normalize relations with the PRC and would have been unlikely to negate such efforts for economic gains from Taiwan, however great the temptation. Nonetheless, the systemic transformations, first in Central Europe and later in the Soviet Union, rendered friendship with China to a lesser ideological and geostrategic significance. Having abandoned communism and the planned economy, the former communist states looked to the economically advanced liberal democracies of

Closing the Cold War chapter   45 Western Europe and North America for a developmental model and economic assistance. In this context, Taiwan was facing an unprecedented opportunity to present itself to the ­states-­in-transition as a democratic and economically developed alternative to China, as well as a potential source of developmental assistance. At the same time, as a member of the democratic world, Taipei was more likely to garner attention and sympathy among the new ruling regimes in the ­post-­communist states than China, which was bent on pursuing orthodox communism. Capitalizing on its democratic credentials and economic power, Taipei managed within a few years to open economic cooperation with the ­ post­communist region. However, its hopes of plucking new diplomatic allies from the ruins of European communism proved premature. Most ­ post-­communist regimes, preoccupied with the task of systemic transformations and – in the case of ­post-­Soviet states – wishing to enter international organizations, had neither the time nor the inclination to challenge the PRC. Yet, CETRA’s offices in Budapest and Moscow and – above all – consular agreement with Riga have convinced Taipei of the effectiveness of the promises of economic assistance in opening ­ post-­communist states not only for ‘substantive’ communication, but even an official partnership.

3 Central European focus

The combined effect of the anticommunist euphoria, China’s negative image resulting from the June 4th suppression of the student movement and the ­post­communist states’ need for grants, loans and investments created a favourable environment for a ‘substantive’ – if not diplomatic – partnership between Taiwan and ­post-­communist Europe. However, the new democracies in the early stage of systemic transformations pursued foreign policy intended to strengthen relations with the West. Their preoccupation with domestic affairs and the ‘return to Europe’ ensured that Taipei would find it difficult to stage diplomatic miracles in the region. Yet, Taiwanese diplomacy was not discouraged. Among former Soviet allies, Taipei saw potential in Central Europe’s Czechoslovakia, Hungary and Poland, whose ­ anti-­communist sentiments and – above all – need for developmental assistance rendered them susceptible to the influence attempts based on aid, trade and investment instruments.

Budapest disillusioned In early 1990, Taiwan was poorly prepared to wage a victorious diplomatic campaign in Central Europe. First, China enjoyed support from the ‘old China hands’, the diplomats of the communist era, who were often educated in China (or the Soviet Union) and subscribed to Beijing’s definition of ‘one China’. They not only resisted any temptations new regimes might have entertained regarding relaxing the ‘one China’ policy, but also routinely informed China of Taiwan’s efforts in the region, which helped Beijing to obstruct Taipei’s communication with Central European political elites. Second, Taiwanese leaders – their visions of exploiting the Velvet Revolutions notwithstanding – were largely ignorant about the ­post-­communist states’ history, culture and peoples. Foreign Minister Chien Fu, for example, perceived former Soviet allies as a homogenous entity, besieged by economic disasters and political instability.1 Third, organizationally, Taiwan was slow in responding to the geopolitical reconfiguration in Europe. The ‘Central and East European Section’ (東歐小組) within MOFA’s Department of European Affairs was not set up until January 1991. Its desk officers could not speak any of the Central European languages and had no relevant expertise.2

Central European focus   47 Budapest’s active interest in Taiwan, however, indicated that Central Europe’s favours could be secured with a little bit of effort and cash. Having abandoned communism, the Central European economies began rapidly contracting. The Czechoslovak economy experienced negative growth (3.5 per cent and 13 per cent in 1990 and 1991, respectively), as well as a sudden surge in prices by 26 per cent in 1991. Poland, long suffering from economic crisis, embarked upon the ambitious Balcerowicz Plan (shock therapy) in 1990, which led to further inflation (585.8 per cent in 1990, reduced to 76 per cent and 45 per cent in 1991 and 1992, respectively) and induced economic recession to the tune of over 11 per cent in 1990 and 7 per cent in 1991. Hungary registered recession as well (3.5 per cent in 1990 and 11.9 per cent in 1991) and its economy suffered from the high budget deficit and the highest per capita level of hard currency debt in Central and Eastern Europe. All three Central European states experienced rising unemployment, Poland and Hungary suffering most (11.8 per cent and 7.4 per cent in 1991; 13.7 per cent and 12.3 per cent in 1992).3 Against the economic calamities afflicting the ­ post-­communist economies, Taiwan appeared particularly prosperous. In 1990–1991, it ranked twenty-first among the world’s largest economies (in terms of the GNI) and twenty-fifth in terms of the GNI per capita. Its foreign reserves of US$72 billion in 1991 contrasted more than favourably with ­ cash-­strapped Central European economies. In 1990 and 1991, Taiwan’s GNI exceeded Central Europe’s combined GNI by US$30 billion and US$40 billion respectively, while its GNI per capita was three-times higher than Central Europe’s average.4 Encouraged by the effectiveness of economic diplomacy in securing diplomatic relations with the lesser developed states in 1989–1991 (see Chapter 1) and armed with the OECDF, supposed to hold US$1.1 billion for foreign aid, Taipei planned to win over Central Europe, its knowledge of the region’s peculiarities notwithstanding. The opening of the Taipei Trade Office in March 1990 (officiated in October; see Table 3.1) became the first salvo of its campaign. With that office, ROC diplomats no longer had to go through Austria or Germany to communicate with the Central European officials. The Budapest office could provide Taiwanese business people with more reliable market information about Hungary and other emerging economies. It could also facilitate ­ people-­to-people exchange as it issued visas.5 Above all, however, its existence demonstrated that Beijing tolerated institutionalized relations between its allies and the ROC, as long as these appeared to be non-official in nature. From Taipei’s point of view, it was essential that Budapest’s bold decision to kick off relations with Taiwan paid off for Hungary. Otherwise – Taipei feared – no Central European or any other ­post-­communist state would see any benefit in emulating the Hungarian example. Apart from increasing exports to the ROC, Budapest eyed contracts related to the construction of the Taipei subway system, sought Taiwanese deposits exceeding US$60 million in its National Bank to bolster its foreign currency holdings and hoped for the arrival of Taiwanese investments. A month after the Trade Office opened, Hungarian bus manufacturer, Ikarus, won a contract to provide Taipei City with city commuter buses.6

CETRA Investment and Trade Centre (successor to Taipei Trade Office after 1995; renamed Taiwan Trade Centre, TAITRA Budapest Office, January 2004)

Taipei Economic and Cultural Office

Taiwan Trade Centre

Taipei Economic and Cultural Office

Hungary

Poland

Poland

Slovakia

CETRA

August 2003

MOFA

Yes

Yes

Consular functions

Diplomats Diplomats

Yes

No

Yes

Trade officials No

Diplomats

Diplomats

September 1998 CETRA officials Trade

December 1992 MOFA

October 1990

October 1990

Taipei Trade Office (renamed Taipei Representative Office, October 1995)

Hungary

CETRA

December 1991 MOFA

Czechoslovakia/Czech Republic Taipei Economic and Cultural Office

Establishing Staff institution

Date established

Host states Name

Table 3.1  Taiwanese offices in Central Europe

Central European focus   49 The ROC message was unambiguous: economic rewards follow political friendship. To stay ahead of competitors, a ­six-­member Hungarian Parliamentary delegation, headed by Jozsef Torgyan of the Independent Smallholders Party, visited Taipei in ­ mid-­July, marking the first parliamentary visit from any ­ post­communist state to Taiwan. The ROC Premier Hau ­Pei-­tsun met the delegation, hailing Hungary’s peaceful overthrow of communism and lauding its struggle for freedom.7 Shortly after the visit, the South China Morning Post noted that ‘there is every likelihood that Taipei may stage another victory, by establishing ties with Budapest and Warsaw’.8 The Hong Kong daily’s prediction reflected the dynamism of Taiwan’s communication with Hungary. In July–August 1990, a Taiwanese unofficial delegation (民間團體) toured Central Europe (as well as the Soviet Union, Vietnam and Turkey). Despite its unofficial character, the mission became the ­ highest­level visit from Taiwan to the ­post-­communist states, as it was headed by Chang ­Shih-­liang (張世良), the Chairman of the Parliamentary Committee for Economic Affairs, and included legislators and ­high-­ranking officials from the BOFT and CETRA. The Taiwanese media called Hungary Taiwan’s favourite market in ­post-­communist Europe, noting that four Taiwanese companies had already established their representative offices in Budapest. By the end of 1990, more than ten ROC firms were expected to open their offices there.9 In August, Budapest hosted the 14th Congress of the Europe–Sun ­Yat-­sen Association (歐洲中山 協會) – grouping overseas Chinese living in Europe – which attracted over 170 participants, including ROC ­high-­ranking government officials. In return, Taipei encouraged trading relations with Hungary. Its ‘buy Hungarian’ missions were to address the growing Taiwanese surplus in the ratio of 4:1 in Taiwan’s favour. Impatient with the absence of investments and disappointed with the trade deficit and Taipei’s inability to decide on the bank deposit, Budapest – citing budget constraints – opted against opening its Taipei office. The Taiwanese hinted that economic benefits would follow once the Hungarians accorded a political status to the Taipei Trade Office and concluded agreements on investment protection and aviation.10 Taipei hoped that, by ­mid-­1991, Hungary would allow its China Airlines to fly to Budapest and grant it fifth freedom rights so that the ROC airline could fly on from Budapest to other European destinations. At first, the Hungarian authorities only agreed to grant technical landing rights to China Airlines aircraft, withholding the rights to pick up passengers, while negotiations regarding the direct flights continued. According to eight Hungarian parliamentarians visiting Taiwan in March 1991 and excited by Taiwan’s plans to spend US$300 billion on infrastructure projects within the Six Year National Development Plan, the aviation agreement was to be finalized by the end of the year. Not until early 1991 did MOFA and the Finance Ministry preliminarily agree to deposit money in the National Bank of Hungary, through the International Commercial Bank of China (中國國際商業銀行). In February, the Executive Yuan approved the US$50 million deposit at an annual interest rate of 11 per

50   Central European focus cent. In return, it was understood, Taipei requested permission to rename its office in Budapest (‘trade office’ was deemed insufficiently prestigious), raise the mission’s status and elevate the exchange of delegations to ministerial level.11 In July 1991, Taipei City finalized the purchase of 560 Ikarus buses for over US$43 million. This constituted Taiwan’s first ­large-­scale purchase of buses from any former communist state. In October, an unspecified Hungarian minister was to visit Taipei, symbolically elevating ROC–Hungarian dialogue to the ministerial level. Instead of strengthening Taiwanese–Hungarian ties, however, the buses (or rather Taiwanese complaints about their quality) soured Taiwanese– Hungarian relations.12 Budapest changed its mind over the aviation agreement. And, in January 1992, it stopped issuing landing visas (granted to ROC passport holders in December 1990) to most visitors, including those from Taiwan, in an effort to stem the flood of illegal immigrants. Its hopes to attract Taiwanese investors were not, however, extinguished.

Havel and Walesa Following the opening of the Taipei Trade Office in Budapest, MOFA contacted other ­post-­communist countries, of which Bulgaria, Czechoslovakia and Poland expressed an interest in establishing reciprocal offices. It was East Germany, however, that agreed first to the opening of the Taipei Economic and Culture Centre in Leipzig. The office, officiated a day after German reunification, started operations in August 1990. The reciprocal East German Service Centre was to open in late 1990.13 Immediately after the German reunification, Taipei announced that visa procedures for West Germans would apply to the East Germans as well. Citizens of other former communist states continued to face cumbersome visa procedures, which required them – among other things – to find a local guarantor for their stay in Taiwan. While East Germany disappeared from the map of Europe, and Hungary schemed to win economic rewards from advanced communication with Taiwan, Taipei wished that Czechoslovakia and Poland would follow suit for similar, if not other, reasons. The rise of two ­ anti-­communist heroes, Vaclav Havel in Czechoslovakia and Lech Walesa in Poland, to the highest state offices unexpectedly aided the Taiwanese efforts to forge closer relations with Prague and Warsaw. Shortly after acceding to the presidency, President Havel – inspired by his personal experience of the communist regime’s persecution and his humanist commitment to ‘living in truth’ – became a champion of the democracy movement in China and a critic of Beijing’s policies against Tibet. In February 1990, he invited the Dalai Lama, the Tibetan ­leader-­in-exile, to Czechoslovakia for his first visit to ­ post-­communist Europe. Despite the Czechoslovak claims that the Dalai Lama’s visit was strictly religious, Beijing perceived it as a ‘gross interference in China’s internal affairs’, summoned the Czechoslovak ambassador and cancelled a visit by the Chinese Minister of Metallurgy, Engineering and Electrotechnical Industry (planned for ­mid-­February).14 In early 1990, Havel ignored

Central European focus   51 Beijing’s protests when inviting Chinese democracy activists, Liu Binyan (刘宾 雁) and Wan Runnan (萬潤南).15 As Havel’s human rights diplomacy strained relations with China, Taipei sent Foreign Minister Lien Chan, in April 1990, on a ‘private’ reconnaissance visit to Czechoslovakia. Prague, or rather President Havel, was indeed interested in Taiwan. In early December 1990, Havel’s wife Olga staged a ­five-­day Taiwan visit, becoming the first ever spouse of any European head of state that did not maintain diplomatic ties with the ROC to do so. She was invited by the ROC Young Women’s Christian Association (中華民國 基督教 女青年會 全國 協會) in her capacity as the Chairwoman of the ­non-­governmental organization, Committee of Good Will. The Association’s President, Cecilia Koo Yen ­Cho-­yun (辜嚴倬雲) was married to Koo ­Chen-­fu (辜振甫), Taiwan’s richest man, advisor to President Lee ­Teng-­hui, and apparently Havel’s friend (the circumstances of their friendship are unknown). Although her private visit aimed at establishing contacts with Taiwanese charity organizations, Havlova found time to meet President Lee and Foreign Minister Chien, and to collect 200 wheelchairs and toys (valued at US$20,000), President Lee’s Christmas gift to the Czechoslovak children.16 Havlova’s visit coincided with intense negotiations between CETRA and the Czechoslovak Chamber of Industry and Commerce concerning reciprocal trade offices. Taipei wanted its Prague office to open in early 1991 and be allowed to perform consular duties. While Prague engineered ‘first ladies’ diplomacy’ (夫人外交), Warsaw was set to surpass that achievement by sending its serving president to Taiwan. In September 1990, ROC Legislator Chang ­ Shih-­liang, while visiting Poland, extended an invitation to Solidarity Trade Union leader Lech Walesa. Walesa, having accepted the invitation, set up a subgroup on Taiwan affairs to promote bilateral trade and investments, which drew up a list of 20 projects for Taiwanese investors to consider. Chang speculated that if Walesa won the presidential elections, he would most likely promote ‘friendly political and economic relations’ (友誼的政治經濟關係) with Taiwan.17 Shortly before the second round of presidential elections, Solidarity’s International Affairs Department corroborated Walesa’s visit to Taipei, scheduled for January 1991. Following his victory, President Walesa confirmed his Taiwan visit (rescheduled for ­mid-­1991) and reportedly told Legislator Chang that if cooperation with Taiwan was beneficial to Poland, diplomatic relations would follow, irrespective of the interference of any third party.18 The Taiwanese media questioned the likelihood of Walesa’s visit and the prospects of ROC–Polish diplomatic relations. According to the Taiwanese daily, Lianhe bao (聯合報), two conditions would need to be fulfilled before Walesa visited Taiwan and Warsaw recognized the ROC’s sovereignty, namely, Polish authorities’ resilience in withstanding Chinese diplomatic pressure and Taipei’s willingness to provide Poland with substantial economic assistance. If Taipei wished to win over Poland, the daily concluded, it would have to do more than express happiness over Walesa’s visit.19 The setting up of the Taiwanese Exhibition Centre in Warsaw by six Taiwanese small and medium-sized enterprises (SME) in late December 1990 was unlikely to serve that purpose.

52   Central European focus Encouraged by the Czech and Polish presidents’ ­pro-­Taiwan attitudes, in early January 1991, Foreign Minister Chien expected the establishment of diplomatic relations with both states ‘in the near future’.20 He soon discovered, however, that shared ­anti-­communist sentiments were insufficient to convince Czechoslovakia and Poland to enter a diplomatic partnership with Taiwan. President Walesa – made aware of the geostrategic consequences of his Taipei visit – executed a quiet ­ U-­turn on his promise to visit the island, reminding Taipei that Central Europe, although desperate for economic assistance, needed more than promises of aid and investments to comply with Taiwan’s diplomatic objectives. By late 1991, Taipei gave up on its efforts to gain Central Europe’s diplomatic recognition, resigning itself instead to fostering ‘substantive’ relations with Czechoslovakia, Hungary and Poland.21

US$10 million bait In 1990 and 1991, Central Europe received US$1.042 billion and US$2.588 billion in OA from the DAC member states, respectively (Poland gaining by far the largest share of aid).22 Against this background, Taipei decided to offer Czechoslovakia, Hungary and Poland (as well as Bulgaria and the Soviet Union) soft loans through the OECDF to the tune of US$10 million or US$20 million each.23 The decision to grant loans coincided with the preparation of Taiwan’s first official delegation to ­ post-­communist Europe, led by Vice Minister of Economic Affairs Chiang ­Pin-­kung and including (among its 64 participants) officials from MOFA, MOEA, the Finance Ministry and major Taiwanese corporations. Chiang travelled to Poland, Czechoslovakia and Hungary (as well as Bulgaria) in May– June 1991. In an interview with Zhongguo shibao on 7 June 1991, he expressed his belief – if not Taipei’s policy – that providing the newly democratized states with greater economic incentives when compared to incentives given by the PRC would naturally predispose them to favour Taiwan over China. Chiang’s visit to Warsaw proved that either Taiwanese economic incentives were insufficiently enticing or his assumption was faulty. Possibly due to the forthcoming parliamentary elections in Poland and the imminent visit by PRC Foreign Minister Qian Qichen (钱其琛), the Polish government – despite its broadly ­ anti-­communist credentials – found no time for Chiang. Chiang withdrew a loan offer as punishment for Warsaw’s affront (thus applying sanctions before the arrival of aid), but he did not leave Poland ­empty-­handed. During his visit, CETRA reached an agreement with the Polish Chamber of Commerce to hold annual Polish–Taiwanese conferences on economic cooperation (中波經貿 合作會議), which were to provide Taipei with an opportunity to meet Polish officials at a level that – in time – could be upgraded to ­ semi-­official, if not fully governmental.24 The first such meeting took place in Warsaw in October 1994. Jointly sponsored by the ­Euro-­Asia Trade Organization (中歐貿易促進會), the Chinese International Economic Cooperation Association (CIECA, 中華民國國 際經濟合作協會) and the Polish Chamber of Commerce, it was the first of its kind between Taiwan and any ­post-­communist state.

Central European focus   53 Warsaw did not care much about Taipei’s symbolic soft loans, but it could not ignore the world’s fourteenth largest trading entity and a subject of courtship by major Western states (see Chapter 1). Emulating West European neighbours, all of whom set up offices in Taipei, Poland began discussions on reciprocal offices after its 1991 parliamentary elections. In ­ mid-­1992, the ROC Vice Foreign Minister visited Poland to iron out their remaining differences. Wu ­ Ching-­tang (吳慶堂), a seasoned ROC diplomat (with specialist knowledge of South America), was selected to head the Taipei Economic and Cultural Office in Warsaw. The office enjoyed selected diplomatic privileges (Taiwanese bureaus in Western Europe enjoyed no privileges) and could issue visas (see Table 3.1). According to the Polish Foreign Ministry, a Polish counterpart was to open in Taipei at the same time.25 When the Taiwanese office opened in October 1993, Taipei pledged to move forward with granting Poland a US$20–30 million loan for the development of Polish SMEs.26 The problem was that the Polish government was requested to act as loan guarantor and pay back the loan, with interest, to Taiwan in case of the lender’s loan default. As Poland’s annual budget deficits made it impossible to guarantee such loans, no final agreement was reached. Prague too was interested in establishing close economic cooperation with Taipei. Towards the end of Chiang’s visit, Prague granted Taiwan equal trading status as accorded to all ­member-­states of the General Agreement on Tariffs and Trade (GATT). A year after the talks on reciprocal offices had begun between the ROC officials based in Vienna and the Czechoslovak Foreign Ministry, the major differences between the two sides were settled. In July 1991, MOFA announced that the Taipei Economic and Cultural Office would open in Prague in November (officiated in December; see Table 3.1). Like its later Polish counterpart, it enjoyed selected diplomatic privileges, which were denied to the Taiwanese offices in Western Europe, and could issue visas. Unlike the Taipei Trade Office in Budapest, the bureau in Prague was to be openly staffed by officials from MOFA, MOEA and the Government Information Office (GIO). The Czechoslovak counterpart was expected to open in Taipei within six months.27 In a move that symbolized friendly relations with Taiwan, starting from October 1991, Prague no longer referred to Taiwan as a province of the PRC, but as ‘China, Taiwan’. In Hungary, as in Poland, Chiang failed to meet any government officials, but Budapest confirmed its lingering ­pro-­Taiwan sympathies when consenting to the request of the ­Taipei-­funded World League of Freedom and Democracy (WLFD, 世界自由民主聯盟) – a 1991 reincarnation of the World ­ Anti-­Communist League (世界反共聯盟), founded in 1967 – to organize its congress in Budapest in August 1992. The ROC delegation received VIP treatment and was able to hold talks with Hungarian dignitaries (including the Foreign Minister).28 In ­mid­1993, the Hungarian Vice Minister of Transport visited Taipei to restart negotiations on the aviation agreement. He advocated joint operation of a Taipei–Budapest line. In February 1994, Taipei promised to provide Hungary with an ­interest-­free US$10 million loan (which never arrived). Whilst the Taiwanese entrepreneurs invested over US$3 billion in China (according to the PRC

54   Central European focus data) and close to US$2.5 billion in the United States and Southeast Asia in 1994 alone, the ten Taiwanese investment projects in Hungary, all in the form of trading companies, did not exceed US$1 million combined.29 In its talks on the ROC’s accession to GATT, Budapest insisted that Taipei should open its markets wider to Hungarian products. The Taiwanese, for their part, complained about the lack of preferential visa treatment for Taiwanese business people and students (of whom there were 40 in 1994), bureaucratic red tape, language problems and incompatible work ethics. The Taiwanese media concluded that Polish and Czech markets offered better opportunities for Taiwanese investors and Hungary lost its value as a stepping stone to the Russian market, since Taiwan had established direct communication with Russia.30 Having set up three representative offices, Taiwanese diplomacy could congratulate itself that, at virtually no financial cost, it had laid the foundations for ‘substantive’ relations with Budapest, Prague and Warsaw within four years, while a similar process took almost ten-times longer in the West European case. In ­ mid-­1993, Zhongguo shibao, however, criticized Taipei for lacking a diplomatic strategy (戰略) towards the ­ post-­communist states and losing diplomatic opportunities due to inaction (e.g. approval by numerous administrative units for a US dollar deposit into the Hungarian National Bank took so long that, when approval was granted, the Hungarians no longer needed the money). The daily urged the government to formulate a clear strategy towards Central Europe and appoint top diplomats, capable of speaking local languages, to implement it.31 If ROC diplomacy lost its purpose in the ­ mid-­1990s, Prague’s unmistakenly ­ pro­Taiwan course alerted Taipei to the fact that Central Europe remained a diplomatic battleground, where Taipei could successfully challenge Beijing.

Czech bravura Following the division of the Czech and Slovak Federal Republic into the Czech Republic and Slovakia in January 1993, the Czech determination to pursue relations with Taiwan was driven primarily by ideological and, to a lesser extent, economic considerations. President Havel’s personal conviction that democratic Taiwan’s demands for greater international recognition and separation from the communist mainland were justified created a favourable climate for Czech– Taiwanese dialogue. The relative stability of the Czech government, led by a centre–right coalition under Premier Vaclav Klaus, also facilitated Taipei’s communication with Prague. Unlike its Polish counterpart, the Czech diplomacy was not ideologically opposed to the furthering of relations with Taiwan, while at the same time being aware of the advantages of a ‘Taiwan card’ in the context of its relationship with the PRC. Although Prague did expect to reap economic benefits from cooperating with Taiwan, it never asked Taipei for aid.32 Instead, it expected Taiwanese investments and participation in Taiwan’s US$300 billion ­ Six-­Year National Development Plan. On the investment front, the news was gloomy: by early 1993, no Taiwanese company had invested in the Czech Republic. Better news came in late 1993,

Central European focus   55 when the Czech heavy-industry conglomerate, the Skoda Group, won a NT$970 million contract (US$41.7 million) for the construction of part of the Hsintien (新店) Line of Taipei’s mass rapid transit system, followed by a second contract worth NT$1.71 billion (US$73.4 million).33 Curiously enough, the contracts coincided with the Czech decision to open its representative office in Taipei in November 1993, the first bureau from ­ post-­communist Europe in Taiwan. The Czech Economic and Cultural Office was headed by Dr Jindrich Novotny, a career diplomat who had served as a second secretary in Japan and a consul in Indonesia. A month after opening, the office began issuing business and tourist visas (see Table 3.2).34 While the Czechs hoped that Skoda’s contracts were the beginning of a rewarding partnership with Taiwan, Taipei would have made it clear that injecting more officialdom into bilateral relations could facilitate mutual benefits. In early December 1993, Czech Deputy Minister for Trade and Industry Miroslav Somol travelled to Taipei to outline business opportunities in the Czech Republic. A month later, the Vice Chairman of the Czech Parliament paid a short but busy visit. Three months after that, Czech Economics Minister Karel Dyba – leading a group of Czech manufacturers – became the ­ highest­ranking government official to visit Taiwan. In 1994, the Czechs spoke out in support of the ROC’s bid to join the UN for the first time, while referring to the UN principle of universality.35 Prague was second (following South Africa) to sign the WTO agreement with the ROC. In 1994 and 1995, Foreign Minister Chien Fu and the head of the GIO, Jason Hu ­Chih-­chiang (胡志強, later, foreign minister), visited Prague.36 The Czechs expected greater access to the Taiwanese market, as well as more public works contracts for their heavy industry conglomerates. They were disappointed with the tendering processes in Taiwan, which, in their view, favoured the USA, Japanese and South Korean companies. Despite the Skoda Group opening its representative office in Taipei, the two contracts mentioned earlier were the only ones it secured through open tenders. The Taiwanese continued to convince the Czechs that opening of official communication channels could improve Skoda’s fortunes in Taiwan and prompt Taiwanese investments in the Czech lands. The Czechs took a deep breath and invited Premier Lien Chan for a scholastic visit in late June 1995, the highest ROC dignitary to visit Europe since 1949.

Lien Chan in Prague Before arriving in Prague, Lien stopped over in Austria and Hungary, where his requests to wine and dine with government officials and legislators were declined. In contrast, Prague accorded him a VIP welcome, complete with police motorcycles and tight security measures to protect his entourage. Despite the scholastic nature of his visit – he was formally invited by the Charles University to receive an honorary doctorate – Lien met Premier Klaus, for a ‘short, informal discussion’, so informal that no photos of the meeting were released to the press and the two men met outside the government offices. Initially cancelled due to President Havel’s absence from Prague, a high profile, 45-minute meeting between the two leaders

Establishing institution

The Hungarian Investment and Trade Development Agency

Slovak Economic and Nov. 2003 Cultural Office

Consular functions

An official from the Yes (since 1998, visas issued Ministry of Foreign in the name of the Polish Economic Relations. Consulate in Tokyo) Since 1998, a career diplomat

A retired diplomat. Yes (visas ‘issued in Taipei’ Since 2001, a career in the name of the Hungarian diplomat Consulate in Tokyo)

The Slovak Chamber of A career diplomat Yes (visas issued in the name Commerce and Industry of the Slovak Consulate in Kuala Lumpur)

Poland Warsaw Trade Office Nov. 1995 The Foreign Trade Institute (renamed Warsaw (Poland) of the Ministry of Economics Trade Office, 2004)

Slovakia

Head

Czech Economic and Nov. 1993 Skoda and Strojimport A career diplomat Yes (visas issued in the name Cultural Office of the Czech office in Taipei)

Date established

Hungary Hungarian Trade Office July 1998

Czech Republic

Represented states Name

Table 3.2  Central European offices in Taiwan

Central European focus   57 was eventually arranged. In contrast to the Lien–Klaus meeting, the Lien–Havel meeting took place inside the presidential office and was recorded for posterity, with the Czech News Agency CTK taking photos as Havel welcomed Lien and his wife.37 The Czech Presidential Office issued a statement confirming the meeting, saying that the talks concentrated on deepening the Czech Republic’s economic ties with Taiwan. Lien Chan subsequently proclaimed that ‘friendly and cooperative relations [with the Czech Republic] will become more long term in the future’ and promised cooperation in economic and educational areas, as well as the Czech Cultural Festival, to be organized in Taipei in 1996.38 Prague’s courage in inviting Lien paid off, at least in the ­short-­term. In July 1995, the Czech Minister of Education concluded a student exchange agreement in Taipei: Czech students of Sinology would be invited to study in Taiwan for one year, with a reciprocal arrangement in Prague.39 Also in July, Minister of Economics Chiang ­Pin-­kung, when meeting Klaus at the Crans Montana Forum in Switzerland, proposed a ­ three-­stage cooperation pact, under which Taipei would send a ­fact-­finding team to the Czech Republic, Prague would send delegations to Taiwan to lobby for investments, and Taiwan would organize business groups to visit Prague. At the press conference, Klaus declared Prague’s determination to pursue economic relations with the ROC.40 In August, Taipei announced three separate trade missions to the Czech Republic, of which the most important and the largest ever (including 130 members) was to be headed by Chiang himself in early October 1995. Chiang met several ­ high-­ranking government officials at private functions and held talks with Minister of Economics Karel Dyba, whom he reassured that Taipei would encourage Taiwanese manufacturers to switch some of their machinery orders from Japan to the Czech Republic to narrow Taiwan’s trade deficit with Japan, and would designate the Czech Republic as its priority economic partner.41 He even managed to meet President Havel for a full ten minutes. As an indication of future developments, the Taiwanese purchased US$20 million worth of Czech heavy industrial products (including sewage systems), and signed a letter of intent to develop an industrial park in Pilsen (see Table 3.3). The park – modelled after those operating in Central Table 3.3  Proposed Taiwanese industrial zones in Central Europe Item

Lodz (Poland)

Pilsen (the Czech Republic)

Area

58 hectares

43.5 hectares

Unemployment

17.8 per cent

3 per cent

Cost per square foot

US$24

US$29.5–US$46.5

Expected production

Electronics, electric appliances, computers, chemicals, machinery, sporting goods, medical equipment, bicycle and key components and parts.

Precision machine tools and spare parts, computers, electric appliances, communication electronics, sports equipment, consumer goods.

Source: Jingji ribao, 25 October 1995.

58   Central European focus America and Southeast Asia – was scheduled to open in March–April 1996, attract US$100 million in investments and accommodate 30 to 40 companies exporting to Germany. In ­mid-­December 1995, the Czech Republic saw Taiwan’s first significant investment: the Hualon Textile Company (華隆紡織公司), one of Taiwan’s largest textile manufacturers, pledged US$20 million. In November, the ROC Defence Minister, Chiang ­Chung-­ling (蔣仲苓), went on a ‘sightseeing holiday’ to Prague. The Czech Foreign Ministry confirmed his visit and its private nature. According to the media, however, Chiang’s aim was to visit the troubled Czech aircraft manufacturer, Aero Vodochody, which in October 1996 signed an agreement with a Taiwanese ­state-­run Aerospace Industrial Development Corporation (AIDC, 漢翔公司) to jointly develop the small business jet AE270.42 Under the deal, both sides would hold a 50 per cent stake in the project and jointly invest more than US$60 million. According to the Czech daily Mlada Fronta Dnes, the Taiwanese minister wanted information on what conditions needed to be met before the world’s largest manufacturer of trainer jet aircraft, Aero Vodochody, would be privatized.43 It is not entirely clear whether Chiang managed to meet his Czech counterpart (the request for such a meeting was made nonetheless) and other government officials.44 Aero Vodochody’s agreement with the AIDC was the first (and to date, the only) significant Taiwanese–Central European joint venture.

The Havel factor President Havel was the spiritual guardian of ­ Czech-­Taiwanese partnership. In late October 1995, he made an unprecedented statement during a news conference at the UN’s fiftieth anniversary celebrations in New York, acknowledging the existence of two Chinas and regretting the absence of democratic Taiwan from the United Nations.45 His comments were made without consulting the Czech Foreign Ministry, which, the next day, issued a statement on adherence to the ‘one China’ principle. Neither did Havel consult his Foreign Ministry when censuring China for military manoeuvres in the Taiwan Strait in the spring of 1996, which he considered an exercise in ­sabre-­rattling. When meeting visiting PRC Foreign Minister, Qian Qichen – China’s first ­top-­level visit to Prague since a series of disputes over Prague’s relations with Taiwan began – Havel reportedly told his guest that Taiwan was a political reality and as such Prague could not ignore it.46 In ­mid-­1996, in the first interview granted by the Czech Foreign Ministry to the Taiwanese media, Czech Vice Foreign Minister Pavel Bratinka voiced Prague’s support for the peaceful reunification of China, opposed any military threats to the island and spelt out the Czech understanding of ‘one China’ as being ‘historical and cultural China’.47 In October, the Czechs once again spoke at the United Nations in support of Taiwan’s bid to rejoin the UN. Czech Foreign Minister Jozef Zieleniec urged the UN to admit all countries willing and prepared to join the world body, based on the organization’s principle of universality.48

Central European focus   59 Shortly after ROC Foreign Minister Jason Hu visited Prague in June 1998, Havel’s second wife Dagmar dusted off ‘first ladies’ diplomacy’ by travelling to Taipei at the invitation of the Taiwanese Overseas Investment and Development Co. Ltd (海外投資開發股份有限公司), chaired by Jeffrey Koo (辜濂松, Koo ­Chen-­fu’s nephew). Dagmar represented her charity, ‘Vision 97’, but in addition to meeting the wives of President Lee, Vice President Lien Chan and Foreign Minister Hu, she also met their husbands.49 By late 1998, however, Czech businesses (in tandem with the Social Democrats), eyeing China’s vast market, were increasingly critical of Havel’s principled China policy, which – in their view – unnecessarily antagonized Beijing and made it more difficult for them to seek business opportunities in the PRC. In June 1998, the Social Democrats ousted the centre–right coalition and formed the new Czech government. In the aftermath of Taipei’s spectacular ­ turn-­about regarding the industrial park (which proved too expensive to set up) and its other investment plans, as well as Skoda’s decision to close its Taipei office, Prague seemed to have reached the point of gravitating towards China. During his visit to Britain in October, Havel admitted being under pressure from the business community and some politicians not to ‘complicate things with talk of citizenship, autonomy for Tibet or Taiwan’, since ‘China was a big and powerful nation with vast opportunities for investment’.50 Yet, until the end of Havel’s presidency, Prague continued to speak in favour of Taiwan’s bid to ­re-­enter the UN.

Polish muddling through By the ­mid-­1990s, Poland was Taiwan’s largest trade partner in Central Europe, enjoying a trade surplus. Had it copied the Czechs, it too could have increased the odds of attracting Taiwanese capital. But Lech Walesa chose not to emulate Havel and – advised by the ‘old China hands’ at the Polish Foreign Ministry’s China desk – shelved the Taiwan issue.51 The reformed communists, Democratic Left Alliance and the Peasant Party, who won parliamentary elections in 1993, could have hardly been expected to support Taiwan in any form. When the missile crisis erupted in the Taiwan Strait in early 1996, the Polish Foreign Ministry expressed concern over the concentration of military forces, but issued no formal statement.52 President Aleksander Kwasniewski, the former leader of the reformed communists, elected as president in November 1995, also made no comments on the missile tests, even though the ROC office in Warsaw considered him ‘Taiwan friendly’.53 Instead, expressions of support for Taiwan came from the Polish media and Warsaw Mayor, Marcin Swiecicki.54 Polish reformed communists, however, supported cultural exchanges55 and were not opposed to economic cooperation with Taiwan as long as such did not violate the ‘one China’ principle. Thus, when Poland opened its office in Taipei in November 1995, it did so in the name of the City of Warsaw, which established ­sister-­city ties with Taipei in September 1995 (see Table 3.2). The Warsaw Trade Office was headed by an official from the Ministry of Foreign Economic Relations, rather than a diplomat, and did not issue visas. To attract Taiwanese

60   Central European focus visitors (and investors), Warsaw granted landing visas to ROC citizens in November 1995.56 Trying to draw Taiwanese capital, Warsaw did not object to Minister Chiang ­Pin-­kung’s visit in late September–early October (the ­ highest-­level visit from Taiwan to Poland) and ROC Defence Minister Chiang ­Chung-­ling’s ­fact-­finding mission in November 1995 (despite German and French rejection of his visa applications). It was Chiang ­Pin-­kung’s visit that proved most significant. Having met several ministers in charge of economic affairs, Chiang presided over the agreement between IECDF and Lodz municipality on the joint development of the Lodz Industrial Zone (see Table 3.2), where Taipei promised to invest over US$28 million.57 Following his visit, the Taiwanese media placed Poland among Taiwan’s closest partners (親密夥伴).58 A year later, Taipei promised to set up a Taiwan Trade Centre in Warsaw, meant to coordinate Taiwanese economic interaction with all ­post-­communist Europe. Warsaw considered meeting some political conditions attached to the eventual arrival of Taiwanese investments, namely, the accords on investment protection and avoidance of double taxation. The Memorandum on Taiwan–Polish Taxation Agreement, reached in Taipei after painful negotiations by Swiecicki, in November 1995, however, did not address the question of double taxation.59 A qualitative breakthrough in Polish–Taiwanese relations had to wait until the ­right-­of-centre Freedom Union and Electoral Action Solidarity gained power in the September 1997 parliamentary elections. In late June 1998, ROC Foreign Minister Jason Hu visited Warsaw at the invitation of the Stefan Batory Foundation to participate in the Conference on International Relations and Democracy, attended by Polish Foreign Minister Bronislaw Geremek and the former National Security Advisor to US President Jimmy Carter, Zbigniew Brzezinski. Hu – addressed by the conference organizers as the ‘ROC Foreign Minister’ – was the first ROC foreign minister ever to visit Poland.60 This scholastic event coincided with the formation of the Taiwan Club in the Polish parliament. The ROC Legislative Yuan formed a corresponding grouping in 2002. Shortly after Hu’s return to Taiwan, Taipei announced a US$20 million soft loan to the Polish SMEs, the same loan promised back in 1991 and 1993. MOFA categorically denied that it was a US$20 million cash grant. (The loan was extended in January 1999 by the ICDF via the International Commercial Bank of China (中國國際商業銀行), with a full guarantee from the Polish government.) In ­mid-­1998, Taipei agreed to grant Poland an import quota for compact cars (never used), while the Taiwanese company, Acelon Fibres Corporation (聚 隆纖維), announced a plan to invest US$200 million in Poland within five years (soon raised to US$500 million). In late September 1998, the Taiwan Trade Centre opened in Warsaw.

Beyond the Macedonian breakthrough Taiwan’s diplomatic success in Macedonia (discussed in Chapter 7) caught Central European diplomats by surprise. Publicly, only the Czechs rejoiced.

Central European focus   61 Vice-Premier Egon Lansky noted the possibility of Taiwan contributing to solving Macedonia’s domestic problems and predicted the imminent collapse of Chinese communism. Jiri Pehe, head of the Czech President’s Political Bureau, claimed that Taiwan’s diplomatic breakthrough in Macedonia could lead to other European states following suit. The Chairman of the Parliamentary Committee on Foreign Affairs, Michael Zantovsky, urged the Czech government to strengthen political dialogue with Taiwan, which he characterized as a fully sovereign state.61 The Polish centre–right government – still agonizing over the decision to reach an investment protection agreement with Taiwan – did not comment on the Taiwanese–Macedonian partnership. The Hungarians carefully distanced themselves from any appearance of support for Taipei during Foreign Minister Jason Hu’s private visit to Budapest in February 1999. However, Polish staff at the Warsaw Trade Office in Taipei, interviewed in ­mid-­1999, worried that Taiwanese preoccupation with Macedonia would leave Taipei with little energy to deal with any other ­post-­communist state.62 Indeed, if one is to believe one ROC diplomat, the East European section of MOFA devoted at least 80 per cent of its collective effort to Macedonia.63 To address Polish concerns, Taipei declared in March 1999 its intention to strengthen relations with all of Europe. However, the only trade and investment missions mentioned in the context of this new strategy related to Macedonia. The Czechs did not wait for Taipei’s initiatives. Encouraged by the ­ much­awaited arrival of the Taiwanese investments (see below), they engineered a frantic exchange of visits, which included Czech Minister of Culture Pavel Dostal visiting Taipei in June/July 1999, President Lee’s wife, Tseng ­ Wen-­fui (曾文惠), holidaying in Prague in June 1999, and the ROC Legislative Yuan delegation, led by the Legislative Yuan’s President Wang ­Jin-­pyng (王金平) visiting the Czech Senate in July (with the Czech parliament reciprocating in March 2000). In October 2000, former President Lee attended the fourth Forum 2000 conference in Prague, during which he met President Havel at a cocktail reception. In an interview with the Lianhe bao, Havel reiterated his belief in Taiwan’s right to enter the UN and supported further strengthening of relations with Taiwan.64 Following Chen ­Shui-­bian’s electoral victory, President Havel appeared eager to establish a personal relationship with the ROC’s new President. He even considered Chen’s visit to the Czech Republic ‘in transit’. These plans, however, failed after Chen did not keep an unspecified promise.65 Instead, Chen’s wife, Wu ­Shu-­chen (吳淑珍), visited Prague in November 2001, after accepting, on behalf of her husband, the 2001 Prize for Freedom at a ceremony held in Strasbourg. In Prague, she met Havel and his wife, and donated US$2 million to Dagmar Havel’s Foundation, ‘Vision 97’.66 Visiting Poland in May 2000, Lien Chan – now merely the KMT’s acting chairman – was not as lucky as Ms. Wu and met no high-ranking officials.67 The Hungarians, for their part, granted Vice-President Annette Lu ­ Hsiu-­lien a visa so that she could attend the 51st Congress of the International Freedom League in March 2002. However, she also met no

62   Central European focus government representatives, although she did meet some parliamentarians and business people.68 With Havel’s departure from the Czech presidency in 2003, Taipei lost its most reliable and influential supporter in the Czech Republic. His successor, Vaclav Klaus, known more for ­anti-­EU sentiments than defence of human rights and democracy, led a delegation to China in ­mid-­April 2004, accompanied by a large group of business leaders. Prague’s rekindled friendship with Beijing effectively ruled out any further ­high-­profile support for Taiwan’s struggle for international recognition (Prague, however, abstained rather than vetoed Taipei’s application to international organizations, including the UN and the World Health Organization, WHO), but it neither stopped regular consultations between vice foreign ministers of the Czech Republic and the ROC (held every year since 2000) or between department heads of the ministries of economic affairs (commenced in 2003), nor occasional visits by Taiwanese ­high-­level officials, such as Foreign Minister Mark Chen ­Tan-­sun (陳唐山), who in 2004 convened a conference in Prague of all heads of the ROC representative offices in Europe. Neither did it stop structured consultations on economic cooperation conducted via the Joint Business Council (set up by the Czech Confederation of Industry and the CIECA in 1995) and Industrial Cooperation Meeting at the directorate level between ROC MOEA and the Czech Ministry of Trade and Industry, which began in October 2003. Exchanges of parliamentary delegations continued (with the Chairman of the Czech Senate Foreign Affairs and Defence Committee visiting in June 2005), while the sudden surge in arrivals of Taiwanese tourists in Prague (from 8,000 in 2001 to 26,000 in 2005)69 is tempting the Czech government to revisit the idea of signing an aviation agreement with Taiwan.70

Slovak awakening Following its independence in January 1993, the Slovak Republic, under the leadership of Prime Minister Vladimir Meciar and his Movement for a Democratic Slovakia, was isolated from the West, which condemned Bratislava for its slow pace of democratization and weak rule of law. For geostrategic and economic reasons, Meciar prioritized relations with China to the detriment of Taiwan.71 His political opponent, President Michal Kovac, appeared more supportive of Taiwan, to the point of asking Meciar to establish communication with Taiwan, whether political or economic, in exchange for US$500 million, allegedly promised by Taipei.72 In April 1996, Kovac – more realistically – told the visiting Chinese parliamentary delegation that Bratislava did not rule out a development of trade links, but it did not plan to pursue government contacts with Taipei.73 Slovak–Taiwanese relations were left to ­ non-­governmental trade bodies. In October 1998, the ROC National Association of Industry and Commerce (工商協進會) and the Slovak Chamber of Commerce and Industry signed a cooperative agreement to bolster business and industrial cooperation. The first conference on economic cooperation organized by both trade associations took

Central European focus   63 place in October 1998. The need for representative offices to facilitate trade with Slovakia was apparently so great that, in September 2000, the Taiwanese business community established a bogus ‘Slovak Economic and Cultural Representative Office in Taiwan’.74 Only after Meciar’s departure from the premiership in 1998, and particularly in the aftermath of the parliamentary elections in September 2002, which resulted in the formation of a four-party ­right-­of-centre government in Slovakia, did Bratislava warm up to Taipei. Three years after negotiations began, Taiwan opened the Taipei Economic and Cultural Office, Brastislava, Slovak Republic in August 2003. Envious of the Taiwanese investments in the neighbouring Czech lands and encouraged by the EU’s decision to open a representative office in Taipei in November 2003, the Slovaks became the nineteenth European nation to establish a local office in Taiwan. The Slovak Economic and Cultural Office – headed by an experienced diplomat, former director of the Department of Africa, Asia and Latin America at the Slovak Foreign Ministry, and empowered to issue visas – took energetic steps to attract Taiwanese investors eyeing lower-labourcost economies of Central Europe.75 In April 2004, the first Slovak parliamentarian visited Taipei, followed by other law-makers in August 2004 and July 2005. A year later, Taiwan’s Minister of Economic Affairs, Ho ­Mei-­yueh (何美玥), led the island’s highest delegation to Slovakia. Bratislava, however, remained committed to the ‘one China’ principle, its economic and cultural opening to Taiwan notwithstanding, and continued to vote against the ROC’s membership in international organizations. The Slovak parliament, for its part, did not form a ­ pro­Taiwan friendship group.

Big brother Beijing’s response to the ROC’s relations with Central Europe was ambiguous. As early as 1989, it publicly stated it had ‘no objections to economic, trade and cultural exchanges of ­ non-­governmental nature between Taiwan and countries that have diplomatic relations with China’.76 In practice, however, Beijing worked to contain any development of closer Taiwanese–Central European cooperation, be it economic, cultural or political. China intensified its ­high-­level dialogue with Central Europe, forcing the Central European governments to restate their ‘one China’ policies.77 It also resorted to quiet diplomacy to ­pre-­empt official exchanges between Central European and Taiwanese officials. It lodged complaints against any activities of ROC officials in Central Europe, including academic seminars and conferences. Finally, it retaliated against those Central European states that had the temerity to implicitly recognize Taiwanese sovereignty. In the early 1990s, the PRC’s diplomacy failed in Central Europe. Despite China’s protests, the first Hungarian parliamentary delegation visited Taiwan in July 1990. Dismissing the private nature of the visit, the Chinese Foreign Ministry stressed that China opposed any of its diplomatic allies developing official ties or contacts with Taiwan.78 When Olga Havlova toured Taiwan in December

64   Central European focus 1990, Beijing worried that Walesa would soon follow her. Beijing’s lobbying efforts focused on the Foreign Ministry, where the ‘old China hands’ continued to define Polish Chinapolitik. Eventually, the Foreign Ministry convinced President Walesa to cancel his Taiwan visit for the sake of averting a major diplomatic crisis. Yet, China was aware that cancellation of Walesa’s Taiwan trip was only a setback, rather than a defeat, for the ROC’s economic diplomacy. The opening of CETRA’s office in Budapest and negotiations on the establishment of similar offices across Central Europe convinced Beijing that efforts had to be doubled to forestall Taipei’s diplomatic offensive in the ­ post-­Soviet Europe. To this end, China resumed ­ high-­level political dialogue with Central Europe, suspended since 1989. In March 1991, PRC Foreign Minister Qian Qichen visited Poland, where he spelled out principled support for Poland’s territorial integrity and national independence (­vis-­à-vis German reunification) in exchange for Warsaw’s confirmation of the ‘one China’ policy.79 In Budapest, Qian failed to obtain a Hungarian restatement of the ‘one China’ principle, but the principle was assumed to continue guiding Hungarian policies on Taiwan. In September 1991, Qian Qichen’s trip to Prague revived strained ­ Sino-­Czechoslovak ties, with Prague explicitly recognizing Taiwan as a part of China.80 Having received the Central Europeans’ confirmation of their adherence to the ‘one China’ principle, Beijing switched over to quiet diplomacy, aiming to obstruct Taiwanese diplomatic activities in the region. While protests behind closed doors were successful in many cases, they failed spectacularly in the Czech Republic. With President Havel personally championing good relations with Taiwan, Beijing failed to prevent Lien Chan’s visit to Prague in 1995. When Taiwanese Economic Minister Chiang ­Pin-­kung was invited to the Czech Republic, Klaus made it clear that ‘it is necessary for the Czech Republic to establish economic ties with Taiwan although the move may dissatisfy China’.81 Facing Havel’s ­pro-­Taiwan stand, Beijing resorted to coercive measures to help Prague appreciate the benefits of pursing the ‘one China’ policy and to send a warning signal to other ­ post-­communist states tempted to emulate the Czechs. Thus, in response to Lien’s visit to Prague in ­mid-­1995, Beijing lodged a protest with the Czech Foreign Ministry, issued a statement accusing Prague of damaging relations with China, cut short a visit by a PRC State Education Commission delegation, postponed a planned agreement on student exchange and cooperation between universities and implied that more sanctions were forthcoming.82 When Chiang ­ Pin-­kung visited Prague in October 1995, it appeared that Prague had learned the lesson. The Czech government decided not to send a ministerial level official to sign a memorandum on investment protection between the Czech Republic and Taiwan.83 Eventually, however, the document was signed by the Czech minister. China was aware that any greater sanctions against the Czech Republic would only push Prague further into the Taiwanese embrace. Therefore, the policy had to be carefully formulated to include carrots as well as sticks to produce the desired effects. The planned visit of Havel’s second wife, Dagmar to Taipei in late October 1997 was cancelled to protect a Czech firm in the final

Central European focus   65 stages of negotiation on the construction of a power station in China.84 In response, the ROC representative in Prague, Hsieh ­Hsin-­ping (謝新平) suggested that Taipei should encourage ­ state-­run enterprises to cooperate with the Czech firm, Skoda, in order to help Havel convince the Czechs of the benefits in developing closer ties with the ROC.85 In other words, the Taiwanese carrots should be ‘juicy’ enough to compensate for the pain inflicted by the Chinese sticks. Despite being aware of Beijing’s protests to London over former President Lee’s first overseas trip to Britain in June 2000, President Havel nonetheless extended Lee an invitation to attend a Forum 2000 in Prague. China predictably condemned the visit. PRC Foreign Ministry Spokesman Sun Yuxi (孫玉璽) cautioned China’s diplomatic allies against allowing Lee to perform ‘splittist’ activities within their borders.86 Yet, this time, Beijing limited its response to angry statements and chose not to launch any punitive policies against Prague. After Klaus assumed the presidency, Prague made concerted efforts to ­ re-­establish a trusting partnership with China. Although President Hu Jintao’s (胡錦濤) European tour in ­mid-­2004 excluded the Czech Republic (while including Hungary and Poland), Klaus’s efforts succeeded when Premier Wen Jiabao (溫家寶) arrived in December 2005 on the first ­high-­level state visit from China to Prague since the Velvet Revolution. Having been reassured of Czech loyalty to the ‘one China’ principle, Wen presided over the arrival of the first Chinese investment in the Czech Republic, Shanghai Maling (上海梅林), which subsequently invested US$20 million in canned food production. In 2005, Changhong (長虹) declared its intent to invest US$100 million in LCD TV-set production, bringing the mainland Chinese total declared investments in the Czech lands to US$200 million.87 The Polish daily, Rzeczpospolita, noted the dividing line in internal discussions on the China policy in Poland. The ‘old China hands’ within the Foreign Ministry felt that the soft policy towards China should be maintained, although they realized it offered little by way of economic benefit to Poland. Their assessment of Taiwan was that even economic cooperation should be dealt with cautiously.88 Following the ­post-­communist forces’ rise to power in September 1993, it became even less surprising that Warsaw responded more favourably to China’s quiet diplomacy, hoping that Beijing would notice its efforts to downplay relations with Taiwan and reward it accordingly. Poland delayed the opening of its representative office in Taipei and named it the ‘Warsaw Trade Office’, rather than the ‘representative office’ or even ‘Polish Trade Office’, as originally discussed.89 In addition, the office was denied consular functions. Poland painstakingly edited agreements with the ROC, deleting all implications that the accords were reached by the two governments. During discussions on the agreement on preventing tax evasion, the Polish side requested substituting the term ‘country’ with ‘territory’.90 In the ­ sister-­city agreement between Warsaw and Taipei, the Polish side insisted on deleting all formal names of the Republic of China and Republic of Poland. Poland also fully supported the PRC in various international forums whenever the ROC’s membership was considered. Nevertheless, by the late 1990s the mood in Warsaw with regard to the two Chinas began to change, irrespective of the ­ left-­wing government’s sympathies

66   Central European focus for the PRC. The fear of Chinese retribution was dwarfed when contrasted with Poland’s huge trade deficit with the PRC and the failure of President Aleksander Kwasniewski’s China visit in 1997 to increase Polish exports to China. The lack of economic rewards for loyalty and the parliamentary victory of the ­ right-­ofcentre parties led to another ­U-­turn in Warsaw’s policy towards the ROC. Following Jason Hu’s visit to Warsaw, channels for Polish–Taiwanese political communication were opened and the Polish office in Taipei began issuing visas. Moreover, Poland no longer vetoed, but abstained, when Taiwan’s membership in international organizations was put to a vote. After their return to power in September 2001, however, the Social Democrats, while not necessarily hostile to Taiwan, saw in China a vast market and decided that any impressions of a ­Taiwan-­friendly policy were neither geopolitically nor economically sensible. Warsaw returned to vetoing Taiwan’s applications for membership in intergovernmental organizations and abstained from ­high-­level dialogue. China rewarded Warsaw with Hu Jintao’s visit in June 2004, the first Chinese ­party-­state leader ever to visit Poland. While President Kwasniewski acknowledged ‘differing opinions concerning value systems and human rights’, he noted that ‘Poland still considers that there is a single Chinese state and supports the process of reunification’.91 The leftist government denied a visa to Peng ­Ming-­min (彭明敏), the noted Taiwanese human-rights activist and adviser to President Chen ­Shui-­bian, who planned to visit Poland in June 2005. Peng had no problems visiting the Czech Republic a year earlier.92 Belief in the boundless potential of the Chinese market and Beijing’s international clout seemingly survived the fall of the leftist government. The ­ far-­right government, formed by the Prawo i Sprawiedliwosc party (PiS, Law and Justice) in late 2005, sent its first Foreign Minister, Stefan Meller, to Beijing in March 2006, while Andrzej Leper, the leader of the coalition party Samoobrona (­Self-­defence) had preceded him two months earlier. Yet the ­far-­right government is not unfriendly to Taiwan. The majority of members in the Taiwan friendship group in the Polish parliament belong to PiS and the PiS parliamentarians regularly visit Taiwan.93 This friendship, however, is yet to transform into Warsaw’s support for Taiwan on the international forums.

Promises of El Dorado In the late 1980s and early 1990s, Taipei’s economic diplomacy towards Central Europe included the alleged soft loan to Hungary, the Taipei City’s purchase of the Hungarian buses and promises of US$10 million soft loans to all Central European states. In September 1991, to aid the ­ post-­communist economies, Taipei set up the Taipei China–EBRD Cooperation Fund in collaboration with the European Bank for Reconstruction and Development (EBRD) as part of the EBRD Technical Cooperation Funds Programme. Taiwan’s initial contribution was US$10 million, expanded to US$20 million in early 1994 (of which 20 per cent was tied for the employment of Taiwanese consultants). Noting Taipei’s economic incentives and rising trade between Taiwan and Central Europe – with the latter enjoying a sizeable surplus (see Table 3.4) – Beijing was justifiably

Central European focus   67 Table 3.4  Taiwan’s trade with Central Europe, 1990–2005 (in millions of US dollars) Czechoslovakia

Czech Republic

East Germany

Hungary

Poland

Slovakia

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

– – – – – – – – – 157.4 – 261.2 144.9 27.9 220.3 160.8 111 27.7 172.2 17.1 10.6 128.5 225.4 17.6 100.5 221.8 144.7 144.6 143.9 133.4 194.8 134.7 139.6 196.2 10.7 188.5 275.2 140.3 1176.5 332.5 120.8 1228.6 250 224.8 1138.5 300.5 120.2 1117.57

62.9 220.7 234.1 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

57.1 112.4 138.1 74.1 129.8 134.1 107.5 145.1 11.3 87.6 218.5 152.4 91.1 14 146.7 105.2 115.5 174.5 125.7 119.5 188.8 196.4 156.2 174.2 239.3 121.9 22.2 263.7 110.2 124.9 321.4 121.9 125.6 295.7 28 187.3 352.2 119.1 1176 299.8 214.9 1194.6 355 118.4 1172.5 520.9 146.7 1271.2

171.1 1108.4 2107.9 272.7 159.4 2129.5 234.5 214 2147.5 327.1 158.7 2251.1 381.1 12.4 2221.7 306.5 219.6 229.1 366.2 119.5 123.6 444 121.2 156.8 322.4 227.4 1152.8 272.4 215.5 1164.6 243.9 210.4 1104.9 225 27.7 199.3 263.7 117.2 195.5 279.5 16 1157 349.4 125 1164.6 514.7 147.3 1389.2

– – – – – – – – – 0.4 – 10.4 5.9 1137.5 20.7 7.9 133.9 11 7 213.4 12.2 10.2 145.7 10.8 13.8 135.3 10.5 12.1 212.4 12.6 22.5 186.3 24.8 15.5 231.2 11.6 19.8 127.6 19 40.3 1103.8 19 108.2 1168.4 149.2 230 1112.6 1173.9

T 22.4 % 233.1 B 24.4 T 70.8 % 1216.1 B 232.2 T 145.7 % 1105.8 B 278.3 T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B – T – % – B –

Source: Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao, June 1996, May 2003 and June 2006. Notes. T = total trade exchange; % = change in trade over the previous year; B = trade balance.

68   Central European focus concerned that Taiwan’s economic diplomacy towards the region had the potential to erode its own influence in Central Europe. Its concerns intensified in the ­mid-­1990s, when Taipei declared renewed determination to utilize trade and investments to strengthen relations with Central Europe, by diverting part of its overseas investments to the transition economies.94 The Taiwanese Defence Minister’s visit to Poland and the Czech Republic alarmed Beijing further, as it signalled the possibility of Taiwanese–Central European military collaboration, which (according to the Liaowang) could lead the Taiwanese towards purchasing arms contracts and, eventually, to diplomatic ties with Central Europe.95 Yet, despite the momentum created by the visits by Lien Chan and Chiang ­Pin-­kung in 1995, the ROC’s strategy did not evolve into economic diplomacy on the scale feared by Beijing. The Hungarian company, Ikarus, won a second contract only in 2001 and only for 30–35 buses. Skoda was unsuccessful in its application for public works contracts in Taiwan, beyond those awarded in 1993. The projects to establish industrial parks in Poland and the Czech Republic fell through, and no arms deals between the ROC and Central Europe were recorded. Grants and loans There is no evidence that Taipei pursued grant or loan diplomacy with Central Europe, despite the fact that Central European economies desperately needed foreign aid in the early 1990s. Only the Czech Republic received sizeable grants to cover damage caused by flooding in 1997 and 2002 (US$20,000 and US$120,000 respectively). A grant to Slovakia included US$10,000 in 2002 to finance ­ post-­flooding reconstruction and medical equipment worth US$40,000, donated in 2005. The ICDF’s US$20 million soft loan to Poland arrived when Warsaw no longer needed such loans and remained greatly under-utilized due to the interest rates, which became higher than commercial rates in the early 2000s. MOFA’s denial that Taiwan offered Poland cash aid, rather than a commercial loan, underscores Taipei’s preference to aid ­ post-­communist economies with loans, rather than grants. Bratislava, Budapest and Prague received no loans from Taiwan. By 2001, the Taipei China–EBRD Cooperation Fund financed a total of eight projects in the Czech Republic, Hungary and Poland (no project was financed in Slovakia), with costs amounting to D711,000 (about 5 per cent of the funds disbursed by the Fund).96 Despite limited developmental assistance, Taipei threatened to impose economic sanctions when dissatisfied with Central Europe’s policies on Taiwan. Thus, for example, in 1991, Taipei withdrew its earlier pledge to provide Poland with a soft loan when Chiang ­Pin-­kung was not accorded the official treatment he thought he deserved. In 1997, ROC Premier Vincent Siew linked the Taipei fund at the EBRD to Polish voting at the WHO, openly castigating Poland for voting against Taiwan’s application for observer status.97

Central European focus   69 Investments The ­ much-­trumpeted Taiwanese investments were very slow in coming. The ROC ­government-­controlled organizations (e.g. OECDF and its later reincarnations) or corporations did not invest in the region. Neither did Taiwanese private entrepreneurs appear interested in investing for several reasons, including cultural differences, poor infrastructure, the absence of ethnic Chinese communities (a factor especially significant for Taiwanese SMEs), economic and political instability caused by corruption, red tape, high unemployment and high inflation. Poor infrastructure and red tape discouraged Taiwanese investments in Poland, which averaged US$5–6 million by 2005,98 while Acelon’s US$500 million investment evaporated with the news of the Asian Financial Crisis. In Hungary, Taiwanese investments increased slowly from US$1.5 million by early 1996 to US$10 million by late 1998.99 Foxconn’s (鴻海精密工業, Taiwan’s largest privately owned manufacturer) investment of US$80 million in 2002 in the production of spare parts for Nokia mobile phones coincided with Hungary’s prospective entry into the EU and followed Nokia’s decision to set up manufacturing facilities in Hungary in the late 1990s. With the expansion of Foxconn’s investment by US$120 million (or US$90 million according to the Hungarians) in 2005, Taiwanese investments in Hungary approximated US$220 million if seven smaller investment projects (valued at US$20 million) are taken into account as well.100 In the Czech Republic, Taiwanese private investments were more substantial. In October 1997, Hualon set up a fabric production facility, investing US$22.5 million. In late 1997, Taiwan’s First International Computer Company (大眾電腦) declared its intention to invest US$100 million in a production plant (production began in 2001). Its success convinced Foxconn to invest – through the acquisition of the bankrupt Czech electric company HTT Tesla – in the production of mobile phones and computers. By ­ mid-­2004, ASUSTeK Computer (華碩電腦) pledged to invest US$30 million in a computer production and repair centre. A year later, BenQ Corporation (明基) announced plans to invest in the production of TV sets. While appreciating Taiwanese investments in the ­labour­intensive, consumer electronics production, Prague wants to attract the Taiwanese investments in the development of ­high-­tech industries. For that purpose, it has resurrected the old plans to construct a Taiwanese science park in the Czech Republic.101 By ­mid-­2006, Taiwan became the second largest Asian investor in the Czech Republic (after Japan), with total investments of US$200 million (Czech statistics) or over US$800 million (ROC statistics) in 12 investment projects, which created more than 8,000 new jobs in areas of high unemployment (see Table 3.5).102 By the early 2000s, Foxconn had become the second-largest exporter in the Czech Republic, with sales exceeding US$1 billion, while First International Computer was among the top five exporters.103 According to Taiwanese statistics, the Czech Republic surpassed the United Kingdom (UK) as Taiwan’s favourite European investment destination, accounting for 41 per cent of the ROC’s

70   Central European focus Table 3.5  Taiwan’s largest investors in the Czech Republic, 2006 Company Sector Invested amount1 Jobs

Year established

Foxconn ASUSTeK Hualon First International Computer BenQ

2000 2004 1995 2001 2005

Electronics Electronics Textile Electronics Electronics

US$82.55 million US$27.53 million US$22.5 million US$13.9 million US$10.6 million

2,248 1,450 1,650 1,300 1,280

Source: Czech Investment and Business Development Agency, Southeast Asia Operations Office, Hong Kong. Note 1 Data do not include acquisitions of companies, shares in the Czech companies or properties.

cumulative investments in Europe in 2004, against 22 per cent for the UK (see Figure 3.1).104 The Czech Republic also registered Taiwan’s only joint venture with a ­post-­communist state. A ten-seater single-engine plane, designed and built by Taiwan’s AIDC and Aero Vodochody, made its debut at the Farnborough International Air Show in June 2000.105 Thus, although the ROC government’s ambitious investment plans all fell through, Taiwan’s private business entrepreneurs demonstrated the economic benefits of cooperating with Taiwan. Yet, the Taiwanese investments in the Czech Republic and Hungary were conditioned neither by Prague’s ­ Taiwan-­friendly policy, nor – as the Chen administration would like us to believe – Taipei’s policy of investment diversification, nor indeed any conscious attempt to induce Central Europe’s foreign-policy compliance with Taiwanese diplomatic objectives.106 Central Europe’s membership in the European Union was the single most important factor facilitating Taiwanese investors’ interest in the region. It is not a coincidence that most Taiwanese investments arrived in Central Europe shortly before or after the EU’s expansion in May 2004. After the enlargement, the EU brought together 450 million people in a market with combined GNI of US$9.3 trillion. Central Europe’s proximity to Western Europe, in addition to its highly trained and relatively inexpensive workforce, as well as developed transport and telecommunications infrastructure, made it an ideal springboard for Taiwanese companies looking to expand into West European markets. Prague’s positioning as a leading destination for Taiwanese investors rested – in addition to location, labour and infrastructure factors – upon the proactive attitude of the Czech Investment and Business Development Agency, and numerous incentives (ranging from preferential tax rates to simplified bureaucratic procedures) extended by the Czech authorities.107 In a broader context, Taiwanese investments in Central Europe were but a small proportion in the total flows of direct investments in the region. Overall foreign investments in Central Europe increased rapidly from a low of US$750 million in 1990 to US$37 billion in 1996. In 1997, when Taiwan’s first investment project arrived in the Czech Republic (valued at US$22.5 million), the

Central European focus   71

Cz

83, 4%

ech Repub

lic

United Kingdom

90, 4%

Italy

130, 6% 870, 41%

196, 9%

Nether Ger

300, 14%

lands many

Hungar 483, 22%

y

Finland

Figure 3.1 Cumulated Taiwanese investments in Europe, end 2004 (in millions of US dollars) (source: European Economic and Trade Office, EU–Taiwan: Trade and Investment Factfile 2006 (Tapei: European Economic and Trade Office, May 2006), p. 28).

Central European region absorbed US$42 billion in direct investments. By the early 2000s, when Taiwanese investors had chosen the Czech Republic as their favourite destination, the cumulative foreign investments in the Czech lands increased to US$26.8 billion, while Central Europe collectively attracted US$95.3 billion (2001 figures).108 Significant as they are, the Taiwanese investments in the Czech Republic account for about 1 per cent of total investments in that country in 2006. Trade If there was any initial economic interest among Taiwanese entrepreneurs in Central Europe, it was limited to exports to the region. However, the Taiwanese traders complained about high inflation rates, financial instability, high shipping costs, and price competition from mainland China and other suppliers with low production costs. Another major obstacle to Taiwan’s trade with Central Europe was the weak financial standing of many Central European companies, which lacked hard currency and often deferred on payments, increasing the risk of bad debts, which Taiwan’s SMEs were seldom able to absorb. Complaints notwithstanding, the Taiwanese managed to expand their exports of computers, computer peripherals, bicycles, textiles, machinery and consumer products to Central Europe, while Taiwan’s hunger for Central European steel, ­semi-­finished ­ non-­metal products, crystal and glass, lumber, chemicals, and other basic metals gradually tapered off. Following the Asian Financial Crisis of 1997–1998, MOEA allegedly reconsidered its ‘go south policy’, as the battered

72   Central European focus economies of Southeast Asia lost much of their attraction. It suggested intensification of the exploration of the Central European markets. The opening of the Taiwan Trade Centre in Warsaw in September 1998 was to serve that purpose.109 By the early 2000s, Taiwan’s trade with Central Europe had indeed intensified, its pace surpassing the growth rate of Taiwan’s overall foreign trade. Until 2000, Poland – with a population larger than other Central European nations combined – was Taiwan’s largest trading partner in the region. However, the Taiwanese investments in the Czech and Hungarian manufacturing industries facilitated Taipei’s trade with the two states to an extent that, by 2002–2003, both had surpassed Polish trade with Taiwan. For Central Europe, Taiwan emerged as the third or fourth largest trading partner in Asia (after the PRC, Japan and Korea or Hong Kong). For Taiwan, however, trade with the region was of little economic consequence as it consistently oscillated around 0.3 per cent of its total foreign trade (see Figure 3.2). The significant feature of Taiwanese trade with Central Europe was the latter’s trade deficit, which Hungary had sustained since the 1980s, while the Czech Republic and Poland had experienced a deficit from 1995 (see Table 3.4). Central Europe’s deficit was substantially larger if the exports from Taiwanese manufacturers in mainland China were included. In 1996, Czech trade with the ROC began declining, while Taiwanese–Polish trade fell by almost 30 per cent in 1998 due to the ­ anti-­dumping duties imposed on Polish steel. For the same reason, by 2002, Polish trade with Taiwan was almost 60 per cent lower than in the record year of 1997. By 2005, Taiwan’s trade with Central Europe had recovered spectacularly, at the cost, however, of Central Europe’s expanding trade deficit. A Polish trade surplus of some US$252.1 million in 1993, for example, turned into a deficit of US$389.2 million in 2005. It is clear that Taipei did not manipulate trade relations to induce Central Europe’s dependence on Taiwanese imports. Quite the reverse: the Taiwanese

0.4 0.35 0.3 0.25

Central Europe’ share (%)

0.2 0.15 0.1 0.05

20 05

20 03

20 01

19 99

19 97

19 95

19 93

19 91

19 89

0

Figure 3.2  Central Europe’s share in Taiwan’s foreign trade, 1989–2005.

s

Central European focus   73 trade officials did their utmost to transform Central Europe into a lucrative export market. Taipei’s only intervention to correct trade ‘irregularities’ happened in 1998, when Hungary’s ten-year trade deficit with Taiwan miraculously transformed into a balanced budget. This miracle followed the opening of Budapest’s office in Taipei, the Hungarian Trade Office, which was opened in July 1998 by the Hungarian Investment and Trade Development Agency and was headed by a retired diplomat with a vast working experience in the PRC (see Table 3.1). The transformation was ­short-­lived, however, as, a year later, Hungary again registered a trade deficit with the ROC. Thus, despite Beijing’s concern that the ROC would buy Central Europe’s diplomatic recognition, Taiwan appeared unwilling to flex its financial muscle prior to the establishment of diplomatic relations. Since these were not forthcoming, Taipei pursued a policy of quid pro quo, where economic rewards followed political concessions made by the Central Europeans. Taipei rewarded Prague, Warsaw and Budapest with contracts, loans or increased imports for their decisions to open bureaus in Taiwan. Following Lien Chan’s visit to Prague, Taipei intended to forge a strong economic partnership with the Czech Republic. ­Semi­official visits by the ROC ministers of foreign, defence and economic affairs were preceded with assurances that, if accomplished, such visits would have contributed to Taiwan’s greater economic cooperation with host nations. Taiwan’s Central News Agency, for example, alleged that Acelon’s investment in Poland only became possible after Jason Hu’s visit to Warsaw.110 Such a quid pro quo strategy, however, did not envisage any ­ long-­term economic commitment to Central Europe, nor indeed any plan to render ­post-­communist economies dependent on Taiwan. In the longer term, Taipei saw its role as a facilitator, not a banker. It sought agreements covering such areas as tariffs, investments and customs clearance. It organized numerous trade and ‘fact finding’ missions to help familiarize Taiwanese entrepreneurs with the region and establish direct contacts with the Central European partners. It established representative offices in the region to assist ROC businessmen. Finally, it spearheaded grand investment projects, which were to be implemented by private firms. The primary purpose of these activities was to help Taiwanese entrepreneurs benefit from the emerging markets, rather than support Central Europe’s economic development. Despite its grandiose aims, which were articulated in 1989, Taiwanese diplomacy settled on securing economic, rather than diplomatic, objectives. Funding ­pro-­Taiwan support Taipei did spend money to achieve political goals, but only when lobbying Central European political and intellectual elites. It assigned a quota for hosting Central European guests, many of whom were friendly politicians, journalists, public figures (e.g. Walesa visited in 1996 and 2000, while Havel followed in 2004111) and academics. It also organized and financed training programmes for government officials, as well as sponsored cultural events, such as film festivals

74   Central European focus and exhibitions, academic seminars, and the publication of books and other information materials on Taiwan. Taipei promoted ­ sister-­city agreements and offered scholarships for undergraduate students. Charities chaired by President Havel’s first and second wives also benefited from the Taiwanese largesse. This ­low-­profile aid diplomacy helped the formation of a ­ pro-­Taiwan lobby, which disseminated information about Taiwan to offer a challenge to the ­ China­imposed definition of the ‘one China’ principle. The most visible expression of that phenomenon was the emergence of Taiwan friendship groups in state parliaments, which often sympathized with the Taiwanese struggle for sovereignty, voicing support at the crucial junctions of Taiwan’s troubled relationship with China. ­ Pro-­Taiwan friendship groups formed in the Czech (1994), Hungarian (1995) and Polish parliaments (1998).112 However, the ­ pro-­Taiwan lobbies in Central Europe have limited – if any – political clout to influence government policies on issues related to Taiwan’s international status.

Conclusion The Taiwanese daily, Jingji ribao, described the ROC’s early diplomacy towards Central Europe as an offensive on a grand scale (大張旗鼓), involving provision of loans, politically motivated imports and creation of Taiwanese industrial zones in the region.113 Following the introduction of the market economy, the Central European need for economic assistance and its readiness to welcome aid from any corner of the world indeed created for Taiwan a unique opportunity to flex its financial muscle for diplomatic gains. The Hungarian eagerness to strengthen economic relations with Taiwan, coupled with the Polish and Czech Presidents’ friendly gestures towards Taipei, convinced the Taiwanese that the ­ post­communist nations would be willing to accord greater political status to relations with Taiwan – possibly diplomatic recognition – should they be offered sufficient economic stimulus. The economic assistance promised in exchange for political concessions helped to forge ‘substantive’ relations with Central Europe, symbolized by the exchange of representative offices (quasi-consulates), as well as government and parliamentary delegations. Beijing worried over the prospects of Taiwan utilizing economic means for political ends and responded with heightened vigilance of Taipei’s communication with Central Europe, as well as political sanctions if vigilance failed (as it did in the Czech Republic). However, China did not attempt to better Taiwan’s promises of economic assistance. In retrospect, China’s avoidance of economic ­one-­upmanship was shrewd, as Taipei appeared to baulk at following through with its grand investment and economic cooperation projects in the absence of diplomatic ties with any Central European nation. The Taiwanese would have been satisfied with official agreements on investment protection and avoidance of double taxation. They would have been happy to see greater support for Taipei’s efforts to ­re-­enter intergovernmental organizations. The Central Europeans, however, were reluctant to sign official agreements with Taipei or vote in favour of the ROC on international forums without any guarantee of sufficient eco-

Central European focus   75 nomic compensation, should their actions result in Chinese reprisals and loss of business opportunities in China. The political and economic cost of alienating China appeared significantly higher than the hypothetical benefits ensuing from their support for Taiwan. By the late 1990s–early 2000s, it was clear that Taipei, entangled in its own financial crisis, was unlikely to stage any economic miracles in Central Europe. The Taiwanese private investments that did eventually arrive in the Czech Republic and Hungary were more stimulated by the attractiveness of the Czech and Hungarian economies and their entry into the European Union than by the ROC government’s encouragement. Yet, the failure to forge diplomatic relations or stronger ‘substantive’ partnership with Central Europe through official agreements and ­ministerial-­level dialogue does not nullify the achievements of Taiwanese economic diplomacy in Central Europe. All Central Europeans institutionalized their ties with Taiwan through bilateral de facto consulates and engaged in ­ semi-­official communication. They supported the ROC’s membership in the WTO and concluded various cultural and scientific agreements. In the ­mid-­1990s, Prague provided Taipei with vocal support on the ­ inter-­governmental forums, including the United Nations. Budapest, Prague and Warsaw welcomed ­high-­ranking dignitaries from the ROC, including the vice-president, ministers of foreign affairs and defence. The Taiwanese managed to create ­pro-­Taiwan lobbies in Central Europe. These achievements expanded Taiwan’s international space and facilitated its informal diplomacy. However, friendly ties with Taiwan also benefited Central Europe, which gained access to the ROC market, investors, tenders and developmental assistance. The difficulty in attracting Taiwanese investments, rising trade deficits and insignificant loans or other developmental aid programmes do not undermine the Central European perception of Taiwan as a major Asian economy. Therefore, Central Europe’s ‘substantive’ relations with Taiwan, forged regardless of Taipei’s ­penny-­pinching attitude, point to Budapest, Prague and Warsaw’s voluntary alignment of economic objectives with those of Taipei. Having entered the capitalist world, the emerging economies could not ignore Taiwan, one of Asia’s leading economies and a potential investor. Taiwanese promises of assistance in exchange for ‘substantive’ ties might have accelerated the process of establishing economic and cultural cooperation. The Slovak case demonstrates, however, that such cooperation would have emerged regardless of Taipei’s tempting offers. The bandwagon effect (emulation of the West European pattern of interaction with Taiwan) alone would have been sufficient to ensure Central Europe’s ‘substantive’ partnership with the island. In 2004, when Central Europe entered the EU, its combined GNI exceeded that of Taiwan’s and its average GNI per capita approximated 60 per cent of Taiwan’s. Anchored in the ­pan-­European economic structures, increasingly affluent Central European economies no longer look for Taipei’s assistance. Although Taiwanese investors might consider them attractive, Taiwanese investments are unlikely to affect Central Europe’s Taiwan policy, which will follow the EU’s ‘one China’ principle. If Taipei ever hoped to score diplomatic victories amongst the ruins of Central European communism, it missed its opportunity.

4 The Latvian model

The three Baltic states, namely Estonia, Latvia and Lithuania, seem to be rather odd extras in the ­ long-­standing conflict between the two Chinas. Their small economies make them unimportant economic partners, while their geographical location – strategically important to Russia and Scandinavia – is of little rele-­ vance to both governments on the opposite sides of the Taiwan Strait. Histori-­ cally, the Baltic states had limited contacts with China, whether that was the ­pre-­1949 Republican China or ­ post-­1949 communist China. During the Baltic states’ ­ short-­lived period of independence (1918–1940), neither the Balts nor Chinese rushed to establish official relations. Latvians were the first to conclude a Treaty of Friendship with China in June 1936 and Estonians followed in December 1937. The Soviet invasion of the Baltic states in 1940 terminated nascent ­Sino-­Baltic relations. The Republican Chinese government, however, did not recognize the forced incorporation of the Baltic states into the Soviet Union – despite its renewed friendship with Moscow – and did not renounce the treaties signed with Latvia and Estonia.1 For 50 years, the Baltic region disappeared from the Chinese foreign policymakers’ mental map of the world. At the same time, the ­post-­1949 diplomatic – and, occasionally, military – confrontation between the PRC and the ROC did not concern the Baltic peoples. When the Baltic nations began their struggle for independence in the late 1980s, their eyes were turned to Europe and the United States. Having won sovereignty in 1991, their foreign policy concerns centred primarily on relations with Russia and the West. China and Taiwan were of little – if any – consequence in their desire to join the Council of Europe, the EU or North Atlantic Treaty Organization (NATO). Yet, as early as 1990, the Baltic region featured prominently in PRC–ROC diplomatic rivalry.

The Baltic option? When the first Taiwanese trade delegation toured the USSR in October 1988, it chose to visit Moscow, Leningrad, Kiev and Minsk, ignoring the Baltic region and its economic potential. Only the news of ­pro-­independence demands in the Baltic republics drew Taipei’s attention, revealing the possibility of winning far more than just access to the Soviet market – new diplomatic allies. The three

The Latvian model   77 Baltic ­would-­be allies were neither wealthy nor influential in world affairs, but these shortcomings, in fact, made them excellent candidates for diplomatic part-­ nership. The ­ post-­communist economies, in need of investments and financial assistance, were likely to be more receptive to promises of grants, soft loans, investments and expanded bilateral trade than stronger, more-established econo-­ mies. The Baltic’s fiercely ­ anti-­Soviet and, by extension, ­ anti-­communist stand made them more inclined to sympathize with democratic Taiwan’s struggle against encroachment from communist Beijing. The PRC leadership’s lack of support for the Baltic demands for sovereignty gave a boost to the ROC’s hopes of forming diplomatic partnerships with countries in the region. Finally, the embryonic diplomatic corps in the newly independent states may have been less cognisant of the wider consequences of adopting ­pro-­Taiwan policies and, there-­ fore, more willing to depart from the ‘one China’ principle. Taipei may have appeared ill-prepared to wage a successful diplomatic cam-­ paign in the distant and unfamiliar Baltic lands, but its record of activities in Central Europe indicated its ability to forge the necessary local alliances with ­post-­communist leaderships, despite its unfamiliarity with the languages, cul-­ tures and political complexities of any of the ­post-­communist nations. Such alli-­ ances, however, did not produce diplomatic ties with Taiwan, as China’s ‘traditional friendship’ with Central Europe survived the systemic transforma-­ tions, while Taipei opted against following through with its promises of eco-­ nomic assistance. In the Baltic region, China lacked a network of trusted friends, who would rally to its support whenever the issues of Taiwan or Tibet surfaced in domestic politics. The Baltic economies were also more than five-times smaller than those of Central Europe and, thus, more likely to feel the impact of Taiwan-­ ese limited generosity. In sum, the Baltic states were a testing ground, where Taipei and Beijing could compete with each other on – as it seemed at the time – ­more-­or-less equal footing. Once the Baltic republics asserted their independence in early 1990, MOFA set to work on the assumption that it was only a matter of time before Estonia, Latvia and Lithuania would gain sovereignty. It was, however, mindful of not upsetting emerging relations with Moscow. Thus, when Lithuanian leader Vytau-­ tas Landsbergis urged Taiwan – in the wake of the ROC Executive Yuan’s direc-­ tive allowing direct trade relations with the Soviet Union – to trade with his republic independently of the ROC’s trade with the Soviet Union, MOFA rejected the request.2 Taiwan’s ­ low-­key communication with the Baltic leaderships (of which little is known) continued however. Its incentives were strong enough not only to open the doors of ­high-­ranking officials, but also to entice them to visit the ROC.3 The first Baltic officials to visit the island came from Latvia in early March 1991. Maris Gailis, General Director of the Department of Foreign Economic Links (ironically, the same person who three years later would terminate Latvia’s consular ties with Taiwan), and Ojars Kehris, the Chairman of the Economic Commission of the Supreme Council, allegedly proposed reciprocal establish-­ ment of trade offices in both capitals, as well as requested Taiwanese financial

78   The Latvian model assistance to strengthen Latvia’s budget, establish a World Trade Centre in Riga, and support its educational system and SMEs. ROC Vice Foreign Minister John Chang welcomed the proposal to exchange trade offices, though he remained uncommitted on the details.4 Most importantly, he spelled out Taipei’s readiness to make substantial capital investments in Latvia, while dismissing criticism that promoting economic ties might affect Taiwanese efforts in the Soviet Union.5 Official communication channels were also established with Estonia (and, possibly, Lithuania). The Deputy Secretary General of CETRA visited Tallinn in ­mid-­July 1991, where he held talks with Prime Minister Edgar Savisaar. At the same time, Estonian Minister of Foreign Economic Relations Dr Mehis Pilv promised CETRA to visit Taiwan within three months.6 The Taiwanese officials’ access to the ­ high-­ranking politicians in the Baltic republics indicated that – limited knowledge of the region and its peculiarities notwithstanding – Taipei had successfully established the necessary network of friends, who facilitated its activities in the region. Little – if anything – is known of these ­ Taiwan­friendly individuals. It is highly unlikely, however, that these unnamed but ­well­placed officials suddenly, and without any financial incentives, fell in love with Taiwan.7 The Baltic states achieved independence sooner than expected. In the after-­ math of the abortive coup of August 1991, the USSR’s State Council formally approved their sovereignty. On 27 August 1991, a few days after their proclama-­ tion of independence, the Taiwanese approached the embassies of the Baltic states in Washington, expressing Taipei’s readiness to recognize their sovereignty. At the same time, Taipei sent letters and envoys to the Baltic leaderships to probe their intentions regarding diplomatic ties with China.8 Only Latvia responded in writing by suggesting the establishment of reciprocal offices and inviting Chang ­Hsiao-­yen to Riga.9 In early September 1991, ROC Foreign Minister Chien Fu officially indicated Taiwan’s readiness to establish diplomatic relations with Estonia, Latvia and Lithuania and list them as targets for direct trade and prefer-­ ential tariff treatment.10 Technically, the two friendship treaties between the ROC and Latvia and Estonia that had been signed before the Second World War were still in force, as none of the signatories had renounced them. MOFA toyed with an idea of simply renewing these treaties and inviting Lithuania to resume treaty negotiations.11 The Legislative Yuan’s main parties, the KMT and DPP, however, urged the government to confer formal and immediate recognition on the Baltic states. Seemingly, only fear of the embarrassment of possibly being spurned in favour of Beijing stopped Taipei from actually doing so.12 The PRC, as a perma-­ nent member of the UN Security Council with the right to veto Baltic states’ membership, enjoyed a natural advantage over Taiwan. Thus, the terms of ­Sino­Taiwanese competition for allies in the Baltic region proved less equal than envisaged. Beijing formally recognized the Baltic states’ independence on 7 September 1991. A few days afterwards, PRC Vice Foreign Minister Tian Zengpei (田曾佩) travelled to Estonia, Latvia and Lithuania to seek formal agreements on diplo-­ matic relations at ambassadorial level. The negotiations did not run smoothly,

The Latvian model   79 which was reflected by the official rank of the Chinese guest’s hosts. In Estonia, Tian met the chairman of the Supreme Soviet. In Lithuania, he met the prime minister and the chairman of the Supreme Soviet and in Latvia, Tian managed to speak only to the deputy prime minister. Although all three republics recognized the government of the PRC as the sole legal government of China (唯一合法政 府) and Taiwan as an inalienable part of the Chinese territory (台灣是中國領土 不可分割的一部份), they differed on their statements concerning relations with Taiwan. Reflecting relatively friendly ties with the ROC, Latvia and Lithuania limited their promise to an agreement (承諾) not to establish official relations with Taiwan and not to engage in the exchanges of official visits (官方關係和進 行官方往來), while Estonia – already distancing itself from the ROC – went further by pledging not to establish formal and official relations with Taipei in any form (任何形式的正式的官方的關係). In the final communiqués, Beijing expressed its support or full support for Lithuanian and Estonian membership in the UN. However, in the ­ Sino-­Latvian joint communiqué, Beijing did not mention Latvian UN membership.13 Still, following the establishment of diplo-­ matic relations with the PRC, all three Baltic states were admitted to the UN, its various committees and auxiliary bodies. Although it had lost the first battle, Taipei still hoped to win a diplomatic war. Chien Fu declared a ­pro-­active (積極) strategy towards the Baltic states, aiming at diplomatic and consular relations (全面外交關係), coupled with the setting up of representative offices bearing the ROC’s official name. It was considered that the breakthrough would arrive once the new states were admitted to the UN and other ­ inter-­governmental organizations.14 In December 1991, Latvian Foreign Minister Janis Jurkans – while visiting Taipei – lent credence to Chien’s expectations, claiming that recognition of mainland China instead of Taiwan was an expedient move used solely for the purpose of winning entry into the United Nations.15 Similarly, The Lithuanian Vice-President Bronislovas Kuzmitskas, shortly before recognizing China, suggested that ­ consular-­level ties with the ROC might be developed alongside diplomatic relations with the PRC.16

The ‘Latvian model’ A month after the establishment of official ties with China, during the annual conference of the International Monetary Fund and the World Bank in Bangkok, the Latvian delegation met Chang ­Hsiao-­yen, while Latvian Premier Ivars God-­ manis dined with the ROC Central Bank Governor Samuel C. Shieh (謝森中) at a private banquet organized by Jeffrey Koo, the Chairman of China Trust (中信 金控).17 The Koo family enjoyed cordial relations with many ­high-­ranking offi-­ cials in ­ post-­communist Europe (including Czech President Vaclav Havel) and beyond.18 While its role in Taiwan’s diplomatic strategy ­vis-­à-vis ­post-­communist countries is yet to be examined, Koo’s meeting with Godmanis provides some evidence that the Taiwanese financial elite mixed with the Baltic politicians. Following the meeting, Godmanis emphasized Latvian interest in ‘substantive’ relations with Taiwan.

80   The Latvian model In early November 1991, Vice Foreign Minister Chang was officially wel-­ comed in all three Baltic states. Armed with promises of aid from the IECDF, he convinced his hosts of the advantages of establishing reciprocal trade representa-­ tive offices, with the Latvians and Estonians agreeing to allow the Taiwanese office to bear the ROC’s official name, ‘the Republic of China Trade Representa-­ tive Office in Latvia/Estonia’. The two Baltic nations also signed memoranda on trade and economic cooperation with Taiwan (in which Latvia acknowledged the sovereignty of the ROC on Taiwan), expecting to conclude an investment protec-­ tion agreement in the near future.19 Concerns about China’s response notwith-­ standing, the Lithuanian premier promised to visit Taipei, while the Latvian and Estonian premiers specified the exact time of their visits: December 1991 and January 1992 respectively.20 Chang’s visit revealed the Baltic states’ differenti-­ ated response to the Taiwanese advances, with Latvia being the most enthusiastic and Lithuania the most restrained. The latter allowed the Taiwanese office to bear the name ‘Taipei’ rather than the ROC and signed the agreement with Chang in the name of Vilnius rather than the Republic of Lithuania.21 The scheduled visits by the Latvian premier did not materialize due to the political crisis in the Soviet Union and the uncertainty surrounding the birth of the CIS. Nonetheless, keen on attracting Taiwan’s financial aid (including food and fuel), in late November, Riga opened a ‘trade mission’ (or ‘export council office’) in Taipei to issue visas and promote investment and tourism – headed by a Taiwanese businessman and established with Taiwanese dollars – and sent Foreign Minister Jurkans to the ROC in ­mid-­December 1991.22 Giving in to Tai-­ pei’s intense lobbying, Jurkans agreed to the new name of the Taiwanese office in Riga (‘Mission of the Republic of China’) and invited President Lee to Latvia, conditional on the joint establishment of diplomatic relations.23 In return, accord-­ ing to unnamed political sources quoted by the Hong ­Kong-­based South China Morning Post, Taipei had agreed to supply substantial economic and technologi-­ cal assistance to Latvia.24 In late December 1991, MOFA – in order to strengthen diplomatic communication with the Baltic states – reorganized its Department of West Asian Affairs (亞西司). It no longer dealt with Baltic affairs, which were transferred to the newly formed Central and East European Section of the Department of European affairs, but focused exclusively on the CIS (first Section, 第一科) and Middle Eastern countries (second Section, 第二科).25 In ­mid-­January 1992, following in Jurkans’ footsteps, Pilv, the Estonian Min-­ ister of Foreign Economic Relations, visited Taipei with requests for economic assistance and cooperation. Pilv signalled Tallinn’s resolve to sign investment protection and double taxation agreements, but nothing concrete resulted from his meetings in Taipei.26 The scheduled visit by the Estonian premier did not follow. With Lithuania clearly avoiding Taiwan, Latvia remained the only Baltic state firmly committed to upgrading ties with the ROC. Vice Foreign Minister Chang once again travelled to Riga, where on 29 January 1992 he signed an agreement to exchange consulates ‘as soon as possible’, in what appeared to be a prelude towards full diplomatic relations.27 While enjoying an official status, the Taiwanese ­consulate-­general was not meant to have diplomatic status and was to

The Latvian model   81 bear the name Riga, rather than Latvia (The Republic of China Consulate General in Riga, Latvia).28 Ostensibly due to the lack of funds, the Latvians resolved not to establish a consulate in Taipei.

A short-lived friendship Neither Latvia nor Taiwan elaborated on the foundations of their newly estab-­ lished consular relations. It is unlikely, however, that Latvia risked a diplomatic feud with China just to learn from Taiwan’s developmental experience. Taipei offered something more tangible than an economic model: hard currency. Neither Riga nor Taipei made any official comments on the scale of Taiwanese aid expected in Latvia. Vice Foreign Minister Chang, while emphasizing that Taiwan ‘did not offer Latvia one penny this time’, did not forget to add, however, that the government would certainly consider providing foreign aid to its ‘good friend’.29 The Zili zaobao reported in late March 1992 that Riga had requested economic aid amounting to US$10 million even before its resumption of sovereignty in August 1991. Taiwan pledged to provide Latvia with a grant of US$60 million on condition that the Latvians establish official ties with the ROC. Both sides reportedly waited for confirmation of Latvia’s UN membership before initiating official relations.30 Although unreported, it is likely that consular ties carried a higher price tag than the ­ semi-­official relationship established in November 1991. Latvia, unlike Central European states, was a more affordable target for Taiwan’s economic diplomacy. Its GNI in 1991 was only US$8.2 billion, 22 times smaller than Taiwan’s. According to the UN data, Latvia’s economy con-­ tracted (in current US dollar terms) by 34 per cent in 1992 and a further 13 per cent in 1993. In 1993, Taiwanese GNI and GNI per capita were 47 and six times larger, respectively, than Latvia’s.31 Riga’s decision to seek Taiwanese economic assistance was as much rooted in both partners’ shared ­ anti-­communism, as in Latvia’s dire economic situation and Taipei’s capacity to meet Latvian needs. Taiwan was soon presented with an opportunity to display its readiness to provide timely help. When, in March 1992, Russian oil deliveries fell short of the agreed supplies and Latvia faced a serious energy crisis, Taipei provided Riga with US$10 million from IECDF to ease Latvia’s energy crunch. The speedily set-up first – and only – Latvian–Taiwanese joint venture, LatTai Ltd, handled the grant.32 To facilitate Taiwanese expected investments in Latvia, Latvian Prime Minister Ivars Godmanis – accompanied by ministers in charge of foreign, finance, construction, education and communication affairs, as well as the head of the Latvian central bank (altogether 26 officials) – made a ­five-­day official visit to the ROC in ­mid-­September 1992, the first prime-ministerial visit from Europe to the ROC in decades. The visit brought about an accord on invest-­ ment guarantees (the first of its kind between Taiwan and any ­ post-­communist country) and a preliminary agreement on aviation exchanges and tourist activi-­ ties.33 As a gesture of goodwill, Taipei donated medicines to Latvia worth US$200,000 and promised to partly finance the construction of a coal power station and to modernize Latvia’s existing hydroelectric power station.34 In

82   The Latvian model return, Godmanis invited the ROC premier and foreign minister to pay official visits to the Baltic state and hinted that solid economic cooperation might ulti-­ mately lead to diplomatic relations. At the end of the visit, Foreign Minister Janis Jurkans expected Latvian–Taiwanese diplomatic relations to follow quickly. In April 1993, Riga concluded an aviation accord with Taipei – the first of its kind between the ROC and a ­ post-­Soviet state – which provided for direct air links between the two capitals.35 Direct flights, however, proved economically infeasible and never took off. IECDF furnished training for 20 Latvian techni-­ cians in light industry and telecommunications. It also promised to provide a US$6 million soft loan for Riga International Airport (December 1993, repeated in April 1994) and US$10 million for the development of SMEs (June 1994). Both pledges, however, never materialized.36 There were no Taiwanese invest-­ ments in Latvian industry and no signs of forthcoming ­joint-­venture projects. In defence of Taipei, it should be noted that Latvia’s undeveloped commercial law and Latvian parliament’s (Saeima) ­non-­ratification of the agreement with Taiwan on investment protection could have contributed to the Taiwanese investors’ reluctance to risk money in Latvia, as much as the Taiwanese business people’s unfamiliarity with the Baltic state and the ROC government’s ­half-­hearted pro-­ motion of the Latvian market. MOFA left the management of relations with Latvia (as well as with Lithua-­ nia and Estonia) to its representative in Riga, Keenan K.H. Chang (張貴祥), whose major achievement was the initiation of cultural exchanges.37 He was, however, unsuccessful in lobbying for Taiwanese investments, while his efforts also made little impact on the paltry amount of Latvian–Taiwanese trade. Although bilateral trade more than doubled in 1993, from a low figure of US$6.2 million to US$16.06 million (see Table 4.1) – most of it in Taiwanese imports – in absolute numbers it was, nonetheless, hardly impressive and paled when com-­ pared to the rapid growth of commercial ties between Latvia and China. Analysts in Riga calculated that Latvian exports to the PRC could be as much as ten-times higher if diplomatic contacts with Beijing were resumed.38 Taipei’s standing in Latvia was further weakened by the departure of its allies from the Latvian domestic political scene. First, ­Taiwan-­friendly Foreign Minis-­ ter Jurkans, due to his moderate stance on the issue of giving citizenship to Rus-­ sians living in Latvia, was forced by the Saeima to resign in the spring of 1993. The second blow came when the ‘­pro-­Taiwanese’ Latvian Popular Front, led by Godmanis, did not pass the 5 per cent threshold and failed to gain even one seat in parliamentary elections in June 1993. Godmanis himself left politics, while the ­ centre-­right Latvian Way formed a government together with the Peasants’ Union. Unfortunately for Taipei, the members of the new government, except a few who accompanied Godmanis during his visit to Taiwan in September 1992, felt little affection for the ROC. Although Taiwanese diplomats managed to win the sympathy of a major opposition party, the ­right-­wing Latvian National Inde-­ pendence Movement (LNNK), their friendship proved of little immediate use. In ­mid-­July 1994, the coalition government of the Latvian Way and the Peasants’ Union collapsed, resulting in a brief period of political instability.

The Latvian model   83 Table 4.1  Taiwan’s trade with the Baltic states, 199222005 (in millions of US dollars)

Estonia

Latvia

Lithuania

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0.45 20.31 1.01 0.05 125 1.83 1.11 81 4.1 2.38 124 5.64 5.18 38 8.33 6.11 48 9.24 6.32 10 10.55 4.51 15 25.4 14.39 140.1 13.62 9.04 246.9 16.66 10.51 23.27 22.16 16.6 33.17 86.55 74.87 288.09 90.91 80.12 5.04

6.2 26.12 16.06 20 14.48 159 10.42 22.4 235 6.42 3.04 238 18.36 27.74 186 17.52 22.02 25 11.57 9.46 299 13.58 6.37 17 13.37 12.09 22.14 11.68 11.23 212.73 17.29 13.31 48.58 27.85 26.71 61.32 35.73 33.45 27.75 49.48 46.87 38.48

0.53 20.15 3.39 22.51 540 4.22 21.52 24 3.77 2.15 211 7.86 2.3 108 11.36 2.82 45 21.56 2.73 89 15.89 5 227 19.91 8.46 24.28 22.79 13.34 16.46 24.75 19.96 8.63 34.13 29.88 37.58 72.03 63.31 111.4 106.48 97.22 47.83

TT B TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B % TT B %

Source: Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao, July 2000 and June 2006. Notes. TT = total trade; B = trade balance; % = change in total trade over the previous year.

84   The Latvian model The Latvian politicians were most concerned with the general direction of economic policies and the withdrawal of the Russian army. The outgoing govern-­ ment – disillusioned with unfulfilled promises of economic assistance from Taiwan and facing an unfaltering recession and near 40 per cent inflation – found time, however, to reverse Riga’s policy on China. In the name of fulfilling its international obligations, on 28 July 1994, after a 29-month hiatus, visiting Latvian Deputy Prime Minister and State Reform Minister Maris Gailis signed a joint communiqué with PRC Vice-Premier and Foreign Minister Qian Qichen on the normalization of relations between the two countries. Riga terminated consu-­ lar relations with Taiwan and requested the closure of the Taiwanese ­consulate­general.39 By doing so, it prompted Taipei to ‘reconsider’ – in effect, to withdraw – the loans promised to Latvia.40 Taiwanese application of economic sanctions was certainly inconsequential for the Latvian economy given Taipei’s neglect of Latvia’s economic needs since Godmanis’s visit. In contrast, the DAC’s aid to Latvia averaged US$40 million annually in 1992–1994, which – in terms of its size relative to Latvian GNI – was more substantial than aid provided to other ­post-­communist nations.41 The resumption of ­Sino-­Latvian relations did not come as a surprise to Taipei, as Riga had formally notified the Taiwanese side of its scheduled ­high-­level visit to Beijing and the possible outcome of such a visit. MOFA hoped the Latvian government that emerged from the political crisis would take a ­pro-­Taiwan stand and resume consular ties with Taipei. These hopes, however, proved futile, as the ‘­pro-­Taiwan’ LNNK failed to form a minority government and Latvian Way’s Maris Gailis – the same politician who signed the ­ Sino-­Latvian communiqué normalizing Latvia’s relations with China – constructed Latvia’s new coalition government, which was finally approved by the Latvian parliament in ­ mid­September 1994.

Down but not out The ‘loss’ of Latvia was mourned in Taiwan as it signified not only a defeat of ‘flexible diplomacy’ in the Baltic region, but also heralded the bankruptcy of the ‘Latvian model’. If Taiwan hoped some other ­post-­communist states in Europe would follow the Latvian example and establish parallel official ties with both parts of the divided China, the ­ Sino-­Latvian joint communiqué forced it to abandon such expectations. Disheartened but not resigned, Taipei embarked on intense lobbying, directed at Latvia’s new opposition force, the National Bloc, formed in late September 1994. Its efforts bore fast results. A month after the Bloc’s formation, its Chairman and Associate Parliamentary Speaker (from the LNNK faction), Andris Krastins, led the Bloc’s delegation on an all-expensespaid visit to Taipei. Krastins openly supported the restoration of consular links with the ROC and called for Taiwanese investors to explore Latvia’s markets.42 Gailis’s government, however, was unimpressed. It stuck to the new China course, which climaxed in December 1994 when Latvian President Guntis Ulmanis paid the ­first-­ever Latvian state visit to Beijing.

The Latvian model   85 Under Gailis’s leadership, Riga made no effort to resume dialogue with Taipei, although it did voice indirect support for Taiwan’s UN bid from 1994. After the parliamentary elections to the Saeima in October 1995, the parliamen-­ tarians from the National Bloc formed a ­pro-­Taiwan group and pressed Gailis to reconsider Latvia’s Taiwan policy.43 Once the new, ­ six-­party coalition govern-­ ment, led by Andris Skele and including the National Bloc factions, was formed, Riga’s communication with Taipei improved, but the new authorities were reluc-­ tant to return to consular relations. After two years of talks, the Taiwanese finally managed to conclude negotia-­ tions reopening their representative office in Riga, the Taipei Mission in the Republic of Latvia, which focused on economic and cultural affairs, but did not enjoy the status of a diplomatic representation (although the Taiwanese staff did enjoy selected diplomatic privileges).44 Bilateral foreign trade recovered, but sur-­ passed ­Sino-­Latvian trade only for a brief moment (see Tables 3.1 and 3.2). The Latvian conservative government attempted to engineer a policy that was friendly to both sides of the divided China. On the one hand, it welcomed Taiwanese trade and parliamentarian delegations. In November 1996, Economics Minister Guntars Krasts (from the conservative Fatherland party) even pledged his per-­ sonal assistance to any Taiwanese investors interested in exploring Latvia’s market.45 In late April 1997, Latvian President Guntis Ulmanis, in an interview with the Lianhe bao, confirmed Riga’s desire to strengthen trade links with Taiwan, which he described as a ‘reliable trade partner’. At the same time, however, Ulmanis acknowledged that both sides continued to trade indirectly, which inevitably hindered bilateral economic cooperation.46 The Latvian Academy of Sciences was allowed to sign a scientific and technological agree-­ ment with the ROC’s National Science Council in March 1997.47 Riga continued its indirect support for Taiwan’s UN bid at the General Assembly debate sessions. It also did not shy away from ­ higher-­level official communication.48 ­ Sister-­city agreements were reached in 1998 between Balvi and Taoyuan and in 2001 between Riga and Taipei. On the other hand, however, Latvia did not ratify the 1992 investment protection guarantee. In February 2004, the Latvian parliament annulled the treaty (presumably in order to pave the way for a China–Latvia investment pro-­ tection agreement). Riga did not consider it necessary to grant Taiwanese visitors preferential visa treatment. The ROC’s ­would-­be investors and legislators some-­ times had to wait three to four hours before obtaining entry permits.49 The Latvian trade office in Taipei – due to the lack of funds and qualified personnel – never opened. Finally, Riga repeatedly assured Beijing of its sincerity on the question of ‘one China’, while intensifying cooperation with the PRC. Shortly after taking up the Presidential Office, Latvia’s President Vaira ­Vike-­Freiberga, for example, reiterated her support for China’s policy on the Taiwan issue (while stressing Riga’s desire to strengthen relations with Taiwan), while new Foreign Minister Indulis Berzins pledged not to change Latvia’s policy on Taiwan.50 Given Taipei’s limited influence over overseas investments, Riga’s ­ pro-­China policy did not put a dampener on investment interest from Taiwan, although this

86   The Latvian model is how the Taiwanese government would have certainly preferred to interpret its consequences.51 Latvia’s policy on Taiwan, designed to maintain Taipei’s friendship while advancing relations with Beijing, was matched by Taipei’s disinterest in pursuing relations with Latvia as long as the latter refused to upgrade bilateral ties to an official (presumably consular) level. The ROC office in Riga repeatedly urged Taipei – to no avail – to establish an ‘ROC–Latvian Development Fund’ and post an economic and trade relations official to Riga.52 The ROC government did nothing to promote Latvia to Taiwanese investors. It offered neither loans nor developmental assistance. Latvians did not enjoy any preferential visa treatment, such as that granted to the Czechs, Hungarians, Poles and, most recently, Slovaks. In 2005, Taipei donated personal computers to Latvia, valued at US$10,000, by all standards a gift of negligible significance. And yet, the Latvian legislature Saeima appeared very sympathetic to Taiwan. In March 1996, it condemned mainland China for its war games and missile tests in waters near Taiwan. Four months later, it welcomed a delegation of 11 ROC parliamentarians.53 In late April 1999, the Saeima foreign commission even criti-­ cized the Latvian foreign ministry for being overly cautious towards Taiwan and urged the ministry to evaluate Latvia’s potential advantages and losses from establishing closer ties with Taiwan.54 During the ROC’s presidential elections in 2000, Latvian legislators overwhelmingly voted in favour of settling the question of Taiwan in a peaceful manner.55 In 2001, the Latvian parliamentary group for friendship with China (which comprised parliamentarians from all parties repre-­ sented in the Saeima) requested the visiting Taiwanese Vice Foreign Minister Chiou ­ Jong-­Nan (邱榮男) to help Riga select an appropriate candidate for the office of Latvian honorary consul in Taipei.56

Vilnius’s late awakening For five years, Latvia dominated Taiwan’s Baltic policy. However, this was not Taipei’s original plan. As early as 1990, Estonia and Lithuania also expressed interest in closer economic ties with the wealthy Taiwan. In Lithuania, this early interest was nonetheless soon frustrated by changes in domestic politics. The ‘­Taiwan-­friendly’ Sajudis National Movement lost Lithuania’s first ­ post-­Soviet democratic elections in October 1992 to the ­ ex-­communists of the Lithuanian Democratic Labour Party. The former communists sealed their victory in Febru-­ ary 1993 when their leader, Algirdas Brazauskas, was elected President. The reformed communists felt little sympathy for Taiwan’s struggle with communist China and steered clear of political communication with Taipei. In November 1993, Brazauskas led an official delegation to China. In the communiqué issued at the end of his visit, Lithuania ­re-­stated its adherence to the ‘one China’ princi-­ ple.57 In the meantime, the Taiwanese continued their ­ low-­key lobbying among the leadership of Sajudis. The new ­ right-­wing political party, the Homeland Union–Lithuanian Conservatives – formed in May 1993 by the Sajudis’s Vytau-­ tas Landsbergis (former President) and Gediminas Vagnorius (former Prime

The Latvian model   87 Minister and a visitor to Taiwan in August 1992) – emerged as Taiwan’s new ally in Lithuania. Disillusioned with the ­ ex-­communists’ economic performance, the Lithua-­ nians turned to Landsbergis’s conservatives in the October 1996 parliamentary elections. The Homeland Union’s poll victory paved the way for Taipei’s ­ long­desired rapprochement with Vilnius.58 Three weeks after the elections to Lithua-­ nia’s parliament (Seimas), ROC Legislative Yuan Vice-Chairman, Wang ­Jin-­pyng, headed a delegation to Lithuania. There, he held talks with the Homeland Union’s Executive Board Chairman, Vagnorius (who subsequently became Lithuania’s new Prime Minister), and other parliamentarian leaders, including the Seimas’s Vice Chairman and the leader of the Social Democratic Party, Aloyzas Sakalas.59 The Homeland Union’s government, however, did not reverse it’s predecessor’s China policy. Landsbergis – now Chairman of the Seimas – described Vilnius’s policy towards the PRC as ‘positive’, terming Lithuania’s relations with Beijing as a ‘priority’.60 The conservatives, nevertheless, thought it unwise to focus exclusively on China and exclude the possibility of Taiwanese investments. Taipei, for its part, tried to convince the Lithuanian leadership that parts of its vast liquid capital could be invested in Lithuania provided that certain conditions were met.61 Invited in May 1997 by Lithuanian Minister for European Affairs Laima Andrikene, ROC Vice Minister of Foreign Affairs Chen ­Chien-­jen (程建人) was reassured that the necessary conditions would be fulfilled. These included the agreement on double taxation and an accord on mutual encourage-­ ment and protection of investments (all to be signed in September 1997).62 Such agreements, however, did not come through, while the accord on accelerating investment cooperation (August 1997) was a poor substitute. The two accords that Vilnius eventually reached with Taipei concerned cooperation on technologi-­ cal exchanges (March 1998) and ­ sister-­city ties between the two capitals (May 1998), rather than commercial relations. No longer expecting any breakthrough in relations with Lithuania, ROC MOFA made it clear to the visiting Minister Andrikene that it had no plans to set up an office in Vilnius, unless such an office was given a higher rank than a regular trade mission. The Riga office served all Baltic states and Taipei saw no urgent need to establish a trade office in Lithuania. This was despite Vilnius’s apparent readiness to reach an agreement on bilateral offices as early as March 1998. The absence of an ROC trade bureau (and with it, a shortage of reliable, ­up-­to-date economic information about Lithuania), as well as the ROC govern-­ ment’s unwillingness to offer guarantees for investments in the Baltic states, con-­ tributed to the Taiwanese business community’s reluctance to invest in Lithuania. Sporadic trade missions failed to entice them. Despite Prime Minister Vagno-­ rius’s assurances of preferential tax incentives for prospective investors in Lithua-­ nia’s free economic zones and the simplification of visa procedures for Taiwanese visitors (effective from January 2001), Taiwanese entrepreneurs preferred to engage in bilateral trade (mostly indirectly), which did not commit them to any ­long-­term financial involvement in the Baltic state. By 1998, their activities had transformed Lithuania into Taiwan’s largest trading partner in the Baltic region,

88   The Latvian model with Taiwan registering a consistent trade surplus. In absolute numbers, never-­ theless, this trade was barely significant for either side. During the Chen ­Shui­bian period, Taiwanese relations with Lithuania stagnated, despite Seimas’s establishment of the Taiwan friendship group in 2004. Taipei’s donation of per-­ sonal computers (valued at US$10,000) two years later was the only proof that MOFA did not forget about Lithuania’s existence.

China’s carrots and sticks The Baltic region ranked low on communist China’s list of strategic priorities. Even though Mao Zedong (毛澤東), at the height of the ­Sino-­Soviet ideological dispute in 1963, reportedly questioned Estonia’s inclusion within the Soviet Union, Beijing did not support the ­pro-­independence forces in the Baltic region. In the late 1980s, when the Balts awakened to the possibility of regaining sover-­ eignty, the PRC’s sympathy was firmly on the Soviet side. Fearful that the Baltic struggle for independence might spur on similar movements among ethnic minorities in China, the Chinese leadership backed Gorbachev’s efforts to ­ re­establish central rule. The Baltic republics’ independence, recognized by Moscow on 6 September 1991, came as a surprise and an inconvenience, to say the least, for China’s diplomacy and domestic politics. Aware of the Taiwanese efforts to win new diplomatic allies in the Baltic region, Beijing had no choice but to expe-­ dite, on 7 September 1991, its diplomatic recognition of the newly independent Baltic states, reiterating the tired formula of ­ non-­interference in their internal affairs, respecting the choice of the peoples in the Baltic region, and pressurizing the Balts to claim adherence to a ‘one China’ policy. The problem lay in the fact that Beijing had insufficient contacts with the new – largely ­ anti-­communist – ruling elites in the region. Its efforts to win their friendship were frustrated by the harrowing scenes of the Tiananmen massacre, still fresh in the memories of the region’s leaders and peoples, and by China’s previous support for Moscow’s centralizing policies. Domestically, the Chinese leadership could hardly be seen to welcome the Balts’ independence as it set a dangerous example for dissatisfied ­non-­Han ethnic groups in China’s northwest and southwest. The main evening news on the Chinese Central Television downplayed Beijing’s recognition of the Baltic states, relegating it to the end of the broadcast and devoting only one minute of airtime to the subject.63 The Renmin ribao’s (人民日報) short para-­ graph on China’s recognition of the Baltic states was published three days after the fact and buried on page 4.64 Although China did not consider relations with the Baltic states as essential for its diplomatic or trade strategy in the ­post-­Soviet region, it found cordial ties with the Baltic region necessary to obstruct Taiwan’s diplomatic activities there. Beijing held two trump cards, namely its veto power in the UN Security Council and its vast market, which could potentially absorb some of the Baltic exports. These advantages were more than sufficient to facilitate the Baltic states’ willingness to establish official relations with China, which precluded the possibility of diplomatic ties with Taiwan. These political and economic lures

The Latvian model   89 seemed, however, to be insufficient to impede the Balts’ communication with Taipei. The Latvian diplomatic challenge confirmed Beijing’s worst nightmare: the successor states of the Soviet Union turning away from China towards Taiwan. Beijing realized that if it cut diplomatic ties with Latvia, Riga would most likely upgrade its relations with Taiwan to the diplomatic level. If it ignored the Tai-­ wanese–Latvian consular agreement, other states might feel encouraged to repli-­ cate the ‘Latvian model’. China’s ability to overturn Riga’s policy on Taiwan had, therefore, far-reaching consequences for Taiwan’s future advances in the Baltic region, if not the entire ­post-­Soviet geopolitical space. Eventually, Beijing settled on neither ignoring nor ­ over-­reacting to Latvia’s Taiwan policy. However, in order to make sure that the Latvian example would not find followers, China’s Foreign Ministry set up a special task force (特別專案小組) – headed by the chief of the ministry’s department of the Soviet Union and Eastern Europe as well as the Chinese ambassador to Russia – with the sole purpose of thwarting the establishment of official or ­ semi-­official ties between the ROC and the remaining former Soviet republics.65 It also intensified its vigilance over Taiwan’s activities in other ­post-­communist countries, including Russia. Immediately after the Latvian–Taiwanese consular agreement became public in January 1992, Beijing lodged a protest in Riga, expressing hope that the Latvian side ‘would reverse its wrong doings on the question of Taiwan’, and postponed the accreditation of its ambassador to Latvia. The Chinese Foreign Ministry spokesman appeared so ­ self-­righteously incensed by Riga’s policy on Taiwan that he confused the pledges made by Latvia and Estonia when remind-­ ing the former of the wording contained in the ­Sino-­Latvia joint communiqué of 13 September 1991. It was Estonia that promised not to establish official and formal relations with Taiwan in any form, whereas Latvia merely pledged not to establish official relations with Taipei.66 While the Taiwanese were painfully aware of the difference between the consular and diplomatic ties, Beijing refused to see the difference and claimed that Latvia’s consular ties with Taiwan amounted to parallel official relations with both parts of a divided China that violated the ‘one China’ principle. Going beyond verbal warnings, Beijing can-­ celled the dispatch of its ambassador to Latvia, while Renmin ribao publicized the PRC ambassador’s arrival in Estonia.67 Following the opening of the ROC ­consulate-­general in Riga in late February 1992, China closed its embassy in Latvia (25 February), suspending political contacts, but did not sever diplomatic relations.68 It should be noted that such a resolution had its precedents. When London recognized the PRC in 1950, its consulate in the ROC’s county of Tamshui (淡水) – first set up in the ­mid-­nineteenth century and ­re-­established in 1945 – continued operations until 1972, when it was finally dissolved as part of the agreement to upgrade relations with Beijing to the ambassadorial level. Simi-­ larly, the Netherlands kept a consulate in Taiwan from 1954 until 1972, while maintaining diplomatic ties with China at the chargé d’affaires level. More recently, Beijing maintained its embassy in the Nigerian capital Lagos, while Taipei established a consulate in a provincial city in 1993.

90   The Latvian model Beijing continued to wield a stick as it embarked on the strategy of isolating Riga in the context of its relations with the Baltic states. When Chinese Vice Foreign Minister Tian Zengpei and Foreign Minister Qian Qichen travelled to the Baltic region in 1993 and 1994 respectively, they not only avoided Riga, but also utilized their trips to remind Latvia of the ‘violated accords on the establishment of ­ Sino-­Latvian ties’.69 Meanwhile, Beijing handed out carrots to its Baltic friends, expanding relations with Estonia and Lithuania, and receiving the Presi-­ dents of both countries on official visits to the PRC. Beijing reiterated its support for Estonia’s demand for the withdrawal of ­ ex-­Soviet troops and sold Tallinn weapons (mostly Kalashnikov rifles) despite the United States’ embargo on arms sales to the Baltic states.70 It also entered into a series of economic agreements with both states, which laid the foundations of China’s expanding trade relations with Estonia and Lithuania and its potential investments in the two countries. During the first prime ministerial visit from the Baltic states in ­mid-­May 1992, Estonian Prime Minister Tiit Vahi left China with a US$6 million loan for the purchase of Chinese consumer goods, as well as food and consumer products worth about US$1 million.71 Lithuania was also offered US$6 million in loans to purchase Chinese goods, when Lithuanian President Brazauskas visited Beijing in November 1993. While isolating Latvia diplomatically, Beijing proffered a small incentive in the form of expansion of ­Sino-­Latvian trade, which until 1995 consistently sur-­ passed the PRC’s trade with the remaining Baltic states. China’s purpose in doing so was evident: to demonstrate to the Latvian leadership the benefits of reversing its decision on the Taiwan issue. Having received little of the promised ­ ROC­sponsored El Dorado, Riga reversed its decision on consular ties with Taiwan in late July 1994. Gailis and Qian Qichen, in a joint statement issued in Beijing, committed themselves to upholding the agreement of 12 September 1991 estab-­ lishing ties, and Latvia pledged ‘not to form an official relationship or maintain official contacts with Taiwan’.72 Qian reiterated Beijing’s support for Latvia’s sovereignty and demand for the Russian troops’ withdrawal, as well as sketching some vague plans for making Latvia a transit point for Chinese goods to Belarus, Russia and Northern Europe. He also declared that China would take active steps towards expanding economic ties with Latvia.73 In order to catch up with the rest of the Baltic states, Latvian President Ulmanis rushed to Beijing in December 1994. Predictably, his Chinese counter-­ part Jiang Zemin seized the opportunity to praise Riga’s decision to end ties with Taiwan and cemented the reconstituted friendship with promises of oil deliver-­ ies.74 An improvement in ­Sino-­Latvian political relations, however, did not trans-­ late into the expected ten-fold increase in bilateral trade; quite the opposite, in fact. Starting in 1995, ­Sino-­Latvian trade began declining, and hit rock bottom in 1997, with a barely significant figure of US$7 million. It recovered in 1998, due to the rise in Chinese exports, rather than – as Riga hoped – Chinese imports from Latvia.

The Latvian model   91

Explaining ­Sino-­Baltic friendship Following its success in Latvia, Beijing continued its scrutiny of Taiwanese activities in the Baltic region. Its primary goal became the impediment of official communication between Baltic and Taiwanese governmental officials. Beijing made sure that all Taiwanese ­government-­level visits would be rare and termed ‘unofficial’. The Chinese veto over Baltic ­ government-­level contacts with Tai-­ wanese visitors was so effective that even the outgoing Lithuanian Prime Minis-­ ter Mindaugas Laurinas Stankevicius – scheduled to meet ROC Legislative Yuan Vice Chairman Wang in November 1996 – called the meeting off following Chinese protests.75 While enjoying the unqualified support of ­ post-­communist political forces in the Baltic states (­ex-­communists or reformed communists) who vehemently opposed official ties with Taiwan, Beijing also made an effort to befriend the centre and ­right-­of-centre parties in order to influence their stand on the question of Taiwan. Each parliament in the Baltic region established a friend-­ ship group with China, which was reciprocated with a corresponding group from the National People’s Congress in Beijing. After Latvia’s return to China’s camp, the Taiwan issue was no longer a sig-­ nificant irritant in ­ Sino-­Baltic relations. Beijing did not object to the Baltic states’ largely symbolic economic ties with the island, while the Baltic govern-­ ments pledged adherence to the ‘one China’ principle. Such pledges were loudly repeated during PRC President Jiang Zemin’s visits to Latvia, Estonia and Lithuania in June 2002, which reflected the strategic importance of the Baltic region to China’s policy of isolating Taiwan internationally. During Jiang’s visit, Latvian President ­ Vike-­Freiberga reiterated Riga’s ‘one China’ policy and her country’s support for an expeditious solution to the Taiwan question (while failing to specify Riga’s preference for a peaceful solution).76 Similarly, Estonian Prime Minister Siim Kallas and Lithuanian Seimas Chairman Arturas Paulaus-­ kas restated their respective ‘one China’ policies.77 Notably, incidents in Lithua-­ nia involving two legislators displaying the Tibetan flag when Jiang arrived in the Seimas and public protests against China’s policy on Tibet (suppressed by the government), together with the Dalai Lama’s visit to the Baltic region in June 2001, demonstrated that the Baltic political elites and public were more con-­ cerned with the fate of Tibet than with Taiwan’s conflict with China. There is no simple explanation for the Baltic states’ differentiated response to China and the ­Sino-­Taiwanese conflict. Factors that affected their China policies included: 1 2 3 4 5

the political orientation of the governing elites (­ex-­communists siding with China, while the conservatives inclined towards cooperation with Taiwan); the degree of trust in Taiwanese aid commitments; the scale of the ROC’s actual aid disbursement; recognition of China’s political and economic clout in the international arena; China’s potential influence over Russia’s policies towards the Baltic states;

92   The Latvian model 6 7

the European Union’s adherence to the ‘one China’ principle; and concerns over China’s opposition against the Baltic states’ membership in NATO.

From the onset of their independence, all Baltic states were aware of China’s power to veto their UN membership. For that reason alone, they welcomed Bei-­ jing’s diplomatic recognition. However, not all foreign policy-makers in the Baltic region immediately appreciated the sensitivity of the Taiwan issue for their Chinese counterparts and the economic and political significance of China in the international arena. In addition, not all of them sought China’s support for inter-­ national activities or demands for the withdrawal of Russian troops. After their initial communication with Taiwan in 1991–1992, Lithuania and particularly Estonia chose closer ties with China over Taiwan. ­ Pendulum-­like swings, from right to left and ­ vice-­versa, in domestic politics notwithstanding, the Estonian governments appeared most consistent in their adherence to the ‘one China’ policy and avoided any official contacts with Taipei.78 Estonian Prime Minister Tiit Vahi became the first ­ high-­ranking official from the Baltic states to visit China in May 1992, where he met Premier Li Peng and President Yang Shangkun (楊尚昆). Beijing rewarded Tallinn’s loyalty with soft loans, arms sales, investments and by articulating its support for Estonian membership in the EU and NATO. It is noteworthy, however, that both arms sales and invest-­ ments were pitiful and China’s stand on the status of Russian troops in the Baltic region probably played no role in the Kremlin’s calculations.79 Similarly, bilateral trade was barely significant for either side, although it had increased dramati-­ cally by 2000 (mostly in Chinese exports). By 2002, Estonia became China’s biggest trading partner in the Baltic region, while China became Estonia’s fifthbiggest trading partner (rising from thirteenth position in 2000).80 Tallinn hoped to become Beijing’s preferred transit route for goods from China to Europe even though, in ­mid-­2002, only 1 per cent of Chinese exports or imports were trans-­ ported via Estonia. In the early 1990s, Lithuania’s ­pro-­Beijing stance on the question of Taiwan could be largely attributed to the ­ex-­communists’ rise to power in 1992. Not until 1996 did parliamentary elections bring conservatives back to government and ­re­ignite Vilnius’s interest in Taiwan. The new government (and its successors), however, continued their predecessors’ ‘one China’ policy. Most recently, Vilnius hoped to gain Beijing’s support for its bid for ­non-­permanent membership of the UN Security Council and the UN Economic and Social Council, and competed against other Baltic states to become China’s trading gateway to Europe. However, as far as bilateral trade and Chinese investments were concerned, Lithuania gained little, if anything, from the PRC. The Lithuanians consistently registered a trade deficit with China. By 2002, Chinese investments in Lithuania were estimated at a paltry US$12.6 million.81 It is doubtful that the Chinese embassy’s donation of valuable printed works, audio and video recordings to the Lithuanian National Library in late 2003 compensated for Vilnius’s disappoint-­ ment over the scale of economic cooperation with the PRC.

The Latvian model   93 Latvia took the longest to appreciate China’s political and economic clout, but once it did, Riga made a concerted effort to show its reverence to Beijing. In a ­mid-­2002 meeting with President Jiang, Latvian Prime Minister Andris Berzins termed Latvia’s relations with the PRC as a ‘­high-­level priority’.82 As a result of this reprioritizing, by late 2000, Latvia emerged as the only Baltic state that not only refrained from ­ high-­level political communication with Taipei, but also ceased its criticism of China on the issues of human rights and Tibet.83 Latvia was correspondingly rewarded. It secured Beijing’s blessing for its membership in the EU and NATO and emerged as a front runner in the Baltic states’ ‘beauty contest’ for selection of the Baltic transit route for Chinese trade to Europe (the Asia–Europe Transcontinental Bridge or Asia–Europe silk road).84 China became Latvia’s largest trading partner in Asia. Beijing also paid for the Latvian Foreign Ministry and the Seima’s computer equipment and stationery. Sporadic critical voices of excessive emphasis on relations with China failed to derail official friendship with Beijing. The Chairman of the Lithuanian Seimas, Vytautas Landsbergis, for example, described Vilnius’s relations with Beijing as a priority.85 Estonian Foreign Minister Toomas Ilves considered a rela-­ tionship with China as an ‘investment into the future’, while his Latvian counter-­ part Indulis Berzins thought of China as ‘the most important player for us [in Asia] because [of China’s] good relations with [. . .] EU countries’.86 Acting upon such beliefs, the Baltic states engaged in an exchange of ­ high-­level state visits with China: they set up their first East Asian embassies in Beijing, and concluded economic accords, which paved the way for potential mutual investments.87 While sharing similar diplomatic strategies ­ vis-­à-vis Beijing, they remain, however, competitors for China’s political and economic favours.

Conclusion In the early stages of Taiwan’s emerging relationship with the Baltic states, Taipei quickly found friendly political forces that championed its diplomatic cause in the region. However, its limited financial and human resources, coupled with Estonia and Lithuania’s doubts regarding the usefulness of official relations with the ROC, resulted in Taipei focusing on Latvia as the litmus test of the effective-­ ness of its ‘flexible diplomacy’ in the Baltic region. In the wake of its initial success, when Riga agreed to consular relations with Taiwan in January 1992, Taipei behaved as if the treaty was Latvia’s final word on the question of rela-­ tions with Taiwan and China. The ROC’s negligible economic assistance and symbolic trade with Latvia was insufficient compensation for the Chinese diplo-­ matic ostracism of Riga and stalled economic cooperation with the PRC. When Taiwanese dollars stopped talking, Taipei’s ­anti-­communist and democratic cre-­ dentials were dwarfed by Beijing’s international influence and potent economy. Having failed to gain diplomatic recognition, Taipei settled for ‘substantive’ – rather than official – relations with the Baltic states, which translated into eco-­ nomic, cultural, scientific and technological ties, with some elements of political consultation. It opened the Baltic region for its investors and its trade with the

94   The Latvian model Baltic states developed slowly but persistently. Latvian and Lithuanian ruling political parties and their opposing numbers strongly supported unofficial rela-­ tions with Taiwan. The exchanges of parliamentarian and ­minister-­level visits – which took place despite Beijing’s protests – as well as past Latvian support at the UN General Assembly were all conducive to the ROC’s strategy of breaking free from the ­ PRC-­imposed diplomatic isolation and raising the levels of the international recognition. The Baltic states’ policies towards the ROC were motivated primarily by their need to attract foreign investments and economic assistance, rather than by their sympathy for Taipei’s struggle against the China threat. Contrary to Taiwanese promises of generous financial assistance and forthcoming investments, however, the ‘golden rain’ never fell. The few drops that did fall benefited an unknown number of ­ well-­placed officials, rather than wider economies of the region. To some degree, the Balts have themselves to blame, as they avoided signing invest-­ ment guarantees and visa agreements with Taiwan, and did not set up trade offices in Taipei. For a brief period, Latvia – thanks to its more daring Taiwan policy – remained Taiwan’s closest partner in the region, even following the sus-­ pension of consular ties. As a result, it featured on China’s list of suspect coun-­ tries that sympathized with Taiwan’s struggle for international recognition. At the other end of the spectrum, Estonia chose to wholeheartedly support the ‘one China’ principle in a calculated move to gain Beijing’s support for its foreignpolicy goals. Lithuania trod carefully between the ‘one China’ principle and wooing Taiwanese businesses. The ROC’s diplomatic offensive in the Baltic region heightened Beijing’s interest in an area that would otherwise have been of negligible geopolitical sig-­ nificance to China. The Baltic states received China’s explicit support for their membership in NATO, depriving Russia of a major potential ally against NATO expansion. Their cautious foreign policy on Taiwan – similar to the one adopted by Western Europe – is a return to a realpolitik, where wishful thinking has no place. With Estonia, Latvia and Lithuania’s entry into the EU in 2004, Taiwan is unlikely to score a diplomatic victory in the Baltic region for two reasons: first, because the Balts will not depart from the mainstream of European foreign policy towards China; and second, rapid development in the decade since the Baltic states abandoned the planned economy has put them in a stronger eco-­ nomic position, where the lure of Taiwan’s economic carrot is insufficient to compete with the economic and geopolitical benefits of friendly relations with China.

5 The Russian offensive

The fall of communism in Central Europe raised premature hopes in Taipei that diplomatic ties could be established with former communist states. It was, however, the ­break-­up of the Soviet Union in December 1991 that opened up the biggest opportunity for Taiwan’s economic diplomacy. As the Baltic states’ daring policy on Taiwan in the early 1990s demonstrated, not all ­ post-­Soviet states felt bound by the ‘traditional friendship’ with the PRC, and their urgent economic needs predisposed them favourably towards Taipei’s promises of eco-­ nomic assistance in exchange for some sort of official relationship. Among 15 states that emerged from the ruins of the USSR, Russia was the biggest, most populous, the richest in natural resources and – due to its military power and per-­ manent membership in the UN Security Council – the state that possessed the greatest influence in international affairs. Had Russia developed ‘substantive’ ties with Taiwan, this could have had a positive effect on the dynamics of ­crossStrait relations in the ROC’s favour and aided Taipei’s efforts to ­ re-­enter the international community. Official relations between Russia and Taiwan would have been a major diplomatic coup, crowning Taipei’s ­ decades-­long efforts to escape ­ Beijing-­imposed international isolation. China was understandably anxious to obstruct development of relations in any form between Moscow and Taipei. As a result, a pattern of triangular relationships emerged, with China and Taiwan locked in positions of enmity, while Moscow’s pivotal position allowed it to court the two Chinas and reap the benefits.

Early Yeltsin The military coup in August and the USSR’s dissolution in December 1991 con-­ vinced the Taiwanese leadership that the time was ripe to foster a relationship with Moscow beyond that of economic ­cooperation. Taipei eyed ­quasi-­diplomatic relations with the Russian Federation, the sort of ties it enjoyed with another world power, the United States.1 Taipei had good reason to believe in the success of its venture. For one thing, Russian leader Boris Yeltsin looked at the PRC with suspicion as Beijing welcomed the abortive coup. The Russian democrats believed that Chinese communism was doomed to collapse and extended their support to the democratic China in Taiwan. As a result, Taiwanese envoys gained

96   The Russian offensive access to ­ high-­ranking politicians, including Yury V. Petrov Director of the Russian Federation Presidential Office. The publicity surrounding Taiwan’s eco-­ nomic miracle and – as reported by the Russian media – its US$85 billion in foreign reserves inflated Moscow’s expectations for Taiwanese investments in Russia, as well as the hopes for contracts for Russian companies.2 Furthermore, generosity towards ­ well-­placed individual Russians created in the Kremlin an influential Taiwan lobby.3 As a result of these developments, Moscow consented to the opening of the CETRA office in late 1991 (see Table 5.1). The office became Taipei’s essential springboard in Russia, from which vigorous efforts were launched to influence the Kremlin and the Russian public. These efforts and Russian democrats’ ­ pro-­Taiwan sympathies notwithstanding, geopolitical considerations prevailed in Moscow, as the Russians welcomed Beijing’s diplo-­ matic recognition of 27 December 1991. Making a virtue out of necessity, MOFA announced that recognizing Russia was not its top priority. Instead, Taipei would focus on pursuing ‘substantive’ relations with individual republics. The most prominent of these would include Russia, Ukraine and Belarus. ROC Foreign Minister Chien Fu openly admitted, in an interview with the Izvestia in April 1992, that Taipei decided to concentrate on these three republics for their alleged resistance to China’s pressure.4 In late January 1992, ROC Vice Foreign Minister John Chang paid an unoffi-­ cial visit to Russia. Invited by the Soviet ‘ItI’ company, Chang formally acted in his capacity as the Vice Chairman of the Chinese National Federation of Indus-­ tries (全國工業總會). Yet, his objective was to win over the Russians with grain aid (which the Russians themselves requested), rather than helping ‘ItI’ source a Taiwanese partner for a joint venture.5 In Moscow, Chang announced a donation of 100,000 tonnes of rice, worth US$20 million, which China opposed and for which the Russians publicly thanked the ROC government.6 Apart from donating rice, Chang also conducted talks with Oleg Ivanovich Lobov, who was at the time Russia’s third most influential politician, a former vice premier of the Russian Republic before the collapse of the USSR, a head of Russia’s Experts Council and Yeltsin’s close associate since 1972.7 Resulting from these talks, Chang and Lobov signed in Moscow on 16 April 1992 the Protocol ‘On the Establishment of the Taipei–Moscow Coordination Commission and Moscow– Taipei Coordination Commission’.8 Shortly afterwards a secret (presumably intergovernmental) agreement between Moscow and Taipei, which reaffirmed the terms agreed upon in Moscow, was signed in Paris. (The Taiwanese diplomats considers the Paris agreement as the foundation of relations with Russia.) Neither the talks nor the decision to sign any agreement were coordinated with Beijing. Through his personal ties with Yeltsin and the head of the presidential administration, Yurii Petrov (another of Yeltsin’s close associates from the 1970s), Lobov persuaded Yeltsin to approve the agreement with Taiwan on 2 September.9 The agreement was a triumph for ROC diplomacy as it defined the institu-­ tional framework for a ­ long-­term Russian–Taiwanese interaction (regarded by the ROC press as effectively ‘­semi-­official relations’).10 It created two ­non-­governmental institutions, the Moscow–Taipei Economic and Cultural

12 July 1993

MOFA

Representative Office in Taipei for the 15 December 1996 Russian Foreign Moscow–Taipei Economic and Cultural Ministry Coordination Commission

Representative Office in Moscow for the Taipei–Moscow Economic and Cultural Coordination Commission

16 December 1991 CETRA

Taipei World Trade Centre Co., Ltd., Moscow Branch Office

Establishing institution

Date established

Name

Table 5.1  Taiwanese offices in Russia and the Russian office in Taiwan

Yes (visas issued ‘in Riga’)

No

Consular functions

A career diplomat, who formally Yes (visas issued in the name retires for the period of his of the Russian Consulate in appointment/diplomats and Osaka) technical personnel

A career diplomat/diplomats

Trade officials

Head/staff

98   The Russian offensive Coordination Commission (MTC) and the Taipei–Moscow Economic and Cul-­ tural Coordination Commission (TMC), both entitled to have two branch offices and entrusted with the task of formulating and overseeing policies affecting Russian–Taiwanese relations, as well as with consular functions. The TMC and MTC were effectively the equivalent of the Coordination Council for North American Affairs and the American Institute in Taiwan, two nominally ­ non­governmental bodies overseeing Taiwanese–US relations. The creation of the TMC and MTC neutralized the Russian Foreign Ministry’s influence on Russia’s relations with Taiwan and was seen by some observers as the beginning of ­government-­to-government relations between Taipei and Moscow.11 Taipei’s diplomatic success came relatively cheaply. Discounting the rice donation, Taipei rewarded certain Russian individuals who contributed to it (and expected to profit from future economic cooperation between Russia and the ROC).12 At the time, the media speculated that Russia demanded a settlement comparable to the US$3 billion economic package offered by South Korea after Seoul opened diplomatic relations with Moscow in 1990. However, Taipei was considered unlikely to agree to such a demand, partly because of the absence of diplomatic recognition and uncertainty over potential returns on the investment.13 Furthermore, the ROC government never granted billions of US dollars to any state, ally or ­ non-­ally. Although Taiwan’s GNI per capita in 1992 surpassed Russia’s by three times, its total GNI was half that of Russia’s. In other words, Taipei was neither able nor willing to provide Moscow with any sizeable eco-­ nomic assistance, whether in grants or loans. It was more likely to provide Lobov with a loan to set up the MTC office in Taipei.14 Yet, Chang felt it necessary to emphasize that no money was promised to Russia in exchange for the agreement. ‘But we welcome Russia to apply and will consider granting loans if they meet our conditions’, he quickly added.15 Soon after Yeltsin’s approval of the Protocol, Taipei announced the establishment of its offices in Moscow, St Petersburg and Vladivostok in ‘the near future’, and Russia’s opening of bureaus in Taipei and Kaohsiung. Chang noted that although such offices would be technically private, they would, nonetheless, issue visas and their personnel would enjoy diplomatic privileges.16 Lobov became Chairman of the MTC, while Chang headed the TMC.17 Chagrined by the success of Lobov’s private diplomacy, and aware of the threat to its own influence over Russia’s foreign policy on the Taiwan question, the Russian Foreign Ministry vigorously opposed the protocol. The Ministry – in the context of a diplomatic protest made by the PRC embassy in Moscow and opposi-­ tion against the Taiwan deal mounted by Russia’s Foreign Intelligence Service, Ministry of Defence and Parliament (State Duma) – convinced Yeltsin to return Russian–Taiwanese relations to its authority and identify the place for those rela-­ tions within the ‘one China’ principle. On 15 September 1992 (coinciding with Lobov’s visit to Taiwan), Yeltsin signed a decree ‘On Relations Between the Russian Federation and Taiwan’ (Presidential Decree No. 1,072), reiterating Rus-­ sia’s respect for the ‘one China’ principle and its recognition of the PRC’s sover-­ eignty over Taiwan, as well as stressing the unofficial character of relations with

The Russian offensive   99 Taiwan. The Decree empowered the Russian Foreign Ministry to control its imple-­ mentation and stipulated the Foreign Ministry’s central role in running the MTCs representative offices.18 It outlined a legal framework for Russia’s interaction with Taiwan and, as such, neither limited nor precluded any close, ­non-­governmental relations with the ROC. It ensured, however, that private interests would not direct Russia’s policy towards Taiwan and allayed Beijing’s concerns over the direction of Moscow’s collaboration with Taipei. Shortly after the Decree was signed, Russian Presidential Spokesman Vyacheslav Kostikov reassured Beijing that Moscow’s communication with Taipei did not mark a turn away from the ‘one China’ policy, saying: ‘Russia has no official relations with Taiwan.’19 Meanwhile, on his ‘private’ visit to Taipei, Lobov signed three protocols on setting up air links, promoting tourism, and trade and cultural activities. The Russian Foreign Ministry quickly responded that Lobov was in Taiwan as a private citizen and whatever agreements he signed (especially the protocol on the establishment of a direct air link between Taipei and Moscow) were not legally binding.20 The MTC was officially registered by the Russian Ministry of Justice in April 1993, while the TMC opened its Representative Office for the Taipei–Moscow Economic and Cultural Coordination Commission (with an unofficial status, but empowered to issue visas) in Moscow three months later (see Table 5.1).21 With its representative office in operation, the Taiwanese expected the MTC office to be opened in Taipei and a direct air link between the two capitals to be estab-­ lished in the foreseeable future. The settlement of both issues, in their view, was necessary to advance the ROC’s relations with Russia.

Lobbying efforts If the two issues above are taken as yardsticks of the progress in Russian– Taiwanese relations, then this relationship had clearly entered a period of stale-­ mate by the ­ mid-­1990s. In 1994, Russia recalled its ambassador to Mauritius, Viktor Trifonov (a sinologist with diplomatic experience in China and the US) with the purpose of appointing him to head the MTC bureau in Taipei. It was not until May the following year, however, that the necessary documents were sent to Prime Minister Viktor Chernomydrin for approval. The office (the largest of all ­post-­communist states’ representation bureaus in Taiwan) was finally opened in December 1996, three years after the official registration of the MTC with the Russian Ministry of Justice. Although formally answerable to the MTC, headed by Lobov, the Russian office in Taipei was staffed and funded by Russia’s Foreign Ministry. The MTC (staffed by no more than ten people and funded through its consulting services) played no role in Russia’s relations with Taiwan. Similarly, the TMC existed only on paper. MOFA was entirely in charge of relations with Russia. Regardless of whether the late opening of the Russian office resulted from the difficulties in securing sufficient funding (the official explanation) or deliberate obstruction by influential individuals, acting on their displeasure with the Foreign Ministry’s involvement (unofficial speculation), the delay signified Moscow’s

100   The Russian offensive waning interest in strengthening communication with Taipei. Similarly, the nego-­ tiations on the establishment of direct air links between the two sides in March 1997 were bogged down by the Russians’ refusal to grant the Taiwanese carrier fifth freedom rights, i.e. the right to fly on from Russia to a third destination.22 Given Taiwanese reluctance to offer Russia economic assistance when the Russian economy contracted by 28 per cent between 1991 and 1994, Moscow’s attitude is not altogether surprising. Blaming the absence of strong ‘substantive’ relations with Russia on the Kremlin’s growing affinity with the PRC, the Taiwanese launched an affordable campaign to build support for Taiwan in various sectors of Russian society, ranging from government, legislators, political parties to ordinary Russians. The task of recruiting Russian politicians to support Taipei proved particularly difficult, as most political parties in Russia established close relations with the Chinese Communist Party and cherished these connections. The ­ Liberal­Democratic Party of Russia (LDPR), led by the infamous Vladimir Zhirinovsky (a failed contender to the Russian presidency in 1996) proved to be the only party willing to openly support Taiwan.23 There is no hard evidence to suggest whether the ­ pro-­Taiwan stance adopted by the LDPR resulted from Taipei’s generosity or Zhirinovsky’s scheming to challenge the government on the controversial issue, or both. It is evident, however, that the LDPR’s ­pro-­Taiwan stance, rather than being a ­ short-­lived act of political expediency, developed into a ­ long-­term policy, that continues to the present day. The conundrum remains, however, as to how Zhirinovsky and his party could reconcile their impassioned ­anti-­Americanism with their manifest friendship with ­pro-­American Taiwan. The LDPR’s friendship proved to be both a blessing and a curse for Taiwan. The blessing came from the party’s parliamentarians, who, grouped in the Geo-­ politics Committee, kept the Taiwan issue on the agenda of the State Duma. In April 1997, the Geopolitics Committee drafted ‘On the Development of Cooper-­ ation between the Russian Federation and Taiwan’, a legislative act patterned after the Taiwan Relations Act – a law regulating relations between Taiwan and the United States in the absence of official ties. The Russian version of the Taiwan Relations Act was to recognize the ROC as a political entity and stipu-­ lated that when Russian laws were unable to handle ties with Taiwan, interna-­ tional laws and practices could be followed. Unlike the US version, it omitted any references to Taiwan’s security and arms sales commitments. It also dis-­ cussed in great detail the activities and aims of the MTC, granted its staff all the rights of government employees, including ‘privileges and immunities’.24 The Russian Foreign Ministry bitterly opposed the proposal, citing its violation of the ‘one China’ principle and claiming that Russian–Taiwanese unofficial relations were sufficiently governed by the Presidential Decree of September 1992. Dis-­ cussion of the bill was scheduled for early June 1998, but the Speaker of the State Duma, Communist Party member Gennady Seleznev arbitrarily removed the bill from the Duma’s agenda. Although approximately 77 Duma deputies supported Zhirinovsky’s bill, it needed 226 votes to pass.25

The Russian offensive   101 The LDPR also floated the idea of inviting ROC President Lee ­Teng-­hui to Russia (to participate in the LDPR conference), urged Moscow to sell weapons to Taiwan, intensify ­non-­official ties and support Taipei’s UN bid. Furthermore, friendship with the LDPR facilitated the exchange of unofficial visits by Russian parliamentarians to Taiwan and Taiwanese legislators to Russia. Zhirinovsky’s first and only ­ three-­day visit to Taipei in October 1998 made history when his chartered Vnukovo Airlines jet became the ­first-­ever direct flight from Moscow to Taipei (the arrangement Taipei in all probability fully sponsored).26 The curse of friendship with the LDPR derived from the party’s ­well-­publicized notoriety. Russia’s ­best-­known ­ultra-­nationalist party, the LDPR was keen on sensational-­ ism and widely ridiculed both domestically and internationally. Association with Zhirinovsky did not necessarily serve Taipei’s aim of enhancing its public image in Russian society. Amusingly, even the ROC press – on rare occasions – noted Zhirinovsky’s colourful lifestyle, classifying him as a lunatic (瘋人).27 Despite a cold response from the other Russian political parties, Taipei con-­ tinued its attempts to establish communication with the wider spectrum of Rus-­ sia’s political scene. The ­ ROC-­founded and funded World League for Freedom and Democracy was utilized as a vehicle to promote closer ties with Russia’s politicians. The Russian chapter of the League was established by former Moscow Mayor Gavril Popov, who visited Taiwan for the first time in October 1990. The League held its annual conference in Moscow in August 1994 (attended, among others, by Popov). During the conference, Russian Prime Min-­ ister Viktor Chernomydrin met the President of WLFD Chao ­Tze-­chi (趙自齊), praised Taiwan’s economic development, expressed Russia’s interest in further-­ ing economic cooperation with Taiwan and welcomed the organization to hold its meetings in Russia. In April 1995, the WLFD hosted a huge delegation from the CIS, which included Nikolai Stolyarov, the Deputy Chairman of the State Duma, and ­ high-­ranking Russian officials, such as I. Korochenya, Secretary General of the CIS, members of the Presidential Office Secretariat and the Vice Mayor of Moscow. A few months later, the head of the Russian chapter of the WLFD, Nikolai ­Zhdanoff-­Lutsenko, together with Sergei Filatov, a senior adviser to President Yeltsin, and Anatoly Sobchak, the former Mayor of St Petersburg, visited Taipei.28 Taipei’s persistent efforts to court Russian political circles paid off. Gradually, all major political parties in Russia (including Yedinaya Rossiya, the Communist Party, Yabloko and Yedinstvo) established some informal contacts with Taipei and did not shun ­ ROC-­sponsored ‘study tours’ to Taiwan.29 ­ Pro­Russia and ­ pro-­Taiwan friendship groups were formed in the Legislative Yuan (August 1999) and the State Duma (February 1999). The ­ pro-­Taiwan group in the State Duma, however, is informal. While cultivating good relations with Russian politicians, Taipei did not neglect intellectuals and the general public. The former were tempted by scholar-­ ships, research funds, employment in Taiwanese universities and research centres, and sponsorship of academic conferences on Taiwan in Russia.30 The latter was addressed directly by ROC propaganda through advertisements in the Russian press, free and glossy press publications (especially the ­ bi-­monthly,

102   The Russian offensive Svobodny Kitaj, established in May 1994 and six years later renamed Tajvanskaya Panorama), publication of books (distributed free of charge to politicians, scholars and journalists) presenting a positive picture of Taiwan, Russianlanguage broadcasting of the ­Taiwan-­based Broadcasting Corporation of China (中國廣播公司) and numerous cultural activities (e.g. photo/art exhibitions and annual film festivals).31 Taipei also showed generosity towards Russian journal-­ ists, many of whom made ­ROC-­sponsored visits to Taiwan, and invited promi-­ nent Russian public figures to Taiwan (including former Soviet leader Mikhail Gorbachev, who visited Taiwan in March 1994, former Russian Prime Minister Yegor Gaidar, who attended an academic conference in Taipei in August 1995 and Aleksandr Yakovlev, the ‘architect of perestroika’ in the late 1980s, who visited Taiwan in April 1999).32 Moreover, Taipei organized short courses (usually lasting for about two to four weeks) in land reform, small and ­medium­sized enterprise management and other related fields, for Russian civil servants (ranking below department director level) and management personnel.33 The exchange of tourists took off despite the absence of regular direct air links, with Russian visitors to Taiwan outnumbered by Taiwanese visiting Russia.34 By the early 2000s, more than 100 Taiwanese students studied in Russia (mostly in Moscow and St Petersburg), while up to 50 Russian students studied in Taiwan.35 The result of the Taiwanese lobbying attempts among intellectuals and the general public is impossible to quantify. However, the Russians’ response seems to be, overall, rather positive. In early 1992, the Institute of Oriental Studies in Moscow established a Taiwan Studies Centre, with which Taipei actively collab-­ orates. A year later the first Russian–Taiwanese academic conference was held in Moscow. Numerous conferences on issues related to Taiwan followed. With the help of ROC funding, Taiwanese studies developed into a separate field of Russian Sinology. Published studies on Taiwan in Russia helped clarify common misconceptions about Taiwan and amplify the perception of Taiwan as a separate entity, rather than a composite part of Mainland China.36 Taiwanese ­ scholars­cum-politicians have received honorary doctorates from Russian tertiary institu-­ tions. For example, Chen ­Shui-­bian of the DPP was honoured by the Plekhanov Russian Academy of Economics in December 1995 and Lien Chan of the KMT received his honorary doctorate from St Petersburg University in December 1999. Russian press coverage on Taiwan steadily increased and tended to present the ROC either in a neutral or a sympathetic manner. Several letters sent weekly to the editors of the ROC ­Russian-­language publications and radio programmes manifest the Russian public’s interest in Taiwanese culture, history and politics, while ­ ROC-­organized exhibitions and film festivals are usually well-attended.37 It must be noted, however, that the extensive coverage of Taiwan in the Russian media (greater than that of most Asian countries and second only to that of China) notwithstanding, the Russian public at large remains largely ignorant about Taiwan affairs. By the late 1990s, 20 per cent of Russians said they had never heard of Taiwan, only 5 per cent knew about Taipei’s efforts to ­re-­enter the UN and 90 per cent were unaware of the ROC’s confrontation with the PRC.38

The Russian offensive   103 Moreover, as Alexander Lukin observes, the ­pro-­Taiwan lobby, comprising poli-­ ticians, business people and academics, is largely motivated by personal gain (e.g. business opportunities or securing sponsorship for political or academic activities) and its influence on the Kremlin’s Taiwan policy is limited, to say the least.39

Economic cooperation Taipei perceived the Russian market as a new lease on life for Taiwan’s ­labour­intensive exports and an opportunity for Taiwan to make up for its losses in the US and Japanese markets, where Taiwanese products, due to the strengthening Taiwanese currency, were no longer competitive in terms of price.40 However, it soon became apparent that, far from diversifying the ROC’s export markets and ­counter-­balancing the emerging trade deficit with the West, doing business with Russia proved to be a new headache for Taiwanese trade officials. Apart from coping with Russia’s lack of foreign currency, galloping inflation, the language barrier, an unfamiliar legal system and seemingly endemic political instability, the Taiwanese business executives also had to deal with the absence of banking links, periodic economic crises (notably the financial crisis of 1998) and racially motivated violence in Russian cities. Furthermore, the Taiwanese found Russian law offered insufficient protection for both trade contracts and direct invest-­ ments. As a result, at least two-thirds of Taiwan’s trade with Russia was con-­ ducted indirectly through third countries (such as Japan, Germany and even mainland China), and Taiwanese investments in Russia stood at a rather sym-­ bolic US$3 million by December 2004 (while mainland Chinese ­ non-­financial investments in Russia amounted to US$980 million by the end of 2005).41 Indi-­ rect trade decreased the risks of doing business with Russia, but it also unavoida-­ bly increased the price of Taiwanese products. ­ Price-­wary customers in Russia embraced cheaper goods ‘made in China’, while the new rich preferred branded Western products. Only Taiwanese computer and machinery producers success-­ fully met the challenge from China and the West. By the ­mid-­1990s, computers and components constituted 41 per cent of all ­ Russian-­bound exports from Taiwan, while Taiwan’s machinery exports steadily increased their share of the total exports to Russia. From 1994, the two-way trade between Taiwan and Russia maintained a steady volume of around US$1.2 billion annually (see Table 5.2), declining in 1998 and 2001. The decline in 1998 resulted from Russia’s financial turmoil, while the decline in 2001 was a consequence of worldwide economic recession, further aggravated by the September 11 terrorist attacks on the United States. In 2002, bilateral trade returned to its typical levels, while two years later it more than doubled, mainly because of the increased prices for raw materials. Trade with the Soviet Union or Russia amounted to about 0.5–0.8 per cent of the total foreign trade of the ROC (see Figure 5.1). Cumulatively, between 1992–2005, Russia was Taiwan’s twenty-third largest trading partner, with a 0.59 per cent share in Taiwan’s total trade.42 For Russia, Taiwan became the fifth-largest trade

104   The Russian offensive Table 5.2 Taiwan’s trade with the Soviet Union (1988–1991) and Russia (1992–2006) (in millions of US dollars) Year Export Import

Total trade Balance Change in TT (TT) over the previous year (%)

1988    – 1989   20.64 1990   59.03 1991   63.27 1992   23.02 1993   72.89 1994 163.58 1995 174.04 1996 141.25 1997 172.50 1998 137.77 1999 108.28 2000 188.17 2001 265.02 2002 255.14 2003 305.02 2004 436.59 2005 516.46 2006 (Jan.–June) 232.13

7.79 75.43 119.62 227.78 368 713.98 1,260.31 1,802 1,205.10 1,409.31 981.86 1,291.59 1,567.96 868.73 1,182.51 1,604.92 2,909.72 2,712.86 1,496.08

7.79 54.79 60.59 164.51 344.98 641.09 1,096.73 1,627.96 1,063.85 1,236.81 844.09 1,183.31 1,379.79 603.71 927.37 1,299.90 2,473.13 2,196.40 1,263.95

–7.79 – –34.15 868 –1.56   59 –101.23   90 –321.96   62 –568.20   94 –933.14   77 –1,453.92   43 –922.60 –33 –1,064.31 17 –706.33 –30 –1,075.03 32 –1,191.62 21 –338.70 –45 –672.23 36 –994.88 36 –2,036.53 81 –1,679.95 –7 –1,031.82 –

Source: Minstry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao, June 1996 and June 2006. 0.9 0.8 0.7 0.6 Russia’ s share in T aiw an’ s trade

P ercentage

0.5 0.4 0.3 0.2 0.1

04 20

02 20

00 20

98 19

96 19

94 19

19

92

0

Figure 5.1  Russia’s share in ROC total foreign trade, 1992–2005 (in %).

partner in Asia (after the PRC, Japan, India and South Korea) and third-largest source of trade surplus (behind the PRC and Japan). The consistent trade deficit was an unintended feature of Taiwan’s trade rela-­ tionship with Russia. While Taiwan failed to transform Russia into a major export market for consumer products and machinery, Russia became a signifi-­ cant source of raw materials, such as iron (or ­non-­alloy steel components), nickel

The Russian offensive   105 and aluminium for Taiwan. In 2004, imports of these materials from Russia con-­ stituted 80 per cent of all imports (the remaining 20 per cent being made up of bituminous coal, unwrought titanium, organic chemicals, wood pulp and paper). Russian steel, ferrous ores and chemical materials replaced Taiwan’s imports from Latin America. Moscow’s early extension of the preferential treatment it gave to PRC goods to trade with the ROC (in 1992) cut tariffs on Taiwan exports to Russia from 30 per cent to 7.5 per cent, but did little to stimulate Taiwanese exports to Russia, while Taipei’s delayed granting of preferential import duties for Russian goods (in 1994) failed to arrest swelling imports from Russia.43 Tai-­ wan’s trade deficit – as large as US$2 billion in 2004 (see Table 5.2) – became a constant feature of its trade relationship with the Russian Federation. Taipei’s only consolation was that imported goods were mostly raw materials, which were often competitively priced and indispensable for its industrial development. Given the adversities confronting Russian–Taiwanese trade, Taipei’s persist-­ ence in promoting trade and economic cooperation with Russia is admirable. The ­semi-­official CETRA organized countless exhibitions and ‘fact-finding’ missions to Russia, and made information on the Russian market available in Taiwan. Taipei strove to reach a number of bilateral economic agreements with Moscow, including an investment protection agreement, an accord on prevention of double taxation and a temporary customs clearance agreement. Despite the fact that the MTC and TMC could front various accords, precious little was accomplished. The Russians appeared reluctant to enter into any bilateral agreements – however unofficial – and were ready to agree only to such accords that benefited them immediately. Moscow’s reluctance to formalize its economic ties with Taipei through the myriad of various ­ semi-­official agreements resulted from two con-­ siderations: 1 2

its apprehension that such agreements would strengthen Taipei’s claim to statehood and antagonize Russia’s strategic partner, China; the Russian government’s inability to formulate a ­ pro-­active and coherent trade policy ­vis-­à-vis Taiwan.

As early as 1992, for example, Moscow made it clear that Taiwanese vessels had no right to fish in Russian territorial waters or to visit Russian ports. Recognized as Chinese ships, the ROC vessels eventually gained access to the Russian ports. Ironically, Moscow’s reluctance to consider a maritime agreement with Taiwan annoyed Russian shipping companies, which could not benefit from the surging Russian exports to Taiwan (transported by ships from third countries and, to a lesser extent, by Taiwanese vessels). Sensing immediate profits, Moscow finally consented to a maritime transportation agreement with Taipei in January 1998.44 The Russians continued, however, their refusal to enter into any discussion on fishing agreements (periodically detaining Taiwanese fishing boats for poaching in Russian economic waters) and saw little benefit in reaching agreements with Taiwan on investment protection and avoidance of double taxation. Symptomati-­ cally, an aviation protocol (preliminarily agreed upon in March 1997 and in a

106   The Russian offensive different form in 1998, and excluding fifth freedom rights) still awaits finaliza-­ tion. Moscow, despite its hopes, won no contracts for public works in the frame-­ work of Taipei’s ambitious Six Year Plan in the early 1990s.45 It did not ask for any bilateral soft loans and Taipei extended none.46

Enter the dragon A long history of bilateral relations, a common experience of constructing a communist utopia, a long land border (and ensuing geostrategic considerations), as well as economic complementarity ensured that Moscow would value Bei-­ jing’s camaraderie above Taipei’s. Decades of economic cooperation and political consultations had resulted in the emergence of an influential China lobby in the Soviet corridors of power. Soviet ‘old China hands’ might not have loved main-­ land China, but they possessed an intimate knowledge of it and built entire careers by advising the state and party leadership on diplomatic, military and economic policies towards the PRC. Knowing little – if anything – about the ROC, they viewed Taiwan as a regenerate outpost of American imperialism. Moscow’s contacts with Taipei in the late 1980s were, therefore, not meant to redefine relations with China, but were rather a response to the policy of eco-­ nomic restructuring (perestroika), which stood to benefit from Taiwanese invest-­ ments and a new export market. The disintegration of the Soviet Union and Taiwanese promises of economic assistance reignited Beijing’s concern over the possibility of rapprochement between Moscow and Taipei. In order not to be upstaged by its rival, Beijing quickly recognized all 12 former Soviet republics, including the Russian Federa-­ tion, in December 1991.47 Two months later, the PRC Foreign Ministry created a special task force, whose main purpose was to frustrate Taiwan’s diplomatic offensive in the former Soviet Union. Although Beijing failed to prevent the establishment of the CETRA office in Moscow in December 1991 and the setting up of the TMC and MTC in April 1992, Russia did not discard its ‘one China’ policy. The Presidential Decree of September 1992 emphasized Russia’s respect for the ‘one China’ policy and defined Russia’s ties with Taiwan as exclusively unofficial and ­ non-­political. At that time, Russian Vice Premier Aleksandr Shokhin advised his Taiwanese guest, Vice Minister of Economics Chiang ­ Pin­kung, to relinquish his fantasies (幻想) regarding political relations with Russia.48 Beijing reluctantly resigned itself to tolerating Russian–Taiwanese unofficial collaboration and the Russian–Chinese joint communiqué during Yeltsin’s visit to China in December 1992 approved of Moscow’s intention to develop eco-­ nomic, scientific and cultural cooperation with Taipei, making it clear, however, that such relations were to be firmly unofficial.49 Subsequently, Beijing closely monitored Russian–Taiwanese communication and tirelessly reminded the Rus-­ sians that ‘methods and tricks employed by Taiwan authorities in their elastic and pragmatic diplomacy are noted for their diversity and ­many-­sidedness’.50 Disillusioned with the West’s reluctance to offer Russia economic aid propor-­ tionate to its economic needs, and its unwillingness to treat Russia as an equal in

The Russian offensive   107 international affairs, Moscow acquired a distinctly less ­pro-­Western, less demo-­ cratic and more great ­power-­oriented outlook in its diplomatic strategies. Follow-­ ing the commencement of President Yeltsin’s ‘­all-­directional diplomatic strategy’ in late 1993, the importance of the ­Asia-­Pacific, with China at the centre, stead-­ ily increased in Russia’s diplomacy. Its new emphasis on the strategic importance of relations with the ­ Asia-­Pacific for Russia’s economic, security and cultural objectives amplified the importance of the PRC – termed by Yeltsin as the ‘most important partner in the world’ – in Russia’s diplomacy.51 Taiwan was increas-­ ingly perceived by the Russians as a menace to the expanding ­ Sino-­Chinese friendship, rather than a source of potential economic assistance and invest-­ ments. The Russian nationalists, in particular, viewed the ROC as a bad example to the separatists in the Russian Federation (especially Chechnya). Shortly after President Jiang Zemin’s visit to Russia in September 1994, the PRC side publi-­ cized Russian assurances that Moscow would not develop official links with Taiwan, call it a republic or hold talks with government officials.52 Within a few years, the PRC emerged as Russia’s strategic partner. Beijing and Moscow not only accelerated their economic cooperation (with China becoming Russia’s third most important trading partner after Germany and the United States among countries outside the former Soviet Union), but also entered into border demarcation talks and initiated confidence-building measures.53 They also found themselves in full agreement on a number of international issues.54 These included their opposition to the ­ post-­Cold War unipolar international system, with the US dominating the global economy and playing the leading role in the settlement of major military disputes, from Kosovo to the Middle East peace process. China and Russia condemned the US development of Theatre Missile Defence Systems, claiming that such systems would upset regional and global peace.55 The strategic partnership with Beijing was ‘­heart-­warming’ both to Russian leaders, who could remind the West that Russia was not isolated in its criticism of US ­post-­Cold War policies, and to the ­left-­wing opposition in Russia, which was ‘touched by the red colour of the Chinese national flag and the for-­ mally unchallenged leading role of the [Chinese] Communist Party’.56 In the context of strategic partnership, Moscow became very understanding of China’s reunification policy. Thus, Beijing could exert a significant influence on the direction and scope of Russian–Taiwanese relations. The Russian Foreign Ministry in particular catered to Chinese sensitivity regarding the Taiwan ques-­ tion. It kept China informed about its plans to open a representative office of the MTC in Taipei and repeatedly reassured Beijing that the office would perform purely economic and unofficial tasks.57 Moscow consulted Beijing on the issue of direct air links between Russia and Taiwan, conceding to the Chinese demand that the air link should be operated by private airlines carrying no official symbols, flags or crests.58 China vetoed the establishment of Taiwan’s liaison office in Vladivostok until Beijing had opened its consulate general there, while the Taiwanese media accused China of obstructing negotiations to conclude the Russian–Taiwanese fishery and aviation agreements. In a rare exception to the rule, Moscow failed to inform Beijing of Taipei Mayor Chen ­Shui-­bian’s visit to

108   The Russian offensive Russia in December 1995. The PRC embassy angrily reacted to his visit, reiterat-­ ing that China was ‘categorically against any official contacts between Russia and Taiwan’.59 Chen was reported to have held meetings in Moscow with his counterpart, Yuri Luzhkov, and Russian Finance Minister Vladimir Panskov. The Russian State Duma became yet another ally in China’s efforts to contain Taiwan’s influence in Russia. Although the parliamentary group for friendship with China included only a handful of deputies, the Russian legislature whole-­ heartedly supported the Kremlin’s ‘one China’ policy and thwarted all attempts by the LDPR (and others) to bring the Taiwan question under the consideration of the State Duma. For example, in March 1996, when Taiwan held its first presi-­ dential elections and China tested its missiles in the Taiwan Strait, the Duma’s Deputy Chairman Stolyarov drafted a resolution on expanding trade, economic and cultural ties with Taiwan: the resolution – passed at the morning session on 20 March – was revoked at the evening sitting on the same day, on the grounds that it might evoke a negative reaction from China. The report, for its part, was ‘considered without voting’.60 Yet, there were limits to the Duma’s appeasement of China. The Duma refused to censure Zhirinovsky for his 1998 visit to Taiwan, although the motion was supported by the Foreign Ministry and Beijing.61 Moscow’s ‘one China’ policy translated into Russian principled support for ‘one China’ on the international stage. When Taipei began a campaign to regain its seat in the UN, Russia consistently voted against the inclusion of the motion concerning Taiwan’s representation in the agenda of the UN General Assembly, claiming that ‘the Chinese representation issue was solved a long time ago’.62 Proceeding from an assumption of one China, governed from Beijing, the Russian Foreign Ministry principally opposed the idea of Taiwan’s entering the UN as an ‘associated member’ or an ‘observer’, or allowing Taiwan to participate in the work of UN specialized bodies. While opposing internationalization of the ‘Taiwan question’, Moscow preferred the ‘Taiwan question’ to be solved ‘peace-­ fully through negotiations’.63 It did nothing, however, to discourage China from resorting to military solutions for the Taiwan problem. During the Taiwan Strait crisis of March 1996, when the Chinese army tested ­ Russian-­made ­ Su-­27s and ­Kilo-­class submarines, the Russian Foreign Ministry followed the situation ‘extremely carefully’, expressing hope for the peaceful resolution of hostilities, but noted that a strain in relations between Beijing and Taipei would not affect President Yeltsin’s April visit to China.64 Yeltsin’s visit not only proceeded as planned, but even initiated a strategic partnership and reaffirmed Russia’s support for the PRC’s position on Taiwan.65 Colonel General Dmitry Kharchenko, the Deputy Chief of the General Staff, stressed the destabilizing effect of an Ameri-­ can battle group in the immediate proximity of China’s military exercises, which could lead to ‘undesirable incidents’ aggravating the situation in the ­Asia-­Pacific. He claimed that the exercises themselves were of a ‘local nature’.66 In August 1999, Moscow saw ‘no grounds’ to relate the launch of the Chinese ­ long-­range missile test with President Lee ­Teng-­hui’s announcement of Taipei’s intention to build special ‘sovereign state’ relations with China. Moreover, the Russian Foreign Ministry did not even view the missile test as a major threat to Taiwan.67

The Russian offensive   109 Russia’s stand on the question of Chinese reunification, verbally supporting a peaceful solution, but ignoring China’s temptation to resort to force, encouraged Beijing to conclude that Moscow would support Chinese reunification, regard-­ less of the measures chosen by China. An anonymous ‘military person of main-­ land China’, quoted by the Hong ­Kong-­based Ming pao (明報), noted that once Beijing used force against Taiwan, Russia’s support for China would force the United States to think twice before taking ‘reckless actions’.68 According to the South China Morning Post, some observers believe that ‘individual Russian poli-­ ticians and generals have told the Chinese they will help the mainland in the event of US forces coming to the rescue of Taiwan’.69 There is no doubt that officially and in its communications with Beijing, Yeltsin’s Russia adhered to both the letter and spirit of the ‘one China’ principle. Little is known, however, of the secret communication between Russia and Taiwan, which could be facilitated by both sides’ interest in China. The weekly Hong ­ Kong-­based Yazhou zhoukan (亞洲週刊), for example, reported on the secret contacts between Russian and ROC intelligence agencies, reminiscent of similar collaboration taking place in the early 1970s. According to the report, ROC chief of the National Security Bureau Yin ­ Tsung-­wen (殷宗文) met his Russian counterpart in late 1997 in a third country. Vyacheslav Trubnikov, Chief of Russian Foreign Intelligence Service, visited Yin in Taipei in early 1998. In September the same year, the chief of Taiwan’s Investigation Bureau of the Justice Ministry travelled to Moscow to further cooperation between the Taiwan-­ ese and Russian intelligence agencies. There were at least four other contacts between the two intelligence agencies. This cooperation notwithstanding, both Taiwan and Russia allegedly spy on each other as well. In 1994, the Russians created the Taiwanese Line, an ­ anti-­Taiwanese espionage group within the Federal Security Service, to monitor the activities of the Taiwanese in Russia. By late 1998, three Taiwanese intelligence officers supposedly worked in the TMC office in Moscow, while two or three other spies were allegedly disguised as stu-­ dents or business men.70

Arms money cannot buy In November 1998, coinciding with President Jiang Zemin’s visit to Russia, President Yeltsin announced his ‘four nos’ on Russia’s relations with Taiwan. The first three ‘nos’ (namely, ‘no’ to ‘two Chinas’ or ‘one China, one Taiwan’; ‘no’ to Taiwan’s independence; and ‘no’ to Taiwan’s entry into the UN or any other international organization composed of sovereign states) were originally formu-­ lated by US President Bill Clinton earlier in 1998. Yeltsin added a fourth ‘no’ to arms sales to Taiwan.71 The addition of the fourth ‘no’ was not only meant to contrast Russia’s strategic partnership with America’s engagement policy, but was also – if not expressly – a final reassurance to China that Russia did not sell weapons to Taiwan. A consistent theme advanced by the ROC media since the Taiwanese–Russian rapprochement took off has been the idea of Taipei’s interest in purchasing

110   The Russian offensive Russian weapons. The first denials from Taiwanese officials concerned the ‘intended’ purchases of 90 ­MiG-­29 warplanes in January 1992. Whilst officially denying any intention to purchase the ­MiG-­29s, Taipei did not rule out possible future purchases of ­Russian-­made military equipment, depending on the ‘devel-­ opment of the situation as a whole and on the changes in the world situation’.72 To China’s horror, Moscow’s initial reaction was inconsistent, if not purposefully ambiguous. Yeltsin’s ‘­West-­first’ oriented administration, awaiting China’s immi-­ nent systemic collapse, looked favourably at arms deals with Taiwan as a way to boost the state budget, although it officially denied such a possibility.73 In ­mid­March 1992, Russia’s Minister for Foreign Economic Relations Petr Aven cate-­ gorically ruled out any likelihood of Moscow’s arms sales to Taiwan, noting, however, the Russian military–industrial complex’s pressure on the Russian gov-­ ernment to permit arms deals with Taiwan.74 Several days later, his deputy Sergei Glazyev was quoted by the Japanese daily, Asahi, as saying that Moscow had abandoned politically motivated arms deals in favour of commercial ones. In this context, Taiwan was a possible customer of the Russian military–industrial complex. ‘Taking into consideration relations with China, we do not licence arms sales to Taiwan’, Glazyev said, but added that ‘if the licence is issued, the volume of armaments exported to Taiwan may exceed that of military shipments to China and total several billion US dollars’.75 During his ­ seven-­day ‘private’ visit to the ROC in June 1992, Admiral Vladimir Sidorov, a former deputy com-­ mander of the Soviet navy and a former commander of its Pacific fleet, was quoted as saying that Russia did not rule out the possibility of selling arms to Taiwan.76 Vice Foreign Minister Chang rejected press speculation that the Russian visitors (Sidorov and ­Rear-­Admiral Anatoly Shtyrov) discussed sales of military equipment.77 While dismissing news of purchasing Russian weaponry, Chang did not rule out employment of Russian scientific and technological experts in aerospace and other national defence industries, who could cooperate with their Taiwanese colleagues in upgrading Taiwanese defence and related industries.78 It soon became apparent that the Russian arms exports continued to be guided by political considerations, at least in Taiwan’s case. Yeltsin’s emphasis on ‘one China’ precluded any official sales of armaments to the ROC. It was China – not Taiwan – that emerged as one of the leading importers of Russian arms. Between 1991 and 1997, the mainland reportedly purchased US$6 billion worth of arms from Russia.79 By late 1998, the PRC accounted for US$2 billion to US$2.5 billion out of the US$8 billion portfolio of annual foreign orders for Russian arms. In addition to purchasing Russian air defence systems (e.g. S300 ­ anti­aircraft missiles), ­Su-­27 jet fighters and ­Sovremmeny-­class destroyers and ­Kilo­class (‘noiseless’) diesel submarines, all of which posed a grave threat to Taiwanese security, Beijing also secured transfers of Russian military technology and production rights.80 The Russians realize that their arms sales accelerate military modernization of China, which in the future could pose a threat to Russia. They insist, however, that given Russia’s long lead on China in key military capabilities, arms sales do

The Russian offensive   111 not create a military challenge to Russia itself.81 But they are fully aware that the Chinese air force and navy upgrading is in part geared towards Taiwan and might contribute to the growth of tension over the South China Sea and Taiwan.82 They also realize that an exacerbation of tension in East Asia, threatening to break out into military conflict in immediate proximity to Russian borders, runs counter to Russia’s national interests. Such a conflict could not only jeopardize Russian trade and economic relations with China and Taiwan (which both account for about half of Russia’s total trade in the ­Asia-­Pacific), but also be detrimental to Russian relations with the United States.83 However, the ­short-­term commercial benefits (China’s imports sustain Russia’s military–industrial complex) and ­long­term view of China’s dependence on military–technological cooperation with Russia (especially in terms of Moscow providing spare parts, upgrades and tech-­ nical maintenance) have prevailed over security concerns in the Taiwan Strait.84 Officially, Moscow maintains that the arms sales to China are meant only to benefit China’s national security and pose no threat to any third party. It would also most certainly dismiss the claim, suggested by some scholars, that the arms sales had bound Russia to China’s Taiwan policy.85 The persistent rumours of alleged sales of Russian arms to Taiwan beg the question: did Taiwan buy any Russian arms? Access to the Russian arms market would have diversified Taiwanese sources of arms purchases, while motivating Washington to show more flexibility over armament sales to the ROC. Moreover, it would have been highly advantageous for Taiwan to possess at least a few pieces of the same or similar major weaponry that Russia was already exporting to China in order to test their fighting capabilities.86 It is highly likely that Taipei acquired a few items from Russian arms catalogues, for training purposes, through third parties. However, Moscow’s firm commitment to the ‘one China’ principle ultimately rendered Taiwan’s mass procurement of Russian weapons infeasible. Moreover, ROC troops had never used ­ Russian-­made weapons and their introduction could have caused problems with parts supplies, logistics support and integration with other weapons systems purchased in the West.

Chen ­Shui-­bian’s Russian policy The DPP supported the KMT’s policy of expanding Taiwan’s relations with Russia. The DPP consistently, however, expressed dissatisfaction over the tempo of interaction with Moscow. In order to accelerate relations with Russia, the DPP founded the ­ Sino-­Russian Association for International Humanitarian Dialogue (中國與俄羅斯國際人文協會).87 In May 1994, an Association’s delegation, led by DPP Central Committee member Chen ­Sheng-­hung (陳勝宏), visited Russia, making an unsuccessful attempt to achieve a breakthrough in relations.88 In December 1995, DPP leader Chen ­ Shui-­bian travelled to Moscow as Taipei’s Mayor, where he received an honorary doctorate in economics from Plekhanov Russian Academy of Economics.89 In the late 1990s, the party blamed the ­KMT­appointed representative to Russia James Chang ­Wen-­chung’s (張文中) inability to speak Russian for the lack of progress in Taiwanese–Russian relations.90

112   The Russian offensive On only one issue did the DPP differ remarkably from the KMT’s policy towards Russia, and that was Chechnya. Following Yeltsin’s decision to suppress the independence movement in Chechnya in December 1994, the DPP strongly backed the Chechens, whose struggle, in the party’s view, resembled the ROC’s conflict with China. In January 1995, the DPP legislators motioned to provide substantial humanitarian assistance to Chechnya and requested the government to take a stand on the conflict.91 The ROC government refused to censure Russia or provide humanitarian assistance to the Chechens. Claiming that the Chechen war was Russia’s internal affair, it merely urged a peaceful solution to the con-­ flict.92 Three years later, the DPP invited Chechen representatives to a ­ non­governmental international conference sponsored by the Unrepresented Nations and People’s Organization and to be convened in Taipei in September 1998. At first, the ROC Foreign Ministry agreed to Chechen participation, but later on – possibly because Moscow threatened to close down Taiwan’s representative office if Chechens attended the conference – Taipei rejected visa applications by delegates from Chechnya (and the Caucasus).93 When Russia recommenced its second offensive in Chechnya in late 1999, the Foreign Affairs Committee of the Legislative Yuan, headed by the DPP legislator, vocally condemned Russia’s attack.94 The DPP’s White Paper on Foreign Policy for the 21st Century, issued shortly before the DPP’s victory in the presidential elections in 2000, dedicated a small paragraph to Taiwan’s relations with Russia, the only ­post-­communist state spe-­ cifically referred to in the document. The White Paper called for the ­re-­evaluation of Taiwan’s ­long-­term prospects for investing in Russia, Taipei’s involvement in the reconstruction of the Russian economy, encouragement of academic exchanges, establishment of institutions in Russian studies and promotion of technological collaboration between the two sides. In the context of the White Paper’s proposal to abandon cash grants as the method of attaining (­short-­term) political gains in favour of the provision of low-interest loans, strategic imports, dispatch of experts and the training of specialists from developing countries, it could be deduced that Taipei, under the DPP’s leadership, hoped to engage Russia through soft loans and humanitarian aid, greater emphasis on academic and technological exchanges and promotion of Taiwanese investments.95 The absence of any innovative thinking on relations with Russia – the KMT was already following the same policy (with no success) and considered offering Russia soft loans (which did not interest the Russians) – indicated that the ruling DPP would opt for continuity, rather than drastic change, in Taipei’s relations with Moscow. It came as no surprise, therefore, that following his electoral victory on 18 March 2000, President Chen ­Shui-­bian did not recall the ROC representative to Russia, despite his linguistic shortcomings, while the question of Chechnya was forgotten. In fact, once in power, the DPP did not consider Russian linguistic skills, historical and political knowledge to be prerequisites for appointment as the head of the Taiwanese office in Moscow. Chang ­ Wen-­chung’s successors Charles King ­Shu-­chi (金樹基, a KMT member, was appointed in February 2001

The Russian offensive   113 for his knowledge of Germany, Russia’s largest economic partner in Europe) and Chen ­ Rong-­jye (陳榮傑, was appointed in November 2002, for his negotiating skills and allegedly ­ pro-­DPP sympathies), neither spoke Russian nor knew much about Russia.96 In the spirit of continuing the KMT’s Russian policy, President Chen showed reverence to Oleg Lobov, still the head of the MTC (his only ranking position in Russia), despite Lobov’s irrelevance in Russian pol-­ itics and his (increasingly obvious) impotence regarding the promotion of Rus-­ sia’s relations with Taiwan, and to Zhirinovsky’s LDPR. In June 2000, Chen bestowed upon Lobov and Aleksei Mitrofanov (the Duma’s Geopolitics Commit-­ tee Chairman and leading LDPR politician) medals for their contributions to the development of Taipei–Moscow relations (Mitrofanov was specifically awarded for his efforts to push the Taiwan Relations Act through the Russian legislative process). President Chen had no illusions regarding Russia’s role in taming China’s bel-­ licose policy towards Taiwan. He openly admitted that the Kremlin, due to its strict adherence to the ‘one China’ principle, was bound to play a very limited (if any) role in improving ­cross-­Strait ties.97 Yet, Russia, in his view, had the poten-­ tial to play a very significant role in destabilizing the situation in the Taiwan Strait through its arms sales to China. In virtually every meeting with any visit-­ ing Russian politician, Chen voiced his concerns regarding Russian deliveries of advanced weaponry to China. He did so, for example, when meeting Lobov in October–November 2000, and again when meeting Duma deputy Aleksandr Karelin of the ­pro-­Putin Edinaya Rossiya party in February 2001.

Seeking a breakthrough Although improvement in relations with Russia did not top the Chen administra-­ tion’s agenda during the first two years of his tenure, President Chen articulated the core objectives of ROC diplomacy with Russia as early as November 2000. These were: strengthening of cooperation in military technology and science, establishing direct air links and accelerating bilateral trade, scientific and aca-­ demic exchanges.98 Chen’s first objective was soon scuppered, when Moscow ruled out any possibility of military–technical cooperation with Taiwan.99 In an unprecedented interview given to the Russian daily, Vremya Novostei, in May 2002, President Chen revised the objectives. Gone was military cooperation, while the inauguration of direct flights between Taipei and Moscow emerged as the most pressing issue. Two other issues of importance included signing agree-­ ments for a closer business relationship (including accords on investment protec-­ tion and avoidance of double taxation) and reinforcing bilateral cooperation on technology (particularly biotechnology and nanotechnology) and disaster preven-­ tion. In an interview, Chen recalled his meeting with Vladimir Putin (then St Petersburg’s Vice Mayor) in December 1995 in St Petersburg and expressed hope that the fact that both future presidents shook hands and spoke to each other would help promote Taiwanese–Russian relations. He also hoped for the Russian authorities’ consent to ­government-­level communication with Taipei, and noted

114   The Russian offensive that Moscow could play an active role in Taiwan’s ­ cross-­Strait relations with China on the condition that it stopped blindly adhering to China’s policy on Taiwan.100 Although the first two years of Chen’s presidency did not witness any signifi-­ cant breakthrough in Taiwan’s relations with Russia, Taiwanese–Russian rela-­ tions did not exactly stagnate. Taipei vigorously lobbied for the inauguration of direct flights between the two capitals. It donated US$200,000 to the families of the deceased sailors of Russia’s Kursk submarine, an amount ten-times higher than that given by China. It also announced that oil would be imported from Russia.101 (As of 2006, Taipei is yet to start importing Russian oil.) In June–July 2002, a ­high-­profile trade delegation from Taiwan (headed by the presidents of the ­ state-­owned Chinese Petroleum Corporation (中油公司) and the ­ Export­Import Bank and including government officials) toured Russia for three weeks. On 30 April 2001, the first direct commercial charter flight (manned by Vladi-­ vostok Airlines) took Taiwanese tourists from Taipei to Vladivoskok. Among the 150 tourists from Taiwan to Vladivostok was Chen ­ Che-­nan (陳哲男), Deputy Secretary to the President of the ROC and the ­ highest-­ranking ROC official to visit Russia since Chen ­Shui-­bian assumed the presidency.102 Taipei also maintained ­ inter-­parliamentary exchanges with Russia. In May 2002, for example, a group of Russian parliamentarians led by Aleksandr V. Korzhakov (the Vice Chairman of the Duma’s Committee of Defence) and including Evgeny I. Zhupanov (the Duma’s Deputy ­ Secretary-­General) visited Taipei. In the area of scientific cooperation, in ­mid-­July 2000, Taiwan’s Industrial Technology Research Institute signed a memorandum on collaboration with the Russian Academy of Sciences to explore optoeletronics and materials technolo-­ gies. Taiwan also planned to join forces with Russia in a ­satellite-­launching deal. In April 2002, Taiwan’s Academy of Sciences established a working group on scientific exchanges with Russia. Taipei hoped that some Taiwanese students could carry out postgraduate research in Russia.103

The Taiwan–Russia Association In early 2001, in an interview with the Russian daily Nezavisimaya Gazeta, ROC Foreign Minister Tien ­Hung-­mao hinted that Russia was to blame for the stagna-­ tion of ­ Russian–Taiwanese relations, due to its unwillingness to enter into ­government-­to-government dialogue.104 President Chen did not entirely agree. The DPP’s dissatisfaction with MOFA’s inability to promote dynamic coopera-­ tion with Russia led to the revival of the DPP’s earlier initiative to strengthen communication with Russia through ­ non-­governmental organizations. In early 2002, President Chen floated the idea of forming a Taiwanese–Russian Commit-­ tee (台俄工作會), which would coordinate Taipei’s economic, diplomatic and aid policies towards Moscow. Such a move was to be a part in a broader strategy of strengthening relations with Northeast Asia, including Japan, Mongolia and North Korea (allegedly President Chen’s pet project).105 The idea soon became reality when, on 27 July 2002, Taipei created the Taiwan–Russia Association

The Russian offensive   115 (TRA, 台俄交流協會), originally devised by the private ­ think-­tank, Taiwan Institute of Economic Research (TIER, 台灣經濟研究院). The TRA aimed at boosting bilateral exchanges with Russia in the fields of economics and trade, science and technology, banking and finance, culture, academia, aeronautics and space, the arts and energy resources. Although nomi-­ nally ­ non-­governmental, the TRA was very close to the government indeed. Chang ­Chun-­hsiung (張俊雄), the DPP’s ­Secretary-­General and former premier, became the first president of the Association. Chiang ­ Pin-­kung (then Vice Speaker of the Legislative Yuan), Wu ­Rong-­i (吳榮義, TIER’s President and Vice Premier in 2005–2006) and Chen ­ Wu-­hsiung (陳武雄), President of Ho Tung Chemical Corporation (和桐集團), became the Vice Chairmen of the newly established organization.106 The Association’s membership of over 90 affiliates included numerous ­ heavy-­weights in Taiwanese politics and economics. The founding ceremony was attended by President Chen himself, as well as by Lobov and Oleg I. Botka, Russian deputy to the Duma. Chen appeared optimistic of the Association’s potential, claiming that it would not only help promote bilateral trade, but also bilateral cooperation in every field, including party, parliamentary, city, cultural, humanitarian and academic diplomacy. Some members of the Tai-­ wanese media did not share his enthusiasm. The Lianhe bao, for example, noted that the TRA’s goal of stimulating economic cooperation between Russia and Taiwan, especially encouraging Taiwanese investments in Russia, would not be easy to achieve, due to petty crime on the streets of Russian cities, terrorist attacks, police corruption and the lack of legal protection for Taiwanese invest-­ ments in Russia.107 The TRA’s primary objective was to initiate direct flights between Taipei and Moscow. In early September 2002, Chang ­Chun-­hsiung led a 20-plus delegation to Vladivostok. Intending to take part in ‘The Third Investment Mart’ of the ­Asia-­Pacific Economic Cooperation forum (APEC), Chang’s delegation scored the first point for the TRA. The delegation included Minister of Transportation and Communications Lin ­ Ling-­san (林陵三) and Chairwoman of the ­ Cabinet­level Council of Labour Affairs Chen Chu (陳菊), acting as advisers to the Association, Taiwan’s first ­minister-­level officials to visit Russia.108 In Vladivos-­ tok, the Taiwanese delegation engaged in the aviation agreement negotiations, reportedly reaching a breakthrough as both sides agreed to grant each other fifth freedom rights.109 On 24 and 31 August 2002, Taiwan’s China Airlines and a private Russian carrier, Transaero Airlines, flew the first charter flights between Taipei and Moscow respectively. On this occasion, President Chen’s second Foreign Minister Chien ­Yu-­hsin (簡又新, identified by the Russian News Agency ­ Itar-­Tass as ‘Foreign Minister of China’s largest Taiwan Island’110) did not forget to remind Moscow of the benefits of regular flights between both sides. These included the flow of Taiwanese investments and mass arrivals of Tai-­ wanese tourists, whose annual expenditure on overseas travel approximated US$7 billion. The exchange of two charter flights did not amount, however, to a final reso-­ lution of the aviation issue. In late October 2002, Lin ­Lin-­san announced that an

116   The Russian offensive aviation accord would be signed either in late 2002 or early 2003, and the first regular flights would commence in April 2003. Each airline was to initially offer up to two weekly ­non-­stop flights. Both China Airlines and Transaero agreed on ­code-­sharing and seat swapping arrangements to reduce the operational risks. Yet, the intensive negotiations did not resolve the issue of fifth freedom rights and income tax exemption.111 China Airlines hoped to secure the fifth freedom rights from Russia to allow it to extend Taipei–Moscow flights to Europe, which it said was the only way to make the route profitable.112 Moscow, for its part, wanted to put aside the fifth freedom rights discussion and begin the direct Moscow–Taipei chartered flights. By ­ mid-­2003, the issue of taxation also remained unsolved. The Russians proposed that Taiwan would not charge the Russian airline any taxes, while Moscow would charge Taiwan’s China Airlines. Taipei rejected the offer. In May 2003, Transaero Airlines decided to delay com-­ mencement of regular direct flights from Moscow to Taipei due to the outbreak of SARS. Chang ­ Chun-­hsiung revisited Russia (Moscow and St Petersburg) in early September 2003 on yet another business-promotion tour, during which four trade agreements were signed, including deals to purchase Russian crude oil and raw materials for the production of fertilizers. The ­ Export-­Import Bank signed a US$1 million re-lending deal with Russia’s Guta Bank, while the Land Bank of Taiwan (臺灣土地銀行) established US$2 million remittance cooperation rela-­ tions with three Russian Banks.113 In late September 2002, the MTC and TMC – under the watchful eye of ­Secretary-­General of the TRA, Lo ­Chih-­cheng (羅致 政) – signed a memorandum in Moscow on the bolstering of the development of SMEs. Taiwan was to lend its experience in SME development to related Russian agencies and private sectors to help develop SMEs in Russia. The memorandum marked the first major breakthrough in business cooperation between Taiwan and Russia since the two countries had initiated contact 10 years earlier. In 2005, the TRA established a bilingual Internet network to facilitate contacts between Tai-­ wanese and Russian SMEs: www.­taiwan-­ru.com. Starting in September 2003, the TRA began annual trade and investment mis-­ sions to Russia, during which Taiwanese–Russian cooperation seminars (台俄合 作論壇) were organized. Grouping Taiwanese and Russian government officials, academics and business people, the seminars debated the prospects of Taiwan-­ ese–Russian economic relations.114 Above all, however, they provided Taiwanese delegates (who often included vice ministers in charge of economic affairs) with an opportunity to meet Russian politicians, including the State Duma’s vice speakers (September 2003 and October 2005). The TRA’s business missions to Russia also provided Taipei with a platform to showcase Taiwanese interest in economic cooperation with Russia. During the mission in September 2004, the Chinese Petroleum Corporation, for example, preliminarily agreed with LUKOil, Russia’s largest oil company, to import Ural oil, worth US$250 million. This was the first direct deal between the Taiwanese oil company and its Russian counter-­ part.115 Taipei also continued its humanitarian diplomacy towards Russia. In October 2002, it donated US$16,000 to the families of hostages who had been

The Russian offensive   117 murdered by a group of Chechen separatists at a Moscow theatre. A year later, in the name of the TRA and MOFA, Taipei donated US$10,000 to help earthquake refugees in the Russian Republic of Altai. Given the uncertainty of the DPP’s election prospects in the presidential elec-­ tions in 2008, the fate of the TRA – its achievements in fostering stronger ties with Russia notwithstanding – hangs in the balance. As the DPP’s creation, it is likely to lose its ­quasi-­official status and the government’s support if the KMT returns to power. Its economic functions could be taken over by the CIECA (chaired by Jeffrey Koo), which in 1998 signed a cooperation agreement with Russia’s Chamber of Commerce and Industry (CCI, currently chaired by former Premier Primakov) and holds annual meetings with the CCI, either in Moscow or Taipei.

Putin’s Taiwan policy While Taiwan under President Chen’s leadership was undeniably committed to developing closer relations with Russia, it was not clear to what extent Putin’s Russia was equally committed to friendship with the ROC. In the aftermath of the massive earthquake that hit central Taiwan in September 1999, Prime Minis-­ ter Putin promptly approved the dispatch of a Russian relief mission (altogether 83 rescuers).116 President Putin, however, appeared less friendly to Taipei, despite his personal acquaintance with Chen ­ Shui-­bian. Since the inauguration of his presidency in May 2000, Putin reiterated on various occasions Moscow’s firm support for China’s stand on the Taiwan issue. Internationally, Moscow’s ‘one China’ principle translated into Russian vetoes against Taiwan’s bids to ­re-­enter the UN and WHO and discussion of the Taiwan issue on other intergovernmental forums. Domestically, Putin’s emphasis on relations with China resulted in bowing to Beijing’s pressure and denying visas to key Taiwanese politicians, especially those from the ruling DPP. Legislator and leading member of the DPP, Chang ­Chun-­hung (張俊宏), became the first victim of a ­Sino-­Russian tacit ban on DPP officials’ visits to Russia. Chang, who intended to attend the symposium on Taiwan’s democratization in early May 2000, organized by the University of Moscow, was denied a visa on the eve of his departure, having had no visa prob-­ lems during his two previous trips to Russia.117 Putin’s ‘one China’ policy also meant strengthened Russian support for China’s belligerent policy on Taiwan. Although officially never confirmed (or denied), Putin reportedly went beyond Yeltsin’s ‘four nos’ policy on Taiwan by pledging Russian military support for China in the event of the United States’ intervention in any ­Sino-­Taiwanese conflict. According to reports from the ­ROC­based Central News Agency, the pledge followed a Putin–Jiang meeting in Dush-­ anbe in July 2000. The Russian President allegedly issued special instructions for the Russian military to be prepared for a deployment in the Taiwan Strait to block intervention by the American navy in the ‘internal Chinese affair’. A report based on US intelligence and published in the Washington Times revealed that in February 2001 the Russian military conducted exercises, which included

118   The Russian offensive l­arge-­scale simulated nuclear and conventional attacks against US military units ‘opposing’ a Chinese invasion of Taiwan.118 Article 9 of the Treaty of Good Neighbourly Friendship and Cooperation between the PRC and the Russian Fed-­ eration (signed on 16 July 2001) underscored the likely ­ Sino-­Russian security cooperation on the Taiwan issue by committing both sides to ‘contact’ and ‘consult’ each other to eliminate the threat that could potentially arise from ‘aggression menacing peace, wrecking peace, and involving [their] security interests and is aimed at one of the parties’. Needless to say, the Treaty also con-­ tained an extended paragraph (Article 5) restating Russia’s opposition to Tai-­ wan’s independence ‘in any form’.119 The Russian commentators, noting the ­non-­military nature of the ­ Sino-­Russian alliance, acknowledged that Russia’s neutral stance in the event of a ­Sino-­US confrontation over Taiwan would most probably be tilted strongly in favour of China.120 Under Putin, Moscow increased supplies to China of the advanced weaponry necessary for China to stage a successful naval invasion of Taiwan. According to the Stockholm International Peace Research Institute, Russian arms exports to China increased – at constant 1990 prices – from an average of US$725 million annually in 1992–1999 to an average of US$2.4 billion annually in 2000–2005.121 The types of weapons Putin sold to China were to enable Beijing to dominate the Taiwan Strait and deter US intervention in any future conflict involving Taiwan. As a result of the Putin administration’s enthusiasm for arms deals with China, Moscow supplied Beijing with 89 per cent of China’s foreign arms acquisitions, while Beijing emerged as the world’s leading importer of weapons.122 Given the strength of its alliance with China, Moscow was positively dis-­ suaded from developing any active policy on Taiwan. The appointment by the Russian Foreign Ministry of Vladislav Verchenko as the head of the Russian office in Taipei in June 2001 underscored Taiwan’s insignificance in Moscow’s greater diplomatic strategy. Unlike his predecessor, Verchenko had never reached an ambassadorial position. Despite 15 years of diplomatic service in China, his highest position was heading the Russian consulate in Shengyang. Although he spoke fluent Chinese, he knew very little about Taiwan.123 He was posted to Taipei to manage Russia’s ­low-­key, ­non-­governmental cooperation with Taiwan, rather than to engineer Moscow’s ­pro-­active policy towards the ROC. And yet, in the context of Putin’s emphasis on strategic diversity in Asia, meant to reduce Russia’s dependence on China,124 Taiwan – seen as a source of trade surplus and potential investments – played some role in the Kremlin’s policy of diversification. Putin’s approval of the changes to Russia’s environmen-­ tal laws allowing large quantities of foreign radioactive waste to be imported into the country for reprocessing and interim storage opened a promising new niche for Russian–Taiwanese economic collaboration, as the Taiwan Power Co. (台電) showed interest in shipping radioactive spent fuel to Russia for disposal. (No agreement has been signed to date.) When a private Ukrainian fishery company sold Taiwan (and North Korea) fishing rights for saury in waters around the ­ Russia-­held South Kurile Islands claimed by Japan (the Ukrainians won the fishing quota through public tender in Russia in July 2001),

The Russian offensive   119 the Kremlin did not voice opposition, although Russia itself sought no fishery agreement with Taiwan. Finally, Putin did not block scientific and technological cooperation between the Russian research institutions and their counterparts in Taiwan.

Russia, China and Taiwan ­post-­9/11 President Putin’s efforts to move Russia onto a pragmatic ­ pro-­Western track in the aftermath of the 11 September 2001 terrorist attacks on the United States, which resulted in signing on to the ­ US-­led ­ anti-­terror coalition, acquiescing to American military bases in former Soviet Central Asia, acceptance of Washing-­ ton’s withdrawal from the ­Anti-­Ballistic Missile Treaty and even dropping objec-­ tions to NATO expansion deep into the former Soviet sphere of influence, seemingly did not affect Moscow’s stand on the Taiwan issue. Although signs that the USA would ignore Moscow’s actions against Islamic separatists in Chechnya suggested that there was less need for Russia to support any future Chinese action against Taiwan, Putin insisted that Moscow’s increasingly cosy relations with the West neither threatened its partnership with China nor altered the Kremlin’s ‘one China’ policy. In November 2002, on the eve of his visit to Beijing, he sought to allay China’s fears about Russia’s honeymoon with the West, stating that relations with China remained a priority.125 In substance, the Kremlin’s flirtation with the West indeed made no impact on its ‘one China’ policy. Russian arms sales to China continued. The exchange of charter flights between Taipei and Moscow was preceded by consultations with China. Prior to the commencement of the first charter flights between Moscow and Taipei, the Russian Foreign Ministry emphasized that the direct air link between Russia and Taiwan was a commercial decision and did not indicate any change in Moscow’s principled stand on the ‘one China’ policy. The Ministry stated that these flights should ‘only be regarded as unofficial commercial air traffic targeted at enhancing unofficial bilateral trade, economic, cultural and tourist links to Taiwan’. It continued stating that ‘there is only one China, while the government of the People’s Republic of China is the only legitimate repre-­ sentative enjoying the right to speak on behalf of China’.126 US President George W. Bush’s statement on an ‘axis of evil’ in January 2002, and his decision to attack Iraq in March 2003, despite Russia’s opposition, cooled the Kremlin’s enthusiasm for a cosy partnership with Washington. When, in May 2003, President Hu Jintao went to Russia on his first overseas visit since he assumed the presidency, China and Russia ­ re-­emphasized their common opposition to unilateralism in world politics and commitment to constructing a multipolar world.127 A year later, Putin praised Russia’s ties with China as having reached unparalleled heights.128 In this context, Russia’s strong support for Bei-­ jing’s ‘one China’ policy does not surprise. Putin spoke against the first referen-­ dum on Taiwan’s defences against China’s menace, proposed by Chen ­Shui-­bian and held on 20 March 2004. Russian Foreign Minister Sergei Lavrov criticized the proposed referendum as ‘counterproductive’ to peace in the Taiwan Strait.

120   The Russian offensive ‘The Taiwan problem is China’s domestic affair’, Lavrov said. ‘We hope that it will be settled without damaging peace and stability in the ­Asia-­Pacific region.’129 The Kremlin voiced support for the ­Anti-­Secession Law, passed by the Chinese legislature in March 2005, which targeted Taiwan. The Putin administration, however, intended its ‘one China’ policy neither to obstruct economic relations with Taiwan nor to transform Russia into Taiwan’s enemy. Thus, Moscow dropped its ban on DPP officials’ visits to Russia. Despite China’s alleged pressure on Moscow to bar the TRA President, Chang ­ Chun­hsiung, from entering Russia, Chang was welcomed on more than one occasion. In December 2003, the Russian Foreign Ministry for the first time issued a statement expressing hope for a peaceful solution to the Taiwan problem. Similar statements followed in December 2004 and March 2005.130 The legislators from ­ pro-­Putin Yedinaya Rossiya form half of the informal, 50-member Taiwan friendship group in the State Duma, elected in 2003.131 Russia did its best not to transform the war games with China in 2005 – initiated upon its suggestion – into a warning to Taiwan. It proposed holding the ‘Peace Mission 2005’ in Central Asia, while Beijing suggested Zhejiang (浙江) province, across from Taiwan, which Moscow rejected as too provocative. The two sides eventually agreed to hold the exercise in the Shandong (山東) peninsula. Colonel General Vladimir Moltenskoi, Deputy Commander-in-Chief of Russian land forces, noted that ‘the exercise has nothing to do with interests of a third state [sic] such as Taiwan or North Korea’.132 After years of stalled negotiations on direct flights, some progress was made and charter flights took place (most recently in January–October 2004 by Transaero). The aviation agreement still awaits its finalization due to the unresolved financial and logistics issues, rather than political pressure from China. The Russians have engaged in negotiations with Taiwan over Russia’s prospective membership in the WTO. The results of these negotiations are likely to boost Russian–Taiwanese economic cooperation by giving Taiwan increased access to the Russian market in the areas of tele­ communications, financial services, tourism and consumer services, law, educa-­ tion, taxation administration and construction, as well as lowering tariffs on Taiwanese exports. The arrival of Russia’s new representative to Taipei, Dr Sergey N. Gubarev – former Minister Plenipotentiary to Belgium, fluent in Chinese, English and French – in November 2005 raised the level of Russia’s representation to Taiwan. Finally, Moscow agreed that Taipei could open, in Vladivostok, its second representative office in Russia in 2007, which is likely to accelerate Taiwan’s economic penetration of Russia’s Far East and convince the Russian government to authorize direct air links between Taipei and Vladivostok.133 The cultural exchanges between Russia and Taiwan blossomed. ­ World­renowned Russian ballet dancers, orchestras (including the Russian Red Army Brass Band) and conductors have often visited the island, while Russian scien-­ tists worked in the Hsinchu Science Industrial Park (新竹科學園區) and the Academia Sinica (中央研究院).134 (In return, the Taiwanese organized annual film festivals in various Russian cities, showcasing Taiwan’s recent cinematogra-­

The Russian offensive   121 phy, as well as photographic and art exhibitions.) The Russian media have dem-­ onstrated their sympathy towards Taiwan through interviews with the Taiwanese leaders, including President Chen. Furthermore, an interview with ROC Premier Chang ­Chun-­hsiung by the Merchant carried a hidden symbolism, as it was pub-­ lished on 10 October, Taiwan’s national day. Finally, ­city-­to-city diplomacy was boosted when the Kaohsiung Harbour Bureau and the Port of Vladivostok signed an agreement on sisterhood ties in August 2003.

Conclusion The Taiwanese Russian policy could be considered a fiasco. If its strategic goal was to establish close relations with Moscow, comparable to the ROC’s ties with the United States and, thus, encompass arms sales and security guarantees, Taiwan failed on all counts. The Kremlin rejected the ­ LDPR-­proposed Taiwan Relations Act and spelt out a ‘fourth no’ to Russia’s arms sales to Taiwan. It even, reportedly, went as far as committing Russian military support to the PRC in the event of a US intervention in the ­Sino-­Taiwanese conflict. The Taiwanese could not prevent the resumption of ­ Sino-­Russian military cooperation, which permitted China to redeploy its military forces from the Russian border to the Southeast coast, directly threatening Taiwan’s security. Taiwan protested in vain against Russian arms sales to the PRC, which boosted China’s military capacity to launch a successful attack on the rebel island. To date, Moscow’s most daring acts on the Taiwan question were an announcement urging the peaceful unifica-­ tion of China and Putin’s prompt humanitarian assistance in the aftermath of the devastating earthquake in Taiwan in 1999. The continuous flow of Russian arma-­ ments to China, however, shows that Moscow endorses Beijing’s goal of reunifi-­ cation by military intimidation or force if necessary. The ROC’s Russian strategy was an equal failure if Taipei aimed less ambitiously at merely exploring the Russian market. Instead of expanding Taiwanese exports to Russia, it was Russia that turned Taiwan into its leading export market in Asia. Even so, to describe the Taiwanese foreign policy as a failure is to judge its accomplishments by its unrealistically high expectations, which were very distant goals. To argue that Taipei failed to establish relations with Moscow, comparable to its relation with the US, is to expect the impossible. The ROC’s campaign to forge links with Russia started from a low level and was burdened by the memory of fierce political antagonism. Taipei lacked ­ Russian-­speaking experts and the necessary connections with influential politicians. Most importantly, however, it baulked at providing Russia with any economic assistance, except the rice donation in the early 1990s, even though the Russian economy certainly needed help: it shrank in US dollar terms by 28 per cent between 1991 and 1994, and 55 per cent between 1997 and 1999. Despite the fact that Taipei did not aid Russia, while its imports of Russian raw materials were of little significance as Russia could readily find new markets for its primary products, Taipei success-­ fully built the institutional foundations for ­ quasi-­official relations with the Kremlin. The establishment of the MTC and TMC as two ­ non-­governmental

122   The Russian offensive bodies overseeing Russian–Taiwanese relations, and the subsequent opening of their representative offices in Moscow and Taipei, which function as de facto consulates, are Taipei’s indisputable achievements. Taiwan also began enjoying some political support in the State Duma and the sympathy of Russian academ-­ ics, the media and the public. From the geopolitical perspective, Taipei’s qualified failure in Russia is not altogether surprising. One glance at the map suffices to identify Russia’s geostra-­ tegic interests in East Asia. Internationally isolated, distant and parsimonious Taiwan is hardly an attractive partner for a regional power with global ambitions. Russia’s 4,375 kilometre border with China and China’s increasingly active inter-­ action with ­post-­Soviet Central Asia ensure Moscow’s strong interest in preserv-­ ing friendly relations with Beijing for the sake of border security and stability in Central Asia. The ROC’s domestic economy pales in comparison with the vast potential of the PRC market. Russia’s trade with China consistently surpassed, by a wide margin, Russian–Taiwanese trade. Still, Moscow’s strategic partner-­ ship with Beijing did not preclude its economic cooperation with Taipei. As a result, Russia skilfully positioned itself as the beneficiary of ­ Sino-­Taiwanese hostility. On the one hand, as tensions rose in the Taiwan Strait, Russian arms exports to China grew. On the other, Russia’s economic cooperation with Taiwan led to an increase in exports to the island. Both Chinas became Russia’s major economic partners in Asia and sources of a trade surplus. Politically, Moscow could present itself as an alternative security guarantor in East Asia, while Bei-­ jing’s goal of reunification impedes the progress of ­Sino-­American relations and highlights the attractiveness of partnership with Russia. This partnership – trans-­ lated into active support or friendly neutrality if China attempts unification by military means – could become critical to the success of the Chinese reunifica-­ tion venture. As long as China refrains from invading Taiwan, Russia’s ‘firm support’ for the ‘one China’ principle has no negative – economic or diplomatic – implica-­ tions for Russia. Thus, it could be argued that the status quo – China’s division and cooperation with both the PRC and ROC – favours Russia, whereas the resolved ‘Taiwan problem’ is not necessarily in Russia’s interest. Even a sym-­ bolic naval assistance for China against the US military intervention in the Taiwan Straits could lead to an undesirable confrontation with the United States, while the successful reunification of China would augment the PRC’s economic power, remove the major obstacle to closer ­Sino-­American ties and, thus, render Russia’s strategic friendship less significant in the new geopolitical context. Realpolitik seemingly demands that Moscow does not encourage a military reso-­ lution of the ‘Taiwan problem’. The crucial question, however, is not whether the status quo benefits Moscow but whether Russia works towards sustaining the status quo in the Taiwan Strait. There is no evidence that the Kremlin enjoys any influence over China’s Taiwan policy. For geostrategic and economic reasons, Moscow cannot afford alienating its neighbour, currently the world’s fourth largest economy and rising global power. It might have skilfully managed economic cooperation with Taipei, while

The Russian offensive   123 strengthening strategic partnership with China, but the Kremlin is interested neither in playing the ‘Taiwan card’ against Beijing nor in interfering in ­ cross­Strait relations as the cost of such a course appears significantly larger than the potential benefits, economic or diplomatic. Russia, far from taking an active interest in the ­ intra-­Chinese conflict, has settled on a policy of benign neglect, leaving the tough decisions on Taiwan’s future to China and the United States.

6 China’s Balkan fortress

From the late 1940s until the 1970s Taipei pursued a policy of hostility towards all socialist states, irrespective of their geographical location. However, when it allowed direct trade with Czechoslovakia, East Germany, Hungary, Poland and Yugoslavia in November 1979, the majority of Balkan states were considered too hostile to benefit from the new policy. Only in December 1981 did Taiwan permit direct trade with Bulgaria, followed shortly by Romania. The end of Taipei’s ban on direct trade with the Balkans notwithstanding, Taiwan continued to consider the Balkan states not only as politically suspect (due to their intimate relations with Beijing), but also as economically less attractive than their counterparts in Central Europe. In the early 1980s, Taipei cautiously encouraged Taiwanese entrepreneurs to explore Central European markets.1 This encouragement was lacking with the Balkans (again, with the exception of Yugoslavia). As a result, the Balkans lagged behind Central Europe in advancing economic relations with the ROC. By the late 1980s, Taiwan’s increasing diplomatic isolation, its need to identify new export markets, as well as its domestic democratization forced Taipei to rethink an ideological approach towards the communist states in general and the Balkans in particular. When, in 1988, the Executive Yuan announced – for the second time – the policy of direct trade with the communist states, only Albania was excluded. The Balkans, preoccupied with their domestic problems, appeared moderately interested in stronger economic ties with Taipei. In 1988, Romania and Yugoslavia were the first among the communist states to open direct dialling with Taiwan. In the same year, Romania became Taiwan’s third largest communist trading partner, while Bulgaria’s trade with the ROC surpassed that of Hungary and Czechoslovakia. In March 1990, Taipei finally terminated its ­long­standing hostility towards Tirana by lifting the ban on both direct trade and Taiwanese investments in Albania. In late 1990, Taipei indicated that the Balkan states may, in the near future, apply for aid from the OECDF.2

Yugoslav ­head-­start Although all Balkan states were accorded similar opportunities to pursue economic relations with Taiwan, Taipei’s limited human and financial resources

China’s Balkan fortress   125 forced it to concentrate on one Balkan state, which could help it establish a base from which its economic and political campaign could be launched across the Balkan region. Yugoslavia was an obvious choice as it was economically the most prosperous and politically the most liberal. Taipei calculated that Belgrade’s domestic liberalism and ­ non-­aligned foreign policy would translate into warm relations with the ROC. At first, Belgrade showed a strong interest in pursuing economic relations with the ROC. In June–July 1990, CETRA was allowed to set up a trade office, subsequently named the Far East Trade Service Centre.3 It became Taiwan’s second trade office in the ­post-­communist region, after Hungary. An official from the Slovenian Republic’s Foreign Economic Relations Department, Mitja Dtorepec, participated in the first Export–Import Fair (進步夥伴展) organized in Taipei to cater for traders from the communist and former communist economies.4 In October, Belgrade gave permission for China Airlines to use Yugoslav airports for technical stopovers, rendering Yugoslavia the first among the communist and former communist countries to allow the ROC planes to enter its airspace (Hungary soon followed).5 However, two decades of intimate partnership with the PRC had made the Yugoslav government aware of China’s sensitivity regarding the Taiwan issue. Unlike Budapest, which for a brief moment seemed determined to sacrifice friendly ties with Beijing on the altar of Taipei’s financial generosity, Belgrade was not prepared to venture into the murky waters of official ambiguity concerning relations with Taiwan. Cooperation with the ROC was to be strictly confined to the economic and trade areas. Thus, despite Taipei’s intention to copy the ‘Budapest model’, where the nominally CETRA office was effectively established by MOFA and MOEA, the Yugoslav government agreed to a genuine trade office only, to be operated by a ­ non-­governmental body.6 MOFA was disappointed with Belgrade’s refusal to allow for a ­quasi-­diplomatic office, permitted to issue visas. It was further aggravated when the Yugoslav Foreign Ministry did not issue visas to the Service Centre’s staff until late December 1990, even though the office was allowed to start operations in ­mid-­1990.7 A 300 per cent hike in ROC–Taiwanese trade, registered in 1990 (see Table 6.1), failed to impress Belgrade, which raised import tariffs on ­Taiwan-­made products by 70 per cent. The Yugoslav decision to grant ROC passport holders landing visas did not appease Taipei. In late 1990, the ROC government announced that all contacts between Taiwan and Yugoslavia would take place on ­ non-­governmental levels. It also threatened that Chiang ­ Pin-­kung’s trade delegation to the ­ post­communist region would skip Yugoslavia.8 Relations between Taiwan and Yugoslavia were expected to improve following the visit to Taiwan by the Serbian Vice Minister of Foreign Economic Relations, Zoran Ilic, who arrived in Taipei in ­ mid-­1991. Ilic indicated Belgrade’s interest in applying for financial assistance from the OECDF and hinted that Yugoslavia could grant Taiwan MFN status (and, thus, reduce high import tariffs). The Serbs hoped that the Taiwanese would invest in the newly created free economic zones.9 Yet nothing concrete was achieved. In July 1991, MOEA

– – 2.7 22.7 8.0 27.8 0.1 0.1 2.3 20.3 1.0 20.6 0.4 0.4 0.5 0.5 0.3 0.1 0.3 0.1 0.1 0.1

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

– – – – – – – – – – 0.9 –0.9 0.6 –0.4 1.5 1.5 0.1 0.1 0.2 –0.2 0.0 –

Bosnia 35.4 222.6 17.0 24.2 12.6 2.0 15.1 27.5 20.1 4.7 35.1 211.1 38.3 –5.5 51.8 213.8 26.2 23.2 24.0 24.0 21.0 1.2

Bulgaria – – – – – – – – – – 0.5 20.1 2.6 0.4 6.1 4.3 5.6 2.6 6.2 3.4 11.4 5.8

Croatia – – – – – – – – – – 1.5 20.3 3.7 2.3 1.1 0.9 0.5 0.5 0.5 0.5 2.5 1.3

Macedonia 40.9 237.1 11.0 219.2 14.8 26.4 15.3 22.9 19.4 0.2 32.9 217.3 47.2 226.6 86.3 245.7 42.0 0.6 59.9 213.9 60.7 –6.3

Romania

Notes T = total trade exchange, B = trade balance.

Source: Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao, April 1996 and March 1999.

T B T B T B T B T B T B T B T B T B T B T B

Albania



Table 6.1  Taiwan’s trade with the Balkan states, 1988–1998 (in millions of US dollars)

– – – – – – – – – – 5.0 21.8 16.5 25.7 22.3 4.3 29.7 8.5 26.8 5.2 42.3 5.3

Slovenia

21.4 212.6 12.1 6.3 47.7 24.7 31.5 13.1 25.9 21.7 17.3 23.9 3.1 2.1 9.1 5.5 10.6 4.0 13.2 10.8 12.7 8.1

Yugoslavia

China’s Balkan fortress   127 sent an ultimatum to Belgrade demanding the reversal of its 70 per cent increase in tariffs on Taiwanese products. Otherwise, it threatened, Taipei would adopt a corresponding policy and abolish preferential tariff treatment for Yugoslav imports.10 In ­mid-­1991, CETRA closed its trade office, more likely as a result of the escalating ethnic strife in Yugoslavia, which did not facilitate economic cooperation, than as a reaction to trade disagreements between the two governments, although these disputes may have made the decision to pull out an easier one.11 The civil war in Yugoslavia put a stop to the possible outbreak of a ­full-­scale Taiwanese–Yugoslav trade war. In May 1992, the UN Security Council imposed economic sanctions on Yugoslavia, which Taiwan followed in ­mid-­January 1993. From then on, Taiwanese firms were forbidden to trade with Yugoslavia.12 Taipei also took note of the UN Security Council resolution (April 1993) that imposed an economic blockade on Yugoslavia. In ­mid-­May, MOFA banned all ­Yugoslav­owned ships from Taiwanese ports. In late May, the Americans provided Taipei with a list of over 100 ­Yugoslav-­owned ships. On 6 June, the American Institute in Taiwan – the US de facto embassy in the ROC – called the ROC Ministry of Transportation and Communications to alert it to the fact that two Yugoslav ships (both registered in Malta) had docked in the Kaohsiong port. Upon the intervention of MOFA, the Ministry of Transportation resolved to detain the ships.13 This affected one Yugoslav cargo ship, which was still in Kaohsiong port when the decision was made.14 The ship and its cargo were released two days later. The event had a further negative impact on Taiwanese–Yugoslav trade, which began declining in 1991, and plunged in 1994 to an insignificant figure of US$3 million (see Table 6.1). Taipei’s trade with Belgrade began recovering after economic sanctions on Yugoslavia were lifted in November 1995, but never returned to its high, ­pre-­war levels. At the same time, Belgrade consistently avoided all forms of economic or ­non-­economic cooperation with the ROC. The ­post-­Yugoslav states of Slovenia and Croatia showed some interest in pursuing trade relations with Taiwan, but religiously avoided any ­political interaction with Taipei. In August 1992, the Chamber of Economy of Slovenia participated in CETRA’s trade fair.15 In November 1992, Feri Horvat, the Chamber’s Chairman and CETRA signed an agreement on cooperation and, in May 1992, CETRA visited Slovenia.16 The Taipei Trade Office in Budapest coordinated the Taiwanese policy towards the ­ post-­Yugoslav republics. ROC representatives stationed in Budapest made several trips to Slovenia, where the ­ Sino-­Slovenian Friendship Association (中斯友好協會) was formed. The Trade Office, however, did not predict that representative offices would be exchanged between Slovenia and Taiwan in the foreseeable future.17 By the late 1990s, Slovenia had become Taiwan’s third-largest trade partner in the Balkans (see Table 6.1). The Croatian Chamber of Economy opened its office in Taipei in 1993, followed, in August 1994, by the visit of a large trade delegation from Croatia to Taiwan. The Croatians hoped that Taipei would use their ports for its trade with Central and Eastern Europe. In December 1996, during a visit to Japan, Croatia’s Foreign Minister, Mate Granic, stated Zagreb’s interest in pursuing economic relations with Taiwan in the context of the ‘one China’ policy. In May 1997,

128   China’s Balkan fortress Taipei for the first time organized a trade delegation to the former Yugoslavia, visiting Croatia. More than 200 Croatian business leaders attended trade seminars sponsored by the ROC trade delegation.

Sofia’s gamble In the early 1990s, Taiwan also began courting Bulgaria. In ­ mid-­1990, shortly after the CETRA office opened in Budapest, the head of the Economic Department in the Bulgarian Ministry of Foreign Economic Relations, Venelin Djourov (who had visited Taiwan in March), implied Sofia’s interest in reaching an agreement with Taipei on opening reciprocal representative offices.18 Shortly afterwards, the Bulgarian Chamber of Trade and Industry organized a trade promotion tour to Taiwan. Led by the Chamber’s Chairman, Vladimir Lambrev, the delegation included a number of government officials in charge of foreign economic relations. The Bulgarians hoped not only for Taiwanese investments, but also for direct trade relations. The routing of trade via Singapore or Western Europe increased the cost of products and reduced profits. In May 1991, the Bulgarian government officials met Taiwanese trade delegates (led by Chiang ­Pin-­kung) to discuss the possibility of opening an ROC office in Sofia. The Bulgarians expressed readiness to sign agreements on investment protection and avoidance of double taxation in order to attract Taiwanese investors to the newly established free economic zones. During the meeting, a decision was allegedly made that the ROC office in Sofia would be set up in the second half of 1991.19 After the anticommunist Union of Democratic Forces won the parliamentary elections in October 1991, relations between Sofia and Taipei visibly warmed up. In January 1992, the Bulgarian Prime Minister’s wife travelled to Taiwan, where she met President Lee ­Teng-­hui. In late March, Sofia agreed to direct air links, hoping to facilitate the flow of Taiwanese investments. Vice Minister of Bulgarian Ministry of Communications Kiril Sadonkov signed the aviation agreement – the first of its kind between the ROC and the ­post-­communist country – with his ROC Civil Aeronautics Administration. The pact provided for a total of four ­round-­trip flights a week between Sofia and Taipei. None of the Taiwanese airlines expressed an interest in operating the Taipei–Sofia route. The ROC media speculated that Bulgaria’s national carrier, Balkan Bulgarian Airlines, would operate the route in the initial period.20 The Bulgarians expected that the opening of the direct air link would facilitate economic relations between the two sides in addition to attracting Taiwanese investments. Bulgaria certainly needed help. Its GNI contracted by 9.1 per cent and 11.7 per cent in 1990 and 1991, respectively, making the Bulgarian economy (in current US dollar terms) smaller than Latvia’s.21 In terms of GNI per capita, Bulgaria was the second poorest in ­post­communist Europe (after Albania). In this context, Sofia’s support for Taiwan’s struggle with China – expressed by Prime Minister Filip Dimitrov in a meeting with a visiting delegation of the WLFD in August 199222 – should be interpreted as its compliance with Taiwanese diplomatic objectives in the expectation of economic assistance.

China’s Balkan fortress   129 Sofia, however, soon discovered that Taiwanese promises of economic assistance and investments did not easily translate into reality. Despite the aviation agreement, which, unsurprisingly, angered Beijing, ROC investors did not show any interest in the Bulgarian market. Due to the small number of passengers, Balkan Airlines were to operate the Taipei route only once a week. But even this ­scaled-­down service was suspended a month after it was initiated, in late January 1993.23 It is a moot point whether the decision to suspend flights was based on low turnover figures or pressure from China. In response to the absence of Taiwanese aid diplomacy, Sofia re-emphasized its ‘one China’ policy. When, in 1995, Taipei hoped to forge ­sister-­city ties with the Bulgarian capital, the latter declined the accord shortly before Taipei mayor Chen ­Shui-­bian embarked on his European tour.24 According to the Xinhua News Agency, in 1998, Taipei sent Dr Kvint, manager of the US Arthur Anderson Financial Consultation Corporation, to Bulgaria, reportedly to offer economic aid in exchange for Sofia’s recognition of Taiwan. The President’s economic advisor, Angarski, who allegedly met Kvint, denied any such meeting took place.25 By then, however, Bulgaria received annual OA from the DAC amounting to US$137 million in 1998 and 1999 and US$207 million in 2000. Taipei was very unlikely to surpass the DAC’s aid levels.

A focus on Central Europe In October 1992, Taiwan also expressed a passing interest in Bucharest, which was triggered by a plan by a Swiss bank consortium to finance the deliveries of ­Taiwan-­made machinery to Romania. Although the plan never materialized, the size of the Romanian market attracted Taiwanese business people. Their activities turned Romania into the ROC’s largest trading partner in the Balkans (see Table 6.1). In 1997, Bucharest declined a soft loan offer made jointly by the EBRD and the ICDF, amounting to US$12.5 million.26 Thus, neither expanding trade nor financial assistance enticed Bucharest to commence a political dialogue with Taipei. In 1991 and 1993, Taipei sent two study tours to investigate the economic prospects of Albania, Europe’s poorest state. According to the mainland Chinese sources, the Taiwanese promised the Albanians US$500,000 in exchange for diplomatic relations (which roughly equalled to one-third of Albania’s GNI).27 Unimpressed with the offer, Tirana only woke up to the possibility of doing business with Taiwan in ­mid-­1995 when Albanian President Sali Berisha invited Taiwan’s business community to invest in his country. In a meeting with the Taiwanese trade delegation in July 1995 – the first ever acknowledged direct contact between Albania and Taiwan – he promised to consider simplifying visa procedures for ROC citizens, but made it clear that Tirana would not sign any agreements with Taiwan.28 In late October, at the Crans Montana Forum, Berisha initiated discussions with the Minister of Economic Affairs, Chiang ­ Pin-­kung, who headed the Taiwanese delegation to the Forum. Neither investors nor traders, however, showed interest in the Albanian economy. Albania was to resurface in

130   China’s Balkan fortress Taipei’s foreign policy strategy in the aftermath of the diplomatic breakthrough in Macedonia in 1999–2001 (see Chapter 7). Despite the democratization of the Balkans, and the Balkan need for foreign aid and investments, the removal of all formal barriers to relations with the region resulted neither in official relations with Taipei nor stronger and ‘substantive’ Taiwanese–Balkan ties. Although all Balkan states welcomed Taiwanese trade and investments, they lacked, nonetheless, interest in elevating commercial contacts to the official or ‘substantive’ level by allowing the opening of Taipei representative offices, exchanging governmental or parliamentarian visits, or opening their own bureaus in the ROC. In addition, they neither tendered for Taiwan’s governmental orders nor actively sought Taiwanese loans. This attitude was best summarized by Croatian Foreign Minister Mate Granic, who expressed Zagreb’s interest in economic relations with Taiwan, but stressed Croatia’s support for the ‘one China’ policy, which precluded any official contacts with Taipei.29 Taipei, however, did not appear particularly distressed over its failures in the Balkans, as it showed greater interest in undermining Balkan attachment to the ‘one China’ principle, than in investing or trading with this troubled region. Its business people – ignorant of Balkan culture, politics and economics – considered the region to be too unfamiliar and undeveloped to offer any commercial opportunities. The Taiwanese leadership seemingly shared this view and did little to promote the Balkans, diverting – instead – the attention of the business community to ­post-­communist Poland, Hungary and the Czech Republic. By 1999, ‘substantive’ Taiwanese–Balkan relations hardly appeared to exist: Taiwan courted Central Europe, acknowledging the PRC’s paramount influence in the Balkans. Behind the scenes, however, Taiwanese business leaders and diplomats made strong efforts to establish friendly ties with the democratic parties in opposition. In Romania, Taipei won over the Democratic Convention of Romania, whose leader, Emil Constantinescu (who became the president in 1996) called, in 1992, for a break in diplomatic relations with the PRC and the establishment of relations with the ROC.30 In Bulgaria, Taipei found friends in the United Democratic Forces, which gained power in the late 1990s. In Macedonia, the Taiwanese communicated with all major opposition forces, who won state power in late 1998. Until 1999, Taiwan’s friendship with the Balkan opposition parties did not pay off. As soon as these former opposition parties won parliamentary or presidential elections, they rallied behind the PRC and avoided official contacts with the ROC. Macedonia was to become the first exception to this rule.

China in the Balkans The persistence of Beijing’s influence in the Balkans after 1989 is one of the most intriguing aspects of the PRC’s ­post-­Cold War relations with Europe. ­Sino­Balkan camaraderie during the Cold War rested primarily on shared ideological worldviews and common geopolitical interests, rather than financial considerations.31 While Beijing’s rapprochement with the West did not weaken its interest

China’s Balkan fortress   131 in the Balkans (despite some predictions32), China’s gradual reconciliation with the Soviet Union in the late 1980s did contribute to the Balkans’ reduced geopolitical and ideological significance in Beijing’s diplomatic strategy. The dynamics of this relationship were reflected in declining ­Sino-­Balkan trade and a less vigorous exchange of party and state visits.33 In the aftermath of the ­ Sino-­Soviet rapprochement, systemic changes in the Balkans and the collapse of the Soviet Union, geopolitical and ideological considerations ceased to play any role in ­ Sino-­Balkan relations. China no longer viewed its relations with the Balkans through the prism of its policies towards other states, nor indeed perceived them as an essential part of its global foreign policy. On the other hand, it found the continuation of its friendship with the Balkan states useful in preventing ­ pro-­Taiwan and ­ pro-­Tibet sentiments from sweeping across Southeastern Europe and in accentuating the continuity of its policy of peaceful coexistence with the ­ post-­communist region, irrespective of the systemic changes of 1989. Thus, the ­post-­Cold War reality, instead of further decreasing China’s interest in the Balkans, seemingly revived Beijing’s camaraderie with the region. Domestically, Chinese sympathy for the Balkans was expressed in an understanding attitude towards the ­ post-­1989 changes in Romania, Albania and Bulgaria, which contrasted with the harsh criticism the Chinese media unleashed against Hungary and Poland.34 Internationally, its determination to sustain good relations with the Balkans was manifested by the dynamic exchange of ­high-­level state visits. The new states of the disintegrated Yugoslavia offered a unique opportunity for Taiwan, as they lacked any tradition of cooperation with the PRC, and their economies were small enough to feel the impact of any economic assistance from the ROC. However, Beijing’s veto in the United Nations Security Council guaranteed that each of the states would avoid antagonizing China in order to secure the PRC’s support on various security matters decided in the UN. Yugoslavia, for instance, consistently sought China’s backing for its bid to lift economic sanctions, to return to the international community, and for its military operations in Kosovo in early 1999. Croatia wanted China to support its claim to sovereignty over ­ Serb-­held Krajina and the Danube River region, as well as to understand the importance of the United Nations Transitional Administration in Eastern Slavonia. Bosnia hoped China would support its sovereignty and territorial integrity. Macedonia, for its part, lobbied Beijing to secure an extension of the peacekeeping mandate of the UN Preventive Deployment Force in Macedonia (UNPREDEP). Beijing’s responses to these requests were – in general – sympathetic. It either voted in their favour or abstained, when its support would necessitate a veto and an open conflict with the United States.35 Until 1999 it never vetoed any ­Balkan-­related UN resolution. China’s membership in the UN Security Council and its rising status in the international community also played significant roles in Albanian, Bulgarian and Romanian policies towards the PRC. In 1995 Tirana sought Beijing’s backing for its bid to become a ­non-­permanent member of the UN Security Council and, in 1999, moderated China’s stand on ethnic cleansing in Kosovo. Bucharest, for its

132   China’s Balkan fortress part, wished to revive its international prominence by dusting off its Cold War role as an intermediary between the PRC and the international community.36 There was also an economic dimension to the Balkans’ relations with China. The tradition of ­pre-­1989 ­Sino-­Balkan lucrative trade continued after the Cold War, as Beijing seemingly showered its Balkan friends with generous trade contracts. President Jiang Zemin’s trip to Bucharest in June 1996, for example, accelerated discussion of a US$500 million package deal, while Romanian President Constantinescu’s visit in September 1997 brought with it a pledge from Beijing to import thousands of Dacia cars. In 1996, Beijing proposed a trade deal with Belgrade, exchanging Chinese oil for Yugoslav machinery in order to help revive the Yugoslav economy. Following the lifting of a 1992–1995 UN oil and trade embargo over Belgrade’s role in Balkans wars, the Chinese National Chemicals Import and Export Corporation (中國化工進出口總公司) and Jugopetrol signed a deal in March 1996 for an annual two million tonnes supply of crude oil over a five-year period, to be paid for in counter deliveries of ­Yugoslav-­made goods. It was the first major deal signed by Yugoslavia after the lifting of the trade embargo. Yugoslav Trade Minister Djordje Siradovic openly admitted that the barter deal was a result of ‘the excellent political relations between the countries’.37 Vice Premier Li Lanqing’s (李嵐清) visit to Sofia in November 1996 brought about Beijing’s import of US$30 million worth of Bulgarian urea. Croatia, for its part, conducted mutually beneficial trade with China in oil and oil products.38 The combination of China’s membership in the UN Security Council, its understanding attitude towards various problems experienced by the Balkan states, as well as its economic might cemented Balkan friendship with the PRC. The vocal support for a ‘one China’ policy was one of the expressions of this friendship. All Balkan states explicitly promised not to establish or develop any form of official relations or carry out any official exchange with Taiwan, and they religiously adhered to the ‘one China’ principle. The Bulgarian premier even termed official contacts with Taiwan as ‘dangerous’ and stressed that the Taiwan question should not be internationalized.39 The prominence of the Taiwan issue in ­Sino-­Balkan relations notwithstanding, until 1999 the question of Taiwan did not occupy the entire space of the bilateral communication, nor was it the most critical concern in ­Sino-­Balkan relations. There was a broad consensus in the Balkans, across the whole political spectrum, on the desirability of good relations with the PRC. Thus, not only did the Leftist parties (reformed communists) – who maintained good relations with the Chinese Communist Party – respect the ‘one China’ principle, but many ‘­pro­democracy’ parties did so as well. After defeating Iliescu in the presidential elections, Constantinescu – previously an ardent supporter of Taiwan – called China a ‘strategic partner of Romania’, and proclaimed relations with the PRC to be as important as relations with Europe and the United States.40 The leader of the Democratic Party, Petre Roman, reportedly identified China as a ‘key plank in [Romanian] foreign policy strategy, in spite of the international changes’.41 All major Romanian opposition parties (the Party of Social Democracy, the Alliance

China’s Balkan fortress   133 for Romania and the Romanian National Unity Party) stressed the strategic significance of relations with Beijing. In Yugoslavia, the Democratic Party and other critics of Slobodan Milosevic did not question Belgrade’s Chinapolitik. In 1996, Nasha Borba, Serbia’s independent daily, did not condemn Milosevic’s foreign policy towards the PRC, but rather his attraction to the ‘Peking model’, summarized as ‘one party rule, absolute control of media and control of foreign investment’.42 Similarly, no Slovenian political group questioned governmental focus on Beijing, although the media occasionally ridiculed ‘Slovene–Chinese love’.43 In sum, the Balkan political elites perceived friendship with Beijing as critical for the region’s economic development, its security and its place in the international community. As a result, China was able to exercise a ­near-­veto power over the Balkans’ interaction with the ROC. In the two most publicized events involving Bulgaria, Beijing reportedly demanded that Sofia suspend air links with Taiwan and reject a ­ sister-­city agreement with Taipei, even though a similar agreement had gone ahead between Taipei and Warsaw. China only tolerated Balkan–Taiwanese unofficial trade relations, which by the late 1990s began involving ­government-­sponsored trade delegations from the ROC.

Conclusion Taipei’s efforts to upstage Beijing in the Balkans proved impossible, as the ­Chinese-­Balkan Cold War camaraderie survived the fall of the communist system due to the new Balkan regimes’ recognition of Beijing’s importance in international politics and commerce. Facing the Balkans’ principled rejection of any official contacts, Taipei diverted its efforts to Central Europe, which appeared less dogmatic about the ‘one China’ principle. In the Balkans, Taipei’s interest was limited to occasional trade visits and lobbying efforts directed at opposition parties that could potentially champion its cause domestically and internationally. Unexpectedly, this ­ low-­profile approach, reinforced with the promises of massive financial aid, succeeded in Macedonia.

7 Macedonian breakthrough

Following the collapse of the communist regimes in Central and Eastern Europe in 1989, Taipei considered the idea of establishing diplomatic relations with some of the new ­post-­communist states. Utilizing a mixture of the promises of aid, trade and investments, as well as ­ less-­publicized rewards for certain ­ well­placed individuals in the ­post-­communist regimes, Taipei succeeded in establish-­ ing ‘substantive’ ties with Central Europe and several post-Soviet states. However, the ultimate goal of gaining a diplomatic foothold in the ­ post­communist geopolitical space evaded Taipei until January 1999, when the Tai-­ wanese finally managed to win an ally in Macedonia.

The Macedonian model At no point did PRC diplomacy support the disintegration of Yugoslavia. However, once Belgrade itself acknowledged the inevitable in April 1992, Beijing promptly recognized not only the newly proclaimed Federal Republic of Yugoslavia, but also Slovenia and Croatia.1 Thereafter, China’s interaction with the three republics took on a dynamic of its own, their secessionist past notwith-­ standing. Having reconciled itself to the break up of Yugoslavia, Beijing went on to recognize Macedonia on 12 October 1993 under its constitutional name ‘Mac-­ edonia’, rather than the name under which Macedonia was forced by Greece to join the United Nations: the Former Yugoslav Republic of Macedonia.2 Unlike Beijing’s ties with Ljubljana and Zagreb, however, ­ Sino-­Macedonian relations were not particularly active. The PRC’s first ambassador to Macedonia arrived in Skopje in June 1996, three years after the establishment of diplomatic relations.3 Skopje, however, did not complain. On the contrary, the Macedonian ruling party, the Social Democratic Union of Macedonia Party (Socijaldemokratski Sojuz na Makedonija, SDSM) – and particularly President Kiro Gligorov (former leader of the SDSM) – were pleased to note China’s interest in Macedonian and Balkan affairs and its support on the UN forum for peace in the Balkans. When Gligorov made his first visit to the PRC in June 1997, he called the ­ Sino­Macedonian relationship ‘a model of bilateral relations for the world’ and described China as ‘one of the best friends of Macedonia’.4 Beijing supported the establishment (in March 1995) and the subsequent extensions of the mandate

Macedonian breakthrough   135 of the UNPREDEP in Macedonia, signed a number of economic and cultural agreements with Skopje, and gave humanitarian aid to Macedonia.5 In return, the Macedonians pledged ‘not to initiate official relations, nor to maintain official relations with Taiwan’.6 Bilateral trade lagged behind the political interaction. Macedonia’s trade with the PRC was consistently rather symbolic, oscillating around US$1–2 million annually, mostly in Chinese exports (see Figure 7.1). The Macedonians blamed the economic sanctions against Yugoslavia and the ­ war­disrupted communication routes for the low trade figures and seemed satisfied with Beijing’s readiness to give Macedonian products ‘advantage under equal conditions’, that is, if they are equal in quality and price, but not competitive with the rest.7 Negligible trade notwithstanding, in the late 1990s China did offer Skopje a US$83 million loan to construct a hydroelectric power plant. Taiwanese businesses saw little benefit in exploring the Macedonian market, which suffered from prolonged economic recession. Taiwan was too distant and exotic for Macedonian export companies, which in any case had little – if any-­ thing – to offer Taiwanese consumers. The resulting negligible Taiwanese– Macedonian trade (see Figure 7.2), coupled with the perceived high political costs of compromising a firm stance on the ‘one China’ policy for the sake of rapprochement with Taipei, rendered the Social Democrat government inaccessi-­ ble to the Taiwanese envoys. Neither the economic nor the wider geopolitical considerations, however, constrained the Macedonian opposition. In August 1997, Vasil Tupurkovski, then a private citizen, made the acquaintance of Tai-­ wan’s representative to the Netherlands, Ku ­ Chung-­lien (顧崇廉). In the same month, Tupurkovski visited the ROC, where he met President Lee ­ Teng-­hui. Thereafter, the ROC representative office in Austria liaised with the Macedonian opposition. Having become the chairman of the newly formed political party, Demokratska Alternativa (Democratic Alternatives, DA) in early 1988, 40

US dollars (millions)

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Figure 7.1 The PRC’s trade with Macedonia (in millions of US dollars) (source: Direction of Trade Statistics Yearbook, 2005 (Washington, DC: International Monetary Fund, 2005).

136   Macedonian breakthrough Tupurkovski arranged the DA’s visit to Taiwan in March 1999. President Lee reportedly discussed the issue of Taiwanese–Macedonian relations with the DA’s representatives.8 Secret talks followed between Taiwanese envoys and the Mace-­ donian opposition. Conducted in Macedonia, as well as at bars and restaurants in Amsterdam, Vienna and The Hague, their communication centred on the futuris-­ tic issue of the Taiwanese economic assistance to the Macedonian economy in exchange for diplomatic recognition. Little is known of the exact promises made by the Taiwanese diplomats. They must have been sufficiently enticing and sincere for the opposition leaders to consider them seriously. This was particu-­ larly true in the case of the DA, whose campaign pledge in parliamentary elec-­ tions in late 1998 included attracting US$1 billion in foreign investments to Macedonia. As it later turned out, much of the envisaged investment was to come from Greece and Taiwan. During the parliamentary elections in November 1998, the Macedonian voters – disgruntled with ­post-­communist Europe’s slowest growth rate (3 per cent) and Europe’s highest unemployment (40 per cent) – gave opposition parties a parlia-­ mentary majority. In the promptly formed ­centre-­right coalition government, led by the Internal Macedonian Revolutionary Organisation–Democratic Party for Macedonian National Unity (Vnatresna Makedonska Revoluciona Organizacija– Demokratska Partija za Makedonsko Nacionalno Edinstvo, VMRO–DPMNE), and its leader Ljubco Georgievski as the Prime Minister, DA’s Chairman Vasil Tupurkovski became Vice Premier, while his party colleague Aleksandar Dim-­ itrov took over the foreign affairs portfolio. Shortly after the election victory, Tupurkovski visited Taiwan once again. In late January 1999, ROC Deputy Foreign Minister David Lee ­Ta-­wei (李大維) met the new Macedonian leader-­ ship in Skopje, where he finalized – in great secrecy – an agreement on mutual diplomatic recognition.9 In Taipei on 27 January, Dimitrov (in Tupurkovski’s company) signed an agreement with his ROC counterpart, Jason Hu, opening diplomatic ties between Macedonia and the ROC. Macedonia became Taiwan’s twenty-eighth diplomatic ally, 24 years after Taipei ‘lost’ Portugal as one of its only two diplomatic footholds in Europe (the Vatican being the other one). Tupurkovski, the broker of the deal, was generously rewarded by Taipei.10

Confusion The unexpected establishment of Taiwanese–Macedonian ties caught President Gligorov – a ­self-­proclaimed friend of the PRC – off-guard. Gligorov reaffirmed Macedonia’s continued recognition of Beijing and of Taiwan as an integral part of the PRC. In a televised address to the nation on 29 January 1999, he called on the Macedonians to oppose the government’s decision on Taiwan (an ‘illegal act’, harmful to Macedonia’s ‘vital interests’) and urged the government to revoke it.11 The Social Democrats and Liberals backed the President, calling for a parlia-­ mentary emergency session on Taiwan (which, due to the ruling coalition’s Assembly Speaker Savo Klimovski’s opposition, never took place). The SDSM leader, Branko Crvenkovski, called Macedonia’s ties with Taiwan ‘racketeering

Macedonian breakthrough   137 diplomacy’ and ‘political prostitution’, and vowed that the moment his party came to power, it would annul the decision on diplomatic ties with the ROC.12 It should be noted that the Macedonian constitution, although urging the govern-­ ment to inform the President of the proposed texts of the international agree-­ ments, made no provisions for the President’s or parliament’s approval of the international agreements signed by the government. Thus, the President and the opposition parties were powerless to change Georgievski’s decision on Taiwan. The Macedonian dailies Dnevnik and Makedonija Denes shared the Presi-­ dent’s outrage by calling the establishment of diplomatic relations with the ROC a ‘hazardous decision’ and a ‘scandalous move’, and requesting a ‘thorough explanation’ from Dimitrov and Tupurkovski.13 Despite Tupurkovski’s assurances that the Taiwan deal would bring millions of dollars in aid and investment, Makedonija Denes maintained that foreign investment from Taiwan (or elsewhere) was not the only key to Macedonia’s salvation, which must also ‘generate its own revenue to activate its own development’.14 The ROC ­ government-­published Free China Journal saw in Macedonia’s decision a manifestation of the ­post-­Cold War trend where the sharing of demo-­ cratic values replaced ideological confrontation.15 To the Macedonian leadership, however, the ROC’s coffers, rather than Taiwan’s democratic credentials, were the island’s major attraction. In order to moderate domestic condemnation, the Mac-­ edonian officials were frank about the economic motivations behind their Taiwan policy and spoke of very substantial economic assistance allegedly pledged by Taipei. Foreign Minister Hu refused to comment on the media report that Taipei promised Skopje US$1.6 billion (in aid, rather than investments) in exchange for diplomatic recognition. When Dimitrov mentioned the US$1 billion (the daily Nova Makedonija reported that US$200 million was expected in the form of a grant, US$100 million as funds for state institutions and the rest as investment in agriculture) Taipei insisted that such an amount was ‘very unlikely’.16 One glance at the economic indicators suffices to conclude that Macedonia was certainly an affordable ally. Measured in terms of GNI, its economy in 1999 was only marginally larger than Albania’s, then ­post-­communist Europe’s small-­ est economy. Taiwan’s economy was 80 times larger than Macedonia’s, its foreign exchange reserves of US$106 billion in 1999 were twice as large as Macedonia’s combined GNI for 1990–1999. Assuming that Taipei promised Skopje US$1 billion in aid, this amount equalled close to one-third of Macedonia’s GNI in 1998. Taiwan’s decision to assist Macedonian economic development coincided with a surge of foreign aid flows to the Balkan state from the DAC member states (from US$32 million in 1998 to US$136 million in 1999). The scale of Taiwanese assistance, therefore, should be judged against aid Macedonia received from the West. The astronomical figures for diplomatic partnership with Skopje, cited by the Macedonian leaders, did not go down well in Taiwan, especially as Taiwan was still recovering from the financial crisis of 1997. ROC legislators from the ­pro­PRC New Party (新黨) and even the KMT questioned the need to ‘spend so much money pursuing diplomatic allies’, instead of, for example, strengthening

138   Macedonian breakthrough Taiwan’s economic competitiveness.17 Taiwanese business people – for their part – questioned the benefits of economic cooperation with Macedonia, which was poor, distant and unfamiliar. The KMT Business Management Committee (國民黨投資事業管理委員會) Chairman Liu ­Tai-­ying (劉泰英) was quoted as saying that ­ KMT-­run companies would not consider investments in Macedonia because of the uncertainty of possible returns on such investments.18 In any case, the Taiwanese economic downturn, caused by the Asian Financial Crisis, augured ill for Taipei’s willingness (or, indeed, ability) to subsidize exotic friendships. While denying any allegations of conducting ‘dollar diplomacy’, Taiwanese diplomats attempted to highlight the value of their new venture. Vice Foreign Minister Lee praised Macedonia’s infrastructure facilities, quality manpower, as well as natural and tourist resources,19 while his boss left no doubt that the Mac-­ edonian breakthrough increased Taipei’s international visibility and ‘bargaining power in international relations’.20 Lee went on to stress the government’s deter-­ mination to make relations with Macedonia an example of how the ROC’s coop-­ eration with Europe could be beneficial. In the longer term, he envisaged relations with Macedonia becoming ‘a vehicle for cultivating friendly ties with other European countries’ (presumably, those in the Balkans).21 In other words, Macedonia was projected as the first step in Taiwan’s reinvigorated campaign to conquer Europe. Appearing to ignore the domestic debate in Macedonia con-­ cerning the legality of Skopje’s recognition of Taiwan, on 31 January Taipei sent its representative to Macedonia to make the necessary arrangements for the opening of the ROC embassy in Macedonia.

Beijing’s UN veto Both Macedonia and Taiwan made concerted efforts to ­ pre-­empt China’s fury. Dimitrov proclaimed that his country ‘would like to maintain ties with both Beijing and Taipei’ (but will accept ‘any possible decision’ from Beijing on their bilateral relations), while Hu emphasized that forging official ties with Macedo-­ nia was not aimed at a third party.22 Unsurprisingly, such remarks failed to appease Beijing. A day after the Taiwanese–Macedonian joint communiqué, PRC Foreign Ministry Spokesperson Zhang Qiyue (章啟月) urged Skopje to ‘proceed from the fundamental interests of its people’ and ‘make a “wise decision” not to recognize the validity of the communiqué’.23 On 31 January, the PRC ambassa-­ dor to Skopje, Xu Yuehe (許月荷), issued a final warning stating China’s deter-­ mination to sever diplomatic relations and reconsider support for the extension of the UNPREDEP’s mandate, if Macedonia did not immediately reverse its decision.24 Beijing also advised Skopje to abandon illusions of sustaining paral-­ lel relations with both parts of the divided China. Undeterred by these warnings, on 8 February 1999 the Macedonian govern-­ ment officially confirmed the establishment of diplomatic ties with the ROC, ending two weeks of confusion.25 A day after the clarification, China suspended diplomatic relations with Macedonia, citing the violation of the Joint Communi-­ qué on the Establishment of Diplomatic Ties Between China and Macedonia

Macedonian breakthrough   139 (October 1993) and Macedonia’s stated commitment to consider Taiwan an inal-­ ienable part of China. Beijing halted the implementation of all agreements between the two governments and recalled its ambassador, while Macedonia settled all outstanding payments to China.26 The Macedonian leadership played down the prospects of China’s possible UN veto. It expressed publicly a hope that China, as a major international power, would not block the extension of the UN peacekeeping forces’ mandate (due to expire on 28 February 1999) in a retaliatory move against Taiwan’s policy, thereby punishing the small and impoverished Balkan state. Dimitrov stated that China’s responsibility as a permanent member of the Security Council was to safeguard peace in all parts of the world, including Macedonia, irrespective of ‘certain bilateral problems’.27 In Klimovski’s view, the poor economy posed a greater threat to Macedonia than Beijing’s negative reaction at the UN.28 The Western powers, however, did not share Macedonian optimism. Although US State Department spokesman James Rubin saw no reason ‘why one ought to connect the issue of the UN force and the mandate with the subject of Macedo-­ nian–Taiwanese relations’, Washington was keenly aware of China’s possible retaliation.29 Amid domestic and international criticism that Skopje would have been wiser to make its Taiwan move after the UN voting on UNPREDEP’s mandate, Macedonia’s Information Minister, Rexhep Zlatku, reposted that the government expected either US pressure over the UN mission or China’s con-­ science to prevent Beijing from vetoing the UN peacekeeping force mandate. Therefore, the coalition government did not consider the timing to be an issue.30 Unfortunately, timing was important. Unable to rise above its parochial inter-­ ests, the Chinese Foreign Ministry announced that the role of the UN peacekeep-­ ing force in Macedonia was complete and there was no need for an extension. Consequently, given the UN’s limited financial resources, China would vote against the extension of the UN mission so that the UN could devote more atten-­ tion to places ‘with more urgent needs’.31 On 25 February 1999, Beijing vetoed a Security Council resolution to renew UNPREDEP’s mandate until 31 August 1999.32 The Chinese veto disconcerted the Security Council’s permanent members, Secretary General Kofi Annan, the European Parliament, as well as the Balkan states (particularly, Bulgaria and Slovenia).33 Their calls on Beijing to reconsider its decision in order to maintain stability in Macedonia and abide by the obligations incumbent upon China under the UN Charter proved fruitless. The 1,100-member peacekeeping force, which successfully prevented the spread of fighting from Bosnia into Macedonia, was sent home. Facing escalating ethnic conflict in Kosovo, the departure of UNPREDEP put Macedonia in an extremely precarious position. The coalition government, however, appeared unperturbed. Shortly after the UN vote, the Macedonian ambassador to the UN, Naste Calovski, announced that Beijing’s veto would not affect his country’s relations with Taiwan, which he described as ‘strong and steadfast’.34 Premier Georgievski seemingly rejoiced at the prospects of having the UN mission replaced by the troops of NATO, which could bring Macedonia closer to ­Euro-­Atlantic military structures.35

140   Macedonian breakthrough

Friendship subsidized Neither the Macedonians nor the Taiwanese people knew much about each other, but they eventually yielded to the determination of their respective governments. The Macedonian press began writing more favourably of prospective coopera-­ tion with Taiwan. Makedonija Denes even predicted that the success of the Taiwan venture would spell the end of the SDSM opposition, while Nova Makedonija commented that ‘Gligorov’s constant mentioning of the Taiwan case is upsetting the public’.36 If the Macedonian public’s enthusiastic response to Foreign Minister Hu’s speech given in the provincial city Prilep in early March 1999 is indicative, Macedonians warmed up remarkably to Taiwan in the first month of Skopje’s diplomatic relations with Taipei.37 Macedonian politicians publicly described the ‘Taiwan project’ as being moti-­ vated by the desire to improve living standards in their country through the ROC’s economic assistance. Macedonia’s government official responsible for construction and capital development, ­Duko-­Kadievski, revealed in an interview with the Lianhe bao that the critical cabinet meeting on 8 February 1999 justified the establishment of relations with Taiwan on financial grounds.38 On 23 Febru-­ ary 1999, Premier Georgievski – in a televised address to the assembly – con-­ firmed that recognition of Taipei was triggered by the disastrous economic situation of his country, rather than dissatisfaction with ­ Sino-­Macedonian rela-­ tions.39 ‘We are not expecting to receive gifts from Taiwan’ – Georgievski said a week later – ‘we hope Taiwan businessmen will turn their eyes to Macedonia, where they will find opportunities are waiting for them’.40 The ­on-­going assess-­ ment of the correctness of the Taiwan policy was, thus, to be measured against the economic performance of Taiwanese–Macedonian cooperation. Taipei seemed aware of this. In an interview with the Macedonian daily Vecer, Foreign Minister Hu spoke confidently of Macedonia being an ‘ideal place for an eco-­ nomic breakthrough of Taiwan towards Europe’.41 The Macedonian leadership expected the ‘golden rain’ from Taiwan – now revised to US$235 million in ­government-­to-government aid and US$1 billion in commercial investments – to fall in the second half of 1999.42 It is unclear whether Taipei planned to spend that much money, and, if so, over what period. According to an ROC–Macedonian communiqué on the estab-­ lishment of diplomatic relations, Taiwan pledged to provide its new ally, via the EBRD, with aid up to US$15 million for the development of SMEs (the money that was available to Macedonia anyway through the Taipei China–EBRD Coop-­ eration Fund).43 Foreign Minister Hu’s trip to Macedonia in early March 1999 confirmed Taipei’s intention to provide further financial aid, but not on the scale publicized by the DA’s politicians. The ROC agreed to station a technical mission in Macedonia as well as to train Macedonian technical personnel in Taiwan, allo-­ cated US$10 million in revolving credit to support private enterprises and opened the Taiwanese market to Macedonian commodities. Moreover, Taipei reportedly provided Skopje with US$10 million to bolster Macedonia’s foreign reserves and earmarked US$163 million for eight big projects, set to create

Macedonian breakthrough   141 10,000 jobs. It was also expected to launch 800 projects ranging from moon cake and dessert-making factories to chopstick factories.44 President Lee and Vice President Lien Chan, while meeting the visiting parliamentary speaker Kli-­ movski, reassured the Macedonians of the Taiwanese determination to assist them so that they could enjoy ‘prosperity and affluence’.45 According to Foreign Minister Hu, Taiwanese aid was to accelerate in the period leading to the presi-­ dential elections in Macedonia, scheduled for late September, in order to bolster the election prospects of Tupurkovski, the only ­ pro-­Taiwan candidate in the contest. The sudden outbreak of the military conflict in Kosovo (late March 1999) delayed Georgievski’s visit to the ROC, as well as the arrival of the chopstick factories, but offered Taipei an opportunity to showcase generosity. Prompted by an urgent request from Skopje, Taipei donated – as a ‘member of the interna-­ tional community’ – US$2 million in humanitarian aid (soon increased to US$4 million) to help Macedonia settle 140,000 refugees from Kosovo.46 Vice Foreign Minister Lee personally led a 91-member relief team (马其顿境内难民救援团), which set up a field hospital at one of the refugee camps and delivered medical equipment worth US$300,000. Taiwan’s medical relief effort in Macedonia ended with the Yugoslav peace agreement, signed in late June 1999. The 75-day project provided medical assistance to some 11,000 Kosovar refugees.47 Taiwan’s charity gala continued with a technical pact, signed in May 1999, providing up to US$20 million for technical cooperation. But the ­ headline­stealing offer came only during Georgievski’s visit to Taipei in early June 1999, when ROC President Lee ­Teng-­hui promised US$300 million for the reconstruc-­ tion of Kosovo.48 Although the fund was – in name at least – intended for Kos-­ ovo’s reconstruction and the training of Kosovars in various engineering fields, in reality much of it was to benefit Macedonia, as Taiwan would pay for Kosovo’s imports from Macedonia. Skopje was to receive the first US$10 million of the package in the following three months. Alongside President Lee’s grand plan, Georgievski left Taiwan with a US$12 million loan provided by the ICDF for Macedonian private business, a helicopter (donated by the ROC Ministry of National Defence), 500 computers and 200 scanners worth US$5 million (donated by a private computer company) and 100 wheelchairs. Taipei commit-­ ted itself to buying US$1 million worth of tobacco and wine from Macedonia, as well as agreeing to construct an export processing zone in Macedonia, said to attract US$200 million worth of Taiwanese investments and to create 20,000 jobs. To facilitate Taiwanese investments, Premiers Vincent Siew and Geor-­ gievski signed agreements on the avoidance of double taxation, investment guar-­ antees and customs cooperation.49 ­ High-­level visits seemed conducive to facilitating Taiwanese generosity. Despite his declaration that Taiwan intended not to give Macedonia ‘free fish’ (我們不送魚) but to teach Macedonians how to catch fish,50 Premier Siew, on his first and only visit to Macedonia, in early August 1999, promised about US$61 million in ­ low-­interest loans and grants, and an additional US$10.5 million to fuel Macedonia’s battered economy.51 Macedonians were supposed to

142   Macedonian breakthrough learn the art of catching fish in the Skopje Export Processing Zone (EPZ, 加工 出口區), the opening of which the Premier officiated. A zone – financed by Tai-­ wan’s ICDF – was to be developed by the China Development Financial Holding Corporation (中華開發金控), in which the KMT had a large stake. At least eight ­KMT-­related companies indicated their willingness to set up factories in the zone. In order to ensure a supply of qualified workers, Taiwan funded a training programme (馬其頓技術人員來台培訓計畫) for up to 2,000 Macedonians.52

Expanding the Macedonian project Taipei never publicly elaborated on its long-term Balkan strategy, but there is suf-­ ficient evidence to deduce that Macedonia was meant to be only the initial step in a larger diplomatic campaign to expand Taiwan’s visibility in the international scene and – most importantly – to win over other Balkan states. As soon as Taiwan established diplomatic ties with Macedonia, the Taiwanese press reported on several Balkan states (including Slovenia) expressing an interest in improving ties with Taiwan.53 According to Tupurkovski, Bulgarian and Albanian officials privately expressed the possibility of establishing official ties with the ROC.54 The ROC mission in Skopje became a coordination centre for the efforts to befriend the neighbouring states (primarily Albania, Bulgaria and Romania) and the terri-­ tories believed to be about to become independent: Montenegro and Kosovo. In ­mid-­April, Foreign Minister Hu mentioned ‘two to three’ countries allegedly interested in diplomatic ties with Taiwan.55 The conflict in Kosovo unexpectedly provided a splendid opportunity to expand Taiwan’s visibility in the region by offering financial assistance to the affected Balkan nations. In May 1999, Taiwan reportedly communicated with Montenegro, seeking its diplomatic recognition once Montenegro declared independence. The Montenegrin Foreign Ministry denied the allegations as ‘ugly insinuation’ and affirmed respect for good relations with the PRC.56 To strengthen relations with Montenegro, Chinese Assistant Foreign Minister Liu Guchang (劉古昌) travelled to Podgorica to discuss tensions in the Balkan region and announced the opening of its consulate there. In early June, Taipei donated – through Catholic charitable organizations – US$100,000 in cash to Albania to help the Balkan state to cope with its refugee problems.57 This donation paled, however, when compared to US$600,000 donated to Albania by China in late May for the same purpose. In a letter to Albanian President Rexhep Meidani, Chinese President Jiang Zemin thanked Tirana for its adherence to the ‘one China’ policy.58 Soon after, President Lee announced a grand offer of US$300 million, officially aimed at helping Macedo-­ nia cope with the Kosovar refugees and assisting Kosovo with ­ post-­war recon-­ struction, but also addressed to neighbouring countries (including Albania and Bulgaria). ROC Foreign Minister Hu claimed that the aid package was not politi-­ cally motivated, but he did not deny that the ultimate purpose was to increase the island’s international visibility and to make a major diplomatic breakthrough in ­post-­communist Europe. The Bulgarian government publicly declared interest in

Macedonian breakthrough   143 strengthening economic ties with Taiwan, calling its predecessors’ decision not to pursue relations with the ROC a ‘mistake’.59 In order to strengthen Taiwan’s nascent influence in Kosovo, Premier Siew intended to visit Kosovo’s capital, Pristina. His plan, however, failed, ostensibly due to NATO’s inability to guarantee the Premier’s security in Kosovo. In reality, the United States, fearful of antagonizing Beijing, whose support over ­Kosovo­related issues was indispensable at the UN Security Council, convinced the Tai-­ wanese to abandon plans to visit Pristina. Still, Siew managed to hold talks with Deputy Prime Minister and concurrently Foreign Minister Mehmet Hajrizi of the Kosovar provisional government in Skopje, during which he announced an offer of US$5 million to establish a ­ medium-­size commercial bank in Kosovo (in a joint venture with the EBRD) and indicated a readiness to help train Kosovar banking personnel. He also donated buses, refrigerators, blankets, clothing and fertilizer to Kosovo.60 The Premier of the Kosovar provisional government, Hashim Thaci, expressed interest in closer economic collaboration with Taiwan, but cautioned that political relations should be further discussed.61 The Taiwan-­ ese generosity in the Balkans drew positive responses from the Czech Republic and two unnamed ­post-­communist states, which reportedly expressed interest in enhancing their relations with the ROC.

Humanitarian diplomacy The Macedonian refugee crisis and the Kosovo war provided Taiwan with an opportunity to resurface in the international arena as a ‘responsible member of the international community’ through the pursuit of ‘humanitarian diplomacy’ (人道外交). The ROC medical relief operation chose the biggest refugee camp in Macedonia (at Stenkovec), not only to provide aid to the largest possible number of those in need, but also – if not above all – to gain the greatest possible media exposure. Taipei repeatedly emphasized its generous participation in its first ever direct humanitarian relief programme in Europe and its efforts to ‘promote regional peace’, observing that the international mass media (including CNN) had reported on the Taiwanese humanitarian contribution.62 The Taiwan-­ ese utilized their humanitarian assistance to propagate the statehood of Taiwan. Shortly after disembarking from the plane, the Taiwanese mission unveiled a banner proclaiming ‘Love from Taiwan’, while the ­ ROC-­funded and manned field hospital was marked by the ROC flag, a unique feature, as no other humani-­ tarian missions displayed their national symbols. The Taiwanese daily Zhongguo shibao questioned the humanitarian credentials of the mission, dubbing it a ‘propaganda team’ (文宣團).63 President Lee’s US$300 million offer was yet another attempt at ‘humanitar-­ ian diplomacy’, geared towards catching world media headlines and – in the longer term – developing cooperation with international organizations involved in the reconstruction of Kosovo. Foreign Minister Hu publicly stated that the figure of US$300 million was chosen to attract the attention of world public opinion.64 The originally considered sum of US$10 million was deemed too

144   Macedonian breakthrough unimpressive to achieve the purpose. Although the offer represented only 1 per cent of the total estimated cost of ­post-­war reconstruction required by Kosovo, it exceeded any aid pledge made by any NATO member state and embarrassed the efforts of the UN High Commission for Refugees, which managed to raise a total of US$470 million from 185 member states for Kosovo.65 Taipei’s scheme that such an amount would not go unnoticed by the international media proved correct. However, the hope that such a large sum could not be easily turned down by the ­ UN-­affiliated organizations, even if China applied diplomatic pressure, proved misguided. At first, Taipei’s strategy seemed to work. The International Organization Department of the ROC’s MOFA swiftly organized the Overseas Aid Council of Taiwan, designed to coordinate relief operations. Three-to-five international organizations (including the International Red Cross and World Vision) and the EBRD appeared keen to help Taiwan channel its funds into the Balkans, while the US State Department, European Parliament and the Vatican welcomed Tai-­ wan’s plan to offer aid to Kosovar refugees and for the reconstruction of their homeland.66 China was understandably concerned about Taiwan’s humanitarian assistance, ‘dollar diplomacy’ in disguise. Beijing reacted angrily to President Lee’s US$300 million offer, calling the gesture a political ploy and detecting more sinister political motives (creating ‘two Chinas’) behind it. The PRC Foreign Ministry Spokesperson, Zhang Qiyue, announced, ‘as for Taiwan’s assistance to refugees in Macedonia, the motive is very clear’, and noted with pleasure the New Party’s demonstrations opposing the aid package.67 Chinese radio, for its part, emphasized the wastefulness of ‘money diplomacy’, at the time when Taiwan’s ‘people’s money’ was badly needed at home.68 Beijing’s pressure proved sufficient to deter ­UN-­affiliated organizations and the UN High Commissioner for Refugees from accepting Taiwanese largesse. Ultimately, 30 ­Macedonian-­made buses turned out to be Taiwan’s only contribution to the reconstruction of Kosovo. In the aftermath of the devastating Taiwan earthquake in September 1999, Taipei quietly shelved the US$300 million aid package.

Promises to Albania Irrespective of the failure of President Lee’s aid scheme to increase Taiwan’s international visibility via grand relief projects, Taipei did not give up on the Balkans. Premier Siew met ‘certain Albanians friendly to the ROC’ during his visit to Macedonia in August 1999. Although the Premier denied any discussion of potential diplomatic relations or the offer of any sum of money, the Albanians were allegedly promised US$800 million for diplomatic recognition.69 Albanian Foreign Ministry Spokesperson Sokol Gjoka reiterated Tirana’s ‘one China’ policy. To display the strength of ­ Sino-­Albanian cooperation, the Albanian– Chinese Joint Economic and Trade Commission was to be reinstated. In late November 1999, the Taiwanese offer reportedly rose to US$1 billion (to be deliv-­ ered over ten years after the establishment of Taiwanese–Albanian diplomatic ties), an amount equal to the entire financial assistance Albania received from

Macedonian breakthrough   145 international donors for seven years starting in 1991, when the country’s com-­ munist party was toppled. During a meeting between the ROC envoy, Peter P. C. Cheng (鄭博久, a seasoned diplomat and former vice director of the Taiwanese representative office in the United States), and Albanian parliamentarians, Nikolle Lesi, the Chairman of the Taiwan–Albania Friendship Association, Ramadan Hasanaj, the Secretary of the Association, and Pellumb Shullazi, Deputy Chairman of the Association, Cheng was reportedly authorized to offer Albania US$1 billion for the establishment of diplomatic relations. Some 47 Albanian law-makers supposedly favoured a resolution on establishing diplo-­ matic relations with the ROC and Taipei was asked to arrange their visit to Taiwan in the near future.70 Lesi alleged that the Albanian Premier himself sup-­ ported diplomatic ties with Taipei being forged in the foreseeable future.71 Tai-­ wanese Foreign Minister Chen ­ Chien-­jen confirmed the meeting between the Taiwanese diplomats and the Albanian parliamentarians, but claimed to have no knowledge of the content of the communication and cast doubts on the US$1 billion offer as contradicting common sense.72 Gjoka – in an effort to appease Beijing – ­ re-­emphasized Tirana’s firm stand on the ‘one China’ policy. A few days later, Neritan Ceka, chairman of the ruling Democratic Alliance Party and honorary president of the Albania–Taiwan Friendship Association (formed in ­mid-­May 1999 on the initiative of some Alba-­ nian parliamentarians), left the organization and called on other parliamentarians to follow suit. Ceka insisted that the association should not concern itself with political issues, but should promote economic ties with Taiwan. In December 2000, Chinese Foreign Minister Tang Jiaxuan (唐家璇) visited Albania, where he was reassured of Tirana’s continued ‘one China’ policy. Albanian Foreign Minister Maskal Milo told Xinhua (新華社) that the voices in support of Taiwan in Albania reflected the opinion of a small number of people and never repre-­ sented the position of the government.73 Soon after Tang’s visit, President Mejdani went to Beijing.

The honeymoon is over The Taiwanese envoy to Macedonia, Peter Cheng, opened the ROC embassy in ­mid-­April 1999. However, President Gligorov – fulfilling his promise made in late January – refused to accept his accreditation letters. As a result, Cheng acted in the capacity of a minister (using the title of chargés d’affaires). Reciprocally, his Macedonian counterpart Vera Modanu, who opened the Macedonian embassy in Taipei in early June 1999, also served with the rank of minister.74 Taiwanese– Macedonian diplomatic relations thus failed to reach ambassadorial level. MOFA hoped that, following the presidential elections in October 1999, a new presi-­ dent, preferably Tupurkovski, would upgrade the relationship to the ambassado-­ rial level. Unfortunately for Taipei, the ruling coalition failed to agree on one candidate and Tupurkovski campaigned not only against Tito Petkovski of the SDSM (who vowed to restore relations with the PRC), but also against Boris Trajkovski from VMRO–DPMNE. Unlike Tupurkovski, whom the Macedonian

146   Macedonian breakthrough public closely associated with the Taiwan deal, Trajkovski distanced himself from the controversy surrounding the recognition of Taiwan, even though as a Deputy Foreign Minister he visited the ROC in early March 1999 and then appeared moderately supportive of Taiwan.75 The Taiwan project did not help Tupurkovski, who lost the first round of elections. In ­mid-­November, Trajkovski emerged as a new President in a ­ run-­off ballot. Described as ‘very friendly’ to Taiwan by Vice Foreign Minister Lee, he was expected to stabilize Macedonia’s diplomatic ties with the ROC.76 Taiwanese optimism, however, was unwarranted. Trajkovski’s careful evasion of the Taiwan issue and cautious pledge to improve relations with Beijing, the emerging split in the ruling coalition and the Macedonian public’s growing per-­ ception of the Taiwan project as a costly failure did not augur well for the future of Taiwanese–Macedonian relations. Angering Premier Georgievski and the DA coalition members, President Trajkovski continued the policy of his predecessor and refused to accept the credentials from the ROC envoy until the economic ben-­ efits of Macedonia’s diplomatic relations with Taiwan became evident.77 Macedo-­ nia’s Foreign Ministry statistics indicated that, by ­ mid-­2000, the ROC direct financial assistance amounted to a meagre US$6.4 million (or US$8 million, according to Jane’s Intelligence Review), while Taiwanese direct investments amounted to nil.78 Following the establishment of diplomatic relations, bilateral trade jumped by 171 per cent in 2000; in absolute terms, however, it was pitiful (oscillating around US$2–3 million annually) and Taiwan enjoyed a consistent trade surplus (see Figure 7.2). Vice Premier Tupurkovski and Foreign Minister Dimitrov visited Taipei in January and March 2000, respectively, in an apparent attempt to accelerate Taiwanese investments and aid. The Taiwanese rejected the Macedonian Foreign Ministry’s statistics, claiming to have allocated US$80 million for Skopje’s use, in addition to US$12 million transferred directly to the Macedonian National Bank.79 They also called for patience, as the financial bene-­ fits of bilateral cooperation were slow to emerge due to bureaucratic red tape in Macedonia. ‘If it takes six months to obtain a license to open a company, after waiting at some 30 windows, then things will not develop as they should’, com-­ mented ROC ­ Ambassador-­at-large Loh ­ I-­cheng (陸以正) during his visit to Skopje in May 2000.80 After long delays, a formal agreement on establishing an EPZ was only signed in early May 2000, after the parliamentary amendments made to the Law on Free Economic Zones eliminated legal obstacles to the con-­ struction of the EPZ. Under the agreement, Macedonia undertook to build the infrastructure, while Taiwan allocated US$12 million of initial capital in support of Taiwanese companies willing to invest in the zone. Taipei also committed itself to providing assistance to Macedonia in carrying out ten relief and infrastructure projects. The problem was that the Taiwanese investors did not rush to Macedo-­ nia, fearing economic instability, cultural differences, high labour costs and the uncertainty of Taiwanese diplomatic partnership with Macedonia.81 In a separate move, in February 2000 Taipei earmarked US$1.5 million for the EBRD’s Balkan Regional Special Fund, which was part of the EBRD’s Balkan Regional Action Plan of May 1999, initiated in response to the impact of the Kosovo crisis in the

Macedonian breakthrough   147 4

US dollars (millions)

3.5 3 2.5

Import Export

2 1.5 1 0.5

04

03

20

02

20

01

20

20

00

99

20

98

19

97

19

96

19

95

19

94

19

19

19

93

0

Figure 7.2 Taiwan’s trade with Macedonia (in millions of US dollars) (source: Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi tongji yuebao, August 2001 and March 2005).

region. Macedonia became the biggest beneficiary of the Taiwanese contribution, receiving D877,000 (76 per cent of the Taiwanese fund’s disbursements).82 The Taiwanese politicians had their own doubts regarding relations with Mac-­ edonia. The US$300 million aid offer to the Kosovars, in particular, triggered a debate in Taiwan. Although all major parties agreed in principle that Taiwan could provide some assistance for the Kosovars, they questioned the scale of the proposed aid and criticized the ­ decision-­making process.83 The ­ pro-­unification New Party announced that Taiwan, given its huge budget deficit, could not afford such grand humanitarian projects, calling it ‘too big, larger than what we can comfortably afford’. As President Lee announced the aid without going through the consultation with the Legislative Yuan and MOFA, the New Party demanded the President’s resignation for what it termed a ‘pompous’ step.84 The DPP lead-­ ership, for its part, criticized the aid package for being too vague, since President Lee neither specified where the money would come from nor whether it was intended for humanitarian or strategic purposes.85 The DPP also questioned the general direction of ‘dollar diplomacy’, suggesting that ‘instead of spending bil-­ lions to build ties with insignificant countries’, Taiwan should ‘put aid to use where [it] can be more influential’.86 Despite the DPP’s well-publicized concerns regarding ‘dollar diplomacy’ (see Chapter 1), the ROC’s new President, Chen ­ Shui-­bian, and his administration reaffirmed the commitment to sustain diplomatic ties with Macedonia through economic assistance, irrespective of its previous doubts and President Trajko-­ vski’s ­ non-­recognition of the ROC envoy’s ambassadorial letters. New Foreign Minister Tien ­ Hung-­mao made his first overseas trip to Skopje in June 2000, during which he not only confirmed the importance of relations with Macedonia, but also opened a new bag of economic offers. ‘The Republic of China, as a

148   Macedonian breakthrough developed nation, has the responsibility of contributing to the international com-­ munity by providing loans or technical assistance to other less fortunate coun-­ tries’, Tien announced in Skopje, where he signed new multimillion-dollar economic agreements and donated computers for the Macedonian Foreign Min-­ istry, worth US$5 million.87 New offers of economic assistance, mostly in the form of loans, however, paled in comparison with President Lee’s US$300 million aid plan, to which the DPP administration remained uncommitted. Skop-­ je’s waning trust in Taipei’s commitments to aiding Macedonia was underscored by President Trajkovski’s refusal to meet Foreign Minister Tien, who sought during his ­ four-­day visit to convince the president to accept the ROC envoy’s accreditation letters. Aware of the shaky nature of a diplomatic partnership with Macedonia, the ROC Legislative Yuan established a 20-member ­pro-­Macedonia task force (友馬小組), composed of legislators from all political parties, to promote exchanges between ROC legislators and their Macedonian counterparts.

Friendship terminated The mounting disagreements between the ­VMRO-­DPMNE and the DA led to the collapse of the ruling coalition. On 30 November 2000, the Liberal Party of Mac-­ edonia – a critic of the Taiwan project – replaced the DA. The restructured gov-­ ernment was neither ­pro-­Taiwan nor united on the merits of the Taiwan projects, as the ROC assistance to Macedonia was yet to bear fruit and Taiwanese investors were yet to arrive.88 The newly appointed Foreign Minister, Srgjan Kerim of the Liberal Party, hinted of Skopje’s wish to forge parallel official relations with both Chinas, while the new Chairman of the Macedonian Parliament, Stojan Andov, called for the ­re-­establishment of diplomatic ties with the PRC.89 The emergency visit by ROC Vice Foreign Minister David Lee in ­mid-­December 2000 reaffirmed bilateral ties, but failed to disperse doubts regarding Skopje’s ­long-­term commit-­ ment to diplomatic relations with the ROC. A month after Lee’s departure, an anonymous Macedonian diplomat revealed that the coalition government had resolved to ­re-­establish relations with the PRC, but not immediately.90 The doubts concerning Macedonia’s ties with Taiwan intensified when the rebel National Liberation Army (Ushtria Clirimtare Kombetare), fighting on behalf of Macedonia’s Albanian minority, took up arms in February 2001. The armed conflict escalated in March and April and led to the formation (13 May 2001) – under considerable pressure from NATO and the EU – of the govern-­ ment of national unity, comprising VMRO–DPMNE, SDSM and seven smaller parties, with the DA becoming the only excluded party. Thus, Taiwan’s major ally remained outside the government, while its most vocal critic, SDSM, was put in charge of foreign affairs. Given the Social Democrats’ ­well-­known stand on the Taiwan project and the wider geopolitical considerations, which required China’s support at the UN Security Council if UN peacekeeping forces were to be involved in restoring peace in Macedonia, the fate of Taiwan’s diplomatic ties with Macedonia seemed sealed. Taipei’s donation of US$1 million to help Mace-­ donian refugees displaced in the civil war failed to impress the new government.

Macedonian breakthrough   149 On 25 May, Foreign Minister Ilinka Mitreva, in a televised interview, called formal relations with the ROC a mistake and announced a ­ re-­establishment of diplomatic ties with China. Her announcement coincided with the visit to Beijing by the Director of the Macedonian Presidential Office, Zoran Jolevski, who reportedly discussed the prospects of the resumption of diplomatic relations with the PRC’s Foreign Ministry.91 On 31 May, when Foreign Minister Tien – upon President Chen’s insistence – travelled to Skopje in a ­last-­ditch effort to shore up bilateral ties, Mitreva (who refused to meet Tien) officially confirmed the gov-­ ernment’s resolve to sever relations with the ROC. The government, however, seemed hardly united on the issue. Premier Georgievski vetoed Mitreva’s motion to switch Skopje’s diplomatic recognition from Taipei to Beijing on the grounds that it was against the administrative process. On 12 June, however, the Macedo-­ nian government finally resolved to normalize relations with the PRC, under pressure from the ­ SDSM-­controlled Foreign Ministry. The stern warning from Taiwan, issued a day later, threatening to terminate all ­ ROC-­funded assistance projects in Macedonia (estimated at US$140 million) failed to impress Skopje. In Beijing on 18 June, Foreign Minister Mitreva and her PRC counterpart, Tang Jiaxuan, signed a joined communiqué on the normalization of relations, in which Macedonians recognized the government of the PRC as the sole legal govern-­ ment representing the whole of China, including Taiwan.92 In return, Beijing pledged support for Macedonia’s territorial integrity, ‘just demands’ in handling ethnic conflict, as well as the expansion of economic ties. Shortly before Macedonia and the PRC resumed diplomatic relations, Taipei broke off official ties with Skopje, terminated all agreements and cooperation projects, closed its representation in Skopje and withdrew its technical mission (subsequently transferred to Guatemala). The construction of the EPZ was halted, leaving only a couple of ­half-­built buildings in an otherwise empty field.93 Three commercial pacts concerning tax, tariffs and investment protection were kept intact, however. There is no evidence that Skopje repaid any of the loans extended by Taipei in 1999–2001. Foreign Minister Tien indicated Taiwan’s will-­ ingness to return to diplomatic ties with Macedonia whenever the Balkan state decided.94 In the aftermath of the parliamentary elections, held in ­mid-­2002 and won by the Social Democrats, it became apparent that Macedonian ­ re­examination of the China policy was unlikely to occur for at least four years. Visiting China in April 2002, President Trajkovski reaffirmed that there would be no official relations between Macedonia and Taiwan, emphasizing that the Taiwan question was China’s internal affair.95 The VMRO–DPMNE’s return to power in ­ mid-­2006 (once again on the wave of the public discontent with the Macedonian economy, plagued by 36 per cent unemployment and the lowest ­per­capita income in ­ post-­communist Europe) opened the possibility for Taipei to return to a partnership with Skopje. However, given the Macedonians’ disap-­ pointment with the scale of Taiwanese economic assistance in 1999–2001, the new centre–right government is unlikely to provoke China again in return for uncertain economic returns. In any case, Macedonia has already received close to US$1 billion in aid, but from the DAC.96

150   Macedonian breakthrough Skopje’s decision to return to the China camp was portrayed by the PRC media as yet further evidence of the widespread endorsement by the international community of the ‘one China’ principle.97 In Taipei, it sparked a corresponding debate on the merits of the ‘dollar diplomacy’, with most voices urging the gov-­ ernment to rethink its diplomatic policy. Legislators from the opposition KMT, People’s First Party (親民黨) and New Party requested the government not to engage in ‘dollar diplomacy’, stressing that the focus of diplomatic effort should be placed on exchanges between nations, rather than an increase in the number of allies.98 Foreign Minister Tien announced that MOFA would review ‘relevant qualifications’ of prospective candidates for allies more carefully in the future, particularly their domestic political stability, their strategic importance in regional geopolitics and the cost of diplomatic recognition. Touching upon Tai-­ wan’s slowing economy and the Taiwanese public’s concern over the affordability of foreign aid, Tien added: ‘We will make commitments in proportion to our own financial resources.’99

China’s ­counter-­offensive Following Taipei’s success in Macedonia, Beijing unsurprisingly worried about the possible defections of other Balkan states. The veto to extend the mandate of the UN peacekeeping forces in Macedonia damaged China’s prestige in the region and opened the gate wider for Taiwan’s entry into the geopolitical region, which until 1999 had been China’s zone of exclusive influence. Apart from Albania, Bulgaria was another country often mentioned by the Taiwanese media as a potential candidate for diplomatic partnership. Sofia’s interest in strengthen-­ ing relations with the ROC intensified following Taipei’s announcement of a US$300 million aid package for Kosovo. The Bulgarian Vice Prime Minister, and concurrently Minister of Industry, in an interview with the daily Zhongguo shibao expressed an opinion that the former Bulgarian government’s decision to shun all contacts with Taiwan was a mistake. He added that both sides should seek closer economic relations and consider the establishment of bilateral representative offices.100 However, Taiwanese failure to demonstrate the benefits of diplomatic partnership for the Macedonian economy tempered Sofia’s enthusiasm about closer relations with the ROC. A year before Skopje cut official ties with Taipei, Bulgarian Prime Minister Ivan Kostov, in an interview with the Lianhe bao, stressed that Bulgaria did not intend to follow the Macedo-­ nian example and establish official ties with the ROC. Although he did not con-­ sider Taiwan’s diplomatic relations with Macedonian as damaging political stability in the Balkans, he did notice that Taiwanese economic assistance given to either Macedonia or Kosovo was largely invisible.101 In an exchange of ­high­level visits between 1999 and 2001 (which included Foreign Minister Nadezhda Mihailova’s visit to China in June 1999 and Premier Zhu Rongji’s (朱鎔基) trip to Bulgaria in July 2000), the Bulgarian side clearly spelled out its position on Taiwan as an inalienable part of the PRC. The Bulgarian officials did not even try to state Sofia’s interest in developing commercial ties with Taipei. Instead,

Macedonian breakthrough   151 they focused on attracting investments from China, which by late 2002 stood at US$300,000.102 Bulgarian loyalty to Beijing on the Taiwan issue was further rewarded in the form of a US$10 million soft loan in support of Bulgaria’s balance of payments, which was doubled during Premier Zhu’s visit.103 Its firm ‘one China’ policy notwithstanding, Bulgaria did not shun economic relations with Taiwan. In October 2005, Sofia agreed that the Taiwan External Trade Asso-­ ciation (TAITRA, successor to CETRA) could establish its representative office in Bulgaria.104 Despite rumours that Romania also showed interest in expanding political dialogue with Taiwan in the aftermath of the ­Sino-­Macedonian diplomatic coup, Bucharest officially stood firm on the ‘one China’ principle. In July 2000, in an effort to deny media reports on alleged contacts with Taiwan, Foreign Ministry Spokesperson Ireny Comaroschi stated that foreign media reports concerning Romania’s intention to enter into official relations with Taiwan were ‘absurd and totally untrue’.105 The Romanian leaders (including President Ion Iliescu in August 2003) visited Beijing, sustaining the tradition developed by Nicolae Ceaucescu. Bucharest reassured Beijing on numerous occasions of its support for China’s claim to represent all of China, including Taiwan. In a joint state-­ ment, which followed President Iliescu’s China visit, the Romanian side went as far as promising not only not to develop any official ties with Taiwan, but also not to support Taiwan’s applications to join any international organization.106 Friendship with China translated into tangible benefits for Romania, who received RMB600 million from Beijing annually, in ­ non-­repayable grants and witnessed an expansion of its trade with the PRC.107 In August 2005, Bucharest violated Iliescu’s promise not to develop any relations with Taiwan when it agreed for TAITRA to establish its office in Romania.108 This office (as well as its counterpart in Bulgaria), however, has no political functions and, unlike the CETRA bureau in Budapest 15 years earlier, does not amount to the beginning of partnership with Taiwan going beyond purely economic cooperation. Given its international isolation and the ­anti-­Western orientation of its leader-­ ship, it is hardly surprising that Yugoslavia took no notice of Taiwan’s efforts to expand its diplomatic space in the Balkans. The NATO bombing of Kosovo in the spring of 1999 and the destruction of the Chinese embassy in Belgrade on 7 May put Yugoslavia and China on the same side of the struggle against US hegemony. Fearing that the bombing could constitute a precedent for possible future interventions in other countries (including China itself) perpetrating alleged ‘ethnic cleansing’, Beijing vocally opposed the Western policy of mili-­ tary intervention in Yugoslavia. It also demanded the return of the Kosovo issue into the UN framework so that the UN could play a decisive role in the process of a political solution. Beijing’s interest in Yugoslavia, however, was mainly geostrategic. The Chinese leadership was fully aware that Yugoslavia was in no position to contribute to China’s economic development, whether through trade or investments. The China Daily noted, on 11 April 1999, that the ‘trade volume between China and Yugoslavia rose 43 per cent to US$33.3 million last year, a drop in the ocean of China’s foreign trade aggregate of US$323.9 billion’. But

152   Macedonian breakthrough the tradition of ‘profound friendship’ and the geopolitical considerations were sufficient to keep Beijing interested in Yugoslav affairs, while Belgrade’s need for allies in the international arena (particularly in the UN Security Council), as well as for economic assistance, kept Yugoslavia firmly in the China camp. In December 1999, China reportedly extended US$300 million in grants and soft loans to finance reconstruction of the economy of Serbia, which was seriously damaged by NATO’s 11-week bombing campaign.109 In August 2000, a Belgrade government minister, Borka Vucic, reported that China had offered an additional US$200 million. The presidential elections held in Yugoslavia in September 2000 could have rocked ­Sino-­Yugoslav friendship, leading potentially to Belgrade’s reconsidera-­ tion of the Taiwan policy. On 5 October 2000, over 300,000 supporters of Vojis-­ lav Kostunica, the Yugoslav opposition leader, who won presidential elections in September, stormed the parliament building to force Slobodan Milosevic out of office. Beijing, however, was fully behind Milosevic. The Chinese Foreign Min-­ istry expressed ‘serious concern’ over the situation in Yugoslavia. The Foreign Ministry Spokesman Sun Yuxi said that Beijing ‘respected the choice of the Yugoslav people’, without specifying what ‘choice’ he was referring to.110 Presi-­ dent Jiang Zemin waited until after Milosevic conceded defeat to Kostunica and the Russians gave their seal of approval before delivering formal congratulations. China became the last of the word’s major powers to acknowledge Kostunica’s victory in the presidential elections. Once this decision was made, however, Beijing made great efforts to distance itself from Milosevic. Chinese border offi-­ cials were ordered to turn back Milosevic’s son, Marko, who arrived at Beijing International Airport with a diplomatic passport, which – according to the ­Sino­Yugoslav visa agreement – allowed him ­visa-­free entry to the PRC.111 Although comments in the Chinese media reflected distrust over the Western handling of Milosevic, Beijing remained officially silent when the former president was sent to The Hague in June 2001 to stand trial for war crimes in Kosovo, Bosnia and Croatia. China was worried that, given its close association with the ousted Pres-­ ident Milosevic, the new president’s ­pro-­Western sentiments, and Beijing’s lack of personal connections with the opposition parties that had gained power in October, Belgrade might defect to the Taiwanese camp. To forestall such a devel-­ opment, Chinese ambassador to Belgrade Pan Zhanlin (潘占林) paid a visit to the new president to relay Jiang’s congratulations.112 During the meeting, Kostu-­ nica talked of the continuing sanctions against Yugoslavia as well as Belgrade’s desire to join the United Nations and other intergovernmental organizations. He made no mention of a Yugoslav ‘one China’ policy. Although democratic Yugo-­ slavia looked to the European Union and the United States as its primary diplo-­ matic and economic partners, China did not altogether disappear from Yugoslav diplomatic considerations. Chinese friendship was still useful where it counted: in the United Nations. In November 2000, China spoke in favour of Yugoslavia’s return to the United Nations. In September 2001, Beijing fully supported the UN Security Council’s resolution to lift the arms embargo against Yugoslavia, which had been ­re-­imposed in 1998.

Macedonian breakthrough   153 Two months after Kostunica came to power, PRC Foreign Minister Tang Jiaxuan visited Belgrade. He left reassured that Yugoslavia, under the new lead-­ ership, continued to support the ‘one China’ policy. In return, Tang indicated that China was interested in completing a US$200 million trade agreement sealed with Milosevic’s government, of which US$77 million had not been used. He also mentioned that another US$200 million was available to Belgrade to boost Yugoslav foreign currency reserves.113 In a separate move, the Chinese govern-­ ment granted Belgrade humanitarian aid worth US$2 million. In January 2002, President Kostunica visited China. In a joint statement, the Yugoslav side reiter-­ ated its long recognized stance that there is only one China in the world, that the government of the People’s Republic of China is the sole legitimate govern-­ ment representing the whole of China, and that Taiwan is an inalienable part of the Chinese territory.114 Kostunica hoped that, during his visit, Beijing would agree to ­re-­negotiate Yugo-­ slavia’s standing oil debt and repayment of a US$200 million loan. When, in early February 2003, the two chambers of the Yugoslav parliament passed a new constitutional charter, which marked the dissolution of Yugoslavia and the founding of Serbia and Montenegro, Beijing immediately welcomed the move as safeguarding the stability of southeast Europe. Its embassy was renamed, while all existing bilateral treaties and agreements continued in effect. In April 2003, Minister of Foreign Affairs of Serbia and Montenegro Goran Svi-­ lanovic travelled to Beijing to reiterate his country’s adherence to the ‘one China’ policy and seek China’s continued support for Serbia and Montenegro on the international arena. When Montenegro chose independence through referendum in late May 2006 and the Montenegrin parliament declared independence in early June, China extended diplomatic recognition of Montenegro on 14 June. On 6 July, while vis-­ iting Beijing, Foreign Minister of Montenegro Miodrag Vlahovic signed with his Chinese counterpart, Li Zhaoxing (李肇星), a joint communiqué on the estab-­ lishment of diplomatic relations, which devoted substantial attention to the Taiwan issue. In the communiqué, Montenegro recognized that ‘there is but one China in the world, that the Government of the People’s Republic of China is the sole legal government representing the whole of China, and that Taiwan is an inalienable part of China’s territory’. It opposed ‘Taiwan independence of any form’ and opposed Taiwan’s accession to any international or regional organiza-­ tions whose membership applied to sovereign states. Finally, Montenegro vowed not to establish official relations of any form or have any official exchanges with Taiwan.115 The following day, China opened its embassy in Podgorica, becoming the second state to do so after Slovenia. China also did its best to shore up friendly relations with Slovenia and Croatia. While both ­post-­Yugoslav states professed the ‘one China’ policy, they reserved the right to pursue economic ties with Taiwan and emphasized their

154   Macedonian breakthrough wish to see China’s reunification accomplished in a peaceful manner. Such themes were missing in China’s communication with other Balkan states. In June 2000, Li Peng visited Croatia and Slovenia. Croatian Parliamentary leader Zlatko Tomcic told him that, while supporting the ‘one China’ policy, Croatia hoped China would reunify with Taiwan under ‘one country, two systems’.116 When, in October 2001, Defence Minister Chi Haotian (遲浩田) visited Croatia, the Croatian side reiterated its support for China’s consistent policy of resolving the Taiwan issue through ‘peaceful reunification’ and ‘one country, two systems’.117 In May 2002, Slovene Foreign Minister Dimitrij Rupel told Tang Jiaxuan during his China visit that Slovenia supported the ‘one China’ policy, but would con-­ tinue business ties with Taiwan.118

Conclusion For a decade, Taipei attempted to capitalize on the political transformations in ­post-­communist Europe, but the goal of gaining new allies in the region consist-­ ently eluded it. In the mistaken conviction of the new Macedonian leadership that Taiwanese assistance could address the structural predicament of the Mace-­ donian economy, Taipei found fertile ground on which to accomplish its goal. Resorting to aid commitments, Taiwanese envoys convinced Macedonia’s new leadership of the economic advantages of forging official ties with the ROC. In order to turn the Macedonian project into a showcase of effective ­ aid-­driven diplomacy in the Balkans, Taipei made a concerted effort to assist the Macedo-­ nian economy through loans, grants, humanitarian relief and technical aid. Grand projects, such as President Lee’s US$300 million package and the construction of the EPZ, were meant to symbolize Taiwanese commitment to Macedonia in particular and the whole Balkan region in general. Following China’s diplomatic setback, caused by NATO’s bombing of the Chinese embassy in May 1999, Tai-­ pei’s aid diplomacy, designed for the reconstruction of the Balkans, seemed timely enough to facilitate a resumption of Taiwan’s official cooperation with the Balkan states and intergovernmental organizations. Yet, Taipei proved unable not only to replicate its Macedonian success in other parts of the Balkan region, but even to maintain its presence in Macedonia. When the Macedonian project failed, following Skopje’s resumption of diplo-­ matic relations with China in June 2001, Taiwanese diplomats did not attribute the failure to the poorly thought out and implemented foreign aid, but to the domestic instability within Macedonia and the salience of the China factor.119 Although Beijing refrained from utilizing economic tools of foreign policy to lure Skopje back to its camp, China’s permanent membership in the UN Security Council was sufficient to keep the Macedonians aware of the importance of the China factor. The civil war in Macedonia accelerated the political change in Skopje, bringing to power forces hostile to Taiwan and creating the situation where China’s involvement in the resolution of Macedonian domestic problems seemed necessary. Hence, Skopje resolved to re-establish relations with the PRC for security, rather than economic, reasons.

Macedonian breakthrough   155 Foreign Minister Tien announced that MOFA would review ‘relevant qualifi-­ cations’ of prospective candidates for allies more carefully in the future, imply-­ ing that the socially stable ones would be preferred. However, the claim that the Macedonian project failed because of the domestic instability in Macedonia is only partially justified. Given the Macedonians’ disregard for the China veto in February 1999, despite the concerns expressed by the Western powers, and doubts about the Taiwan project long predating the civil war and resulting primarily from the invisibility of Taiwanese economic assistance, the failure of the Macedonian project was triggered as much by Taipei’s mismanagement of its economic diplomacy as by the China factor and Macedonia’s domestic instability. Shortly after ‘losing’ Macedonia, ROC legislators from all opposition parties requested an end to aid diplomacy, claiming that the focus of diplomatic efforts should be placed on exchanges between nations. The increasing transparency of ROC diplomatic activities, the parliamentary scrutiny of foreign aid and public opposition against funding friendship with small states at a time of economic crisis in Taiwan do not augur well for the continued employment of foreign aid to expand Taiwan’s pool of diplomatic partners. The failure of the Macedonian project heralded not only a setback in the ROC diplomatic strategy in ­ post­communist Europe, but also the ultimate bankruptcy of economic diplomacy – based on commitments rather than actual disbursement of aid – as a viable method to break away from ­PRC-­imposed international isolation.

8 Fair-weather friends

As early as 1988, the Taiwanese had set their eyes on developing closer ties with Belarus and Ukraine. This interest was prompted by the republics’ economic potential and their UN membership. High hopes notwithstanding, Taipei lost a battle for diplomatic recognition of the ­ post-­Soviet Belarus and Ukraine. It subsequently decided to develop ‘substantive’ relations with both states, expecting that, given their size and importance in the CIS, they would not be easily deterred by Chinese objections from developing ­semi-­official relations with Taiwan. Moreover, having gained independence, they were in dire economic straits and Taiwanese financial assistance could facilitate their willingness to interact with Taiwan. Having just abandoned communism, they should also be inclined to sympathize with the Taiwanese struggle against communist China.

The 1992 campaign in Ukraine Despite Taiwan’s wish for diplomatic ties with Ukraine, there is no evidence that Kiev ever considered the Taiwan option. However, when the Chinese ambassador to Moscow, Wang Jinqing (王藎卿), and Ukrainian Vice Foreign Minister Makarevich signed an agreement establishing diplomatic relations on 4 January 1992, Taiwanese diplomacy was encouraged by what was missing from the com-­ muniqué. The joint communiqué predictably stated Kiev’s recognition of the PRC government as China’s only government and its respect for China’s territo-­ rial integrity. It did not, however, specifically oblige Ukraine not to develop offi-­ cial relations with Taiwan in any form. This omission indicated that Kiev was not averse to ‘substantive’ relations with Taiwan.1 Ukraine’s Minister of Foreign Eco-­ nomic Relations, in an interview with the Zhongguo shibao, confirmed Kiev’s readiness to sign a commercial agreement with Taiwan, including an accord on the exchange of trade offices.2 Ukrainian officials also made Taipei aware that Kiev would welcome economic assistance from the ROC. Wasting no time, Taiwan launched positive economic diplomacy towards Ukraine in the form of humanitarian assistance. In late January 1992, Vice Foreign Minister John Chang travelled to Kiev on – what seemed to be – an offi-­ cial visit. He met the Deputy Speaker of the Ukrainian parliament, as well as

Fair-weather friends   157 numerous government officials (including the Minister of Defence). ‘I was really surprised and kind of astonished’ – Chang commented – ‘to see that the support from the Ukrainian side for the relationship with the Republic of China was that strong. I was told directly by one of the ministers that he wished that a kind of diplomatic relations could exist.’3 Loaded with promises of medical and food aid, Chang probably aimed at convincing Kiev to elevate relations with Taiwan, if not to diplomatic level, then, at the very least, consular level. The Ukrainian government, however, unlike the Latvian one, did not see any benefits in signing a consular agreement with Chang. Nevertheless, an economic agreement, inked on 23 January, satisfied Taipei. It envisaged an exchange of commercial offices, and contained provisions for investment guarantees and allowing banks to open branches in each country.4 The Taiwan trade office was to carry the name ‘Republic of China’, making Ukraine one of about ten countries allowing that name to be used whilst maintaining concurrent relations with Beijing.5 In a gesture of friendship, Taipei pledged to donate, at Ukraine’s request medicines to the value of US$15 million and to consider providing Ukraine with food aid. Both donations were to be offered in the name of the Republic of China. In April 1992, Vice Foreign Minister Chang once again travelled to Kiev, this time in the company of senior MOFA officials and legislators. Most remarkably, the ROC delegation flew by China Airlines in the first ever direct flight to the former communist territory by the Taiwanese ­flag-­carrier. The ostensible purpose of the visit was the donation of medicines. In order to make the recipients acutely aware of the donor’s intention, the boxes containing medical supplies (including 100,000 ­extra-­large condoms) were marked with the national flags of Taiwan and Ukraine, and slogan ‘Friendship from the Republic of China’.6 Chang’s second visit to Kiev revealed that, the earlier agreement notwithstanding, detailed arrangements concerning the planned exchange of offices still needed to be worked out. Sensing their hosts’ lingering concern over the impact of closer rela-­ tions with Taiwan on Ukraine’s ties with China, the ROC Vice Foreign Minister emphasized that Taipei desired purely economic and trade ties, rather than politi-­ cal relations. Such ties, however, in order to develop, needed some legal basis and organizational structure. Thus, the exchange of trade offices was essential. It also became apparent that the Ukrainians were not committed to the January agreement on the name of the Taiwanese representative office in Kiev. According to the Vice Speaker of the Ukrainian Supreme Soviet, V. Grinev, who was visit-­ ing Taiwan in April 1992 in the company of five government officials and parlia-­ mentarians, the representative offices were to be operational by the end of 1992. In his enthusiastic comments about Taiwan, Grinev went as far as publicly acknowledging Taiwan’s sovereignty.7 Medical supplies to the value of US$15 million was a good beginning to a calculated friendship, but definitely fell short in terms of Kiev’s expectations (it equalled 0.02 per cent of Ukraine’s GNI in 1992). Ukraine’s First Deputy Prime Minister, Valentin Simonenko, having met visiting ROC Minister of Economics Chiang ­ Pin-­kung, showed greater interest in Taiwanese loans, as they did not

158   Fair-weather friends carry political conditions. ‘I don’t believe too much in credits from the Interna-­ tional Monetary Fund’ – Simonenko revealed – ‘There is another way – get credit from such countries [sic] as Taiwan.’8 He also hoped for the arrival of Tai-­ wanese investments. Taipei attempted to convince Kiev of the necessity of an investment guarantee agreement as a prerequisite for this to happen, and such a preliminary agreement was indeed signed during Chiang’s visit to Ukraine in August 1992 with his counterpart Simonenko. Oddly enough, both ministers also signed a protocol on the exchange of representative offices, specifying that offices could provide consular services. This was already the third such agree-­ ment, a telling sign that the problem of offices was becoming increasingly more complex and the bureaus were unlikely to open by late 1992 as planned.

Dancing the polka with Belarus: round 1 In the waning months of the Soviet empire, Taipei seemed more successful in establishing direct communication with Minsk than with Kiev (see Chapter 2). Shortly after Chinese Vice Foreign Minister Tian Zengpei and his Belarusian counterpart Pyotr Kravchenko signed an agreement on the establishment of dip-­ lomatic ties, two Belarusian ministers requested a meeting with ROC Vice Foreign Minister John Chang, who, in late January 1992, visited Moscow. However, due to the tight schedule, the meeting did not take place until three months later, in April 1992, when Chang made up for the missed opportunity.9 During his official visit to Minsk, he pledged to donate US$1 million in cash and medical supplies to Belarus in exchange for strengthened bilateral relations.10 Two months later, First Deputy Minister of Health Nikolai Stepanenko flew to Taipei to personally accept US$500,000 worth of medical supplies. Another US$500,000 in cash was promised for the victims of the 1986 Chernobyl nuclear disaster.11 Sensing an opportunity to exploit Taiwanese generosity, Minsk was ready to elevate relations with the ROC but at a price, set by Stepanenko, at US$40 million. Asked to provide a ­low-­interest commercial loan for a telecommunica-­ tions development project in Minsk, Taipei was ready to extend US$39.8 million in loans: US$8 million was to come directly from Taiwan’s IECDF, while the remaining US$31.8 million was to be extended through the ­ London-­based EBRD.12 This was the first time that Taiwan was to grant a soft loan to any CIS member state. The loan created a friendly, ­ pro-­Taiwan atmosphere in the republic. Belaru-­ sian ­ pro-­Taiwan sentiments were to be further reinforced by a reminder of the Belarusian background of Faina Chiang ­ Fang-­liang (蔣方良), widow of late President, Chiang ­Ching-­kuo. Considered a very private (if not reclusive) person, Faina surprisingly agreed to meet the Mayor of Minsk in June 1992, who brought her a miniature flag of independent Belarus and a loaf of traditional black bread.13 A month later, Chiang ­ Pin-­kung visited Minsk where, together with the Belarus State Economic Planning Commission, he reached an agreement on the exchange of representative offices and establishment of direct air links. The

Fair-weather friends   159 offices were meant to allow for more intensive communication between Taipei and Minsk, and encourage business and tourist travel as they were to be empow-­ ered to issue visas. Direct air connections from Taipei via Vienna to Minsk were to shorten the travelling time between the two countries, which would turn Belarus into a more readily accessible investment and trade partner.14 After Chiang’s departure, however, Minsk began having second thoughts regarding the costs and benefits of ‘substantive’ ties with Taipei. Possibly with advice from China, the Belarusian government put the plans for representative offices and the formal aviation agreement on hold. By ­ mid-­1993, MOFA’s patience was running thin. In early May, it announced that the US$500,000 origi-­ nally promised for Belarus would instead be donated to Africa, while the soft loan of US$8 million was suspended.15 Having failed to achieve quick success, Taipei was preparing itself for a longer campaign to win over Minsk than origi-­ nally anticipated. The first round of the Taiwanese–Belarusian polka – two steps forward, two steps back – was completed, bringing no visible benefits for either partner.

Polka: round 2 In 1994, Taipei – through the IECDF – became officially involved in the EBRD’s SME Credit Line to Belarus, valued at US$30 million. This was the first initia-­ tive taken by the IECDF after establishing a ­ co-­financing relationship with the EBRD, with the aim of allocating US$20 million to various private investment projects in the transition economies. Yet, in 1994, the IECDF did not commit itself financially to the SME Credit Line, awaiting diplomatic developments in Taipei–Minsk relations. In April 1995, Mikhail Myasnikovich, Vice Prime Minister in charge of eco-­ nomic and foreign trade affairs, led a large delegation from the CIS. Taipei was assured of Minsk’s sincere wish to strengthen ‘understanding and closer exchanges’ between the two sides through ‘proper agencies’.16 Taking advantage of a promising situation, the ROC Vice Foreign Minister – on a secret visit to Minsk – discussed with his Belarusian counterpart the possibility of translating Myasnikovich’s vision of ‘proper agencies’ into reality.17 By the ­mid-­1990s, Minsk was ready to accelerate communication with Taipei, first and foremost because Belarus Vice Premier (and the president’s chief of staff, widely credited for Aleksandr Lukashenko’s presidential election victory in 1994) Leonid Georgievich Sinitsyn became Taipei’s supporter (the circumstances of this acquaintance remain unknown). In late January 1996, Sinitsyn secretly travelled to Taipei, where together with his ROC counterpart, Hsu ­Li-­teh (徐立 德), he signed a new agreement on the exchange of trade offices. Unlike the accord struck with Russia on the establishment of coordination committees, the agreement with Belarus was unambiguously intergovernmental. It called for Taipei and Minsk to set up the Taipei Trade and Economic Representative Office – termed by the Taiwanese media as a ‘diplomatic stronghold’ (外交據點) – and the Minsk Economic and Trade Mission in Taipei. The former came to life on

160   Fair-weather friends 1 July 1996 (formally registered in February 1997), while the latter was planned for late 1996.18 Both offices were to function as ­pseudo-­consulates, as they were allowed to offer visa services and trade and cultural bureaus. They were granted ‘special privileges’ (similar to those offered to genuine diplomatic representa-­ tions) on a reciprocal basis. For US$35 million, Taiwanese–Belarusian relations had made a giant step forward. Although MOFA denied the media reports of Taipei offering a US$35 million, ­ low-­interest loan to Belarus, it confirmed that the loan deal did take place, but between the International Commercial Bank of China and the National Bank of Belarus, rather than between the two governments. The ROC authorities did not deny the reports that, following the establishment of the ROC office in Minsk, the ICDF allocated US$7.5 million as part of the EBRD SME Credit Line.19 Taiwanese bilateral and multilateral soft loans, although seemingly small in size, were welcome in Minsk as, starting in 1996, the DAC drastically reduced its assistance to Belarus (from US$165 million in 1995 to US$61 million and US$32 million in 1996 and 1997, respectively). To date, Taipei’s contribution to the SME Credit Line remains its largest ever financial contribution to any single project in the transition economy, made through the EBRD. In July 1996, Sinitsyn suddenly resigned over his objections to President Lukashenko’s economic and social policies (in the 2001 presidential campaign, he emerged as one of Lukashenko’s rivals). As Sinitsyn was Taipei’s only ally in the Lukashenko administration, Taiwan’s relations with Belarus stalled. Citing budget constraints, the Belarusians decided against opening an office in Taiwan and put a stop to an exchange of visits at the governmental level. By August 2001, when Belarus First Vice Minister of Finance Mikalay Rumas visited Taipei, urging Taiwan to continue providing aid to his country to bail it out of its economic crisis, Taiwanese–Belarusian relations were confined to trade and cul-­ tural cooperation.20 Given the irrelevance of Belarus to the Taiwanese economy (bilateral foreign trade oscillated between US$20 million and US$30 million, see Table 8.1), Minsk’s support for China on the Taiwan issue (which included vetoing Taipei’s efforts to ­re-­enter international organizations) and Minsk’s reluc-­ tance to enter into any ­government-­level dialogue with Taipei, the DPP adminis-­ tration decided to close the Taiwanese mission in Minsk in January 2006. Its functions were taken over by Taiwan’s representative office in Moscow.21

Deus ex machina In October 1992, newly appointed Prime Minister Leonid Kuchma made an unexpected, ad hoc visit to Beijing, which signalled China’s growing concern over the active dialogue between Kiev and Taipei. However, Ukrainian authori-­ ties continued communicating with Taiwan. By ­mid-­1996, Ukrainian visitors to the ROC included: media delegations, Ministers of Education, Health, Light Industry and Economics, Vice Ministers of Economics and Culture, the Vice Speaker of the Parliament and the Chairman of the Association of Foreign Trade.22 Alongside political dialogue, cultural cooperation developed as well:

Fair-weather friends   161 first translations of Taras Shevchenko’s poems were published on the island, several Taiwanese students studied in Kiev and Ukrainian students in Taipei, while the Department of Russian Language and Literature at the Culture Univer-­ sity began teaching the Ukrainian language (albeit on a very limited scale) and the Institute of International Relations at the Chengchi University established working relations with its counterpart at Kiev University. Added to these were visits by music, theatrical and dance groups and numerous arts exhibitions.23 In April 1994, President Kuchma openly noted Kiev’s willingness to expand Ukraine’s relations with the Far East countries, singling out Taiwan as the top priority. In his interview with Izvestia, he even termed Ukraine’s relations with Taiwan as ‘good’.24 The absence of any consistent, ­long-­term policy on Taiwan became more apparent when the Taiwanese Premier and Vice President, Lien Chan, made a ­three-­day detour to Ukraine on the return journey from an official visit to the Dominican Republic in late August 1996. Having displayed concern over China’s possible anger if the ROC bureau was set up in Kiev, the Ukrainians now apparently did not mind playing host to the ­highest-­level Taiwanese official to visit any of the CIS member states. Lien’s unexpected visit was highly secretive and appeared to have a very vague purpose. The secret was kept so well, in fact, that Lien’s arrival in Kiev surprised not only China but also Taiwan’s MOFA and Ukraine’s Foreign Minis-­ try, which immediately denied any knowledge of Lien’s presence in the country. The Vice President’s deus ex machina appearance was reportedly arranged jointly amid great secrecy by Taiwan’s Culture University, ROC Ministry of Edu-­ cation, Ukraine’s Ministry of Education and the Rector of Kiev State University, Viktor Skopenko, who formally invited the Taiwanese ­academic-­turned-politician to bestow upon him an honorary doctorate.25 Despite the ostensibly academic character of the visit, Lien Chan found time to meet Ukrainian ­cabinet-­level offi-­ cials (possibly including Premier Pavlo Lazarenko, the Vice Premier, Minister of Education and parliamentarians) and to visit the Crimea, where he held talks with the Deputy Prime Minister, Deputy Chairman of the Crimean Supreme Council Anushevan Danelyan and Chairman of the Economic Renaissance Party Volodymyr Shevyov.26 The Taiwanese media widely speculated on the likely meeting between Lien and Ukrainian President Leonid Kuchma. A spokesman for Ukraine’s Foreign Ministry, interviewed on Taiwanese television, said a Lien– Kuchma meeting was possible: ‘So far, there is no such meeting in plan, but it may take place absolutely unexpectedly.’27 Upon his return to Taiwan, Vice Presi-­ dent Lien spoke of meeting people ‘of various levels’: ‘I met the people I wanted to meet and discussed the things I wanted to discuss.’28 The Taiwanese media, however, claimed that Lien and Kuchma did meet on the third and last day of Lien’s stay in Ukraine and reached an agreement on the exchange of unofficial representative offices to be accomplished within six months.29 In the report to the KMT Chairman, Lee ­Teng-­hui, Lien Chan allegedly not only admitted to meeting Kuchma, but even to flying to Crimea in Kuchma’s plane. He also acknowledged meeting Ukraine’s Prime Minister, both Vice Prime Ministers, the Vice Speaker of the Parliament and Kiev’s mayor.30

162   Fair-weather friends Ukraine’s Foreign Minister, Gennadiy Udovenko, confirmed Kiev’s interest in developing trade with Taiwan and plans to open a trade mission in Taipei. CETRA announced, however, that it did not need any trade office in Kiev due to Ukraine’s political and economic instability, high levels of crime and undevel-­ oped infrastructure.31 Instead, its activities in Ukraine – primarily trade tours – were to be coordinated by the offices in Warsaw and Moscow. Lien Chan’s visit to Ukraine underscored Taiwan’s lingering economic clout, even in a country such as Ukraine, whose second-largest trading partner was China and who, therefore, had a lot to lose by consenting to ­high-­profile commu-­ nication with Taipei. This achievement aside, however, Lien’s secretive journey highlighted the difficulties under which Taiwan operated its foreign relations. Fearing that Beijing would block Lien’s ‘private’ visit had it had advanced warning, the Vice President and his team kept it highly secret. Lien, thus, literally disappeared from New York airport and boarded a plane for ‘somewhere in Europe’, surprising even the members of his delegation to the Dominican Repub-­ lic. In addition, the secretive nature of the trip prevented the Taiwanese and Ukrainian sides from revealing the visit’s content and possible achievements. Lien could not comment on whom he met and what he discussed because he promised Kiev he would ‘not anger China’ by revealing awkward details. Although the Tai-­ wanese media supported Lien’s visit to Ukraine, as it expanded the ROC’s inter-­ national space,32 some Taiwanese commentators questioned the purpose of such excessively secretive diplomacy: China News commented that Lien’s visit neither showed the Vice President as a government official worthy of the respect of a foreign nation nor did it represent the ­ so-­called ‘respect’ demanded by the 21 million people of Taiwan. Expanding or consolidating relations ‘at any cost’ is not much of a foreign policy.33 Lien Chan himself denied that his visit to Ukraine was an exercise in secret diplomacy, stressing that it was a private, unofficial trip to Kiev and Crimea.34 Lien’s publicity stunt in Kiev made little impact on Kiev’s Taiwan policy, had such ever existed. Although in December 1996, at the WTO conference in Singa-­ pore, the Ukrainian Minister of External Economic Relations and Trade, Serhiy G. Osyka, met ROC Minister of Economic Affairs Wang ­Chih-­kang (王志剛) to discuss the exchange of representative offices, such offices were never estab-­ lished.35 The ROC representative, stationed in Moscow, travelled to Ukraine many times to discuss the issue of office exchange. But Kiev allegedly began making new requests for financial assistance before striking a deal.36 In Taipei’s view, Kiev’s excessive demands were the major stumbling block to the development of relations with Ukraine. The Ukrainians, however, did not ask for soft loans or grants, but for substantial investments to modernize Ukraine’s ­post-­Soviet industry. They particularly sought Taiwanese money and ­know-­how to transform their military industry into civilian production. However, Taipei’s influence over Taiwanese investors was limited, while the Taiwanese entrepre-­ neurs were unwilling to sink considerable amounts of money into the projects in

Fair-weather friends   163 which profitability was highly uncertain. President Kuchma reportedly requested Taiwan to invest money first and only then would Kiev consider an exchange of representative offices.37 To be fair to Kiev, it should be noted that the Ukrainians did not, in principle, oppose the exchange of offices, but preferred the offices to be truly ­non-­governmental institutions with no consular functions. The Taiwan-­ ese, however, did not want a trade bureau, but a de facto consulate. Facing the dilemma of either showering Ukraine with grants and establishing a pseudo con-­ sulate, or settling for a purely commercial and cultural bureau, Taipei opted for neither.38

Ukrainian initiatives In late 2000, several Ukrainian parliamentarians (particularly the Deputy from Crimea and wealthy businessman, Lev Mirimsky) became directly involved in promoting ‘substantive’ relations with Taiwan. Upon their initiative, the Ukrai-­ nian Centre of Developing Relations with China (烏中關係發展中心) was established in January 2001. Registered as a commercial company, the Centre sought to become a ­one-­stop agency facilitating Taiwanese investment and trade activities in Ukraine. In the first and the only issue of its bilingual (Russian and English) publication, Ukraine–Taiwan: Inform, published in November 2001, the Centre advertised its comprehensive services, which included guaranteeing the security of Taiwanese investments in Ukraine, helping Taiwanese investors to identify suitable investment locations and local partners and representing Tai-­ wanese companies’ interests in Ukraine.39 Taipei was reluctant to endorse this private initiative, first objecting to the name of the Centre, then to Deputy Udovenko’s statement (printed in the first issue of Ukraine–Taiwan: Inform) warning Taiwan against the use of economic relations to seek recognition of its sovereignty, and finally resolving not to promote the Centre’s services in Taiwan. Ukrainian parliamentarians, however, remained on the frontline of seeking relations with Taiwan. Former President and legislator Leonid Kravchuk, for example, revived the idea of setting up bilateral offices when visiting Taiwan and meeting President Chen ­Shui-­bian in February 2001.40 In April 2003, 14 Ukrai-­ nian deputies formed the ‘Ukraine–Taiwan’ group in the parliament, ­co-­chaired by Mirimsky (the corresponding group in the Legislative Yuan was formed in 2006). Three months later, in July, the Ukrainian Centre of Developing Relations with China found new life in the form of the Ukrainian–Taiwanese Institute, with Mirimsky as the Institute’s President and Sinologist Viktor O. Kiktenko (former director of the Centre) as Director (currently visiting professor at the Chengchi University). Not unlike the Centre, the Institute offered wide-ranging services to prospective Taiwanese investors and traders (although it no longer claimed to protect their investments).41 In August 2003, several members of the ‘Ukraine– Taiwan’ group of deputies (led by Mirimsky) visited Taiwan.42 A year later, while visiting Beijing, Ukrainian Foreign Minister Konstantin Grishchenko officially reiterated Kiev’s respect for the ‘one China’ principle,43 but unofficially signalled to Beijing Kiev’s intention to open a bureau in Taipei.

164   Fair-weather friends The Orange Revolution (November 2004–January 2005) suspended talks between Ukrainian and Taiwanese foreign ministries concerning the exchange of offices. Ukraine’s new President Viktor Yushchenko neither emphasized relations with China – his first visit to Asia led him to Japan in July 2005 and, although officially invited, he is yet to visit China – nor sought any dialogue with Taiwan. Foreign Minister Boris Tarasyuk, his ­pro-­Western stand notwithstanding, reiter-­ ated Kiev’s principled stand on the question of ‘one China’ and appeared unsup-­ portive of developing relations with Taiwan, however unofficial. Yet, the ­low-­key dialogue restarted in early 2005 and claimed its first success when Taipei short-­ ened visa processing time from over three weeks to three days in January 2005.44 Kiev also successfully completed WTO negotiations with Taipei, paving the way for its entry into the WTO in early 2007. (Taiwan was one of the last WTO members to sign an agreement with Ukraine.) Preparing for revitalized economic relations with Ukraine after its WTO entry, TAITRA opened its representative office, a purely trade bureau with no hidden consular prerogatives, in Kiev in October 2006. The Taiwanese trade officials did not coordinate the opening of their representation with the Ukraine–Taiwan Institute, which signalled Taipei’s unwillingness to subordinate ‘substantive’ relations with Ukraine to the private interests of several resourceful Ukrainian politicians and entrepreneurs. Yet, the Taiwanese authorities were not averse to utilizing such interests to expand Tai-­ wan’s international space. Thus, for example, when invited by Ukrainian Deputy Viktor Pinchuk, former President Kuchma’s ­ son-­in-law and one of the richest businessmen in Ukraine, James Huang ­ Chih-­fang (黃志芳, Presidential Office Deputy ­ Secretary-­General and ROC Foreign Minister since January 2006) accepted the invitation and visited Ukraine in December 2005.45 It appears that Huang’s major objective was not to further relations with Ukraine (he did not seek to meet anyone of importance in Kiev), but rather to demonstrate to Beijing that its ban on ROC ­high-­ranking officials’ visits to its allies was not watertight.

Relations with Crimea The DPP supported, in principle, the KMT’s efforts to establish ‘substantive’ relations with the ­post-­communist states, including Ukraine. It was not, however, satisfied with the results of the KMT’s diplomacy. In order to help Taiwan expand its international space, DPP activists decided to unleash party diplomacy towards Ukraine. Evidently ignorant of Ukraine’s complex political domestic problems, the DPP chose to strengthen relations with Ukraine’s autonomous region of Crimea, claimed by the Russian nationalists. In so doing, the DPP’s good inten-­ tions had the potential to seriously upset relations with both Kiev and Moscow. During the 26th Congress of the World League for Freedom and Democracy, organized in Moscow in August 1994, Crimean President Yuri Meshkov revealed Crimea’s wish to develop closer economic relations with, and his personal hope to visit, Taiwan.46 MOFA responded to Meshkov’s statement warily, welcoming his intention to develop economic relations with the ROC, but cautioning that Taipei could not develop political ties with Crimea, as it constituted an autono-­

Fair-weather friends   165 mous region of Ukraine. Thus, all political consultation had to go via Kiev.47 MOFA’s position notwithstanding, the ­ DPP-­founded ­ Sino-­Russian Association for International Humanitarian Dialogue – chaired by Chen ­ Sheng-­hung, the DPP’s Financial Secretary – decided to invite Meshkov to visit Taipei in ­ mid­November 1994. It hoped that the establishment of relations with Crimea would compensate for the ‘loss’ of Latvia.48 At that moment, relations between Crimea and Ukraine were strained due to strong separatist sentiments expressed by numerous Crimean politicians. Kiev was understandably concerned about the prospects of the Crimean official visiting Taiwan in his ‘presidential’ capacity. It sent a message to Taipei warning that a visit, if carried out without Ukraine’s approval, would hurt relations between the ROC and Ukraine. In response, MOFA blocked any visit that did not have Ukrainian government approval. The Association, however, was determined to go ahead and send an invitation, as a visit by the Crimean leader would – in the Association’s view – raise Taiwan’s international status and broaden its foreign contacts. Chen compared Crimea’s situation in Ukraine to Taiwan’s relations with the PRC, concluding that, given the geopolitical similarities, Taipei should be supporting Crimea. Meshkov’s sup-­ posed promise to invite President Lee to attend the fiftieth anniversary of the Yalta Conference, scheduled for February 1995, constituted an additional reason to welcome the Crimean guest. Although the Ukrainian Foreign Ministry eventu-­ ally allowed Meshkov to travel to Taiwan ‘as a private citizen’, the visit was ulti-­ mately cancelled due to the outbreak of a constitutional crisis in Crimea.

Phantom arms sales During his first official visit to Ukraine in late January 1992, Vice Foreign Min-­ ister Chang met the Ukrainian Minister of Defence, which raised rumours of Tai-­ wan’s possible purchase of Ukrainian arms.49 Chang denied, however, having conducted any discussions about military supplies.50 The official denials notwith-­ standing, in the summer of 1992, the ­ KMT-­owned daily, Zhongyang ribao (中央日報), reported that Chang had discussed the possibility of buying weapons from Ukraine, but had received a negative response from his hosts. Once again, Chang joined the ROC Ministry of Defence in denying having made any contacts – direct or indirect – with any of the republics of the CIS.51 The Ministry restated its claim of zero contact with military establishments in the CIS in ­mid-­July 1992, during a secret meeting of the Foreign and Defence Com-­ mittees of the Legislative Yuan, when it was requested to explore ways of pur-­ chasing weapons from the CIS, in the wake of the United States’ increased restrictions on arms sales to the ROC.52 Ukrainian officials rarely made any comment on the possibility of arms sales to Taiwan. In August 1992, visiting Vice Speaker of the Ukrainian Supreme Soviet, V. Grinev, claimed, when interviewed by the Zili zaobao, that there was a definite possibility of Kiev selling Taipei an aircraft carrier to earn hard cur-­ rency.53 Ukraine’s government, however, did not share his beliefs. When the Taiwanese press reported on four Taiwanese air force pilots allegedly testing

166   Fair-weather friends Sukhotai ­ Su-­27 fighters in Ukraine in early 1996, Ukraine’s Defence Ministry denied the reports. ‘It is against our military rules and practice to allow foreign pilots to use our aircraft in our territory’, the ministry’s spokesman told Reuters.54 The denials served only to add fuel to the fire of Taiwanese media speculation on the ongoing secretive military cooperation between Taiwan and Ukraine. Thus, for example, the media speculated that Lien’s visit to Kiev was aimed at strengthening cooperation in military technology.55 The ROC government denied rumours that Lien discussed military and nuclear exchanges with President Kuchma or explored the possibility of acquiring ­anti-­submarine technology from Ukraine.56 Yet, Taiwanese–Ukrainian military cooperation did exist, the ROC newspapers maintained. The Zhongguo shibao quoted Ukrainian sources, which reportedly learned from unnamed scientists from Ukraine’s State Strategic Insti-­ tute about Taiwanese–Ukrainian cooperation in ­anti-­aircraft missile technology. In August 1996, Beijing allegedly protested against the Taiwanese military visit to Kiev and Crimea, aimed at assessing the feasibility of expanding military col-­ laboration between the two sides. The Chinese embassy in Kiev also protested against the presence of Taiwanese pilots at the Crimean testing site of ­ anti­aircraft systems.57 Since Kiev had already demonstrated its position by dragging its feet in allowing the ROC representative office to open, it was very unlikely to cross Beijing on the far more sensitive issues of arms sales and military collabo-­ ration.

Shopping for steel From the beginning of Taiwan’s interaction with the Soviet Union, Belarus, Russia and Ukraine were singled out as Taipei’s top targets for economic cooper-­ ation. These markets, however, proved to be a difficult terrain to explore. The biggest obstacles included: lack of information about each other’s economies, high tariffs on Taiwanese products, lack of bilateral agreement on mutual invest-­ ment protection, absence of representative offices (which turned simple issues such as visa application into complex procedures), lack of foreign currency in the ­ post-­Soviet economies, their galloping inflation, the language barrier, an unfamiliar legal system, political instability, absence of banking links and peri-­ odic economic crises. Taiwan’s exchange of offices with Russia and Belarus helped to address the trade information gap between the CIS and Taiwan. Yet, other unresolved problems obliged Taiwanese entrepreneurs to trade with the CIS states through third countries. Indirect trade decreased the risks of doing business with the CIS, but it also unavoidably increased the price of Taiwanese products (consisting of computers, plastics, textiles, machinery and other con-­ sumer goods). Moreover, Taiwanese goods were heavily taxed, especially in Ukraine, where they were subject to full, often double, import duty. Due to the high price of Taiwanese consumer products and Taiwan’s hunger for raw materi-­ als (steel, ferrous ores and chemicals), Taipei registered a consistent trade deficit with Ukraine. On the plus side, however, due to its growing imports, Taiwan

Fair-weather friends   167 emerged as Ukraine’s leading trade partner in Asia. By the ­ mid-­1990s, it was Ukraine’s third-largest trading partner in Asia, after China and Turkey. Among ­post-­communist states, Taipei’s trade with Ukraine outran Poland’s and Hunga-­ ry’s, while Belarus became Taiwan’s third trading partner within the CIS (after Russia and Ukraine, see Table 8.1). The flood of cheap Ukrainian steel products distressed Taiwan’s own steel producers, who found it difficult to compete with imports priced at seemingly below production cost. In early 1999, China Steel Corporation (中鋼) and Taiwan Steel and Iron Industries Association (台灣區鋼鐵工業同業公會) filed dumping charges against the Ukrainian steel exporters, calling on the ROC gov-­ ernment to levy ­ anti-­dumping and provisional duties on these imports.58 An investigation by the ROC Ministry of Finance began in May 1999. After one year, MOEA rejected the local producers’ charge of Ukraine’s (and Russia’s) dumping activities, ruling that punitive tariffs were not merited. If the Taiwanese traders found the Ukrainian and Belarusian market difficult, then Taiwan’s investors found it downright hostile. First, the changes of rules and regulations were far too frequent for the investors to follow. The lack of invest-­ ment guarantees only magnified the risks of doing business. Second, inflation and the unstable exchange rate of the local currency also advised against invest-­ ing in Ukraine. Although the ROC government tried to encourage Taiwanese investors to test both CIS markets, the Taiwanese business community consid-­ ered the investment environment there as inferior to that offered by Russia or Central Europe.59 By the ­mid-­1990s, there were about 11 Taiwanese investment projects in Russia, but only one or two in Ukraine.60 By ­mid-­2002, there were no more than 20 Taiwanese companies with local offices in Russia (importing various consumer goods) and a handful of trading firms in Ukraine.61 No invest-­ ments arrived in Belarus. The Belarusian News Agency concluded that Belarus authorities displayed a remarkable indifference to Taiwan’s investment potential, reminding Minsk of Taiwan’s reserves exceeding US$100 billion. According to the agency, Minsk preferred not to anger Beijing by engaging in an aggressive campaign to attract Taiwanese investments.62

Deferring to China Beijing was aware of Taipei’s designs to pluck diplomatic partners out of the Soviet ruins. The Working Group on the CIS (對俄協工作小組), created by the PRC Foreign Ministry and comprising the head of the Ministry’s Department of Soviet and East European Affairs, as well as Chinese ambassadors to the newly independent states, intended to monitor Taiwan’s activities in the ­ post-­Soviet region and to prevent Taipei from successfully challenging the ‘one China’ prin-­ ciple.63 The working group had relatively little to monitor in Ukraine, as Kiev monitored itself very scrupulously. Similarly, Belarus stood firmly by the ‘one China’ principle. After 1992, when both states learned more about Beijing’s sen-­ sitivity to the ‘one China’ question, Belarus and Ukraine made great efforts to adhere to the principle, their ­non-­official interaction with Taipei notwithstanding.

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Notes TT = total trade, B = trade balance.

Sources: Ministry of Finance, Zhonghua Minguo, Taiwan diqu, jinchukou maoyi yuebao, June 1996 and June 2006

Ukraine TT 253.17 2145.97 2183.90 2202.49 2157.21 2305.42 2250.24 2272.19 2367.65 2250.86 2369.43 2296.48 2437.37 2257.82 B 225.55 2124.10 2169.70 2164.40 2126.00 2264.50 2201.80 2218.00 2269.10 2104.40 2231.20 2119.30 2245.70   211.80

Belarus TT   27.58   242.34   215.93    25.71   215.39   228.44   211.49   216.32   219.70   217.04   217.29   228.22   220.10   238.33 B   27.00   241.00   213.33    21.05    27.43   212.94   2  2.01    27.62    28.35    27.39    27.43   218.98    26.53   222.49



Table 8.1  Taiwan’s trade with Belarus and Ukraine (in millions of US dollars)

Fair-weather friends   169 To some extent, Taiwan should blame itself for Ukrainian and Belarusian devo-­ tion to the ‘one China’ principle, as its consular relations with Latvia did not demonstrate a level of generosity sufficient enough to stir imaginations in the CIS. There is also no evidence that Taipei showered Minsk and Kiev with finan-­ cial assistance, save humanitarian aid in 1992 and soft loans to Belarus as a reward for the agreement on reciprocal offices. But above all, Beijing’s success in keeping Minsk and Kiev away from Taiwanese temptations was a consequence of its prudent foreign strategies, which made its friendship more prized (symbol-­ ically and literally) than partnership with the ROC. Beijing encouraged an exchange of ­ high-­level official visits, which satisfied the cumulative ego of Ukrainian and Belarusian officialdom. Chinese leaders who visited Ukraine, for example, included President Jiang Zemin (1994 and 2001) and Premier Li Peng (1995), while President Kravchuk (1992), President Kuchma (1995, 2002 and 2003) and Premier Pustovoitenko (1998) reciprocated. China reached numerous agreements with Belarus and Ukraine covering economy and trade, science and technology, military technology, culture and sports, health, post and telecommu-­ nications, and environmental protection. Beijing also unleashed its own economic diplomacy. Reacting to Taipei’s humanitarian assistance, it instructed the Chinese Red Cross to donate medicines and food to Belarus and Ukraine (as well as Russia).64 During Jiang’s visit to Ukraine in ­ mid-­2001, China pledged a US$1.2 million humanitarian aid grant for joint projects. A year later, it donated antibiotics and medical equipment for the victims of an air crash in Ukraine. By early 2004, the Chinese government had offered a total of RMB77.5 million (US$9.38 million) in aid to Belarus since the two countries established full diplomatic ties.65 China also encouraged Chinese investments in Belarus and Ukraine.66 Some 14 Chinese provinces, cities and prefectures have established ­good-­neighbourly relations with their counter-­ parts in Ukraine. By ­mid-­2001, 45 ­Chinese-­funded firms registered in Belarus, most of them ­small-­scale companies or individuals, were engaged in wholesale, retail and restaurant services.67 In terms of foreign trade, China became Ukraine’s second-largest trading partner (after Russia). In the context of close relations between China and Ukraine, Lien Chan’s visit to Kiev and Crimea was truly out of character. China immediately protested to the Ukrainian Foreign Ministry. Ukrainian Foreign Minister Gennadiy Udovenko emphasized the ‘private’ character of the visit (‘It wasn’t even a visit but a trip, a private journey’) and denied the meeting between Kuchma and Lien: Ukraine never in its policy made a step away from support of China’s territo-­ rial integrity. We consider Taiwan as an integral part of China and we will follow this line further, but life changes. There should be no objections to our scientific, cultural, trade and economic cooperation with Taiwan. We already have established close economic cooperation with China’s other provinces.68 Yet, the PRC Foreign Ministry regarded Kiev’s act of granting permission for a representative of the ROC administration to enter Ukraine as a violation of their

170   Fair-weather friends bilateral understanding and punished Ukraine by indefinitely postponing the formal visit to Kiev by a Chinese government delegation, due to arrive on 21 August, to attend festivities marking the fifth anniversary of Ukraine’s independ-­ ence.69 The Chinese delegation was to be headed by Li Tieying (李鐵映), the Chairman of China’s State Committee on Economic Reforms and Politburo member, and was publicly cancelled ‘due to the situation that developed in Kiev over the past two days’.70 Furthermore, the PRC Ambassador to Kiev, Pan Zhanlin, met Ukraine’s Deputy Foreign Minister Kostyantyn Hryschenko to express concern over the visit. Predictably, the Chinese Foreign Ministry sum-­ moned Ukraine’s ambassador, Anatoly Plyushko, to communicate its displeasure over Ukraine’s decision to allow Lien’s visit.71 Despite the anger, however, Beijing did not resort to any practical sanctions against Ukraine (save the cancelled state visit and Beijing’s insistence on includ-­ ing an extended paragraph on Taiwan in every future communiqué). Vice Foreign Minister Tang Jiaxuan attended the Ukraine embassy’s reception, held to mark Ukraine’s Independence Day on 23 August. In a ­half-­hour chat with Tang, Ply-­ ushko was told that China gave ‘great attention to bilateral relations’ and ‘hoped to develop ties’.72 Beijing’s ­low-­key response to Lien’s trip to Ukraine could be explained in terms of China’s recognition of Kiev’s significance in the CIS, as well as the Ukrainian efforts to keep Lien’s visit ­ low-­key. Moreover, as Lien’s visit coincided with Beijing promulgating new regulations on shipping across the Taiwan Strait, any harsh response to his Ukrainian sojourn could have ruined Beijing’s efforts to create a favourable atmosphere for national reunification through economic means.73 In October 1996, Udovenko, when meeting Foreign Minister Qian Qichen at the conference of the UN General Assembly, promised that Ukraine would not establish official contacts with Taiwan. Two months later, China’s Vice Foreign Minister, Tian Zengpei, reminded his Ukrainian counterpart, Konstantin Grish-­ chenko, about the sensitive nature of the Taiwan issue: We hope that Ukraine can understand the sensitivity and importance of the Taiwan question, stick to the principle of ‘one China’, maintain a high level of vigilance against the Taiwan authorities’ ‘dollar diplomacy’ [. . .] so as not to allow the Taiwan issue to disturb the development of ­Sino-­Ukrainian rela-­ tions.74 To strengthen Kiev’s resolve to distance itself from Taipei, Beijing also offered some incentives. In April 1997, for example, the visiting Chinese Vice Premier Wu Bangguo (吳邦國) proclaimed – surprising Moscow – that China always considered Sevastopol and Crimea as Ukrainian territory. At the same time, the Chinese government decided to extend ‘free assistance’ to Ukraine amounting to US$250,000.75 Shortly afterwards, Kiev blocked the May visit of the ROC Min-­ ister of Economic Affairs, Wang ­Chih-­kang, who planned to explore the possibil-­ ity of setting up an ROC trade office in Kiev.76 James Huang’s visit to Kiev in December 2005 was reminiscent of the Lien

Fair-weather friends   171 Chan episode a decade earlier, although on a smaller scale. Even though Pinchuk claimed to have cleared Huang’s visit with the Chinese Foreign Ministry, and Premier Yuri Yekhanurov was not informed by the Foreign Ministry of Huang’s visit, Beijing responded with sanctions. It reportedly toughened its stand during the WTO negotiations, called off a planned visit by the Ukrainian defence minis-­ ter and postponed the ­Sino-­Ukrainian business forum, to be held in Crimea. Unlike Ukraine, Belarus always kept China well informed of its communica-­ tions with Taiwan. In early August 1996, following the official establishment of the ROC office in Minsk, President Lukashenko sent a letter to Jiang Zemin promising not to establish intergovernmental relations with Taiwan. Jiang Zemin, in return, expressed confidence that Belarus would react ‘with understanding and great attention’ to China’s concern over the Taiwan question and, ‘strictly adher-­ ing to the position of “one China”, will not establish any official contacts with Taiwan in order to avoid any negative influence on the development of ­ Sino­Belarusian relations’.77 Minsk opted against expanding relations with Taiwan, even though the ROC office offered an opportunity to foster relations closer than those enjoyed by other CIS ­ member-­states (except Russia). Taipei’s decision to close its office in Minsk is indicative of President Lukashenko’s firm ‘one China’ policy and its principled avoidance of any communication with Taipei. Minsk and Kiev stood by China whenever the ‘one China’ issue emerged on international forums. Turning into ‘permanent supporters’ of China’s position on the Taiwan issue, both states consistently spoke against the ROC’s UN member-­ ship, claiming during the annual UN debates that Taiwan, as a province of China, lacked qualifications for the UN membership, which was an intergovernmental organization composed of sovereign states.78 Concerning Beijing’s plans to reunite with Taiwan by force if necessary, Belarus appeared equally supportive. In a meeting with Wu Yi (吳儀), a member of the PRC’s State Council, President Lukashenko agreed that the ‘Taiwan problem’ needed to be solved ‘as China wanted it’.79 In the same spirit, Kiev backed China’s opposition to the US plans to include Taiwan in the Theatre Missile Defence. Following Lee ­ Teng-­hui’s statement on ‘special ­state-­to-state’ relations between Taiwan and China in 1999, Ukraine’s Foreign Minister, Tarasyuk, reiterated principled support for China’s territorial integrity.80 When the Chen ­Shui-­bian administration added ‘issued in Taiwan’ words to the cover of the ROC passport in 2003, Kiev at first did not accept new passports as valid.81 China, Belarus and Ukraine also found them-­ selves on the same side of the international debate on US foreign policy or NATO’s actions in Yugoslavia and its eastward expansion, and – more recently – on the ABM Treaty and the establishment of the National Missile Defence Treaty.

Conclusion Taipei’s hopes of plucking allies from the Soviet ruins proved unrealistic. When the ­ post-­Soviet states welcomed China’s recognition in December 1991, Taipei’s efforts shifted towards forging ‘substantive’ ties. Belarus and Ukraine, in

172   Fair-weather friends particular, were targeted in order to establish ­ government-­to-government com-­ munication, official agreements and exchange of ­high-­ranking officials. Knowing that vast Taiwanese liquid capital could contribute to economic growth, the ­post­Soviet states looked favourably at cooperation with Taiwan. Taipei’s humanitar-­ ian diplomacy in 1992 and promises of greater economic assistance yielded results, with Kiev and Minsk consenting to the exchange of representative offices and agreements on direct air links and investment protection. Geostrategic con-­ siderations, however, prevailed, and both capitals took steps to distance them-­ selves from Taiwan. With hindsight, their decision proved correct, as China became their ally on a number of international issues, as well as a major trading partner. Yet, Taiwanese labours to locate friendly political forces in the ­ post­Soviet states were not in vain. Their success in establishing a representative bureau in Minsk and Vice President Lien’s visit to Kiev testified to the potential of Taiwan’s economic diplomacy. Taipei’s difficulties in the ­ post-­Soviet geopolitical space stemmed from the conflicting agendas of all parties involved. Taiwan’s main goal was to score points against China by demonstrating its capacity to establish ­semi-­official ties with the most significant member states of the CIS. Taipei did not need a trade office in either Belarus or Ukraine, nor any investment agreement or accord on direct air links, as Taiwanese investors showed no interest in the ­ post-­Soviet markets, while the number of Taiwanese tourists visiting both states was negligi-­ ble. But Taipei did need representative offices and ­ semi-­official agreements to highlight its expanding ‘substantive’ ties with the international community. Belarus and Ukraine primarily sought Taiwanese investments, soft loans and ­know-­how to restart their economies. They did not wish to be dragged into the ­cross-­Taiwan Strait conflict and antagonize China, a permanent member of the UN Security Council and a rising economic giant. These conflicting objectives benefited China, which could be secure in the knowledge that Taiwan was unlikely to stage a diplomatic coup amidst the Soviet ruins. Beijing’s humanitarian assistance and bourgeoning bilateral trade, coupled with frantic exchanges of ­ high-­level state visits, were set to further strengthen friendship with the PRC and weaken Kiev and Minsk’s desire for Taiwanese dollars. To a large extent this strategy proved successful, as Taipei’s decision to close its office in Minsk and slow response to Ukrainian initiatives in the early 2000s demonstrated its own recognition of failure to upstage Beijing in the Euro-­ pean part of the CIS.

9 Taiwan’s economical diplomacy

Soon after Central and Eastern Europe abandoned communism, Taipei resorted to positive instruments of economic diplomacy in an effort to forge diplomatic (its primary objective) or ‘substantive’ (its secondary objective, see Table 9.1) relations. At first, Taiwanese activities centred on Central Europe, where new regimes – no longer bound by an ideological fraternity with communist China and facing economic restructuring – shared Taipei’s professed ­ anti-­communist convictions and looked up to Taiwan as a source of aid and investments. Responding to Taiwanese promises of aid, Budapest consented to the first ROC office in ­ post-­communist Europe and boldly initiated ­ inter-­parliamentary exchanges. Lech Walesa in Poland seemed ready to raise relations with Taiwan to unmistakably official level by visiting the island in his official capacity, while President Vaclav Havel in Czechoslovakia initiated ‘first ladies’ diplomacy’, in which context his wives travelled to Taiwan on his behalf. Walesa’s ­U-­turn on his pledge to visit the ROC, however, reminded Taipei that, for wider geopolitical reasons, Central Europe was not prepared to sacrifice diplomatic partnership with China, regardless of shared ­ anti-­communist ideals and any potentially attractive aid package Taiwan could offer. By early 1992, Taipei began working towards its secondary objective, namely, seeking ‘substantive’ relations with Central Europe and selected states in the Balkans. Progress was to be measured against a number of key milestones, such as the establishment of representative offices, bilateral economic agreements concluded at the ministerial level, exchanges of ­high-­level visits and setting up ­ministerial-­level committees on bilateral cooperation. Taipei calculated the pursuit of de facto official relations with the ­ post-­communist nations and their support for Taiwan in the international arena would effectively challenge ­China­imposed international isolation, if not lead to official ties in the longer term. There was also an economic element to the Taiwanese strategy: the ­ post­communist states were to become new export markets for ROC manufacturers and, thus, help reduce its dependence on the US and Japanese markets. In the ­post-­Soviet geopolitical space, the Baltic republics, Belarus, Russia and Ukraine – all eager to enlist international assistance for their struggling econo-­ mies – reacted with interest to the Taiwanese promises of economic assistance. Most ­post-­Soviet states had not enjoyed ­decades-­long diplomatic relations with

Time frame

Objectives

Expected ­by-­products

Primary objectives Long range 1  Accelerate the new ally’s economic development. 1  Diplomatic ally’s increased political and economic 2  Extend political influence across the region.    stability. 3  Win new diplomatic allies in ­post-­communist 2  Commercial/trade opportunities for both    Europe.    Taiwanese and ­post-­communist businesses. 3  Possible domino effect among neighbouring states    or other developing states. 4 Quantitative break out from ­China-­imposed international isolation. Medium range 1  Conclude intergovernmental agreements. 1  Internationalization of the ‘Taiwan problem’. 2  Stage ­highest-­level official visits. 2  Increased support of the ROC in international 3  Symbolize ­long-­term commitment to ­pro-­Taiwan    organizations.    regimes. 3  Greater opportunities for Taiwanese businesses. 4  Maintain access to, and influence over, new ally’s 4  Greater political and economic clout in the region.    China policy. Immediate 1  Establish diplomatic relations. 1  Challenge to diplomatic isolation imposed on the 2  Sustain ­pro-­Taiwan regime in power.    ROC by China. 2 Support for Taiwan’s diplomatic objectives on the international arena.



Table 9.1  Taiwan’s diplomatic objectives

Time frame

Objectives

Expected ­by-­products

Secondary objectives Long range 1  Transform ‘substantive’ partners into diplomatic 1  Explicit recognition of Taiwan’s sovereignty.    allies. 2  Quantitative break out from ­China-­imposed 2  Support the new ally’s economic development.    international isolation. 3  Extend diplomatic influence across the region. 3 More business opportunities for Taiwanese entrepreneurs. Medium range 1  Gain the ‘substantive’ partners’ support (explicit 1  Internationalization of the ‘Taiwan problem’.    or implicit) in intergovernmental organizations. 2  Increased support for the ROC in international 2  Sign intergovernmental agreements.    organizations. 3  Expand ­semi-­official communication through 3  Implicit recognition of Taiwan’s sovereignty.    exchanges of government officials and 4  Increased investment and trade opportunities for    parliamentarians.    Taiwanese businesses. 4  Stage visits by ­highest-­ranking dignitaries. Immediate 1  Sign agreements on the exchange of 1  Challenge to international isolation imposed on    representative offices as a foundation for    the ROC by China.    ‘substantive’ ties. 2  Greater economic cooperation between Taiwan 2  Establish regular communication channels with ­    and the ‘substantive’ partners.    Taiwan-­friendly regime(s). 3 Greater economic opportunities for Taiwanese entrepreneurs.



176   Taiwan’s economical diplomacy China, yet, in order to secure membership in international organizations, they welcomed diplomatic recognition from China in 1991–1992. Coinciding with its ­re-­orientation of diplomatic objectives towards Central Europe, Taipei added ‘substantive’ relations with ­ post-­Soviet nations to its priorities. The consular agreement with Latvia in 1992, however, demonstrated that Taiwan’s overriding goal in ­ post-­communist Europe remained diplomatic relations, rather than the establishment of ­non-­governmental, ‘substantive’ ties.

From Latvia to Macedonia With the exception of the early period in Latvia’s consular ties with Taiwan, which witnessed Taiwanese grants and Prime Minister Ivars Godmanis’s visit to Taipei in 1992, Latvia’s partnership with the ROC was uneventful. Taiwanese economic aid dried up soon after Godmanis’s visit, while promised investments and loans never arrived. In 1994, the first stage of Taiwan’s diplomatic campaign in ­ post-­communist Europe came to an end, when Riga cancelled the consular agreement. Although it ‘lost’ Latvia, Taipei successfully forged ‘substantive’ relations with major ­ post-­communist nations. These relations were characterized by the ­semi-­official character accorded to them by the target states, as well as by rapidly expanding trade. Belarus, the Czech Republic, Hungary, Latvia, Poland, Russia and Slovakia agreed to exchange representative offices with Taiwan, all of which performed consular functions. Of these states, all except Latvia and Belarus established de facto consulates in Taipei. ‘Substantive’ relations also involved parliamentary exchanges, visits by the Vice President, ministers (including Tai-­ wanese ministers of defence and foreign affairs) and vice ministers, and joint committees overseeing bilateral economic cooperation (with Poland (since 1994), the Czech Republic (1995), Hungary (1996), Romania (1996), Lithuania (1997), Russia (1998), Slovakia (1998), Slovenia (1999), Latvia (2002) and Belarus (2005)). Taipei gained support (primarily from the Czech Republic and Latvia) for its struggle to ­re-­enter the international community of states. It also advanced cultural, academic and scientific cooperation with most ­ post­communist states and was moderately successful in reaching economic agree-­ ments, such as accords on air links (with Bulgaria) and the maritime transportation agreement (with Russia). Alongside developing ‘substantive’ relations, Taipei initiated a dialogue with the wider community, including political parties, academics, business executives and journalists. This ‘­people-­to-people’ communication, whether in the bilateral or multilateral contexts (via, for example, the ­Taipei-­sponsored World League for Freedom and Democracy), brought Taipei allies in its struggle against China. With the launch of parliamentary and academic exchanges, tourism, ­ sister-­city partnerships and cultural cooperation, Taipei began functioning in the collective consciousness of the ­post-­communist nations as a distinct cultural, economic and political entity, no longer confined to the ­Beijing-­defined, restrictive limits of the political discourse on ‘one China’. The ‘Taiwan lobby’ encompassed a wide social

Taiwan’s economical diplomacy   177 spectrum, ranging from parliamentarians and city councillors to academics devel-­ oping Taiwan Studies and to journalists who disseminated news about Taiwan. Added to these were visits to Taiwan by renowned personalities, such as Lech Walesa, Mikhail Gorbachev and Vaclav Havel, who, once retired from office, became more vocal in their support for Taiwan. While pursuing ­people-­to-people diplomacy (國民外交), however, Taipei never lost sight of its ultimate objective. Surprisingly, it found its first ­post-­communist diplomatic partner in the Balkans. Throughout the 1990s, facing closed doors to the governing elites in the Balkans, Taipei cultivated relations with the opposition forces. This ­low-­key dia-­ logue was of little consequence as, once the opposition parties took office, they sided with China on the Taiwan question. In Macedonia, however, Taiwanese dia-­ logue with the opposition and promises of economic assistance, conditional upon diplomatic recognition, unexpectedly produced a winning formula. Taipei’s dip-­ lomatic relations with Skopje took off in 1999 amid stern domestic opposition in Macedonia. Yet, neither domestic opposition nor China’s diplomatic retributions undermined Skopje’s commitment to a diplomatic deal. For Taiwan, Macedonia was to become a springboard for its diplomatic offensive in the Balkans and beyond. Ultimately, however, its efforts to seek recognition from other Balkan states or the territories believed to be approaching sovereign status proved futile, while Skopje returned to the China camp in 2001. The Macedonian project extended through the end of Lee ­Teng-­hui’s presi-­ dency and the beginning of Chen ­Shui-­bian’s first term in the office. The Chen ­Shui-­bian administration, despite its previous criticism of the diplomatic course taken by the KMT, continued its predecessor’s broad strategy of pursuing rela-­ tions with ­ post-­communist Europe through the application of economic instru-­ ments. Having lost Macedonia, Chen ­Shui-­bian refocused energy on Russia and the Czech Republic, where, however, he achieved little, save an exchange of charter flights between Taipei and Moscow and Vladivostok.

Models of bilateral relations Relations between Taiwan and the ­ post-­communist states were driven as much by the Taiwanese policies as by the reactions from the region. The Hungarian model, the first to emerge from this mix, was seen as the initial blueprint for others to follow. Hungary was quickly eclipsed, however, by other states that chose to strengthen ties with the ROC, boldly going beyond limits the Hungari-­ ans feared to cross. As a result, the Hungarian model lost its lustre in Taiwanese eyes, although it was subsequently adopted by most ­post-­communist states as a primary mode of interaction with Taiwan. The Hungarian (‘substantive’) model The Hungarians did not invent the ‘substantive’ model. Instead, they patterned it after the Western states’ interaction with Taiwan. Its foremost feature was the ­wide-­ranging consensus across the political spectrum that economic interests

178   Taiwan’s economical diplomacy should define communication with Taipei, rather than ideological prejudice against China. Hence, the Hungarian model is based upon a plan to solicit Tai-­ wanese aid, trade or investments in return for some expressive support for Taiwan on the international scene (e.g. through the exchange of nominally ‘unofficial’ visits by government dignitaries). Budapest pioneered the institutional setting of bilateral ties with the agreement on reciprocal trade offices (de facto consulates), although it was one of the last to open its own bureau in Taipei. The Latvian (consular) model The Latvian model rests upon the consular agreement between Latvia and Taiwan, signed in exchange for Taiwanese commitment to aid Latvia’s economy. Its distinctive feature was Latvia’s ability to maintain parallel ties with both Chinas. The model suffered from, first, the absence of a Latvian consulate in Taipei; and, second, Taipei’s failure to aid the Latvian economy. Having severed consular relations, Riga maintained friendly ties with Taiwan, indirectly support-­ ing Taiwan’s UN bid. In 2000, however, having taken a decisively ­pro-­PRC stand, it settled on the Hungarian model. The Czech (ideological) model Guided by his ­ anti-­communist convictions, President Havel engineered a dynamic ­ pro-­Taiwan policy, featuring ‘first ladies’ diplomacy’, vocal (though indirect) support for Taipei’s UN bid, invitations to Taiwanese dignitaries and exchange of ­ministerial-­level visits. The Czech partiality towards Taiwan was, to some extent, also conditioned by hopes of winning public works contracts in Taiwan and attracting Taiwanese investments. The model has not survived Havel’s departure from the Czech presidency. The Russian (geostrategic) model The Russians constructed a relationship with Taiwan along the lines of the Hun-­ garian model: economic partnership was fortified with reciprocal offices and some direct communication at the nominally unofficial level. However, due to its geostrategic influence, Russia – unlike any other ­ post-­communist state – could affect ­Sino-­Taiwanese relations, if it chose to do so. Moreover, unlike other ­post­communist states, Russia’s relations with Taiwan are governed by presidential decree, rather than an implicit code of practice. The existence of the MTC and TMC allows Russia and Taiwan to conclude agreements without involving the government ministries. The Macedonian (diplomatic) model The Macedonian model rested on a straightforward ­ trade-­off: Macedonia exchanged diplomatic recognition for economic assistance. As a diplomatic part-­

Taiwan’s economical diplomacy   179 nership, however, the model was incomplete, as it never reached the ambassado-­ rial level. Yet, Macedonian relations with Taiwan did feature visits by prime ministers and foreign ministers, as well as numerous bilateral agreements. Skopje terminated official relations with Taipei in large measure because of Tai-­ wanese unwillingness to fulfil its promises of economic assistance.

Foreign aid versus primary objective Taipei would have preferred relations with ­post-­communist Europe to rest upon shared beliefs in the democratic values, freedom and open society. However, to the former communist states, desperate for economic assistance, Taipei’s eager-­ ness to part with some of its wealth to aid their struggling economies spoke louder than Taiwanese democratic credentials. Far from downplaying its eco-­ nomic potential, Taipei resorted to positive economic diplomacy in order to achieve its diplomatic objectives, paramount among which was gaining diplo-­ matic recognition from one or more of the ­ post-­communist nations. The effec-­ tiveness of Taiwanese economic diplomacy should, therefore, be judged first against Taipei’s primary objective. Although the fall of communism created an opportunity for Taiwan to flex its economic muscle in order to gain new allies, Taipei’s lack of prior contacts with the communist states and ignorance about their peculiarities rendered the goal tremendously ambitious. For their part, the new democracies – however impover-­ ished – were aware of Taipei’s desperation to break away from the diplomatic isolation imposed by China, and of the stakes involved in siding with Taiwan. Thus, from the onset, Taipei would have found it difficult to construct a credible asymmetrical interdependent relationship of the donor–recipient variety, as its interest in persuading the recipients to become and remain its allies would have been greater than the recipients’ interest in Taiwanese aid, which could have been substituted by China (or other states), or which utility paled when contrasted with the political and economic costs resulting from China’s retribution. The strength of Taiwanese interest in the relationship created, therefore, its own dependence and equalized the relationship. Neither the ignorance of ­ post­communist Europe’s politics, economics and cultures, nor the possibility of reversed dependence, however, discouraged Taipei from pursuing allies through the offers of economic assistance. Scant data is available regarding the exact size of Taiwanese foreign aid to ­post-­communist Europe, as well as its forms and concessionality. Taipei’s aid commitments to Latvia and Macedonia, however, must have been sufficiently attractive to convince both states to forge official ties (consular and diplomatic, respectively). From the perspective of the difficulty of attaining the goal, Tai-­ wan’s aid diplomacy thus proved highly effective. These achievements owed a lot to Taiwanese diplomats’ bargaining skills and their apparent willingness to offer more than the ROC government could or wanted to afford. Although aid com-­ mitment is generally considered more important than aid disbursement, for it reflects the donor’s intention, while disbursements are subject to the recipient’s

180   Taiwan’s economical diplomacy ability to absorb aid, in Taiwan’s case aid commitment did not reflect the donor’s intention. Above all, it was meant to induce the recipient state into a diplomatic partnership, assuming that the target state would not promptly reverse its deci-­ sion in order not to embarrass itself, if not for other reasons. Taiwan did not conceptualize its aid to its consular or diplomatic partners in ­post-­communist Europe as ODA/OA, but rather broadly – and vaguely – as con-­ cessional transfers of economic resources. These included cash grants, loans offered at interests below the market rate, technical assistance, supplies of goods ranging from medicines to computers to helicopters, technical assistance, humanitarian relief, technical training, politically motivated imports and prom-­ ises of investments. Taipei chose soft loans as the main component of its aid package for Macedonia (Latvia never received its promised loans). Publicly, it justified reliance upon loans as an encouragement of Macedonia’s ­self-­help and efficient use of funds provided, as money borrowed had to be paid back. In reality, however, loans were calculated to lessen the financial cost of the assist-­ ance, as well as to cement ­long-­term relations with the recipient, since the debtor was likely to remain in the partnership in order to borrow again in the future. Repayments were to create more opportunities for Taiwan to influence the debtor, especially when the recipient incurred repayment problems. Taipei extended rela-­ tively small loans so that the withholding of repayment would not allow the bor-­ rower any substantial influence upon the lender. Yet, this calculated approach backfired: small loans did not render the debtor particularly grateful to the lender. Furthermore, the debtor did not intend to repay loans after suspension of relations with Taiwan. The Taiwanese aid strategy did not seem to have been placed in the context of the DAC’s assistance to Latvia and Macedonia. Had it been so, Taipei would have realized how insignificant its aid was in total aid flows to both recipients. Nor, indeed, did Taipei seem to have tried to compensate both partners for the economic and – above all – political costs they incurred when Beijing withheld its support for their domestic or foreign policies. The small size of Taiwanese aid (whether in absolute terms or relative to aid provided by other donors) and the costs of compliance with Taiwanese diplomatic objectives weighed heavily in Riga’s and Skopje’s decisions on whether to return to the China camp, in defi-­ ance of Taipei’s attempts of asserting influence. Given scant evidence, it cannot be conclusively determined whether Taiwan-­ ese aid (whether in the form of loans or grants) was tied to Taiwanese exports or employment of Taiwanese experts. Since Latvia and Macedonia’s trade with Taiwan was very small, it is unlikely that Taipei tied aid in order to support its own economy. With regard to Macedonia, Taipei did make an effort to prepare necessary infrastructure in the Balkan state for the Taiwanese manufacturers’ use. The amount earmarked for this purpose, however, was small relative to the absolute aid package. The unrealized Kosovo aid programme was tied, but to Macedonia’s exports to Kosovo, rather than Taiwan’s. Furthermore, Taiwanese loans and grants were largely fungible, as Taipei was only vaguely aware of the specific economic needs of the target states.

Taiwan’s economical diplomacy   181 There is no doubt that Taiwanese aid to Latvia and Macedonia was politically motivated, while MOFA decided upon its size, form and timing. Yet, MOFA failed with regard to displaying a ­ long-­term aid commitment, lacking consist-­ ency in its aid policy and transparency of its intentions. With regards to Latvia, Taipei showed commitment to the Latvian economy for the first six months. Once Riga’s unwillingness to upgrade ties to the diplomatic level became appar-­ ent, Taiwanese aid dried up. Concerning Macedonia, Skopje’s concern over Tai-­ pei’s aid commitment predated Chen ­ Shui-­bian’s presidential victory, which further clouded the prospects of Taiwan’s aid flows, as Chen’s party questioned the practice of funding friendship with distant nations. Eventually, amid domes-­ tic opposition against ‘dollar diplomacy’ and domestic economic difficulties, the DPP shelved the Kosovo aid project, casting a long shadow over Taipei’s inten-­ tion to aid Macedonia. Finally, Taiwanese efforts to use Macedonia as a spring-­ board to ‘conquer’ the Balkans affected the transparency of its intentions, as Skopje was uncertain whether it remained the focus of the Taiwanese attention, or whether it was relegated to the peripheries of Taipei’s Balkan strategy. Constrained by its unwillingness to throw money at its partners, whose loyalty was yet to be tested, as well as the domestic concerns over its cost, and debates about the necessity of buying relations with distant nations, Taipei deliberately chose not to follow up commitments with sizeable disbursements. Its cash grants or humanitarian relief were modest, while aid relied primarily upon soft loans with an unknown grant element. The contrast between the actual economic assist-­ ance and the widely publicized aid projects was particularly glaring in the cases of aid packages for Macedonia and Kosovo, and served to accentuate the limited economic benefits ensuing from political support for Taiwan. Since the less the gains from aid, the less the costs of foregoing aid and the less depend-­ ence on aid, the opportunity costs of forgoing the relationship with Taiwan were insignificant. Latvia’s and Macedonia’s suspension of diplomatic ties, and the resulting Taiwanese economic sanctions, affected virtually no sector in either economy. Taipei chose to save money, rather than spend substantial amounts to create Latvia’s and Macedonia’s dependence on its economic assistance in order to sustain both ­post-­communist nations’ ­long-­term diplomatic loyalty.

Explaining ‘substantive’ achievements While failing to secure stable diplomatic partners, Taiwan was more successful in establishing ‘substantive’ relations with major ­post-­communist nations. These achievements came despite Taipei’s deliberate policy of promising economic rewards on an ad hoc and quid pro quo basis, whenever a given target state met the Taiwanese political conditions and agreed to enter into ­semi-­official commu-­ nication. In the early 1990s, Taipei unleashed humanitarian aid diplomacy towards ­post-­Soviet states, but its relief effort ended soon after Belarus, Russia and Ukraine resolved to follow the ‘one China’ policy. At the same time, Taipei tempted Central Europe with the prospects of grants, soft loans, infrastructure contracts and investments. Neither did soft loans – whether untied (in the Polish

182   Taiwan’s economical diplomacy case) or tied to Taiwanese imports (in the case of Belarus) – nor grants seem to have been Taipei’s main instruments of inducement. Only the soft loan to Belarus could be considered as a straightforward pay-off for Minsk’s agreement on bilat-­ eral offices. The loan to Poland arrived a decade after Taipei opened its office in Warsaw and several years after Warsaw reciprocated. Other ­ post-­communist nations received neither bilateral loans nor grants from Taiwan as a partial payment for establishing ‘substantive’ relations. In 1991, Taipei entered into collaboration with the EBRD by allocating US$10 million (subsequently raised to US$20 million) to the Taipei China– EBRD Cooperation Fund as part of the EBRD Technical Cooperation Funds Pro-­ gramme (20 per cent of which was tied to the employment of Taiwanese consultants). In 1994, through the IECDF, Taiwan contributed US$20 million to ­co-­finance EBRD investment projects across ­ post-­communist Europe. In 2004, the second phase of the ICDF’s cooperation with the EBRD, involving US$10 million, was restricted to lending projects. Until late 2001, the Taipei China– EBRD Cooperation Fund committed D14.6 million (against the EBRD’s com-­ mitments under the Technical Cooperation Funds programme totalling D755 million), while the ICDF contributed US$13.2 million to four investment projects. Taipei’s involvement in EBRD projects was meant to raise its profile in ­post-­communist Europe. Since any EBRD decision involving Taiwanese funds needed the ROC government’s approval, Taipei planned to use the ­EBRD-­linked loans and grants to induce compliance of the recipient states. Only in Belarus, however, was Taipei’s use of the EBRD successful, when it extended a loan to the Belarus SME credit line in return for Minsk’s agreement on reciprocal offices. In other cases, its ­country-­specific loans or investments were too insig-­ nificant (ranging from several thousand to US$3 million) to draw the target gov-­ ernment’s attention. Given the fact that Taiwanese funds constituted only a drop in the vast ocean of the EBRD investment in the transition economies, and almost 60 per cent of the Cooperation Fund was spent on regional, rather than ­country-­specific, projects, Taiwan’s multilateral aid did not stimulate the recipi-­ ents’ foreign policy conformity. At most, it heightened Taiwan’s standing in one of the world’s leading development banks.1 Instead of showering ­ post-­communist ‘substantive’ partners with generous bilateral or multilateral grants, loans or infrastructure projects, Taipei tempted candidates for strong ‘substantive’ partnerships with visions of substantial flows of investments. The irony of this strategy is that Europe has traditionally trailed way behind other investment destinations favoured by Taiwanese entrepreneurs, particularly China, Southeast Asia and the United States. In 1993–1997, for example, Taiwanese investments in all of Europe averaged US$100 million annu-­ ally, whereas investments in Asia (excluding China) and in the United States were over six-times and three times larger, respectively, than Taiwanese invest-­ ments in Europe.2 Needless to say, in China, the Taiwanese businesses invested more in any given year since the early 1990s than the cumulative Taiwanese investments in Europe, amounting to US$1 billion by 2003. In the context of the Taiwanese investors’ prejudice against Europe, the Taiwanese diplomats’ ability

Taiwan’s economical diplomacy   183 to convince ­ post-­communist nations that the Taiwanese business community would risk its money in their economies as long as relations with Taiwan were accorded greater official status is admirable. With such inducements, the Taiwanese staged ­high-­profile events (e.g. Lien’s visits to Prague and Kiev) and successfully convinced several ­ post-­communist nations to upgrade bilateral dialogue to the ministerial level that helped Taiwan expand its international space. The Taiwanese were quick to link political con-­ cessions with economic rewards. In the wake of Lien’s visit to Prague, for example, Taipei promised to build an industrial park, where Taiwanese manufac-­ turers were to invest US$100 million. Following Minister Chiang ­Pin-­kung’s visit to Poland, Taipei also promised to construct an industrial park in Poland, where Taiwan pledged to invest US$28 million. A US$500 million investment in Poland by the Taiwanese company Acelon Fibres in 1998 was linked to Foreign Minister Jason Hu’s participation in the international conference in Warsaw. None of these promises, however, were kept. The industrial park projects in the Czech Republic and Poland fell through, due to their cost and a lukewarm response from the Tai-­ wanese investors. Acelon’s investment was cancelled. The absence of investments despite the Central Europeans’ compliance with Taiwanese diplomatic objectives revealed the emptiness of Taipei’s promises. It also supports the conclusions reached by students of Taiwanese investments in Southeast Asia that the ROC government’s encouragement of investments in any particular overseas location has limited bearing upon Taiwanese firms’ investment decisions.3 Needless to say, Taiwanese investors’ rush to China, despite the ROC authorities’ active dis-­ couragement, is driven by ­profit-­making rather than geopolitical considerations. Therefore, the eventual arrival of large Taiwanese investments in the Czech Republic and Hungary (amounting to over US$1 billion by 2006) owes little to Central Europe’s compliance with Taipei’s diplomatic goals. It resulted primarily from – what Susan Strange would have described as – Central European states’ competition with other states in Europe and beyond, through bargaining proc-­ esses with the Taiwanese firms to convince them to locate their operations within the Central European territories.4 While Taiwanese conglomerates helped to alle-­ viate unemployment problems, introduce new technologies and increase Central Europe’s exports, altruism and support for Taiwanese diplomacy were not their motivators. In order to capture a larger market share in established West Euro-­ pean markets and the ­high-­growth, emerging markets of ­post-­communist Europe, Taiwanese investors took advantage of Central Europe’s proximity to Western Europe, its EU membership, relatively cheap labour and developed infrastruc-­ ture, as well as attractive investment incentives offered by the national and local governments. The ROC government was more successful when facilitating ­people-­to-people diplomacy through ­ pro-­Taiwan lobbies in ­ post-­communist Europe. It appeared particularly generous towards individuals or political parties that advanced its agenda in their state’s foreign policies or legislatures. Taipei assigned a quota for hosting foreign guests, many of whom were friendly politicians, journalists, public figures and academics. It also organized and financed training programmes

184   Taiwan’s economical diplomacy for government officials. Taipei sponsored cultural events, such as film festivals and exhibitions, academic seminars and the publication of books and other infor-­ mation materials on Taiwan. It offered scholarships to university students and grants to researchers. The emergence of Taiwan friendship groups in state parlia-­ ments and various parliaments’ support for Taiwan at the crucial junctures of Tai-­ wan’s struggle against the mainland were the most concrete expressions of Taipei’s success in fostering domestic support in ­ post-­communist Europe. It is hard to quantify, however, the real extent of the ­ pro-­Taiwan lobbies’ influence, as their members were often motivated more by personal gain than a genuine concern for Taiwan’s international standing. It could be argued that, given the importance of Taiwan as a major trading nation and investor, the ­ post-­communist states would have followed the West European example and have reached accords on representative offices, as well as economic, cultural and scientific cooperation, without Taipei’s inducements. Slo-­ vakia’s agreement on the exchange of offices with Taiwan, for which Taipei offered no sweeteners, supports this conclusion. Bilateral offices and agreements were intended to attract investors, help gain access to the Taiwanese market and promote ­ non-­economic cooperation. Yet, promises of economic rewards undeniably accelerated the establishment of ‘substantive’ ties and facilitated ­inter-­governmental dialogue at a level higher than considered acceptable by China. By the late 1990s, having engaged key players in ­post-­communist Europe in ­semi-­official dialogue and entered ‘substantive’ partnerships, Taipei failed to maintain the momentum. It lost support from selected ­post-­communist states for its bid to ­ re-­enter international organizations and was no longer able to stage ­high-­profile visits or convince any ­post-­communist nation to enter into negotia-­ tions over new economic agreements. The ­post-­communist regimes had reached the stage where they no longer trusted Taiwanese promises of investments or economic assistance in return for political support. In any case, they had recov-­ ered from the severe economic recession of the early 1990s, registered respecta-­ ble economic growth rates (averaging 5 per cent or more annually), some of them had entered the EU and no longer needed Taiwanese aid. Witnessing China’s impressive economic development and Beijing’s increasingly greater influence in world affairs, they also steered clear of being seen by Beijing as sup-­ porting Taiwan. They remained, however, committed to economic cooperation with the island, paying particular attention to attracting Taiwanese investors and expanding bilateral trade. This begs the question: did Taiwan resort to the use of trade diplomacy to induce ­post-­communist Europe’s foreign policy compliance, while consciously downplaying the utility of foreign aid?

Trade diplomacy The complementary nature of the Taiwanese and Central and East European economies, the former in need of raw materials, the latter starved of consumer goods, influenced Taipei’s decision to relax commercial relations with the com-­

Taiwan’s economical diplomacy   185 munist states in 1979. Yet, the administrative restrictions remained in place and Taiwanese traders were prohibited from directly approaching the communist firms. In light of the Taiwanese entrepreneurs’ anxiety to tap into communist markets, the ROC government relented and approved direct trade with the Soviet allies and the Soviet Union in 1988 and 1990, respectively. This decision proved beneficial not only economically, but also politically, as trade negotiations became a convenient backdoor for Taipei to enter into a dia-­ logue with the government officials shortly before the systemic changes in the Soviet bloc. The nominally ­non-­governmental CETRA, for example, fronted an agreement with Budapest on the exchange of trade offices, which in reality was negotiated by MOFA. Government officials routinely joined Taiwanese trade tours of the Soviet bloc, while the first visits from the communist states to Taiwan were led by the bankers. At first, the gains from Taiwan trade compensated for the absence of promised developmental aid. Prague and Warsaw, in particular, saw the economic benefits of relations with Taiwan, as both registered a trade surplus with Taiwan until 1994. With the decline in China’s trade with Central Europe, Taiwan positioned itself as Central Europe’s major trade partner in East Asia. In 1991, Taiwan trade surpassed Central European trade with China. In the subsequent years, however, Beijing’s total trade with Central Europe increased dramatically, more due to the flood of cheap consumer products ‘made in China’ rather than a surge of Central European exports. Until the ­ mid-­1990s, Central European exports to Taiwan were greater than their exports to China. The consistent trade surplus Prague and Warsaw enjoyed illustrated the bene-­ fits of cooperating with Taipei. The Czechs and Poles opened their offices in Taipei, partly in the hope to increase their exports. All Central European states concluded agreements with the ROC on WTO accession, which gave them greater access to the Taiwanese market. Taipei’s readiness to shoulder a persist-­ ent trade deficit with Central Europe (excluding Hungary) could be construed as a conscious attempt to utilize trade to press for political concessions. The 1998 ‘miracle’, when Taiwan’s consistent trade surplus with Hungary balanced out after Budapest opened its ­ long-­delayed representative office in Taipei, lends some credence to the suspicions that Taipei ­stage-­managed trading relations with ­post-­communist Europe, rather than left them to the invisible hand of the free market. On rare occasions, Taipei also resorted to politically motivated imports. The trade data, however, do not support a hypothesis of Taiwan manipulating trade with Central or East European states to induce their compliance with its foreign-policy objectives. Starting in 1995, Taiwan registered its first small surplus with Central Europe. In the following years, that surplus continued climbing, reaching almost US$1 billion by 2005. Coincidentally, the trade surplus began at the time when Taipei ­re-­launched its campaign to induce Central European nations into closer partnership. The surplus steadily increased, despite the glaring failure of the large investment projects in Poland and the Czech Republic in the late 1990s. Thus, the surplus and deficit in Taiwan trade should be explained in the

186   Taiwan’s economical diplomacy context of economic growth in ­post-­communist Europe. The Central Europeans’ ability to afford Taiwanese products created a greater market for Taiwanese exports. A similar trend in China’s trade with Central Europe confirms that, by the ­ mid-­1990s, Central Europeans had developed a taste for goods made in China or Taiwan, while Central European exports were increasingly confined to raw materials (especially iron) and stagnated at constant levels. Significant trade deficits incurred by Taiwan with the ­ post-­Soviet states (particularly Russia and Ukraine) can be also explained in terms of the Taiwanese economy’s hunger for raw materials and the limited consumer budgets in the ­ post-­Soviet economies, rather than Taipei’s efforts to manipulate trade in order to befriend ­ post-­Soviet states. The trade component in the ROC’s economic diplomacy towards the ­ post­communist nations was not meant, therefore, to substitute for the absence of foreign aid or to create a dependence on trade with Taiwan. Rather, it was aimed at bringing benefits to the Taiwanese economy by opening new export markets. In the 1990s, Central Europe, the Baltic states and the Balkans were transformed into export markets for Taiwanese producers of consumer products and electron-­ ics. Access to the ­ post-­communist economies allowed the Taiwanese producers to source competitively priced raw materials, which Taiwan itself lacked but needed for sustained economic development. Despite the dramatic growth in trade figures, Taiwan’s trade with the ­post-­communist nations remained constant as a share in the ROC’s total trade, amounting to roughly 1 per cent.

The China factor Beijing worried that, amid the wave of ­anti-­communist euphoria and the intense financial needs of the newly democratized states, Taiwan would find fertile ground to employ economic diplomacy in the ­post-­communist region more suc-­ cessfully than elsewhere. Although China accepted the ­post-­communist nations’ intention to forge commercial and cultural ties with Taiwan, it objected to any form of ­ quasi-­official collaboration, whether resulting in ­ government-­togovernment or parliamentary exchanges, intergovernmental agreements, not to mention diplomatic or consular ties. To isolate Taiwan in ­ post-­communist Europe, Beijing resorted to a ­two-­pronged strategy by: 1 2

strengthening relations with the ­post-­communist leaderships, while holding them accountable to the ‘one China’ principle; and obstructing all Taiwanese activities in the ­post-­communist region.

When neither diplomatic dialogue nor obstruction proved sufficient to prevent Taipei from scoring a diplomatic partner or embarrassing China in some other form, Beijing applied diplomatic sanctions – while implying that economic sanc-­ tions could follow as well – upon the states violating the ‘one China’ principle. In 1989–1991, China faced not only openly ­anti-­communist leaders in ­post­communist Europe, contacts with whom Beijing avoided until the systemic

Taiwan’s economical diplomacy   187 changes had taken place, but also the new political culture, where concerns over human rights could potentially complicate relations. Yet, Beijing – through the ­re-­launch of summit diplomacy, firm support for the ­ post-­communist nations’ domestic and international concerns, as well as vibrant economic and cultural cooperation – restored friendly relations with Central and Eastern Europe in 1991 and established partnerships with all ­post-­Soviet states. With the strengthening of political relations with China, the ­post-­communist regimes, especially those leaning to the left, became receptive to Chinese requests to support Beijing in the international arena over the Taiwan question, block exchanges of visits at ministerial level or above, eschew official agree-­ ments with Taiwan or to nullify agreements already signed. Like their Western counterparts, the ­post-­communist states could neither ignore China’s vast market nor its increasing influence in global politics. Thus, their bureaus in Taipei were, at first, headed by formally retired diplomats and claimed not to engage in any consular activities. They kept Beijing informed over the content and direction of their communication with Taiwan, while China carefully monitored the ­ post­communist nations’ cultural cooperation with the island, fearing that it could become the backdoor through which Taipei would smuggle its claims to sover-­ eignty. Latvia, the Czech Republic, Ukraine and Macedonia tested the limits of Bei-­ jing’s tolerance for the ­post-­communist nations’ dialogue with Taiwan. The con-­ crete steps taken against them were mostly diplomatic, rather than economic, thus augmenting political costs of compliance with Taiwanese diplomatic objec-­ tives. In the Latvian case, China cancelled the dispatch of the PRC ambassador and suspended dialogue with Riga, while intensifying communication with other Balkan states. Lien Chan’s visit to Prague in 1995 caused the visit by the PRC State Education Commission to the Czech Republic to be cut short and delayed an agreement on academic cooperation. When Lien Chan visited Kiev a year later, Beijing postponed the visit to Kiev by a Chinese government delegation. Once the Macedonian government confirmed its diplomatic deal with the ROC, Beijing cut off diplomatic ties, halted the implementation of all agreements, vetoed the extension of stay for UN peacekeeping troops in Macedonia and implied it would veto any ­UN-­sponsored solution to the ethnic strife that devel-­ oped in 2001. China’s economic response to states openly violating the ‘one China’ princi-­ ple was limited. With regards to Macedonia, Beijing did not offer any ­counter­aid. It merely reduced imports from Macedonia, which were insignificant in any case. To win back Latvia, Beijing proffered a small incentive in the form of the expansion of ­ Sino-­Latvian trade, which until 1995 surpassed the PRC’s trade with the remaining Baltic states. However, the perceived lost economic opportu-­ nities in China weighed more heavily on Riga’s decision on the consular agree-­ ment with Taiwan. There is no evidence of China’s economic retribution following Prague and Kiev’s invitations to Lien. The implication of their likeli-­ hood, however, was sufficient to ensure that the ­high-­profile Czech dialogue with Taipei would not coincide with important business negotiations with Chinese

188   Taiwan’s economical diplomacy firms. China rewarded its allies for loyalty, not defiance. Thus, it offered the Balkan states, as well as Ukraine and Belarus, generous soft loans, grants and humanitarian assistance, while the raw ­materials-­rich ­post-­Soviet states became the greatest beneficiaries of the China trade, registering large trade surpluses. The variety of ­post-­communist European models of relations with Taiwan tes-­ tifies to the flexibility afforded by the ‘one China’ principle. Yet, the Taiwanese blamed China for many of their failures in the ­post-­communist region, conven-­ iently ignoring the shortcomings of their diplomatic strategy. Ironically, the China factor conditioned many of Taipei’s achievements in ­ post-­communist Europe as well, since the democratic forces lent their support to the island’s struggle against the communist giant, the absence of economic rewards ensuing from such support notwithstanding. The early ­post-­communist regimes rejected the ‘gains of socialism’ and relegated communist China to the peripheries of their foreign policies, which helped Taiwanese diplomats to ­kick-­start communi-­ cation with new leaders. Presidents Walesa and Havel’s ­ pro-­Taiwan attitudes were rooted in their ideological convictions, rather than economic considerations or, indeed, any knowledge of the complexity of the Taiwan problem. Havel visited the island once, while Walesa went twice, but neither visited China. Tai-­ pei’s success at forging consular relations with Latvia and diplomatic ties with Macedonia owed as much to both states’ desire to gain from Taiwanese generos-­ ity as to their ruling regimes’ ­ anti-­communist stance. Taipei’s ability to foster ­pro-­Taiwan lobbies in state parliaments and befriend select political parties also rested, in no small measure, on their rejection of political values that China seemingly stood for. Therefore, the China factor offers not only a partial expla-­ nation of the Taiwanese failures in ­ post-­communist Europe, but also of its achievements.

Conclusion Economic instruments utilized by the Taiwanese positive economic diplomacy included humanitarian relief, grants, loans, bribes and promises of investments. Whether distrusting of nations whose ­long-­term allegiance to Taiwan was yet to be proven, financially unable to meet their vast needs or fearful of stirring domestic opposition against ‘money diplomacy’, Taipei deliberately offered grants or loans (bilateral or multilateral) that were small, not only relative to the size of the economies targeted or assistance offered by the DAC member states, but also in absolute terms. Yet, skilfully playing on its accumulated wealth, the potential aid recipients’ need for economic assistance and their ­anti-­communist sentiments, Taipei successfully induced some of them into compliant foreignpolicy behaviour in return for promises of assistance, rather than actual aid. Thus, promises were contrived as an inducement, while aid was meant to be a reward for compliance. Taipei certainly did not suffer from the Samaritan dilemma, as its rewards were dispensed on a quid pro quo basis in exchange for specific political concessions, benefiting only compliant states, rather than those most in need. However, even the states that went the longest distance in meeting

Taiwan’s economical diplomacy   189 Taiwanese primary diplomatic objectives were left with more promises of aid than tangible assistance. Taipei made only a token contribution to the economic development of Latvia and Macedonia, as well as other states, such as the Czech Republic, which pursued maverick policies on Taiwan. Not surprisingly, such parsimonious behaviour rendered the threats of economic sanctions – whether implied or actually imposed – inconsequential, since Taiwanese economic rewards were so small that their suspension would hardly affect any segment of the target’s economy, thus leading to Taipei’s failure to retain its consular or dip-­ lomatic partners, or wider support for its efforts to expand its international space. Taipei did succeed in establishing ‘substantive’ relations with major states in ­post-­communist Europe, including China’s strategic partner, Russia. Given its lack of prior contacts and resulting ignorance of the region’s peculiarities, China’s diplomatic influence and the increasing lure of the expanding Chinese market, Taipei’s capacity to do so is indeed remarkable. However, it could be argued that ‘substantive’ relations were as beneficial to ­post-­communist Europe as they were to Taiwan. Therefore, their establishment resulted from a conver-­ gence of economic interests. Taiwan’s influence attempts – relying upon prom-­ ises of large investments and sporadic soft loans and humanitarian relief – helped Taipei to stage ­high-­profile visits and accelerated the formation of ‘substantive’ partnerships, but ‘substantive’ relations would have been forthcoming without these added inducements. Reluctant to part with its wealth, Taipei did not connive to construct an asym-­ metrical interdependence – whether in terms of aid or trade – with any ­ post­communist nation. This explains Taiwanese failure to break out from ­China-­imposed international isolation through greater diplomatic recognition in ­post-­communist Europe. Yet, to term Taiwan’s parsimonious economic diplo-­ macy in ­post-­communist Europe an unqualified failure, because it did not secure the ­ medium-­to-­long-­term primary objectives, would be inaccurate. Taipei suc-­ cessfully staged a ­short-­term challenge to China in a region long considered the zone of Beijing’s exclusive influence. It internationalized its struggle against ­China-­imposed isolation by gaining limited support for its attempts to ­ re-­enter intergovernmental organizations, arranging visits by ­high-­ranking dignitaries and conducting regular dialogue through ­government-­to-government channels. It also successfully transformed ­ post-­communist Europe into a market hungry for its processed goods and a source of raw materials needed by Taiwanese industry. Measured against the less-ambitious secondary objectives, both political and economic, Taiwanese economical diplomacy, indeed, performed remarkably well.

Notes

1  Taiwan’s economic diplomacy     1 As cited in David A. Baldwin, ‘Economic Power’ in James T. Tedeschi (ed.), Per-­ spectives on Social Power (Chicago: Aldine Publishing Co., 1974), p. 402.     2 David A. Baldwin, Economic Statecraft (Princeton: Princeton University Press, 1985), pp. 13–14; Diane B. Kunz, ‘When Money Counts and Doesn’t: Economic Power and Diplomatic Objectives’, Diplomatic History, 18, 4, Fall 1994, p. 542.     3 Baldwin, Economic Statecraft, p. 107.     4 K.J. Holsti, International Politics: a Framework for Analysis (Englewood Cliffs: ­Prentice-­Hall, 1995), pp. 166–167.     5 See, for example, Robin Renwick, Economic Sanctions (Cambridge: Center for International Affairs, Harvard University, 1981); Gary Clyde Hufbauer, Jeffrey J. Schott and Kimberly Ann Elliott, Economic Sanctions Reconsidered (Washington, DC: Institute for International Economics, 1990); A. Cooper Drury, Economic Sanc-­ tions and Presidential Decisions: Models of Political Rationality (New York: Pal-­ grave Macmillan, 2005).     6 David D. Baldwin, ‘The Power of Positive Sanctions’, World Politics, 24, 1, October 1971, p. 19.     7 Baldwin, ‘Economic Power’, p. 395.     8 International Development Strategy for the Second United Nations Development Decade, UN General Assembly Resolution 2626 (XXV), 24 October 1970.     9 Kunz, ‘When Money Counts and Doesn’t’, p. 451, Baldwin, Economic Statecraft, p. 42.   10 For a loan to qualify as ODA/OA, it has to contain a grant element of at least 25 per cent, calculated at a rate of discount of 10 per cent (Working Party on Statistics, Is It ODA?, Development Cooperation Directorate/DAC/STAT (2001) 8, 22 May 2001, pp. 1–5). The critics of the DAC’s definition of aid, which ignores loans with low concessionality even when they do contain a grant element, define foreign aid more broadly as effective development assistance, which includes all concessional transfers of resources, but excludes technical assistance (Charles C. Chang, Eduardo ­Fernandez-­Arias and Luis Serven, ‘Measuring Aid Flows: A New Approach’, December 1998, accessed 10 October 2006 from www.worldbank.org). See also Eric Neymayer, The Pattern of Giving Aid: the Impact of Good Governance on Develop-­ ment Assistance (London: Routledge, 2003), p. 41.   11 Albert O. Hirschman, National Power and the Structure of Foreign Trade (Berkeley and Los Angeles: University of California Press, 1945), especially pp. 16–17.   12 Robert Owen Keohane, ‘Political Influence in the General Assembly’, International Conciliation, 555, March 1966, p. 19.   13 Robert O. Keohane and Joseph S. Nye, Power and Interdependence (New York: HarperCollins, 1989), pp. 10–11.

Notes    191   14 James A. Caporaso, ‘Dependence, Dependency, and Power in the Global System: a Structural and Behavioral Analysis’, International Organization, 32, 1–2, Winter– Spring 1978, p. 22.   15 R.D. McKinlay and R. Little, ‘A Foreign Policy Model of US Bilateral Aid Alloca-­ tion’, World Politics, 30, 1, October 1977, p. 62.   16 Neil R. Richardson, Foreign Policy and Economic Dependence (Austin and London: University of Texas Press, 1978), p. 64.   17 Richardson, Foreign Policy and Economic Dependence, pp. 76–87.   18 Bruce E. Moon, ‘The Foreign Policy of the Dependent State’, International Studies Quarterly, 27, 3, September 1983, pp. 319–320; Kenneth J. Menkhaus and Charles W. Kegley, Jr., ‘The Compliant Foreign Policy of the Dependent State Revisited: Empirical Linkages and Lessons from the Case of Somalia’, Comparative Political Studies, 21, 3, October 1988, p. 330.   19 Richard C. Lin, ‘Complementary Measures to Foreign Aid: Taiwan and the PRC under Diplomatic Rivalry’, Contemporary Economic Policy, 19, 3, July 2001, pp. 365–366.   20 Caporaso, ‘Dependence, Dependency, and Power in the Global System’, p. 22.   21 Adrienne Armstrong, ‘The Political Consequences of Economic Dependence’, Journal of Conflict Resolution, 25, 3, September 1981, p. 402.   22 Baldwin, Economic Statecraft, pp. 304–310.   23 Eileen M. Crumm, ‘The Value of Economic Incentives in International Politics’, Journal of Peace Research, 32, 3, August 1995, p. 327.   24 The Nordic states, the Netherlands and Switzerland are considered to be motivated by humanitarian concerns. The USA, Great Britain, France, Japan, Germany and the South European states are thought to be motivated primarily by ­ self-­interest. While finding the above to be generally true, Schraeder, Hook and Taylor reject the notion of humanitarian motivations behind Swedish aid during the Cold War (Peter J. Schraeder, Steven W. Hook and Bruce Taylor, ‘Clarifying the Foreign Aid Puzzle: a Comparison of American, Japanese, French, and Swedish Aid Flows’, World Politics, 50, 2, January 1998, pp. 294–323). For studies demonstrating donors’ ­self-­interest, see Leonard Dudley and Claude Montmarguette, ‘A Model of the Supply of Bilat-­ eral Foreign Aid’, The American Economic Review, 66, 1, March 1976, pp. 132–142; Alfred Maizels and Machiko K. Nissanke, ‘Motivations for Aid to Developing Coun-­ tries’, World Development, 12, 9, 1984, pp. 879–900; Enzo Grilli and Markus Riess, ‘EC Aid to Associated Countries: Distribution and Determinants’, Weltwirtschaftli-­ ches Archiv, 128, 1992, pp. 202–220; Alberto Alesino and David Dollar, ‘Who Gives Foreign Aid to Whom and Why?’, Journal of Economic Growth, 5, March 2000, p. 55.   25 William N. Trumbull and Howard J. Wall, ‘Estimating ­Aid-­Allocation Criteria with Panel Data’, The Economic Journal, 104, July 1994, pp. 876–882; Eric Neumayer, ‘Is the Allocation of Food Aid Free from Donor Interest Bias?’, The Journal of Development Studies, 41, 3, April 2005, pp. 394–411. Meernik et al. observe that the US criteria in aid allocation were minimally affected by the end of the Cold War, as Washington continues to be motivated primarily by the democratic nature of the recipient government and the recipient’s economic need (James Meernik, Eric L. Krueger and Steven C. Poe, ‘Testing Models of US Foreign Policy: Foreign Aid During and After the Cold War’, The Journal of Politics, 60, 1, February 1998, pp. 63–85; Neumayer, The Pattern of Aid Giving, p. 85).   26 Steven W. Hook, National Interest and Foreign Aid (Boulder and London: Lynne Rienner Publishers, 1995); ­ Jean-­Claude Berthelemy and Ariane Tichit, ‘Bilateral Donors’ Aid Allocation Decisions: a ­Three-­dimensional Panel Analysis’, International Review of Economics and Finance, 13, 2004, pp. 253–274; Ngaire Woods, ‘The Shift-­ ing Politics of Foreign Aid’, International Affairs, 81, 2, 2005, pp. 393–409; ­ Jean­Claude Berthelemy, ‘Bilateral Donors’ Interest vs Recipients’ Development Motives

192    Notes in Aid Allocation: Do All Donors Behave the Same?’, Review of Development Eco-­ nomics, 10, 2, 2006, pp. 179–194; Mumtaz Anwar and Katharina Michaelowa, ‘The Political Economy of US Aid to Pakistan’, Review of Development Economics, 10, 2, 2006, pp. 195–209.   27 Maizels and Nissanke, ‘Motivations for Aid to Developing Countries’, p. 888; Oliver Morrissey, ‘The Mixing of Aid and Trade Policies’, World Economy, 16, 1, January 1993, pp. 69–84; Grilli and Riess, ‘EC Aid to Associated Countries: Distribution and Determinants’, p. 211; Hook, National Interest and Foreign Aid, pp. 69–92; Steven W. Hook and Guang Zhang, ‘Japan’s Aid Policy Since the Cold War: Rhetoric and Reality’, Asian Survey, 38, 11, November 1998, p. 1064; Schraeder et al., ‘Clarify-­ ing the Foreign Aid Puzzle’, pp. 311–314; Saori N. Katada, ‘Japan’s ­Two-­Track Aid Approach: the Forces Behind Competing Triads’, Asian Survey, 42, 2, March–April 2002, pp. 320–342; Berthelemy and Tichit, ‘Bilateral Donors’ Aid Allocation Deci-­ sions’, p. 257; Berthelemy, ‘Bilateral Donor’s Interest vs Recipients’ Development Motives in Aid Allocation’, p. 191.   28 Samuel J. Bernstein and Eugene J. Alpert, ‘Foreign Aid and Voting Behaviour in the United Nations: the Admission of Communist China’, Orbis, 15, 3, Fall 1971, p. 977; Eugune R. Wittkopf, ‘Foreign Aid and United Nations Votes: a Comparative Study’, The American Political Science Review, 67, 3, September 1973, p. 887; Kul B. Rai, ‘Foreign Aid in the UN General Assembly, 1967–1976’, Journal of Peace Research, 17, 3, 1980, p. 275; Per Lundborg, ‘Foreign Aid and International Support as a Gift Exchange’, Economics and Politics, 10, 2, July 1998, pp. 127–141; T.Y. Wang, ‘US Foreign Aid and UN Voting: An Analysis of Important Issues’, International Studies Quarterly, 43, 1999, p. 207.   29 Charles W. Kegley Jr. and Steven W. Hook, ‘US Foreign Aid and UN Voting: Did Reagan’s Linkage Strategy Buy Deference or Defiance?’, International Studies Quarterly, 35, 3, September 1991, pp. 306–307.   30 Armstrong, ‘The Political Consequences of Economic Dependence’, pp. 422–423.   31 Philip G. Roeder, ‘The Ties that Bind: Aid, Trade, and Political Compliance in Soviet–Third World Relations’, International Studies Quarterly, 29, 2, June 1985, p. 207.   32 Randall Newnham, ‘The Price of German Unity: the Role of Economic Aid in the German–Soviet Negotiations’, German Studies Review, 22, 3, October 1999, pp. 421–446; Randall Newnham, Deutsche Mark Diplomacy: Positive Economic Sanc-­ tions in German–Russian Relations (University Park: The Pennsylvania State Uni-­ versity Press, 2002).   33 Randall E. Newnham, ‘How to Win Friends and Influence People: Japanese Eco-­ nomic Aid Linkage and the Kurile Islands’, Asian Affairs: an American Review, 27, 4, Winter 2001, pp. 247–260.   34 Tsukas Takamine, ‘A New Dynamism in ­Sino-­Japanese Security Relations: Japan’s Strategic Use of Foreign Aid’, The Pacific Review, 18, 4, December 2005, pp. 439–461; Hook and Zhang, ‘Japan’s Aid Policy Since the Cold War’, p. 1064; Dennis T. Yasutomo, ‘Why Aid: Japan as an “Aid Great Power” ’, Pacific Affairs, 62, 4, Winter 1989–1990, pp. 500–503; David Arase, Buying Power: the Political Economy of Japan’s Foreign Aid (Boulder and London: Lynne Rienner Publishers, 1995), pp. 203–213; Akatoshi Miyashita, Limits to Power: Asymmetric Dependence and Jap-­ anese Foreign Aid Policy (New York: Lexington Books, 2003); Howard Lehman, ‘Japan’s Foreign Aid Policy to Africa Since the Tokyo International Conference on African Development’, Pacific Affairs, 78, 3, Fall 2005, pp. 423–452.   35 Neil R. Richardson, ‘Political Compliance and US Trade Dominance’, The American Political Science Review, 70, 4, December 1976, pp. 1102–1109; Neil R. Richardson and Charles W. Kegley Jr., ‘Trade Dependence and Foreign Policy Compliance: a Longitudinal Analysis’, International Studies Quarterly, 24, 2, June 1980, p. 191.   36 Menkhaus and Kegley, ‘The Compliant Foreign Policy of the Dependent State Revis-­

Notes    193 ited’, p. 341; Armstrong, ‘The Political Consequences of Economic Dependence’, p. 423; Moon, ‘The Foreign Policy of the Dependent State’, p. 318.   37 Richardson, Foreign Policy and Economic Dependence, pp. 128–164.   38 J.L. Ray, ‘Dependence, Political Compliance, and Economic Performance: Latin America and Eastern Europe’, in C.W. Kegley Jr. and P. J. McGowan (eds), The Polit-­ ical Economy of Foreign Policy Behavior (Beverly Hills: Sage, 1981), pp. 111–136.   39 Crumm, ‘The Value of Economic Incentives in International Politics’, p. 324; Michael Mastanduno, ‘Economics and Security in Statecraft and Scholarship’, Inter-­ national Organization, 52, 4, Autumn 1988, pp. 825–854.   40 The term ‘trading state’ is employed here loosely to denote Taiwan’s reliance upon trade for its economic development, rather in the sense suggested by Richard Rose-­ crance in The Rise of the Trading State: Commerce and Conquest in the Modern World (New York: Basic Books, 1985). Due to uncertain security guarantees by the United States, Taiwan devotes substantial resources to strengthen its physical secu-­ rity. In this sense, it behaves like a territorial state. Although it is also unquestionably a trading state as well.   41 Much of the financing for Taiwan’s foreign-aid programmes before the late 1960s came from American surplus agricultural products sold in Taiwan (Lee ­ Wei-­chin, ‘ROC’s Foreign Aid Policy, in Jason C. Hu (ed.), Quiet Revolutions on Taiwan, Republic of China (Taipei: Kwong Hwa Publishing Company, 1994), p. 333). For an examination of US aid for Taiwan, see Neil H. Jacoby, U.S. AID to Taiwan: a Study of Foreign Aid, ­ Self-­Help, and Development (New York and London: Frederick A. Praeger, 1966).   42 K.T. Li, ‘Republic of China’s Aid to Developing Nations’, Pacific Community, 1, 4, 1970, p. 666; Wei ­Liang-­Tsai, Peking Versus Taipei in Africa 1960–1978 (Taipei: The Asia and World Institute, 1982), pp. 303–329.   43 ­ Cheng-­wen Tsai and ­Chu-­cheng Ming, ‘The Republic of China and Western Europe: Past and Future’, in Yu San Wang (ed.), Foreign Policy of the Republic of China on Taiwan: an Unorthodox Approach (New York: Praeger: 1990), pp. 125–126; Tuan Y. Cheng, ‘Foreign Aid in ROC Diplomacy’, Issues and Studies, 28, 9, Septem-­ ber 1992, p. 70. Wei makes a similar argument implicitly (Wei, Liang-Tsai, Peking Versus Taipei in Africa 1960–1978, pp. 384–395).   44 Chiao Chiao Hsieh, Strategy for Survival: the Foreign Policy and External Relations of the Republic of China on Taiwan, 1949–79 (London: The Sherwood Press, 1985), pp. 190–222; Bernstein and Alpert, ‘Foreign Aid and Voting Behaviour in the United Nations’, p. 977.   45 Harry Harding, A Fragile Relationship: the United States and China Since 1972 (Washington, DC: The Brookings Institution, 1992), p. 4. Copper argues that China’s success at the UN in 1971 owed a lot to Beijing aid diplomacy in Africa, while Lin finds a positive correlation between Beijing’s aid and the aid recipient’s support for China at the UN (John Franklin Copper, China’s Foreign Aid (Toronto and London: Lexington Books, 1976), pp. 85–114; Lin ­Teh-­chang, The Foreign Aid Policy of the People’s Republic of China: a Theoretical Analysis (Ann Arbor: University Micro-­ films International, 1995), pp. 196–202).   46 Byron S.J. Weng, ‘Taiwan’s International Status Today’, The China Quarterly, 99, September 1984, p. 465; Michael Yahuda, ‘The International Standing of the Repub-­ lic of China on Taiwan’, The China Quarterly, 148, December 1996, pp. 1329–1330; Samuel S. Kim, ‘Taiwan and the International System: the Challenge of Legitima-­ tion’, in Robert G. Sutter and William R. Johnson (eds), Taiwan in World Affairs (Boulder: Westview Press, 1994), p. 150.   47 ­ Bih-­Jaw Lin, ‘The Republic of China and Africa: a Case of Positive Adaptation’, in Wang (ed.), Foreign Policy of the Republic of China, pp. 152–153; Yu San Wang, ‘The Republic of China’s Relations with Latin America’, in Yu San Wang (ed.), Foreign Policy of the Republic of China, p. 167; Cheng, ‘Foreign Aid in ROC Diplomacy’, p. 72.

194    Notes   48 Andrew Tanzer, ‘Taiwan Aims to Join the Economic Elite’, Far Eastern Economic Review, 22 May 1981, p. 45.   49 Cheng, ‘Foreign Aid in ROC Diplomacy’, p. 74.   50 Wang, ‘The Republic of China’s Relations with Latin America’, p. 170; Chiao Chiao Hsieh, ‘Pragmatic Diplomacy: Foreign Policy and External Relations’, in Peter Ferdinand (ed.), ­Take-­off for Taiwan (London: The Royal Institute of International Affairs, 1996), p. 79.   51 Hsieh, Strategy for Survival, p. 256.   52 Tsai and Ming, ‘The Republic of China and Western Europe’, p. 137; David N. Laux, ‘Taiwan’s Economic Development, and Trade and Business Relations with the United States’, in Hungdah Chiu, ­Hsing-­wei Lee and ­Chih-­Yu Wu (eds), Implemen-­ tation of Taiwan Relations Act: an Examination After Twenty Years, Maryland Series in Contemporary Asian Studies, 2, 2001, p. 233; Reinhard Drifte, ‘European and Soviet Perspectives on Future Responses in Taiwan to International and Regional Developments’, Asian Survey, 25, 11, November 1985, pp. 1116–1118; Ralph N. Clough, ‘The Republic of China and the World 1949–1981’, in Huangdah Chiu and ­Shao-­Chuan Leng (eds), China: Seventy Years After the 1911 ­ Hsin-­Hai Revolution (Charlottesville: University Press of Virginia, 1984), p. 540.   53 Chi Su, ‘International Relations of the Republic of China during the 1990s’, Issues and Studies, 29, 9, September 1993, p. 3; Hsieh, ‘Pragmatic Diplomacy’, p. 76; Wang, ‘The Republic of China’s Relations with Latin America’, p. 168; Weiqun Gu, Conflicts of Divided Nations: the Cases of China and Korea (Westport and London: Praeger, 1995), p. 124.   54 Chi, ‘International Relations of the Republic of China during the 1990s’, p. 11; Hsieh, ‘Pragmatic Diplomacy’, p. 71.   55 ­ Shu-­yin Ho, ‘Walking the Tightrope: the ROC’s Democratisation, Diplomacy, and Mainland Policy’, Issues and Studies, 28, 3, March 1992, p. 10; Chi, ‘International Relations of the Republic of China During the 1990s’, pp. 10–12.   56 Chi, ‘International Relations of the Republic of China during the 1990s’, p. 18; Yvonne Yuan, ‘A Pragmatic Vision: Interview with Fredrick F. Chien, Minister of Foreign Affairs’, Free China Review, 43, 2, February 1993, p. 18; Shirley W.Y. Kuo, ‘The Taiwanese Economy in the 1990s’, in Gary Klintworth (ed.), Taiwan in the ­Asia-­Pacific in the 1990s (Sydney: Allen & Unwin, 1994), pp. 89–90.   57 Yvonne Yuan, ‘Building Better Relations’, Free China Review, 43, 2, February 1993, p. 13; Lin Teh Chang, ‘Taiwan’s Foreign Aid: an Instrument of Foreign Policy’, New Zealand Journal of East Asian Studies, 4, 1, June 1996, pp. 62–65; Gerald Chan, ‘Taiwan as an Emerging Foreign Aid Donor: Developments, Problems and Pros-­ pects’, Pacific Affairs, 70, 1, Spring 1997, pp. 37–56.   58 Cheng, ‘Foreign Aid in ROC Diplomacy’, p. 74.   59 Shim Jae Hoon, ‘Money and Diplomacy’, Far Eastern Economic Review, 2 February 1989, pp. 29–30; Jing Wei, ‘Overstretched: Taiwan’s “Elastic Diplomacy” ’, Beijing Review, 3–9 April 1989, p. 4; Lee, ‘ROC’s Aid Diplomacy’, p. 345.   60 In exchange for diplomatic ties in 1989–1990, Taipei reportedly offered soft loans to Bahamas (US$2.5 million), Belize (US$50 million), Grenada (US$10 million), Nicaragua (US$100 million), Liberia (US$212 million) and ­Guinea-­Bissau (US$20) (Cheng, ‘Foreign Aid in ROC Diplomacy’, p. 75; Lee, ‘ROC’s Foreign Aid Diplo-­ macy’, pp. 338–339).   61 Cheng, ‘Foreign Aid in ROC Diplomacy’, pp. 77–79.   62 Lee, ‘ROC’s Foreign Aid Diplomacy’, p. 335.   63 ROC Foreign Affairs Report (Taipei: Government Information Office, 1993), pp. 20–23; Linjun Wu, ‘Does Money Talk? The ROC Economic Diplomacy’, Issues and Studies, 31, 12, December 1995, pp. 32–33; Chiao Chiao Hsieh, ‘Pragmatic Diplomacy’, p. 89; Bernard T.K. Joei, ‘Pragmatic Diplomacy in the Republic of China: History and Prospects’, in Hu (ed.), Quiet Revolutions on Taiwan, Republic

Notes    195 of China, p. 319; Kay Moeller, ‘A New Role for the ROC on Taiwan in the ­Post-­Cold War Era’, Issues and Studies, 32, 2, February 1995, pp. 76–77.   64 Hsieh, ‘Pragmatic Diplomacy’, pp. 89–90; Chueiling Shin, ‘Development of ROC– France Relations: Case of an Isolated State and its Economic Diplomacy’, Issues and Studies, 37, 1, January–February 2001, p. 139.   65 Frank Ching, ‘Taiwan Faces New Challenge: “Vacation Diplomacy” Underlines Importance of Economic Power’, Far Eastern Economic Review, 24 March 1994, p. 32; Lin ­ Teh-­chang, ‘The ROC’s Foreign Aid and the Southward Policy’, Issues and Studies, 31, 10, October 1995, pp. 19–20; Yahuda, ‘The International Standing of the Republic of China on Taiwan’, pp. 1333–1334; Samuel C.Y. Ku, ‘The Politi-­ cal Economy of Taiwan’s Relations with Vietnam’, Contemporary Southeast Asia, 21, 3, December 1999, pp. 405–423; Michael Leifer, ‘Taiwan and ­South-­East Asia: The Limits to Pragmatic Diplomacy’, in Richard Louis Edmonds and Steven M. Goldstein (eds), Taiwan in the Twentieth Century: a Retrospective View (Cambridge: Cambridge University Press, 2001), pp. 173–185.   66 Shelly H. Han, ‘Time to Welcome Taiwan Back into the United Nations’, Asian Affairs: an American Review, 22, 3, Fall 1995, p. 175; T.Y. Wang, ‘Taiwan’s Foreign Relations Under Lee ­Teng-­hui’s Rule, 1988–2000’, in ­Wei-­chin Lee and T.Y. Wang (eds), Sayonara to the Lee ­ Teng-­hui Era (Lanham: University Press of America, 2003), p. 252.   67 Li Jiaquan, ‘On Taiwan’s “Elastic Diplomacy” ’, Beijing Review, 26 February–  4 March 1990, pp. 27–31.   68 Lee ­Wei-­chin, ‘ROC’s Foreign Aid Policy’, pp. 349–350.   69 Cheng, ‘Foreign Aid in ROC Diplomacy’, pp. 79–84.   70 Democratic Progressive Party White Paper on Foreign Policy for the 21st Century, 28 November 1999, Taiwan Documents Project. Online, available at: www.taiwan-­ documents.org/dpp02.htm (accessed 19 March 2004).   71 David Rennie, ‘ “Dollar Diplomacy” Must Stop, Says Lu’, Sydney Morning Herald, 24 March 2000.   72 President Chen ­Shui-­bian’s inauguration speech, 20 May 2000. Online, available at: th.gio.gov.tw/pi2000/dow_2.htm (accessed 20 October 2006).   73 Shelley Rigger, From Opposition to Power: Taiwan’s Democratic Progressive Party (Boulder and London: Lynne Rienner Publishers, 2001), pp. 145–146.   74 South China Morning Post, 19 May 2000.   75 Shelley Rigger, ‘Party Politics and Taiwan’s External Relations’, Orbis, 49, 3, Summer 2005, p. 426; Dan Biers, ‘Can’t Buy Me Love’, Far Eastern Economic Review, 28 June 2001, pp. 14–18.   76 Lin, ‘Taiwan’s Foreign Aid’, p. 77; Wang Chian, The Republic of China’s Foreign Policy 1949–1988: Factors Affecting Change in Foreign Policy Behaviour (Ann Arbor: University Microfilms International, 1995), p. 76; Murray A. Rubinstein, ‘Political Taiwanization and Pragmatic Diplomacy: the Eras of Chiang ­ Ching­kuo and Lee ­Teng-­hui, 1971–1994’, in Murray A. Rubinstein (ed.), Taiwan: a New History (Armonk and London: M.E. Sharpe, 1999), pp. 462–465; Linjun Wu, ‘The ROC’s Economic Diplomacy After the March Crisis: Can Money Talk Again?’, Issues and Studies, 32, 12, December 1996, p. 52.   77 Lee, ‘ROC’s Foreign Aid Policy’, pp. 342–347; Joei, ‘Pragmatic Diplomacy in the Republic of China’, pp. 287–330; Moeller, ‘A New Role for the ROC on Taiwan in the ­Post-­Cold War Era’, pp. 67–86; Lin, ‘Taiwan’s Foreign Aid’, pp. 58–80; Hsieh, ‘Pragmatic Diplomacy’, pp. 98–105; Wu, ‘Does Money Talk?’, pp. 22–35.   78 Yahuda, ‘The International Standing of the Republic of China on Taiwan’, p. 1331; Chen Jie, Foreign Policy of the New Taiwan: Pragmatic Diplomacy in Southeast Asia (Cheltenham, UK and Northampton, MA: Edward Elgar, 2002), p. 53.   79 Kim, ‘Taiwan and the International System’, p. 152.   80 Ian Taylor, ‘Taiwan’s Foreign Policy and Africa: the Limitations of Dollar

196    Notes Diplomacy’, Journal of Contemporary China, 11, 30, 2002, pp. 125–140; He Li, ‘Economic Diplomacy: Chinese Policy Toward Latin America’, Problems of ­ Post­Communism, 45, 2, March/April 1998, pp. 36–37.   81 Samuel C.Y. Ku, ‘The Political Economy of Taiwan’s Relations with Southeast Asia: The “Southward Policy” ’, Contemporary Southeast Asia, 17, 3, December 1995, p. 285.   82 Francoise Mengin, ‘The Foreign Policy of the ROC on Taiwan since 1971: an Over-­ view’, in ­Marie-­Luise Nath (ed.), The Republic of China on Taiwan in International Politics (Frankfurt: Peter Lang, 1998), pp. 33–35; Francoise Mengin, ‘Taiwan’s ­Non­Official Diplomacy’, Diplomacy & Statecraft, 8, 1, March 1997, pp. 238–240; Tsai and Ming, ‘The Republic of China and Western Europe’, p. 140; Ralph N. Clough, ‘The Republic of China and the International Community in the 1990s’, Issues and Studies, 29. 2, February 1993, pp. 8–10.   83 Klaus Knorr, The Power of Nations: the Political Economy of International Relations (New York: Basic Books, 1975), p. 205.   84 Deon Geldenhuys, Isolated States: a Comparative Analysis (Cambridge: Cambridge University Press, 1990), p. 421; Lee, ‘ROC’s Foreign Aid Policy’, p. 350; Mengin, ‘The Foreign Policy of the ROC on Taiwan since 1971’, p. 33; ­ Yui-­sang Steve Tsang, ‘Calculated Ambiguity: the ROC in International Politics Today’, in Nath, ‘The Republic of China on Taiwan in International Politics’, p. 42; Ian Taylor, ‘Afri-­ ca’s Place in the Diplomatic Competition Between Beijing and Taipei’, Issues and Studies, 34, 3, March 1998, 131–133; Taylor, ‘Taiwan’s Foreign Policy and Africa’, pp. 125–140; Carlos Brian Pheysey, ‘Diplomatic Rivalry between Taiwan and the PRC in the South Pacific Islands’, Issues and Studies, 35, 2, March/April 1999, pp. 73–104.   85 Tsang, ‘Calculated Ambiguity’, p. 42; Taylor, ‘Taiwan’s Foreign Policy and Africa’, p. 135; Chan, ‘Taiwan as an Emerging Foreign Aid Donor’, p. 56; Mengin, ‘The Foreign Policy of the ROC on Taiwan since 1971’, p. 32; Wang, ‘Taiwan’s Foreign Relations Under Lee ­Teng-­hui’s Rule, 1988–2000’, pp. 254 and 268; Cheng, ‘Foreign Aid in ROC Diplomacy’, p. 78.   86 Ku, ‘The Political Economy of Taiwan’s Relations with Southeast Asia’, pp. 282–297; Leifer, ‘Taiwan and ­South-­East Asia’, pp. 173–185.   87 Samuel C.Y. Ku, ‘Taiwan’s Diplomatic Maneuvers in the ­ Asia-­Pacific: a Perspec-­ tive of Complex Interdependence’, Issues and Studies, 34, 6, June 1998, p. 97; Shin, ‘Development of ROC–France Relations’, pp. 124–159.   88 Hsieh, ‘Pragmatic Diplomacy’, pp. 99–102.   89 Wu, ‘The ROC’s Economic Diplomacy After the March Crisis’, p. 66; He, ‘Eco-­ nomic Diplomacy’, pp. 38–39; Taylor, ‘Africa’s Place in the Diplomatic Competi-­ tion Between Beijing and Taipei’, p. 130; Lee, ‘ROC’s Foreign Aid Policy’, p. 345; Moeller, ‘A New Role for the ROC on Taiwan in the ­Post-­Cold War Era’, pp. 71–73.   90 Davis B. Bobrow, Steve Chan and John A. Kringen, Understanding Foreign Policy Decisions: the Chinese Case (New York: The Free Press, 1979), p. 27.   91 One notable exception is Ku’s analysis of Taiwanese economic diplomacy in the theoretical context of Keohane and Nye’s concept of complex interdependence (Ku, ‘Taiwan’s Diplomatic Maneuvers in the ­Asia-­Pacific’, pp. 80–97).   92 Ku, for example, implicitly suggests that Taiwan’s trade surplus was as influential as the scale of Taiwanese private investments and official foreign aid at influenc-­ ing Hanoi’s decision to deepen a ‘substantive’ partnership with the island (Ku, ‘The Political Economy of Taiwan’s Relations with Vietnam’, pp. 405–423).   93 Zeev Maoz, ‘Power, Capabilities, and Paradoxical Conflict Outcomes’, World Poli-­ tics, 41, 2, January 1989, p. 241.   94 Berthelemy and Tichit, ‘Bilateral Donors’ Aid Allocation Decisions’, p. 254; Berthe-­ lemy, ‘Bilateral Donors’ Interest vs Recipients’ Development Motives in Aid Alloca-­ tion’, p. 180.

Notes    197   95 Berthelemy and Tichit, ‘Bilateral Donors’ Aid Allocation Decisions’, pp. 253–254.   96 Anne O. Krueger, Constantine Michalopoulos and Vernon W. Ruttan, Aid and Devel-­ opment (Baltimore and London: the Johns Hopkins University Press, 1989), p. 82.   97 Chen Jie, ‘The Influences of Democracy on Taiwan’s Foreign Policy’, Issues and Studies, 36, 4, July/August 2000, pp. 9–10.   98 Armstrong, ‘The Political Consequences of Economic Dependence’, p. 404; Menkhaus and Kegley, ‘The Compliant Foreign Policy of the Dependent State Revis-­ ited’, p. 325.   99 Armstrong, ‘The Political Consequences of Economic Dependence’, p. 405; Crumm, ‘The Value of Economic Incentive in International Politics’, p. 326; Newnham, Deut-­ sche Mark Diplomacy, p. 27. 100 Per Lundborg and Richard Lin suggest that China’s competitive bidding for a target’s political compliance – although increasing a target’s bargaining position – does not necessarily prejudice Taipei’s chances of success. Having examined American and Soviet competition for UN votes, Lundborg finds simultaneity between aid levels and political support, i.e. the greater the US aid to a target, the greater the target’s support for the US and lower the Soviet aid to a target. In other words, Taipei could win an ‘aid competition’ with Beijing as long as it offered greater aid in absolute terms. Lin argues that a Taiwanese aid campaign has a greater chances of success when accompanied by skilful diplomacy creating access to a target state’s governing bureaucracy (Lundborg, ‘Foreign Aid and International Support as a Gift Exchange’, pp. 127–141; Lin, ‘Complementary Measures to Foreign Aid’, pp. 360–368). 101 Baldwin reminds us that only the donor’s indifference to the dependence relationship created by aid can credibly threaten to exploit that relationship (Baldwin, Economic Statecraft, p. 308). Lee was the first to note that, instead of creating an asymmetri-­ cal interdependence with the target state, Taiwan often finds itself in the position of reverse dependence, in which the recipient’s dependence on Taiwan as an aid donor does not necessarily reinforce Taiwan’s bargaining position. Although Lee adds that it is unreasonable to believe that Taiwan would fulfil a recipient’s every demand, the very existence of reverse dependence is important when evaluating the effectiveness of Taiwan’s economic diplomacy (Lee, ‘ROC’s Foreign Aid Policy’, p. 352). 102 See, for example, Linjun Wu, ‘How Far Can the ROC’s Informal Diplomacy Go?’, Issues and Studies, 30, 7, July 1994, p. 92 and Taylor, ‘Taiwan’s Foreign Policy and Africa’, p. 131; Richard Payne and Cassandra R. Veney, ‘Taiwan and Africa: Tai-­ pei’s Continuing Search for International Recognition’, Journal of Asian and African Studies, 36, 4, 2001, pp. 442–443. 2  Closing the Cold War chapter   1 ‘Taiwan and Russia Abandon Secret Contacts’, South China Morning Post, 14 July 1970.   2 Dahua wanbao, 29 February 1972.   3 See, for example, Xindao ribao, 12 September 1971; Huaqiao ribao, 10 March 1972; Xindao ribao, 2 April 1972; Zhenbao, 11 April 1972.   4 For an examination of Taiwanese–Soviet relations during the Cold War, see John W. Garver, ‘Taiwan’s Russian Option: Image and Reality’, Asian Survey, 18, 7, July 1978, pp. 751–766; Hsieh, Strategy for Survival, pp. 239–243; Michael Share, Where Empires Collided: Russian and Soviet Relations with Hong Kong, Taiwan, and Macao (Hong Kong: The Chinese University Press, 2007), pp. 180–219; and Czeslaw Tubile-­ wicz, ‘Taiwan and the Soviet Bloc, 1949–1991’, Occasional Papers in Contemporary Asian Studies, 4, 2005.   5 Bi Yingxian and Zhao Chunshan, Dongou guoqing fenxi yu woguo duiwai guanxi [Analysis of East European National Characteristics and the ROC’s Foreign Policy] (Taipei: Xingzhengyuan Yanjiu Fazhan Kaohe Weiyuanhui, 1989), pp. 273, 277–278.   6 Zhongguo shibao, 29 December 1984; Zhongyang ribao, 30 December 1984.

198    Notes   7 Zili wanbao, 23 December 1985.   8 Xindao ribao, 16 July 1986.   9 Lianhe bao, 11 March 1987. 10 Zhongguo shibao, 6 October 1987; Qingnian ribao, 20 May 1988. 11 Jingji ribao, 16 November 1987. 12 Specific trade policies included: 1 direct trade and economic cooperation with seven Central and East European states, including Yugoslavia; 2 opening of the Taiwanese market to consumer products from Central and Eastern Europe; 3 simplification of visa procedures for the communist traders; 4 allowing banking links; 5 allowing direct telecommunication links; 6 lowering tariffs on imported goods from Central and Eastern Europe. 7 specifying an ROC bank to issue insurance for Taiwanese exports to communist Europe. (Zhongyang ribao, 11 March 1988)

Washington expressed concern over Taiwan’s relaxation on trading with the commu-­ nist states, fearing that sales of ­ high-­tech equipment (especially computers) would follow. In response, Taipei restated its prohibition of the exports of products from the list of the Coordinating Committee for Multilateral Export Controls to all communist states and vowed to prosecute firms that violated this ban (Zhongguo shibao, 28 March 1988; Ziyou shibao, 14 May 1988; Jingji ribao, 4 November 1988). 13 Zhongguo shibao, 8 March 1988. In late March 1988, some East Germans reportedly expressed an interest in opening a trade office in Taiwan. Taipei did not think it was desirable (Zhongyang ribao, 28 March 1988). 14 Jingji ribao, 11 April 1988. 15 Lianhe ribao, 28 February 1989. 16 Ziyou shibao, 1 March 1989. In line with this policy, in May 1989, MOFA issued visas to the volleyball teams from Yugoslavia, Hungary and Czechoslovakia invited to play in Taiwan the following October (Lianhe bao, 20 May 1989). 17 Jingji ribao, 20 September 1987. 18 Zhongguo shibao, 22 November 1987. 19 Jingji ribao, 27 January 1988. The first Taiwanese–Hungarian joint investment company was set up in March 1988 (Zhongyang ribao, 28 March 1988). 20 Zhongguo shibao, 15 and 16 March 1989. In June 1989, Yugoslavia opened its air space for the Taiwanese commercial flights (Zhongguo shibao, 3 June 1989. 21 Ziyou shibao, 20 August 1989). 22 Jingji ribao, 14–17 November 1989. 23 Economic benefits secured from South Korea amounted to US$600 million and took the form of soft loans, subsidies to Hungarian exports and investment financing in Hungary (interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005). 24 Lianhe bao, 22 November 1989. 25 Reuters, 28 November 1989. 26 Interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005. 27 Zhongyang ribao, 8 October 1989; Zhongguo shibao, 26 October 1989. 28 Zhongyang ribao, 1 December 1989. 29 Jingji ribao, 27 December 1989. 30 Central News Agency, 30 December 1989, in BBC Survey of World Broadcasts, Far East, 0656, 8 January 1990, p. A2/1. 31 Qingnian ribao, 31 December 1989. Consequently, Taipei reportedly provided Bucha-­ rest with US$200,000 of humanitarian assistance (Wu, ‘Does Money Talk?’, p. 27).

Notes    199 32 Reuters, 8 March 1990 and 24 April 1990. 33 Government Information Office, The Republic of China Yearbook 1989 (Taipei: Kwang Hua Publishing Co., 1989), p. 229. The sports delegation, under the name of ‘Chinese Taipei’, was led by the Chairman of the Taipei City Council. 34 Government Information Office, The Republic of China Yearbook 1989, p. 239. 35 Lianhe bao, 25 February 1988. 36 This gesture of goodwill misfired as the Soviet media presented the sailors’ experi-­ ence in Taiwan as horror (uzhas’). See, for example, V. Itkin and L. Chernenko, ‘34 goda proveli Sovetskiye moryaki v zastkenkakh Taivanya’ [‘The Soviet Sailors Sur-­ vived 34 Years in Taiwanese Torture Chambers’], Izvestia, 19 August 1988. 37 On 19 December 1980, the Executive Yuan issued a regulation stipulating that any applications from government officials to visit communist states must be approved by the work unit and MOFA. Zhongyang ribao, 20 October 1988. Taipei worried that Washington could object to any changes in Taipei’s ­anti-­Soviet policy, especially the technological transfers from the republic to the USSR, which might violate the rules of the Coordinating Committee for Export Control. In May 1988, the Taiwanese received an indirect message from the United States indicating no objection to ROC– USSR commercial relations (Zili zaobao, 31 May 1988, Lianhe bao, 14 October 1988). 38 Shim Jae Hoon, ‘The Old Guard Retreat’, Far Eastern Economic Review, 3 November 1988, p. 35; Lianhe bao, 20 October 1988. 39 Zhongguo shibao, 2 February 1989. In a separate move, the IEAT donated US$40,000 to the victims of the earthquake (Zhongyang ribao, 2 March 1989). 40 Lianhe bao, 15 March 1989; Jeff Hoffman, ‘Soviet Plays Taiwan Card at Trade Talks’, South China Morning Post, 16 May 1989. 41 Lianhe bao, 15 March 1989. 42 The Association was set up in late November 1990; a reciprocal association was formed in Moscow (Lianhe bao, 2 January 1990, 25 November 1990; Sin Tao Daily (Hong Kong), 25 November 1990). 43 Lianhe bao, 24 March 1990. 44 Hsieh, ‘Pragmatic Diplomacy’, pp. 93–94. 45 Lianhe bao, 19 March 1988. 46 Jingji ribao, 20 October 1988. 47 Zili zaobao, 16 October 1989. 48 Zhongguo shibao, 14 May 1989. 49 Ta kung pao (Hong Kong), 8 September 1989. 50 Zhongguo shibao, 13 February 1990. 51 Zili zaobao, 14 May 1989. 52 Lianhe bao, 17 January 1991. 53 See, for example, Evgeny Bazhanov, ‘Peremeny na Taivane’ [‘Changes in Taiwan’], Izvestia, 30 January 1988; B. Pilyatskin, ‘Paradoksy Taivanya’ [‘Taiwan’s Paradoxes’], Parts 1–3, Izvestia, 11–13 June 1990; Aleksandr Chudodeev, ‘Skhvatka dwukh tigrov’ [‘Fight of two tigers’], Novoye Vremya, 46, 1990, pp. 30–32; S. Agafonov, ‘Kapriz Istorii’ [‘A Whim of History’], Parts 1–5, Izvestia, 7, 9, 10–12 January 1990. 54 Zhongguo shibao, 15 May 1989. 55 Zili zaobao, 7 December 1990. 56 Zili zaobao, 14 April 1990. In early November 1990, the Soviet Minister of Finance, Valentin Pavlov, confirmed that the Soviet Union traded with Taiwan indirectly and pointed to the political obstacles as hindering the development of commercial ties with Taiwan (Jingji ribao, 7 November 1990). 57 The Japan Times, 9 April 1990. The first Pravda journalist visited Taiwan in Novem-­ ber 1990 (Zili zaobao, 16 November 1990). 58 New Times, 12–18 June 1990; Zhongguo shibao, 23 June 1990. 59 Lianhe bao, 14 August 1990.

200    Notes 60 F. Toder, ‘Istoriya Izucheniya Taivanya v Rossii’ [‘History of Taiwan Studies in Russia’], Problemy Dalnego Vostoka, 5, 1993, p. 55. 61 The Japan Times, 28 October 1990. The Russian press linked Popov’s visit to Taipei’s readiness to provide Russia with developmental aid through the EBRD and accelerated Soviet–Taiwanese economic and cultural cooperation (Izvestia, 4 November 1990). 62 Zhongguo shibao, 6 January 1991. 63 In May 1991, Taiwan further relaxed visa regulations for the Soviet citizens and per-­ mitted the Soviet citizens to apply for ­long-­term stay permits in response to the Tai-­ wanese universities’ plans to employ Soviet academics and to encourage Soviet business people to establish trading offices in Taiwan (Zhongguo shibao, 10 May 1991). 64 Lianhe bao, 8 January 1991. 65 Peter Ivanov, ‘Russian–Taiwanese Relations: Current State, Problems, and Prospects of Development’, Occasional Papers/Reprints Series in Contemporary Asian Studies, 2, 1996, p. 24; Zhongguo shibao, 6 January 1991. 66 Zhongguo shibao, 20 July 1991; Jingji ribao, 21 July 1991. In September 1991, the Foundation signed a trade agreement with Irkutsk district to trade Soviet timber, oil, aluminium and chemical products for Taiwanese computers, clothing, shoes and machinery at the value of US$200 million (Qingnian ribao, 15 September 1991). 67 Chang ­Hsiao-­yen, Chiang ­Ching-­kuo’s illegitimate child, was considered an advocate of ­pro-­Soviet (聯俄) foreign policy in the early 1970s, when he served as a third sec-­ retary in the ROC embassy in Washington (Lianhe bao, 3 November 1990). 68 Zhongguo shibao, 8 January 1991; Lianhe bao, 8 January 1991 and 29 March 1991. The group was renamed in February 1992 to ‘Working Group on Relations with the CIS’ (對俄協工作小組) (Qingnian ribao, 26 February 1992). 69 Lianhe bao, 29 April 1990. In January 1990, the ROC MOFA officially lifted the ban on the ROC diplomats’ contacts with the Soviet counterparts when stationed abroad (Zili zaobao, 24 November 1990). 70 Zhongyang ribao, 3 November 1990. 71 Lianhe bao, 10 November 1990. 72 Zhongyang ribao, 10 February 1991. 73 As quoted in Ivanov, ‘Russian–Taiwanese Relations’, pp. 30–31. 74 Zhongguo shibao, 25 March 1989. 75 Zhongyang ribao, 31 March 1992. 76 Liaowang (overseas edition), 48, 1990; South China Morning Post, 26 November 1990; Lianhe bao, 25 November 1990. 77 Zhongyang ribao, 18, 22 and 31 May 1991. 78 Lianhe bao, 31 May 1991; Zhongguo shibao, 31 May 1991. 79 The Japan Times, 30 October 1990; Lianhe bao, 11 July 1991. 80 Zhongguo shibao, 22 August 1991. 81 Lianhe bao, 11 September 1991; South China Morning Post, 21 December 1991. As early as April 1990, Taipei refused to rule out diplomatic relations with Moscow (Lianhe bao, 29 April 1990). However, Taipei seemed more hopeful for diplomatic relations with Ukraine, rather than Russia. 82 Lianhe bao, 23 and 28 August 1991. By early November 1991, MOFA decided to provide the Soviet Union with grain assistance (Lianhe bao, 4 November 1991). 83 Ziyou shibao, 17 December 1991. The office was staffed by five people: the CETRA representative and four locals. The Russian government approved the office on 26 December. 84 Jingji ribao, 15 October 1991. 85 Jingji ribao, 10 December 1991. 86 Jingji ribao, 23 November 1991; Zhongguo shibao, 27 December 1991; Jingji ribao, 31 December 1991. 87 Zhongguo shibao, 27 October 1991.

Notes    201 88 Zhongguo shibao, 13 September 1991. 89 China Economic News Service, 27 December 1991. 90 Zhongguo shibao, 21 December 1991. 91 Qingnian ribao, 12 January 1992. 92 Jingji ribao, 1 November 1989. 3  Central European focus     1 Fredrick F. Chien, Opportunity and Challenge: A Collection of Statements, Inter-­ views, and Personal Profiles of Dr. Fredrick F. Chien (Temple: Arizona Historical Foundation, 1995), pp. 47 and 66.     2 MOFA only began sending young diplomats to Central Europe for language training in 1998. However, the training proved ineffective. In early 2004, in the ROC repre-­ sentative office in Warsaw, only one staff member could speak Polish, and that was the result of his marriage to a Polish woman. By ­mid-­2005, in all of MOFA, only two diplomats could speak Polish, two spoke Czech and one Hungarian (interviews with ROC officials, Taipei Economic and Cultural Office, Warsaw, 22 January 2004 and Winsdon J.H. Hsiao, Department of European Affairs, MOFA, Taipei, 15 June 2005 and 29 August 2006).     3 Organisation for Economic Cooperation and Development, ‘Transition at Glance’, OECD Working Papers, 7, 5, 2000, pp. 45, 52 and 55; Judy Batt, ‘The Politics of Eco-­ nomic Transition’, in Stephen White, Judy Batt and Paul G. Lewis, Developments in East European Politics (London: Macmillan, 1993), pp. 205–224.     4 Government Information Office, The Republic of China Yearbook 1991–1992 (Taipei: Kwang Hwa Publishing Company, 1991), pp. 178–180; United Nations Sta-­ tistics Division. Online, available at: unstats.un.org (accessed 12 October 2006).     5 The status and functions of the Taipei Trade Office were left undefined until 1997. Taipei’s practice of issuing visas in Budapest was, therefore, not sanctioned by the Hungarian authorities.     6 Hungarian diplomats consistently deny any linkage between the opening of the office and the bus deal, which was allegedly secured via brokers, who supposedly bribed Taipei City Councillors to win the tender (interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005).     7 Zhongyang ribao, 19 July 1990.     8 South China Morning Post, 22 July 1990.     9 Jingji ribao, 2 August 1990.   10 The Hungarians reached other agreements with Taiwan, including an accord on sports cooperation (November 1990) and scientific cooperation (June 1991). These accords, however, lacked the publicity value necessary to highlight Taiwan’s diplo-­ matic achievements in Central Europe.   11 Jingji ribao, 10 April 1991; Zhongguo shibao, 1 February 1991.   12 Zhongguo shibao, 3 July 1991; Jingji ribao, 29 July 1991.   13 Jingji ribao, 18 August 1990; Qingnian ribao, 2 October 1990.   14 Xinhua, 3 February 1994, in ­ FBIS-­CHI-90–24, 5 February 1990, p. 8; Xinhua, 3 February 1994, in ­FBIS-­CHI-90–24, 5 February 1990, p. 8.   15 A.J.K. Bailes, ‘China and Eastern Europe: A Judgment on the “Socialist Commu-­ nity” ’, The Pacific Review, 3, 3, 1990, p. 237.   16 Zhongyang ribao, 4&5 December 1990; Zhongyang ribao, 5 December 1990; Zuo Ya and Li Fanghua ‘Zhongdongou guojia yu Taiwan de guanxi’ [‘Relations Between East Central Europe and Taiwan’, in Lu Xiaoheng (ed.), Zhongguo duiwai guanxi zhong de Taiwan wenti [Taiwan Issue in China’s Foreign Relations] (Beijing: Jingji Guanli Chubanshe, 2002), p. 208.   17 Zhongguo shibao, 24 September 1990; South China Morning Post, 29 September 1990.

202    Notes   18 Lianhe bao, 27 December 1990.   19 Lianhe bao, 29 December 1990.   20 Zhongguo shibao, 10 January 1991.   21 South China Morning Post, 21 December 1991.   22 Development Database on Aid from DAC Members: DAC online. Online, available at: www.oecd.org (accessed 23 August 2006).   23 Curiously, the loans were also to fund centres propagating Taiwanese developmental experience (台灣經驗推廣中心) and to support cooperation between ROC compa-­ nies and their partners in Central Europe (Zhongguo shibao, 21 May 1991).   24 Zhongguo shibao, 22 May 1991.   25 Rzeczpospolita, 23 July 1992.   26 In December 1993, a representative of the IECDF visited Poland and initiated nego-­ tiations on the loan for Poland. Polish Deputy Prime Minister and Finance Minister Marek Borowski confirmed the negotiations.   27 Zhongguo shibao, 5 July 1991; Jingji ribao, 28 September 1991; Ming pao, 29 Sep-­ tember 1991.   28 Representatives from other ­ post-­communist states (including Bulgaria, Czechoslo-­ vakia, Poland, Romania, Russia, Ukraine, Uzbekistan and Latvia) also attended the meeting. Sofia was represented by the Premier and Prague by the Parliamentary President (Zhongyang ribao, 29 October 1992).   29 Jingji ribao, 28 April 1994.   30 China Post, 2 February 1994.   31 Zhongguo shibao, 24 August 1993.   32 Jingji ribao, 3 May 1998.   33 Gongshang shibao, 19 June 1995.   34 China Post, 6 December 1993.   35 Prague, however, did not formally support the ROC’s bid (Government Informa-­ tion Office, The Republic of China Yearbook 1996 (Taipei: Government Information Office, Republic of China, 1996), p. 134).   36 Zhongguo shibao, 31 May 1995.   37 China Post, 20 June 1995.   38 South China Morning Post, 23 June 1995; Zhongguo shibao, 22 and 23 June 1995.   39 Zhongguo shibao, 24 July 1995. By early 1998, seven Taiwanese students were enrolled in the Czech universities.   40 Reuters, 1 July 1995; Jingji ribao, 1 July 1995.   41 Zhongyang ribao, 6 October 1995.   42 Lianhe bao, 15 November 1996.   43 ‘The Taiwanese Defence Minister Was Interested in Aero’, Mlada Fronta Dnes, 21 November 1996, in FBIS-­EEU-­96–227.   44 The mainland media responded to the Czech deal by terming Taiwan’s new approach a ‘northern policy’, which used military defence cooperation as a prelude to devel-­ oping ‘diplomatic relations’ with those countries (Xin Qi, Taiwan’s ‘Pragmatic Diplomacy’ is Actually Not Pragmatic, Liaowang, No. 13, 31 March 1997, p. 39, in ­FIBS-­CHI-97–74).   45 Reuters, 25 October 1995; Zhongyang ribao, 26 October 1995.   46 Lianhe bao, 24 April 1996; Reuters, 22 April 1996.   47 Zhongyang ribao, 27 May 1996.   48 China News, 2 October 1996.   49 Lianhe bao, 23 June 1998.   50 Scotsman, 22 October 1998.   51 Having lost the presidential elections, Walesa kept his earlier promise and visited Taiwan in late October–early November 1996 at the invitation of the daily Zhongguo shibao and the Chinese Federation of Labour (中華民國全國總工會). He met Presi-­ dent Lee and Premier Lien, predicted the imminent fall of the Chinese communism,

Notes    203 regretted not visiting Taiwan during his presidency and promised to invite Lien to Poland (China News, 2 November 1996; Gongshang shibao, 2 November 1996).   52 Reuters, 18 March 1996.   53 Kwasniewski originally planned to visit Taiwan in 1994, but cancelled his trip due to political instability in Poland. To show his good will, however, three parliamentar-­ ians from his Democratic Left Alliance visited Taiwan on his behalf. In 1990, Kwas-­ niewski made a ­half-­day stop in Taiwan when travelling to South Korea to attend a sports event (Central News Agency, 21 November 1995).   54 Grzegorz Brycki, Unnecessary Quarrel, Zycie Warszawy, 16–17 March 1996, in ­FBIS-­EEU-96–50.   55 In 1997, Warsaw signed agreements with Taiwan on scientific and news agencies’ cooperation. Warsaw and Taipei also agreed on the scholarship exchange programme for students from both countries (eight from each side for one year of language study).   56 Taiwan granted landing visas to the Poles, Czechs and Hungarians on 1 January 1997. The Slovaks joined in April 2006. West European citizens were granted ­visa­free entry to Taiwan on 1 January 1995. In Central and Eastern Europe, the Czechs, Latvians and Poles granted Taiwan landing visas. With their entry to the EU in 2004, the landing visas were withdrawn.   57 Lianhe bao, 2 October 1995.   58 Jingji ribao, 26 October 1995.   59 Taipei insists, however, that the signed document was an agreement on prevention of double taxation (Government Information Office, The Republic of China Yearbook 1998 (Taipei: Government Information Office, Republic of China, 1998), pp. 151–152).   60 Zhongguo shibao, 28 June 1998; Zhongyang ribao, 27 June 1998.   61 Ziyou shibao, 21 March 1999.   62 Interview with a Polish diplomat, Warsaw Trade Office, Taipei, 28 May 1999.   63 Interview with a Taiwanese diplomat, MOFA’s East European Section, Taipei, 28 May 1999.   64 Lianhe bao, 16 October 2000.   65 Informal conversation with a Czech diplomat, Hong Kong, 7 February 2004; inter-­ view with a Czech diplomat, Czech Economic and Cultural Office, Taipei, 14 June 2005.   66 Lianhe bao, 17 November 2001.   67 Zhongyang ribao, 30 May 2000; interview with a Polish diplomat, Warsaw Trade Office, Taipei, 25 September 2000.   68 Lianhe bao, 19 March 2002. Yet, Budapest’s decision to grant Annette Lu a visa was a bold gesture. The Canadian government did not issue her a visa when she planned to attend the fiftieth Congress of the Liberal International, held in Ottawa/Hull in October 2000. Nor did Bulgaria, where the Liberal International held its fifty-third congress in May 2005. Lu attended the Congress as the DPP leader and was the first Taiwanese ­ high-­ranking politician to do so. The DPP is an observer at the Liberal International. Lu’s visit to Hungary angered China. To appease Beijing, Budapest for the first time publicly spoke out against Taiwan’s UN bid in 2002.   69 In 2005, 12,000 Taiwanese travelled to Hungary, 4,000 to Poland and 750 to Slovakia.   70 In November 2004, China Airlines began flying cargo to Prague twice weekly. The first Taiwan–Hungary Economic Cooperation Meeting took place in November 2004.   71 Since the ­ mid-­1980s, Slovak firms have been involved in the construction of the Shentou power station, which was completed in the early 2000s.   72 Lianhe bao, 12 March 1994.   73 Slovakia Radio 1, 11 April 1996, in BBC Monitoring Service: Central Europe and Balkans, 13 April 1996.   74 Ziyou shibao, 15 September 2000.

204    Notes   75 Taiwan News, 7 November 2003; and interview with a Slovak diplomat, Slovak Eco-­ nomic and Cultural Office, Taipei, 14 June 2005. The first Taiwanese investor in Slo-­ vakia, TECO Electric and Machinery, invested in the assembly line of LCD screens. The testing of the production line began in February 2005.   76 Reuters, 24 March 1989.   77 Czeslaw Tubilewicz, ‘Comrades No More: ­Sino-­Central European Relations after the Cold War’, Problems of ­Post-­Communism, 46, 2, March/April 1999, pp. 4–6.   78 Lianhe bao, 23 and 24 July 1990.   79 Xinhua, 2 March 1991, in ­FBIS-­CHI-91–42, 4 March 1991, pp. 4–5.   80 Xinhua, 17 September 1991, in ­FBIS-­CHI-91–180, 17 September 1991, p. 15. In Feb-­ ruary 1991, on the way from Spain to Poland, Qian Qichen made a brief stopover in Prague ‘for technical reasons’, during which time he met Czechoslovak Vice Foreign Minister M. Palous.   81 Reuters, 1 July 1995.   82 China Post, 21 June 1995.   83 Lianhe bao, 5 November 1995.   84 Zhongguo shibao, 13 October 1997. Rudolf Fuerst claims that there is no evidence that at any point Prague’s ­ pro-­Taiwan or ­ pro-­Tibet policies hurt Czech business opportunities in the PRC (Rudolf Fuerst, ‘Supporting Human Rights in the People’s Republic of China: Virtual Obstacle of Czech Economic Concerns’, Perspectives, 19, Winter 2002/2003, p. 71).   85 China News, 23 October 1997.   86 World Tibet Network News, 29 September 2000. Online, available at: www.tibet.ca/ wtnarchive/2000/9/29_3.html (accessed 21 November 2003).   87 Interview with Jaromir Cernik, Director of Southeast Asia Operations, Czech Invest-­ ment and Business Development Agency, Hong Kong, 11 August 2006.   88 Teresa Stylinska, ‘The Efficiency of Structures, Reliability of People’, Rzeczpospol-­ ita, 4 August 1998, in ­FBIS-­EEU-98–218.   89 Warsaw Trade Office has been recently renamed the ‘Warsaw (Poland) Trade Office’.   90 Lianhe bao, 22 November 1995.   91 South China Morning Post, 10 June 2004.   92 Maria Kruczkowska, ‘Polska nie chce tajwanskiego obroncy praw czlowieka’ [‘Poland Does Not Want Taiwan’s Human Rights Activist’], Gazeta Wyborcza, 9 January 2006.   93 They did so in December 2005 and July–August 2006. Interview with Slawek Straze-­ wski, Chief Representative, Warsaw (Poland) Trade Office, Taipei, 28 August 2006.   94 He Shan, ‘Taiwan Suffers Defeat in Promoting “Pragmatic Diplomacy”, which Devi-­ ates from the “One China” Principle’, Zhongguo Tongxunshe, 29 December 1996, in ­FBIS-­CHI-97–3.   95 Xin Qi, ‘Taiwan’s “Pragmatic Diplomacy” is Actually Not Pragmatic’, Liaowang, 13, 31 March 1997, p. 39, in ­FBIS-­CHI-97–74.   96 Poland was the greatest beneficiary, receiving D441,000 (European Bank for Recon-­ struction and Development, Taipei–China and the EBRD (London: European Bank for Reconstruction and Development, April 2002), pp. 7 and 22–23).   97 Helena Luczywo and Adam Michnik, ‘Interview with Taiwanese Prime Minister Vincent Su ­Wan-­chang, 10 December 1998’, Gazeta Wyborcza, 9 January 1998.   98 Interviews with ROC officials, Taipei Economic and Cultural Office, Warsaw, 22 January 2004; interview with Tomasz Wrzosinski, Deputy Representative Director and Head of Commercial Division, Warsaw Trade Office, Taipei, 17 June 2005.   99 China News, 15 December 1998. 100 Interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005; interview with Gabriella Gulyas, Trade Officer, Hungarian Trade Office, Taipei, 30 August 2006. 101 Zhongguo shibao, 13 June 2005. So far, the Taiwanese businesses’ response has been lukewarm, to say the least.

Notes    205 102 Interview with a Czech diplomat, Czech Economic and Cultural Office, Taipei, 14 June 2005; interview with Jaromir Cernik, Director of Southeast Asia Operations, Czech Investment and Business Development Agency, Hong Kong, 11 August 2006. 103 Foxconn subsequently chose the Czech Republic for its European headquarters. 104 Until the late 1990s, 70–80 per cent of Taiwan investments in Europe involving man-­ ufacturing projects were located in Britain, where the investment approval process was fast and labour laws the most flexible in Europe. 105 Taiwan News, 26 July 2000. In December 2005, Aero Vodochody received an inter-­ national certificate for the small plane. Its commercial production, however, depends on whether the Taiwanese side invests an additional US$50 million in the project. 106 Taipei Times, 7 July 2004. 107 The Taiwanese investors admit to having benefited from Czech preferential treatment (Zhang Dianwen, ‘Shenru Hon Hai Ouzhou xinzang’ [‘Foxconn Enters the Heart of Europe’], eTianxia zazhi (TechVantage), 17, May 2002, p. 77). 108 Gabor Hunya, FDI in ­South-­Eastern Europe in the early 2000s (Vienna: The Vienna Institute for International Economic Studies, July 2002), p. 10. 109 Zhongguo shibao, 28 December 1997. 110 Central News Agency, 1 July 1998. 111 During the Taiwan visit, President Chen decorated Havel with the Order of Brilliant Star with Special Grand Cordon in recognition of his support for Taiwan’s UN bid and efforts to strengthen Czech–Taiwanese relations. 112 The ­pro-­Taiwan group in the Hungarian parliament has recently disappeared due to changes in Hungarian laws allowing friendship groups only with those parliaments that belong to the ­ Inter-­Parliamentary Union. The ­ pro-­Taiwan group is one of the largest in the Czech parliament. 113 Jingji ribao, 3 May 1998. 4  The Latvian model   1 Lianhe bao, 27 August 1991.   2 Lianhe bao, 28 and 29 March 1990.   3 At this time, when MOFA was busy communicating with Baltic officials, some Tai-­ wanese businesses tried to gain an early advantage over the possible competition by conducting parallel, private diplomacy. One company (Jingye Jituan), for example, invited the Lithuanian Prime Minister, K. Prunskiene, to visit Taiwan in December 1990. Such attempts were, however, unsuccessful, as shown by Prunskiene’s failure to arrive in the ROC.   4 Ming pao, 7 March 1991; Lianhe bao, 7 March 1990.   5 China Economic News Service, 7 March 1991; BBC, 14 March 1991. The DPP sec-­ onded the government’s support for Latvia and backed the Baltic people’s demand for sovereignty (Zili zaobao, 7 March 1991).   6 Lianhe bao, 28 August 1991.   7 According to the Taiwanese dailies, Taipei’s communication with Riga was aided by an unnamed individual, who enjoyed close ties with the Latvian leadership and arranged the (aborted) Latvian visit to Taiwan in January 1991 (Lianhe bao, 24 November 1991; Zhongguo shibao, 24 November 1991).   8 Lianhe bao, 31 August 1991 and 24 November 1991; Zili zaobao, 13 September 1991.   9 Lianhe bao, 24 November 1991; Zhongguo shibao, 24 November 1991. 10 China Economic News Service, 3 September 1991. 11 Zhongyang ribao, 11 September 1991. 12 Zhongyang ribao, 29 August 1991. 13 Renmin ribao, 12, 13 and 15 September 1991. See also Jan Rowinski, ‘Politika Chin [ChRL i Taiwanu] wobec Estonii, Litwy i Lotwy. Stosunki wzajemne [1991–1994]’

206    Notes [‘The PRC and Taiwan’s Policy towards Estonia, Lithuania and Latvia: Bilateral Rela-­ tions, 1991–1994’], Studia i Materialy, 84, December 1994, pp. 5–6. 14 Zhongguo shibao, 13 September 1991. 15 James L. Tyson, ‘Taiwan, Besting China, Sets up Ties to Baltics’, Christian Science Monitor, 27 December 1991; Lianhe bao, 16 December 1991. 16 Zhongguo shibao, 13 September 1991. 17 Jingji ribao, 18 October 1991. 18 For an analysis of the Koo family’s diplomatic activities in Southeast Asia, see Chen, Foreign Policy of the New Taiwan, pp. 129–130. 19 Lianhe bao, 7 and 10 November 1991; South China Morning Post, 11 November 1991; Zhongguo shibao, 12 November 1991. 20 BBC, 13 November 1991; Reuters, 26 November 1991; Lianhe bao, 10 November 1991. 21 Lianhe bao, 24 November 1991. 22 Reuters, 26 November 1991 and 15 December 1991; Lianhe bao, 23 November  1991. 23 Zhongguo shibao, 19 December 1991. 24 South China Morning Post, 21 December 1991. 25 Zhongyang ribao, 29 December 1991. 26 Jingji ribao, 17 January 1992. 27 According to the Vienna Convention on Consular Relations (April 1963), consular ties do not equal diplomatic ties. Nonetheless, they signify ­ government-­to-government relations. 28 South China Morning Post, 1 February 1992. 29 Jeremy Mak, ‘Taiwan Finds Diplomatic Gold Mine in Relations with New C.I.S. Nations’, the Wall Street Journal, 7 February 1992; Zhongguo shibao, 3 February 1992. 30 Zili zaobao, 22 March 1992. 31 Government Information Office, The Republic of China Yearbook 1991–1992 (Taipei: Kwang Hwa Publishing Company, 1991), pp. 178–180; United Nations Statistics Division. Online, available at: unstats.un.org ( accessed 12 October 2006). 32 China Economic News Service, 8 March 1992; Central European, 1 June 1992; Lianhe bao, 17 September 1992. 33 China Economic News Service, 17 September 1992. 34 Reuters, 17 September 1992; BBC Monitoring Service: Former USSR, 25 September 1992. 35 Ministry of Foreign Affairs, Zhongwai tiaoyue jipian, 1993–1994 [Treaties Between the Republic of China and Foreign States, 1993–1994], 10 (Taipei: Zhonghua Minguo Waijiaobu, 1996), pp. 157–167. 36 Zhongguo shibao, 30 July 1994. 37 The bilateral cultural exchanges included a visit by a Chinese classical orchestra to Latvia and a reciprocal visit by a Latvian chorus to Taipei, sketchy plans to invite Latvian scientists to Taipei for cooperative research and two ROC scholarships a year for Latvian students to study Chinese in Taipei (China Post, 21 February 1994). 38 Jeffrey Lilley, ‘Baltic ­ Two-­Step’, Far Eastern Economic Review, 13 January 1994, p. 27. The low level of trade exchange between Taiwan and Latvia did not come as a surprise. As early as November 1991, BOFT officials predicted that the scope for expansion of bilateral trade was minimal (Zhongguo shibao, 7 November 1991). 39 Renmin ribao, 29 July 1994. 40 Zili zaobao, 30 July 1994. The Taiwanese consulate general was closed in late Novem-­ ber 1994. The PRC ambassador arrived in Riga four years later. 41 Development Database on Aid from DAC Members: DAC online. Online, available at: www.oecd.org (accessed 23 August 2006). 42 Zili zaobao, 10 November 1994.

Notes    207 43 The group consisted of 14 members, some of whom subsequently visited the ROC. In a corresponding move, the ROC Legislative Yuan set up a Friendship Group with the Baltic States (波海三國友好小組) in April 1997. 44 The office was staffed by three officials and functioned from autumn 1995. (Zhongguo shibao, 2 February 1996.) By ­ mid-­2002, staffing levels increased to six (interview with Luo ­ Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002). 45 Ziyou shibao, 14 November 1996. 46 Lianhe bao, 21 April 1997. 47 Ministry of Foreign Affairs, Zhongwai tiaoyue jipian, 1997–1998 [Treaties Between the Republic of China and Foreign States, 1997–1998], 12 (Taipei: Zhonghua Minguo Waijiaobu, 1999), pp. 141–142. 48 In November 1996, for example, ROC legislators and trade officials, led by the Legis-­ lative Yuan Vice President Wang ­Jin-­pyng, met Krastins in his official capacity as Vice Prime Minister. In November 2000, Latvian Minister of Culture Karina Petersone visited Taiwan. 49 Zhongguo shibao, 1 March 1998. 50 Xinhua, 27 July 1999, in ­FBIS-­CHI-99–727. 51 In the ­ mid-­1990s, two Taiwanese textile companies were planning to invest up to US$40 million each in textile factories and dyeing/finishing plants in Latvia. These plans, however, failed to leave the drawing board. 52 Zhongguo shibao, 3 October 1998. 53 Zili zaobao, 21 July 1996. 54 Latvian News Agency, 28 April 1999. 55 Zhongguo shibao, 10 July 2000. 56 BNS news agency, 7 June 2001, in BBC Monitoring Service: Former USSR, 7 June 2001. Outgoing DPP Chairman Hsu ­ Hsin-­liang (許信良) after his ­ two-­day visit to Latvia in June 1998, stated that both Latvia’s ruling and opposition parties were willing to enhance bilateral ties with Taiwan (China News, 12 June 1998). 57 Renmin ribao, 14 November 1993. 58 In late March 1997, the new Seimas formed a ­ pro-­Taiwan group (Lianhe bao, 29 August 1997). 59 Ziyou shibao, 16 November 1996. 60 Lithuanian Radio, 19 March 1997, in BBC Monitoring Service: Former USSR, 22 March 1997. 61 By ­mid-­1997, Taiwan had invested only US$45,000 in the Lithuanian economy. 62 ­Itar-­Tass, 2 May 1997. 63 Lianhe bao, 8 September 1991; Ziyou shibao, 8 September 1991. 64 Renmin ribao, 10 September 1991. 65 South China Morning Post, 8 February 1992. 66 Renmin ribao, 1 February 1992. 67 Renmin ribao, 20 February 1992. 68 Renmin ribao, 26 February 1992. 69 Renmin ribao, 4 July 1994. 70 ETA News Agency, 6 July 1993, in BBC Monitoring Service: Former USSR, 12 July 1993. The US embargo was lifted in late March 1994. 71 Rowinski, ‘Polityka Chin’, pp. 10–11. 72 China Post, 30 July 1994. 73 Lianhe bao, 29 July 1994. 74 Lianhe bao, 23 December 1994. 75 Ziyou shibao, 16 November 1996. 76 Renmin ribao, 11 June 2002. 77 Renmin ribao, 14 June 2002. 78 See, for example, President Meri’s assurances to the visiting Li Peng that the Estonian

208    Notes ‘one China’ policy ‘has not changed since 1994 despite the change of government, and will not change in the future’ (China Daily, 11 September 2000). 79 By 1998, Chinese investments in Estonia amounted to 14.1 million kroons (approxi-­ mately US$980,000) of which 76 per cent were in wholesale and retail. By ­mid-­2002, the Estonians had negotiated an oil shale processing plant with the Chinese. They also hoped for cooperation in oil shale chemistry and rare metals processing (Baltic Times, 5 April 2000; ETA News Release, 12 June 2002). 80 Xinhua, 12 June 2002; ETA News Release, 12 June 2002. 81 Lithuanian News Agency, 17 June 2002. 82 Baltic News Agency, 11 June 2002. 83 In 1997, Latvia did not support the declaration on violations of human rights in China at the UN Commission of Human Rights forum. When Li Peng visited Riga in 2000, his hosts did not raise human rights issues. Similarly, during President Jiang’s state visit to Latvia in June 2002, his hosts chose to keep silent on this question. All planned demonstrations against his visit (including one by the Falungong, 法輪功) were discouraged by the Latvian government. 84 Baltic Times, 13 June 2002. 85 Lithuanian Radio, 19 March 1997, in BBC Monitoring Service: Former USSR, 22 March 1997. 86 Xinhua, 4 May 2001, Baltic Times, 20 July 2000. 87 The Lithuanian embassy was opened in Beijing in May 1995, Estonia and Latvia fol-­ lowed suit in August 1997 and July 1998 respectively. 5  The Russian offensive     1 Lianhe bao, 11 September 1991; South China Morning Post, 21 December 1991.     2 On Russia’s early fascination with Taiwan’s economic miracle and its growing foreign reserves, see Vasilii Zakhar’ko and Vladimir Mikheev, ‘Taivan: V seyfakh uzhe 85 milliardov amerikanskikh dollarov, no glavnoye chudo – vperedi’ [‘Taiwan: There Are Already US$85 billion in the Safe, but the Main Miracle is Yet Ahead’], Izvestia, 2 June 1992.     3 Eugene Bazhanov and Natasha Bazhanov, ‘Russia and Asia in 1992: a Balancing Act’, Asian Survey, 33, 1, January 1993, pp. 94–95.     4 ‘I v Rossii vozmozhno ekonomicheskoye chudo’ [‘An Economic Miracle is Possible in Russia as Well’], Izvestia, 15 April 1992.     5 Ni Xiaoqian and Li Fanghua, ‘Eluosi yu Taiwan guanxi’ [‘Relations Between Russia and Taiwan’], in Lu, Zhongguo duiwai guanxi zhong de Taiwan wenti, p. 224.     6 The immediate media reaction in Russia to the rice donation was very positive. See S. Agafonov, ‘Risovy dar Taivanya’ ‘[Taiwan’s Rice Gift’], Izvestia, 11 January 1992. Unfortunately, the donation’s propaganda effect was ruined by the Russian authorities’ claim – denied by Taipei – that Taiwanese rice was contaminated with toxic chemicals similar to those used by the USA during the Vietnam War (Zili zaobao, 12 January 1992; Qingnian ribao, 29 January 1992; Jeremy Mak, ‘Taiwan Finds Diplomatic Gold Mine in Relations with New C.I.S. Nations’, the Wall Street Journal, 7 Febru-­ ary 1992). The Russian media speculated that Taiwan bought the rice from Vietnam. Some Russian academics suspected that highly placed individuals in the Kremlin had sold the Taiwanese rice in Western Europe and replaced it with cheaper rice from Central Asia, while pocketing the difference (Zhongyang ribao, 12 June 1995).     7 Zhongguo shibao, 19 September 1992. Lobov worked under the future Russian president in the Sverdlovsk Oblast’ Communist Party committee (Alexander Lukin, The Bear Watches the Dragon: Russia’s Perceptions of China and the Evolution of Russian–Chinese Relations Since the Eighteenth Century (Armonk and London: M.E. Sharpe, 2003), p. 269).     8 Peter Ivanov, ‘Russian–Taiwanese Relations’, p. 34

Notes    209     9 Ministry of Foreign Affairs, Zhongwai tiaoyue jipian, 1991–1992 [Treaties Between the Republic of China and Foreign States, 1991–1992], 9 (Taipei: Zhonghua Minguo Waijiaobu, 1994), pp. 236–237; Zhongyang ribao, 10 September 1992; Lukin, The Bear Watches the Dragon, p. 269.   10 Zhongyang ribao, 17 September 1992.   11 See, for example, Hsieh, ‘Pragmatic Diplomacy’, p. 67.   12 Zhongyang ribao, 12 June 1995.   13 Julian Baum, ‘Friends from Afar’, Far Eastern Economic Review, 24 September 1992, p. 17.   14 Lukin, The Bear Watches the Dragon, p. 269.   15 Reuters, 8 September 1992.   16 Reuters, 8 September 1992; Izvestia, 9 September 1992.   17 In April–September 1993 and June–August 1996, Lobov stepped down from the MTC Chairmanship to assume duties of a Vice Premier. He resumed his leader-­ ship of the MTC after losing ­ vice-­premierships. In June–August 1996, Lobov was replaced by Leonid Zapalsky, former First Deputy Minister of Russia’s Ministry of Economy (1991–1995) (interview with a Russian diplomat, Representative Office for the MTC, Taipei, 28 September 2000).   18 Decree ‘On Relations Between the Russian Federation and Taiwan’, in Yu.M. Galen-­ ovich, Moskva–Pekin, Moskva–Taibei [Moscow–Beijing, Moscow–Taipei] (Moskva: Izografus, 2002), pp. 602–603.   19 Reuters, 16 September 1992.   20 Izvestia, 24 September 1992.   21 Zhongguo shibao, 16 April 1993; Izvestia, 10 July 1993; Lianhe bao, 12 July 1993.   22 The draft agreement on aviation exchanges was signed in July 1993, while the final protocol on aviation was concluded in March 1997 (Zhongguo shibao, 8 March 1997). See also ‘Memorandum of Understanding between the Taipei–Moscow Eco-­ nomic and Cultural Coordination Commission and the Moscow–Taipei Economic and Cultural Coordination Commission “On Establishment of Airlink” ’, in Ministry of Foreign Affairs, Zhongwai Tiaoyue Jipian, 1991–1992, 9, p. 242.   23 The LDPR’s ­ pro-­Taiwan stance was made public after the party became the major opposition group in the State Duma, winning 78 of the 450 seats during the Decem-­ ber 1993 elections.   24 Lukin, The Bear Watches the Dragon, p. 288.   25 The LDRP proposed the Russian Taiwan Relations Act as early as 1996, but offi-­ cially announced it in April 1997. Renmin ribao, 4 June 1998; Zhongyang ribao, 5 June 1998.   26 Two-to-four Duma members from the Communist Party joined Zhirinovsky’s del-­ egation (interview with Luo ­ Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002).   27 Zhongyang ribao, 10 September 1995.   28 Gongshang shibao, 26 April 1995.   29 Every year, Taipei invites up to 20 Duma members to Taiwan and three or four jour-­ nalists (interview with Luo ­ Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002). Between 1992 and 1995, some 100 Russian journalists visited Taiwan as guests of the ROC Government Information Office (Yevgeni Bazh-­ anov, ‘Russia and Taiwan’, Berichte des Bundesinstituts fur ostwissenschaftliche und internationale Studien, 29, 1996, p. 27).   30 Russian sinologists obtained grants from the Chiang ­ Ching-­kuo Foundation for International Scholarly Exchanges, the Pacific Cultural Foundation and the Chinese Centre of the National Central Library in Taiwan. The formal student exchange programme between Russia and Taiwan began in June 1998. It envisaged that five college students per year from both Russia and Taiwan would participate in the exchange. A further student exchange programme (initiated in May 1998) provided

210    Notes for five more students per year from both Taiwan and Russia. There are also ­  school-­to-school student exchange programmes. Russian scientists’ employment in Taiwan was based on ‘The Memorandum of Understanding on the Cooperative Relations in Engineering Science and Technological Development between the National Science Council, ROC and the USSR Academy of Engineering’, signed in  November 1991 (Ministry of Foreign Affairs, Zhongwai tiaoyue jipian, 1991–1992, p. 234). Many Russian academics are currently employed in the leading Taiwanese universities.   31 ­ Russian-­language broadcasting began in March 1994. It was suspended several months later for financial reasons, but resumed in April 1997. Its ­ one-­hour pro-­ gramme ‘Voice of Free China’ featured news about Taiwan and Asia, Chinese music and Chinese language courses. For an example of the TMC-sponsored academic pub-­ lication see, Yu.M. Galenovich, Samoutverzhdeniye synovey Taivanya [Self-assertion of Taiwanese Sons] (Moskva: Muravey, 2002).   32 For an example of a Russian journalist’s reflections on Taiwan, see Vladimir Mikheev, Khozhdenie na Taivan: ‘ostrovnaya tzivilizatziya’ glazami russkogo zhur-­ nalista [Walking on Taiwan: ‘Island Civilization’ Through the Eyes of the Russian Journalist] (Moskva: Mezhdunarodnye otnosheniya, 2000).   33 For each course, about 10 to 12 places were reserved for Russians.   34 In 1992, only 600 Taiwanese visited Russia. Five years later, their number increased to 10,000. In 2001, the number of Taiwanese visiting Russia exceeded 10,000, while about 2,600 Russians visited Taiwan. In 2004, Taiwanese tourists’ arrivals in Russia rose to 14,000 (13,000 in 2005), while Russians in Taiwan rose to 3,000.   35 By ­mid-­2002, there were 140 Taiwanese students in Russia, 60 of whom studied in Moscow and 60 in St Petersburg. Taipei offered 15 scholarships for students from the CIS to study Chinese language in Taiwan. At least 12 of these scholarships went to the Russian students (interview with Luo ­Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002). In 2006, the number of Taiwanese students in Russia rose to 150, while 50 Russian students studied in Taiwan (Vremya Novostei, 14 December 2006).   36 See, for example, A.V. Ostrovsky, Taivan nakanune 21 veka [Taiwan Entering the 21st Century] (Moskva: ‘Vostochnaya literatura’ RAN, 1999). Many of the Russian publications on Taiwan are funded by the Taiwanese office in Moscow.   37 Interview with a GIO officer, Taipei, 24 May 1999.   38 Zhongyang ribao, 7 October 1997.   39 Alexander Lukin, The Bear Watches the Dragon, p. 299.   40 Laurie Underwood, ‘Go East, Young Entrepreneur’, Free China Review, 42, 12, December 1992, p. 6.   41 By the end of 2005, Russia’s contracted ­ non-­financial investment in China stood at US$1.4 billion and a utilized amount at US$540 million (Ministry of Economic Affairs, Jingmao nianbao, 1999–2000: Ouzhou bian [Economic and Trade Yearbook: Europe] (Taipei: Jingjibu Guoji Maoyiju and Zhonghua Minguo Duiwai Maoyi Fazhan Xuehui, 1999), p. 325; China Internet Information Centre. Online, available at: www.china.org.cn/english/features/fmar/165930.htm (accessed 12 August 2006)). To facilitate investments, Taipei floated the idea of setting up an industrial park in late 2000. As in the Czech and Polish cases, the idea never left the drawing board. By ­mid-­2002, there were only a few cases of Taiwanese investments in Russia, most in computer technology, while Russia invested in two companies in Taiwan, although several others operated on the island through joint ventures. By 2005, there were about 10–20 Taiwanese companies with local offices in Russia (most in Moscow), which imported products from Taiwan (interview with Luo ­ Jin-­ru, Secretary, Rep-­ resentative Office for the TMC, Moscow, 29 August 2002; Ministry of Economic Affairs, Eluosi touzi huanjing jianjie [Introduction to Russia’s Investment Environ-­ ment] (Taipei: MOEA, September 2005), p. 34).

Notes    211   42 ROC MOEA. Online, available at: cus93.trade.gov.tw/english/FSCE/FSC0011E.ASP (accessed 7 September 2006).   43 Zhongyang ribao, 9 September 1992. By the early 2000s, however, Taiwanese duties on imports were lower than Russia’s (3–4 per cent against an average of 10–11 per cent), which could partly explain the trade deficit (Zhan Manrong, Eluosi jingji fazhan xinju yu TaiE jingmao hezuo celue zhi yanjiu: Qimo baogao [Research on New Developments in Russia’s Economic Development and the Strategy of Taiwan-­ ese–Russian Economic Cooperation: Final Report] (Taipei: Taiwan Jingji Yanjiuy-­ uan, December 2003), pp. 4–14).   44 ‘Agreed Minutes Between Taipei–Moscow Economic and Cultural Coordination Commission (TMECCC) and Moscow–Taipei Economic and Cultural Coordina-­ tion Commission (MTECCC) on the Matter of Marine Navigation’, in Ministry of Foreign Affairs, Zhongwai Tiaoyue Jipian, 1997–1998, p. 234.   45 Izvestia, 10 July 1993.   46 Until 2001, Taipei extended loans to Russia via the EBRD to the amount of US$1 million, the highest amount among all ­post-­communist states (Taipei China and the EBRD, p. 24).   47 Guocang Huan, ‘The New Relationship with the Former Soviet Union’, Current History, 91, 566, September 1992, p. 255.   48 Lianhe bao, 7 September 1992.   49 Zhongyang ribao, 21 December 1992.   50 Zhongyang ribao, 21 December 1992.   51 Bazhanov, ‘Russia and Taiwan’, pp. 13–14. See also S. Bilveer, ‘East Asia in Rus-­ sia’s Foreign Policy: a New ­Russo-­Chinese Axis?’, The Pacific Review, 11, 4, 1998, pp. 490–493; Jeanne L. Wilson, Strategic Partners: ­Russian-­Chinese Relations in the ­Post-­Soviet Era (London and New York: M.E. Sharpe, 2004), pp. 28–30.   52 ­ Itar-­Tass, 19 October 1994. Vladimir Miasnikov argues that Taiwan’s independence would violate the Yalta agreements and undermine the legality of Mongolia’s independ-­ ence and the status of the Kuril Islands (Vladimir S. Miasnikov, ‘Russian–Chinese Rela-­ tions and Taiwan’, Tamkang Journal of International Affairs, 1, 1, March 1997, p. 29).   53 Rajan Menon, ‘The Strategic Convergence between Russia and China’, Survival, 39, 2, Summer 1997, pp. 102–109; Li Jingjie, ‘Pillars of the ­Sino-­Russian Partnership’, Orbis, 44, 4, Fall 2000, pp. 528–530.   54 Gilbert Rozman claims that a shared worldview is the foundation of the ­Sino-­Russian strategic partnership (Gilbert Rozman, ‘­Sino-­Russian Relations: Mutual Assessment and Predictions’, in Sherman W. Garnett (ed.), Rapprochement or Rivalry? Russia– China Relations in a Changing Asia (Washington, DC: Carnegie Endowment for International Peace, 2000), p. 151).   55 See, for example, South China Morning Post, 19 July 2000.   56 Andrej Grachev, A New Dawn is Blazing in the East, Moskovskiye Novosti, 31, 3–10 August 1997, in ­FBIS-­SOV-97–219. See also Alexei D. Voskressenski, ‘The Percep-­ tions of China by Russia’s Foreign Policy Elite’, Issues and Studies, 33, 3, March 1997, pp. 10–12.   57 ­ Itar-­Tass, 19 October 1994. This turned out to be not entirely true. Currently, the MTC office in Taipei openly issues visas. It does so in the name of the Russian Con-­ sulate in Osaka.   58 Rossiyskaya Gazeta, 16 September 1997, in ­FBIS-­SOV-97–259.   59 ­ Itar-­Tass, 18 December 1995, in ­FBIS-­SOV-95–243.   60 Interfax, 20 March 1996.   61 Zhongguo shibao, 25 October 1998.   62 Xinhua, 22 September 1994, in ­FBIS-­CHI-95–185.   63 ­ Itar-­Tass, 6 February 1996, in ­FBIS-­SOV-96–26. During the Taiwanese presidential elections in March 2000, Moscow reiterated its unchanged support for the PRC’s efforts to ‘peacefully unite the country’ (Interfax, 18 March 2000).

212    Notes   64 ­ Itar-­Tass, 13 February 1996, in ­ FBIS-­SOV-96–31; Interfax, 11 March 1996. Some Russian commentators considered the potentially disastrous impact of the mili-­ tary conflict in the Taiwan Strait on Russia’s economy. See, for example, Anatoliy Kurganov, ‘Like: Cures Like. PRC Starts Launching Rockets, While the United States Sends Aircraft Carriers to Taiwan’, Rossiyskaya Gazeta, 13 March 1996, in ­FBIS-­SOV-96–50; Gennadiy Chufrin, ‘Russia and the China–China Crisis’, Mosko-­ vskiye Novosti, 24–31 March 1996, in ­FBIS-­SOV-96–85-S.   65 Wishnick suggests that in exchange for Moscow’s reaffirmation of its ‘one China’ principle, Beijing supported Russian membership in the APEC (Elizabeth Wishnick, Mending Fences: the Evolution of Moscow’s China Policy from Brezhnev to Yeltsin (Seattle and London: University of Washington Press, 2001), p. 131).   66 ­ Itar-­Tass, 14 March 1996, in Foreign Broadcasts Information Service, Arms Control, 5, 1996. For an analysis of Moscow’s response to the 1996 crisis, see Tai ­Wan-­chin, ‘Moscow–Beijing Security Relations: From the Perspective of Taipei after the 1996 Taiwan Straits Crisis’, Tamkang Journal of International Relations, 1, 1, March 1997, pp. 48–51.   67 ­ Itar-­Tass, 3 August 1999.   68 Ming pao, 11 December 1999, in ­FBIS-­CHI-1999–1211.   69 Lam, ‘Singing a Different Tune to the US’. Alexander Lukin suggests that ‘in the case of a serious conflict initiated by the PRC, Russian [public] sympathies would probably be on the side of Taiwan’ (Lukin, The Bear Watches the Dragon, p. 293).   70 Xie Zhongliang, ‘Taiwan anquanju lianE fanggong?’ [‘Taiwan’s Security Bureau United with Russia against China?’], Yazhou zhoukan, 14–20 September 1998, pp. 20–25.   71 Zhongguo Tongxun She, 24 November 1998, in ­FBIS-­CHI-98–331.   72 Ming pao, 20 January 1992; Lianhe bao, 22 January 1992.   73 Renmin ribao, 6 March 1992; Business Times (Singapore), 11 March 1992.   74 Yurii Savenkov, ‘Moskva ne sobiraetsya prodavat’ oruzhie Taivanyu’ [‘Moscow Does Not Intend to Sell Arms to Taiwan’], Izvestia, 13 March 1992; Alexander A. Sergounin and Sergey V. Subbotin, ‘Russian Arms Transfers to East Asia in the 1990s’, Stockholm International Peace Research Institute Research Report, 15, 1999, p. 18.   75 Ecotass, 23 March 1992.   76 South China Morning Post, 23 June 1992; Julian Baum, ‘Guns for Butter’, Far Eastern Economic Review, 9 July 1992, pp. 8–9.   77 Zhongguo shibao, 23 June 1992. The Russian media made no mention of any arms talks. See, for example, Nikolai Buryga and Sergei Agafonov, ‘Nashi admiraly na Taivanye’ [‘Our Admirals in Taiwan’], Izvestia, 10 July 1992.   78 Reuters, 8 September 1992; Business Taiwan, 21 September 1992.   79 South China Morning Post, 24 August 2000. For alternative calculations, see Alex-­ andr V. Nemets and John L. Scherer, ­Sino-­Russian Military Relations: The Fate of Taiwan and the New Geopolitics (Unknown: Scherer and Nemets, 2000), pp. 4–5.   80 Sherman Garnett, ‘Challenges of the ­Sino-­Russian Strategic Partnership’, Washing-­ ton Quarterly, 24, 4, Autumn 2001, p. 45. For an analysis of ­Sino-­Russian military relations, see also Stephen J. Blank, ‘­Russo-­Chinese Military Relations and Asian Security’, Issues and Studies, 33, 11, November 1997, pp. 58–94; Robert H. Don-­ aldson and John A. Donaldson, ‘The Arms Trade in Russian–Chinese Relations: Identity, Domestic Politics, and Geopolitical Positioning’, International Studies Quarterly, 47, 2003, pp. 709–732.   81 Garnett, ‘Challenges of the ­Sino-­Russian Strategic Partnership’, p. 52.   82 Interfax, 18 April 1997, in ­ FBIS-­UMA-108. See also Stephen Blank, ‘Which Way for ­Sino-­Russian Relations?’, Orbis, 42, 3, Summer 1998, p. 358.   83 Gennadj Chufrin, ‘Russia and the ­ China-­China Crisis’, Moskovskije Novosti, 12, 24–31 March 1996, in ­FBIS-­SOV-96–85-S.

Notes    213   84 Evgenij Bazhanov, ‘Brothers in Arms – Brothers for Ever: Should We Sell Military Equipment to China?’, Obshchaja Gazeta, 31, 7–13 August 1997, in ­ FBIS-­TAC97–224.   85 See, for example, Stephen Blank and Alvin Z. Rubinstein, ‘Is Russia Still a Power in Asia?’, Problems of ­Post-­communism, 44, 2, March–April 1997, p. 42.   86 The ROC media reported on Taipei’s intention to purchase 20 ­ Su-­37s as training fighters to be used in exercises to test their air force capabilities; Moscow denied these reports (Asiaweek, 10 October 1997, p. 9).   87 Zili zaobao, 21 February 1994 and 30 May 1994.   88 Ivanov, ‘Russian–Taiwanese Relations’, p. 53.   89 Five years later, Chen invited the Academy’s President to his Presidential inaugura-­ tion ceremony.   90 Central News Agency, 12 January 2000, in ­FBIS-­CHI-2000–11.   91 Lifa Yuan Gongbao, 84, 6, January 1995, p. 438.   92 Lifa Yuan Gongbao, 84, 13, March 1995, pp. 91–92; 24, April 1995, p. 149.   93 Lianhe bao, 23 September 1998; China News, 25 September 1998. Taiwanese media reaction to Taipei’s bowing to Russian blackmail was negative (Ziyou shibao, 15 January 2000).   94 Central News Agency, 27 October 1999.   95 Democratic Progressive Party White Paper on Foreign Policy for the 21st Century, 28 November 1999, Taiwan Documents Project. Online, available at: www.taiwan-­ documents.org/dpp02.htm (accessed 19 March 2004).   96 Taipei Times, 24 November 2002. The majority of the officials staffing the TMC bureau in Moscow, however, spoke Russian fluently. In ­mid-­2002, for example, out of 16 staff members, 11 spoke fluent Russian. In all of MOFA, about 20 ROC diplomats were fluent in Russian. Taipei began sending its diplomats to Moscow for language train-­ ing in 2000 (interview with Luo ­Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002; interview with Keng ­ Chung-­yung, Second Secretary on Home Assignment, Department of West Asian Affairs, MOFA, Taipei, 29 August 2006).   97 Zhongguo shibao, 6 June 2000.   98 Zhongguo shibao, 4 November 2000.   99 Zhongguo shibao, 18 June 2001; ­Itar-­Tass, 27 June 2001. 100 Aleksandr Lomanov, ‘S kommunizmom ne boremsya, Rossii ne soprotivlyaemsya’ [‘We Don’t Fight Communism, We Don’t Oppose Russia’], interview with Chen ­Shui-­bian, Vremya Novostei, 20 May 2002. 101 Arkady Borisov, ‘Russia and Taiwan Are Tying Closer Bilateral Ties’, Taipei Times, 13 November 2000; Zhongguo shibao, 4 November 2000. 102 Lianhe bao, 4 May 2001. 103 Lianhe bao, 24 February 2002; Zhongguo shibao, 6 April 2002. 104 Nezavisimaya Gazeta, 15 February 2001. 105 Lianhe bao, 5 January 2002. 106 Zhongguo shibao, 28 July 2002; Lianhe bao, 28 July 2002. Chang ­ Chun-­hsiung stepped down as the TRA’s President in January 2006 in order to assume the chairmanship of the Straits Exchange Foundation (海峽交流基金會), Taiwan’s ­semi-­official body to hold direct talks with China. Wu ­ Rong-­i took up the TRA’s presidency. In July 2006, he also became the Chairman of the Taiwan Futures Exchange (臺灣期貨交易所). 107 Lianhe bao, 29 July 2002. 108 Central News Agency, 7 September 2002. The inclusion of Taiwanese ministers in the delegation was possible because they attended the APEC meeting. The Russian side hoped that the visit would bring Taiwanese investments. They proposed eight investment projects to the Taiwanese delegates, but none was taken on. Subsequently, no Taiwanese ministers managed to visit Russia, allegedly because of Moscow’s ban on visits above the level of department directors. On rare occasions, vice ministers

214    Notes were issued visas (interview with a Russian diplomat, Representative Office for the MTC, Taipei, 17 June 2005). 109 Zhongguo shibao, 18 September 2002. The formal aviation agreement was indeed very close to finalization. The Taiwanese side’s insistence on clarifying a few minor issues delayed the signing of the agreement, indefinitely as it seems. 110 ­ Itar-­Tass, 27 August 2002. 111 Taiwan News, 28 October 2002. 112 China Airlines wanted to carry Taiwanese passengers from Taipei via Moscow to Frankfurt; it did not seek the right to pick up new passengers in Russia. 113 Taipei Times, 13 September 2003. 114 Coinciding with the mission, the TRA began issuing bulletins (台俄協會通), five of which appeared before being replaced by a glossy Chinese-language quarterly, Taiwanese–Russian Journal (台俄季刊), in summer 2006. 115 Previously, both companies communicated via LUKOil’s Singapore office (Ziyou shibao, 11 September 2004). There was no follow up, however, and Taiwan is yet to import Russian oil. 116 A Russian earthquake relief mission en route to Taiwan was forced to make a lengthy detour over Siberia because China refused to allow the rescuers’ plane to pass through its space. The detour delayed the arrival of the Russian team by 12 hours. The Russian Foreign Ministry was quoted as saying that China’s political con-­ siderations were unnecessary because Russia’s move was a purely humanitarian act. Russian radio and television stations provided extensive coverage of the quake dis-­ aster and carried announcements that the Russian government would send a rescue team to help in the international relief effort (Zhongyang ribao, 3 October 1999). Cynically, China thanked Russia and all nations participating in the rescue effort for their assistance. 117 Zhongguo shibao, 6 May 2000. 118 Straits Times, 10 July 2000; Mark Galeotti, ‘Putin Looks to the Orient’, Jane’s Intel-­ ligence Review, December 2000; Constantine C. Menges, ‘What’s Really on the Table’, Washington Post, 29 July 2001. 119 The text of the Treaty published by Xinhua, 16 July 2001, in BBC Monitoring Service: Asia Pacific, 16 July 2001. 120 Pavel Felgenhauer, ‘Isolating Uncle Sam’, Moscow Times, 19 July 2001. 121 Stockholm International Peace Research Institute, ‘Imported Weapons to China in 1989–2005’. Online, available at: www.sipri.org/contents/armstrad/access.html#chi (accessed 13 August 2006). 122 John Pomfret, ‘China to Buy 8 More Russian Submarines’, the Washington Post, 25 June 2002. 123 Zhongguo shibao, 9 June 2001. 124 Bobo Lo, ‘The Long Sunset of Strategic Partnership: Russia’s Evolving China Policy’, International Affairs, 80, 2, 2004, p. 30. 125 South China Morning Post, 28 November 2002. 126 Pravda ­On-­line, 24 August 2002; see also South China Morning Post, 25 August 2002. 127 ‘Joint Declaration of the Russian Federation and the People’s Republic of China, the Kremlin, Moscow, 27 May 2003’. Online, available at: www.shaps.hawaii.edu/fp/ russia/20030527_r_c_js.html (accessed 16 August 2006). 128 South China Morning Post, 17 October 2004. 129 Interfax, 19 March 2004. 130 Interview with a Russian diplomat, Representative Office for the MTC, Taipei, 17 June 2005. 131 Interview with Sergey N. Gubarev, Representative, Representative Office for the MTC, Taipei, 29 August 2006. 132 Mark Magnier and Kim Murphy, ‘An Exercise Fit for Sending U.S. a Message’, the Los Angeles Times, 17 August 2005; Ivan Safronov and Andrey Ivanov, ‘Between

Notes    215 a Rock and a Hard Place: China Wants to Bluff Taiwan with the Russian Army’, Kommersant, 17 March 2005; Elizabeth Wishnick, ‘China and Russia: Brothers in Arms?’, South China Morning Post, 23 August 2005. People’s Liberation Army ­Major-­General Peng Guangqian (彭光謙) insisted, however, that the war games were to ‘frighten the three evil forces of ethnic separatism, religious extremism and international terrorism’ (South China Morning Post, 24 August 2005). The Taiwan-­ ese press considered the war games to be partly targeted at Taiwan (Lianhe bao, 19 August 2005; Zhongyang ribao, 19 August 2005). 133 Ziyou shibao, 26 July 2006. See also Aleksander Lomanov’s interview with Sergei Gubarev, Vremya Novostei, 14 December 2006. The Putin administration’s consent to Taipei’s office in Vladivostok followed the opening of China’s consulate general in that city in March 2005. 134 In October 2004, Hsinchu Science Park signed a cooperative agreement with the Moscow State University Science Park. 6  China’s Balkan fortress   1 For more details on Taiwanese–Central European economic relations, see Drifte, ‘European and Soviet perspectives’, p. 1120; Bi and Zhao, Dongou guoqing fenxi yu woguo duiwai guanxi, pp. 273–277.   2 However, it was only in October 1991 that MOEA permitted Albania, Bulgaria and Romania (alongside the Soviet Union) to apply for loans from the IECDF (Zhongyang ribao, 17 October 1991).   3 Reuters, 5 July 1990; Asian Wall Street Journal, 16 July 1990.   4 Jingji ribao, 28 August 1990.   5 Zhongguo shibao, 27 October 1990. The Taiwanese side soon abandoned the idea of such landings due to the foggy weather in Belgrade.   6 Zili zaobao, 6 July 1990.   7 Lianhe bao, 26 December 1990.   8 Zili zaobao, 4 December 1990.   9 Jingji ribao, 1 June 1991. 10 Jingji ribao, 26 July 1991. 11 Ministry of Economic Affairs, Jingmao nianbao, 1994–1995 [Economic and Trade Yearbook, 1994–1995] (Taipei: Jingjibu Guoji Maoyiju and Zhonghua Minguo Duiwai Maoyi Fazhan Xuehui, 1994), p. 416. 12 Lianhe bao, 8 June 1993. 13 Lianhe bao, 8 June 1993. 14 Lianhe bao, 7 June 1993. 15 Jingji ribao, 11 August 1992. 16 Qingnian ribao, 8 November 1992. 17 Ziyou shibao, 15 December 1998. 18 Zhongguo shibao, 30 August 1990. 19 Zhongguo shibao, 29 May 1991. 20 Lianhe bao, 28 March 1992. The ROC authorities were surprised at the speed at which Sofia agreed to conclude the aviation agreement. The negotiations were extremely short (lasting for a day or two) and the Bulgarians did not consider the China factor when making their decision. 21 Organisation for Economic Cooperation and Development, ‘Transition at a Glance’, p. 45. 22 During that meeting in Budapest, the Bulgarian chapter was admitted into the League (Qingnian ribao, 18 August 1992). 23 Lianhe bao, 25 January 1993. 24 Central News Agency, 14 September 1995, in ­ FBIS-­CHI-95–178. Sofia and Taipei never reached an agreement on sisterhood ties.

216    Notes 25 Xinhua, 10 March 1999. 26 Lianhe bao, 7 March 1997. 27 Zuo and Li, ‘Zongdongou guojia yu Taiwan de guanxi’, p. 208. 28 Jingji ribao, 2 July 1995. 29 Reuters, 17 December 1996. 30 Rompres, 1 October 1998. 31 For a discussion of ­ Sino-­Balkan relations during the Cold War, see Elez Biberaj, Albania and China: a Study of an Unequal Alliance (Boulder: Westview Press, 1986); Harish Kapur, Distant Neighbours: China and Europe (London and New York: Pinter Publishers, 1990), especially pp. 30–41, 88–91, 111–117, 137–141; Mark Hunter Madsen, ‘The Uses of Beijingpolitik: China in Romanian Foreign Policy since 1953’, East European Quarterly, 16, 3 (September 1992), pp. 277–309. 32 Robert R. King, ‘Rumania and the ­ Sino-­Soviet Conflict’, Studies in Comparative Communism, 5, 4, Winter 1972, p. 392; A. Ross Johnson, ‘Yugoslavia and the ­Sino­Soviet Conflict: the Shifting Triangle, 1948–1974’, Studies in Comparative Commu-­ nism, 7, 1–2, Spring/Summer 1974, pp. 201–202. 33 Alyson J.K. Bailes, Themes of ­Sino-­East European Relations as Seen in the Pattern of Visits: 1 January 1986–30 December 1989 (London: Royal Institute of International Affairs, 1990), pp. 4–5 and 28. 34 Czeslaw Tubilewicz, ‘Chinese Press Coverage of Political and Economic Restructur-­ ing of East Central Europe’, Asian Survey, 37, 10, October 1997, pp. 939–940. 35 Czeslaw Tubilewicz, ‘China and the Yugoslav Crisis, 1990–1994: Beijing’s Exercise in Dialectics’, Issues and Studies, 33, 4, April 1997, pp. 97–103. 36 Octavian Stireanu, ‘Bucharest as ­ Go-­Between for Washington and Beijing’, Azi, 10 September 1997, in ­FBIS-­EEU-97–255. 37 RTB TV, 15 March 1997, in ­ FBIS-­EEU-97–74. Crude oil imports, however, were halted in 1998 due to the failure of Yugoslavia’s idle industry, recovering from years of sanctions, to meet its contract obligations. 38 Beijing’s generosity, however, was not limitless. In 1996, for example, Tirana failed to secure China’s agreement to reduce Albanian debt. Constantinescu was firmly rebuked when he lobbied for the participation of the Romanian company in the second stage of the construction of the Pucheng ­thermo-­electric power station. Finally, despite China’s good will, the barter deal with Yugoslavia fell through. 39 Xinhua, 21 May 1996, in ­FBIS-­CHI-96–100. 40 Xinhua, 14 September 97, in ­FBIS-­CHI-97–257. 41 Xinhua, 14 March 97, in ­FBIS-­CHI-97–51. 42 Sunday Telegraph, 10 March 1996. 43 Edo Pajk, ‘­Slovene-­Chinese Love’, Mladina, 22 October 1996, in ­FBIS-­EEU-96–207. 7  Macedonian breakthrough     1 Chinese Vice Foreign Minister, Dai Bingguo (戴秉國), in ­ mid-­May 1992, visited both republics and signed communiqués on the establishment of diplomatic rela-­ tions.     2 Renmin ribao, 13 October 1993.     3 Xinhua, 8 June 1996, in ­FBIS-­CHI-96–120.     4 Xinhua, 8 June 1997, in ­ FBIS-­CHI-97–159; Xinhua, 10 June 1997, in ­ FBIS-­CHI97–161. Gligorov’s positive impressions of China were not overshadowed by the hiccups that marred his visit. The First Couple’s baggage was lost by Austrian Air-­ lines and Gligorov attended the ceremony in his honour wearing his grey suit (in which he travelled for over 13 hours), instead of the required black. The luggage was never found. The second embarrassment was the Serbian language translator, pro-­ vided by the Chinese side (G. Mihajlovski, ‘The President Could Have Been Lost As Well’, Vecer, 12 June 1997, in ­FBIS-­EEU-97–166).

Notes    217     5 In ­mid-­1995, the Chinese Red Cross Society donated US$50,000 to Macedonia. In February 1997, Beijing provided Skopje with a humanitarian assistance package worth US$130,000, intended to help alleviate Macedonia’s economic losses, which resulted from the international economic sanctions against Yugoslavia and the burden of accepting Bosnian refugees.     6 Macedonian Information Centre, 10 June 1997, in ­FBIS-­EEU-97–162.     7 Nevenka Mitrevska, ‘Close Relations Require Economic Confirmation As Well’, Nova Makedonija, 25 June 1997, in ­FBIS-­EEU-97–197.     8 Zhongyang ribao, 2 March 1999.     9 His secret visit almost led to a major international incident as a ­six-­seat business jet, carrying the Taiwanese delegation from Vienna to Skopje, encountered a severe ice storm when flying near Belgrade. The officials, carrying no visas, worried about being forced to make an emergency landing. Fortunately for them, and Taiwanese–Macedo-­ nian diplomatic ties, the plane withstood the storm (China News, 29 January 1999).   10 His commission must have been sufficiently large, as he later claimed it for construc-­ tion of the philharmonic hall and sports hall. Tupurkovski never reported the sum he received from Taiwan to the tax authorities (Bosnian Serb News Agency, SRNA, 28 July 1999, in BBC Monitoring Service: Central Europe and Balkans, 30 July 1999).   11 Radio Macedonia, 29 January 1999, in BBC Monitoring Service: European–Politi-­ cal, 30 January 1999.   12 Radio Macedonia, 1 February 1999, in BBC Monitoring Service: European–Politi-­ cal, 1 February 1999.   13 Reuters, 28 January 1999.   14 Reuters, 1 February 1999.   15 ‘Editorial’, the Free China Journal, 11 February 1999.   16 Nova Makedonija, 29 January 1999, in BBC Monitoring Service: Central Europe and Balkans, 1 February 1999; Zhongguo shibao, 1 February 1999; South China Morning Post, 30 January 1999. According to Zhongguo shibao, Tupurkovski alleg-­ edly referred to some ‘agreement’ by which Taipei undertook to provide Skopje with US$220 million during the first four years of diplomatic relations. It also pledged to provide US$20 million of financial assistance yearly to balance governmental books, US$30 million for technological development and US$30 million for social welfare programmes (Zhongguo shibao, 4 February 1999). Taiwanese academics claim that Taipei’s financial commitments to Skopje included:

1 US$300 million in grants during 1999–2003; 2 an annual technical aid of US$30 million; 3 US$15 million (presumably) in loans for Macedonian SMEs granted through the EBRD; and 4 up to US$2 billion Macedonians could earn through becoming a major transit point for Taiwan’s trade with Europe.

(Yan Anlin and Huang Zhongping, Minjindang: Duiwai guanxi yanjiu [An Analy-­ sis of the Democratic Progressive Party’s Foreign Relations] (Taipei: Buffalo Book, 2006), p. 167).   17 China News, 28 January 1999.   18 Lianhe bao, 1 February 1999.   19 Zhongguo shibao, 3 February 1999; Central News Agency, 28 January 1999.   20 Frank Chang, ‘Foreign Minister Hu Emphasises Diplomatic Strides Vital to Sur-­ vival’, the Free China Journal, 5 February 1999.   21 Frank Chang, ‘Macedonian Exchanges to Increase’, the Free China Journal, 11 Feb-­ ruary 1999.   22 Reuters, 27 January 1999; Central News Agency, 27 January 1999, in BBC Monitoring Service: ­Asia-­Pacific, 27 January 1999; see also Zhongyang ribao, 10 February 1999.   23 Xinhua, 28 January 1999.

218    Notes   24 Radio Macedonia, 29 January 1999, in BBC Monitoring Service: European– Political, 30 January 1999; Zhongguo shibao, 1 February 1999.   25 On 12 February, the Macedonian parliament overwhelmingly voted for a resolution (65 votes to 7) approving the establishment of diplomatic ties with Taiwan.   26 The construction of the ­China-­funded hydroelectric power plant continued.   27 Radio Macedonia, 12 February 1999, in BBC Monitoring Service: European–Politi-­ cal, 13 February 1999.   28 Zhongguo shibao, 4 February 1999.   29 In ­ face-­to-face talks with Premier Georgievski, Secretary of State Madeleine Albright regretted that Macedonia did not consult Washington prior to its decision on Taiwan. France reportedly requested Skopje to rethink its Taiwan policy shortly before the UN vote took place. Premier Georgievski denied any foreign government requests to reconsider relations with Taiwan.   30 China News, 9 February 1999.   31 Zhongyang ribao, 25 and 26 February 1999.   32 It was China’s fourth veto since 1971. The earlier veto was in January 1997 against military observers who were to monitor peace accords in Guatemala, which had ties with Taiwan. China reversed its position two weeks later, when Guatemala reportedly promised to cease supporting the ROC’s annual attempts to join the UN. Previously, China twice threatened to veto UN troops to Haiti for the same reason. The move forced the UN Security Council to change the name of the Haiti mission and have the United States and Canada fund the troops.   33 Zhongyang ribao, 27 February 1999.   34 China News, 27 February 1999.   35 Radio Macedonia, 1 March 1999, in BBC Monitoring Service: European–Political, 2 March 1999.   36 Reuters, 11 February 1999 and 25 February 1999.   37 For the account of Hu’s ‘I am a Macedonian’ speech, see Zhongguo shibao, 6 March 1999 and Lianhe bao, 6 March 1999.   38 Lienhe Bao, 12 February 1999.   39 Macedonian TV1, 23 February 1999, in BBC Monitoring Service: Central Europe and Balkans, 26 February 1999.   40 See the interview with Georgievski, Lianhe bao, 1 March 1999.   41 Reuters, 23 February 1999.   42 China News, 4 March 1999.   43 Lianhe bao, 18 February 1999.   44 Reuters, 16 March 1999; China News, 20 March 1999.   45 China News, 10 March 1999; Zhongyang ribao, 10 March 1999. Zhongguo shibao, 13 March 1999. President Lee went as far as saying that the prosperity of the Balkans will be facilitated via Taiwan’s economic assistance for Macedonia (Zhongyang ribao, 13 March 1999).   46 Zhongguo shibao, 27 March 1999; Zhongyang ribao, 13 April 1999. According to Georgievski, the ROC was the only country to make cash donations to Macedonia after the NATO air strikes (Lianhe bao, 7 May 1999).   47 Lianhe bao, 13 April 1999; Zhongyang ribao, 15 April 1999.   48 Zhongyang ribao, 8 June 1999.   49 Zhongyang ribao, 10 June 1999; Zhongguo shibao, 10 June 1999.   50 Zhongguo shibao, 5 August 1999.   51 China News, 9 August 1999.   52 The first batch, totalling 98 Macedonians, arrived in Taiwan for training in early Sep-­ tember 1999. The four-month training programme suffered from a language barrier, as no one in Taiwan spoke Macedonian, and not all trainees could communicate in English. The second batch of trainees never arrived: the programme was suspended following the earthquake of September 1999.

Notes    219   53 China News, 15 February 1999.   54 Lianhe bao, 19 February 1999.   55 Zhongyang ribao, 13 April 1999.   56 TV Crna Gora, Podgorica, 29 May 1999, in BBC Monitoring Service: Europe, 29 May 1999.   57 China News, 7 June 1999; Zhongyang ribao, 9 June 1999.   58 Dow Jones International News, 23 May 1999.   59 Xindao ribao (Hong Kong), 22 June 1999; Zhongguo shibao, 25 June 1999.   60 Zhongyang ribao, 6 August 1999; Taiwan News, 7 August 1999.   61 Lianhe bao, 6 September 1999.   62 Zhongyang ribao, 28 April 1999; China News, 12 May 1999; Zhongyang ribao, 30 May 1999.   63 Zhongguo shibao, 18 April 1999.   64 Zhongguo shibao, 8 June 1999.   65 Straits Times, 15 June 1999.   66 Ziyou shibao, 9 June 1999; Zhongguo shibao 10 June 1999, Zhongyang ribao, 19 June 1999.   67 Zhongyang ribao, 10 June 1999.   68 Central People’s Broadcasting Station, Beijing, 19 June 1999, in BBC Monitoring Service: ­Asia-­Pacific, 22 June 1999.   69 Zhongguo shibao, 5 December 1999.   70 Koha Jone, 2 December 1999, in BBC Monitoring Service: ­Asia-­Pacific, 6 December 1999.   71 Lianhe bao, 4 December 1999.   72 Zhongguo shibao, 4 December 1999.   73 Xinhua, 20 December 1999.   74 Vera Modanu, a former director of the Macedonian Foreign Ministry’s Asian Affairs Department, spoke fluent Mandarin and studied Chinese literature and history in Beijing, from 1973 to 1978.   75 During his Taiwan visit, Trajkovski reportedly received a cold reception from the Tai-­ wanese authorities (Zhongguo shibao, 29 May 2001).   76 Lianhe bao, 16 November 1999; China News, 15 November 1999.   77 A1 TV, Skopje, 21 August 2000, in BBC Monitoring Service: Central Europe and Balkans, 23 August 2000.   78 Central News Agency, 26 May 2000, Zoran Kusovac, ‘Macedonia – Surviving Eth-­ nicity?’, Jane’s Intelligence Review, August 2000.   79 Lianhe bao, 14 May 2000. During the presidential campaign, Tupurkovski revealed that his Agency for Renewal and Development had received US$134 million from Taiwan, used to subsidize businesses, increase pension payments, build apartment blocks and stabilize the budget (Makedonija Denes, 9 September 1999, in BBC Mon-­ itoring Service: Central Europe and Balkans, 11 September 1999).   80 Taiwan News, 14 May 2000.   81 Zhongguo shibao, 29 May 2001.   82 European Bank for Reconstruction and Development, Taipei–China and the EBRD, p. 13.   83 Budgetary expenditures of such a large size usually require reviews by parliamentary ­sub-­committees and the Directorate General of Budget, Accounting and Statistics. It should have been the responsibility of the Premier, not the President, to propose the fund to the Legislative Yuan. It seems that the Foreign Minister was not aware of the scale of the aid until after the ­ad-­hoc press conference, called by President Lee (Taiwan News, 19 June 1999).   84 South China Morning Post, 11 June 1999.   85 Only a few days later, the government came up with the ‘strategic content’ of the President’s fund for Kosovo (Zhongyang ribao, 18 June 1999).

220    Notes   86 Taiwan News, 17 June 1999.   87 Taiwan News, 25 June 2000. Tien and his Macedonian counterpart, Dimitrov, signed two agreements regulating a US$20 million credit line and establishing a US$10 million (US$2.5 million a year over four years) economic development fund, designed to help finance (in loans) Macedonia’s infrastructure construction projects (Zhongyang ribao, 23 June 2000; Yan and Huang, Minjindang, p. 168).   88 By the end of 2000, Skopje received US$400 million in direct foreign investments. However, Taiwan did not feature on the list of the 37 largest investors in Macedonia (Hunya, FDI in ­South-­Eastern Europe in the early 2000s, p. 25).   89 B. Markozanova, ‘Beijing establishes contact with Skopje’, Vecer, 8 December 2000, in BBC Monitoring Service: ­Asia-­Pacific, 11 December 2000.   90 Lianhe bao, 30 January 2001.   91 Zhongguo shibao, 25 May 2001; Asian Wall Street Journal, 28 May 2001.   92 Xinhua, 18 June 2001.   93 The real scale of Taiwan’s financial involvement in the EPZ came to light in the ICDF’s annual report, published in 2005, according to which MOFA provided the ICDF with US$6 million in January 2000 for the EPZ (or Skopje Development and Management Co, Ltd, which was created to prepare the zone’s infrastructure). Of this amount, only US$2.5 million was actually spent. The ICDF returned US$3.5 million to MOFA in April 2003 (TaiwanICDF Annual Report 2004 (Taipei: Interna-­ tional Cooperation and Development Fund, 2005), p. 118). The ICDF still formally manages the EPZ.   94 Central News Agency, 18 July 2001.   95 China Daily, 29 April 2002.   96 Data for 1999–2005 (Development Database on Aid from DAC Members: DAC online. Online, available at: www.oecd.org (accessed 13 October 2006).   97 China Daily, 20 June 2001.   98 Central News Agency, 18 June 2001.   99 Central News Agency, 19 June 2001. After the fourth quarter of 2000, Taiwanese economic growth slowed sharply due to the world economic downturn. In the first two quarters of 2001, the economic growth rate dropped to 0.91 per cent and –2.35 per cent, respectively. The Taiwanese economy contracted in 2001 by 2.18 per cent when compared to 2000 (Government Information Office, The Republic of China Yearbook, Taiwan 2002 (Taipei: Government Information Office, Republic of China, 2002), p. 146); Government Information Office, Taiwan Yearbook 2003 (Taipei: Gov-­ ernment Information Office, Republic of China, 2003), p. 138). 100 Xindao ribao, 22 June 1999. 101 Lianhe bao, 8 May 2000. 102 Bulgarian News Digest, 16 December 2002. 103 Capital Weekly, 4 July 2000. 104 Interview with Winsdon J.H. Hsiao, Section Chief, Department of European Affairs, MOFA, 29 August 2006. 105 Xinhua, 1 July 2000. 106 Xinhua, 26 August 2003. 107 Rompres, 20 August 2003. 108 Interview with Winsdon J.H. Hsiao, Section Chief, Department of European Affairs, MOFA, 29 August 2006. 109 Financial Times, 10 December 1999. 110 Reuters, 6 October 2000. 111 The Asian Wall Street Journal, 10 October 2000. 112 David Hsieh, ‘­Sino-­Yugoslav Relations on the Threshold of Change’, the Straits Times, 31 October 2000. 113 Reuters, 3 December 2000. 114 Xinhua, 9 January 2002.

Notes    221 115 ‘China, Montenegro Forge Diplomatic Ties’, 6 July 2006. Online, available at: www. gov.cn/misc/2006–07/06/content_329253.htm (accessed 14 August 2006). 116 China Daily, 17 June 2000. 117 Xinhua, 15 October 2001. 118 Slovenska Tiskovna Agencija, 29 May 2002. 119 Interview with Luo ­ Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002. 8  Fair-weather friends   1 Renmin ribao, 5 January 1992; Zili zaobao, 27 October 1992.   2 Zhongguo shibao, 20 January 1992.   3 As quoted in Jeremy Mak, ‘Soviet Collapse Allows Taiwan to Lift Profile’, the Asian Wall Street Journal, 3 February 1992.   4 It was not revealed which organ signed the agreement for Ukraine (Zili zaobao, 25 January 1992; Ziyou shibao, 27 January 1992; Zili zaobao, 1 February 1992).   5 Mak, ‘Soviet Collapse Allows Taiwan to Lift Profile’.   6 Qingnian ribao, 19 February 1992; Reuters, 6 and 7 April 1992. The second (and final) shipment of medicines was picked up by the Ukrainian airline in July 1992, marking the first time an aeroplane had flown from the former Soviet state to Taiwan (Zhongguo shibao, 21 August 1996).   7 Grinev was Ukraine’s ­ highest-­ranking visitor to Taiwan; however, he travelled as a representative of the Diaspora Economic Foundation, rather than in his official capac-­ ity (Zili zaobao, 28&29 August 1992; Lianhe bao, 30 August 1992).   8 Reuters, 31 August 1992.   9 Zili zaobao, 1 February 1992. 10 In April 1992, the mayor of Minsk visited Taipei. 11 Reuters, 14 April 1992 and 26 June 1992. 12 Included in Belarus’ planned purchases were, among others, ­fibre-­optical equipment from Taiwan (China Economic News Service, 16 July 1992 & 23 September 1992; Zhongyang ribao, 25 July 1992). 13 Zhongguo shibao, 13 June 1992; Zhongyang ribao, 13 June 1992. 14 Lianhe bao, 25 August 1992; Lianhe bao, 26 August 1992; China Economic News Service, 9 September 1992. 15 Lianhe bao, 9 May 1993. 16 Central News Agency, 29 April 1995, in ­ FBIS-­CHI-95–83; Lianhe bao, 29 April 1995. 17 Lianhe bao, 13 April 1995. 18 Zhongguo shibao, 29 June 1996; Lianhe bao, 20 August 1996. The office in Minsk offered Taipei an opportunity to expand communication with the CIS, as the head-­ quarters of the CIS were located in Minsk. The office, however, proved to be of little importance. By ­ mid-­2002, it was staffed by only three people, while the Taiwanese office in Latvia was staffed by six (interview with Luo ­Jin-­ru, Secretary, Representa-­ tive Office for the TMC, Moscow, 29 August 2002). 19 China Economic News Service, 29 June 1996; Belapan News Agency, 16 July 1996; Central News Agency, 14 February 1997, in ­FBIS-­CHI-97–32. 20 Central News Agency, 23 August 2001. 21 Taipei Times, 4 January 2006. MOFA’s budget constraints also played a role in the closure of the Minsk office (interview with Keng ­ Chung-­yung, Second Secretary on Home Assignment, Department of West Asian Affairs, MOFA, Taipei, 29 August 2006). 22 Zili zaobao, 21 August 1996. 23 ­Ukraina-­Taivan: Inform, 1, November 2001, p. 20.

222    Notes 24 ‘Izvestia’ Interviews Kuchma and Comments on Ukraine’s Situation, in BBC Monitor-­ ing Service: Former USSR, 14 July 1994. 25 Zili zaobao, 21 August 1996. Kiev University and Culture University established ­sister-­ties during Skopenko’s visit to Taipei in January 1993. 26 Interfax, 26 September 1996, in ­ FBIS-­SOV-96–189; South China Morning Post, 22 August 1996; China News, 21 August 1995. Viktor Skopenko met Lien as a Chancel-­ lor of the Taiwan National University, which forged sisterhood ties with the Kiev State University. Skopenko visited Taipei twice, in January 1993 and March 1997 (Lianhe bao, 6 January 1993; Lianhe bao, 21 August 1996; Central News Agency, 12 March 1997, in ­FBIS-­CHI-97–71). 27 China News, 21 August 1996; International Herald Tribune, 21 August 1995; Zhong-­ guo shibao, 21 August 1996. 28 Ziyou shibao, 22 and 23 August 1996. 29 Zili zaobao, 21 August 1996; Ziyou shibao, 22 August 1996; Reuters, 22 August 1996; China News, 23 August 1996. 30 Ziyou shibao, 24 August 1996. 31 Gongshang shibao, 22 August 1996. 32 See, for example, an editorial by Ziyou shibao, 23 August 1996. 33 China News, 24 August 1996. 34 Zili zaobao, 23 August 1996. 35 Jingji Ribao, 12 December 1996; Central News Agency, 12 December 1996, in ­FBIS­CHI-96–241. The ROC media widely speculated that the offices would be opened in May–June 1997. The ROC office in Kiev was to assume a higher profile than those in Moscow or Minsk (Ziyou shibao, 18 December 1996). 36 Lianhe bao, 7 April 1997. 37 Ziyou shibao, 22 August 1996. 38 Zhongguo shibao, 21 August 1996. 39 ­Ukraine-­Taiwan: Inform, 1, November 2001, p. 36. 40 Zhongyang ribao, 10 and 13 February 2001. 41 For details, see the Institute’s official website: www.­ukr-­taiwan.kiev.ua. 42 Their visit, however, proved largely inconsequential. The only ­ high-­ranking official willing to meet the Ukrainian deputies was the ROC’s minister of justice. 43 People’s Daily Online, 7 July 2004. 44 Ukraine’s communication with Taiwan over the visa procedures predated the Orange Revolution. Ukraine was one of a handful of ­post-­communist states (alongside Slove-­ nia) that did not promptly recognize the Taiwanese passport with ‘issued in Taiwan’ added to the front page. Using this as an excuse, it pressed Taipei to simplify visa pro-­ cedures for the Ukrainian visitors in exchange for the recognition of the new passport. Resulting from the agreement, in September 2004, Kiev recognized new passports and shortened visa application periods from 21 days to three days. Taiwan followed a reciprocal arrangement in January 2005 (interview with Keng ­ Chung-­yung, Depart-­ ment of West Asian Affairs, MOFA, Taipei, 15 June 2005). 45 Channel 5, 30 November 2005, accessed 25 November 2006 from 5tv.com.ua/eng/ newsline/179/0/17399/. 46 Lianhe bao, 3 August 1994. 47 Lianhe bao, 4 August 1994. 48 Zili zaobao, 16 August 1994. 49 Zhongguo shibao, 26 January 1992. 50 Zili zaobao, 1 February 1992. 51 Zhongyang ribao, 14 July 1992. 52 Qingnian ribao, 14 July 1992. 53 Zili zaobao, 29 August 1992. 54 Ziyou shibao, 25 August 1996. The report asserted that Taiwanese test pilots were sup-­ posed to learn the capabilities of the fighters, selected by China as the backbone of its

Notes    223 air force, and to collect information that could be used in designing Taiwan’s defence strategy (Zhongguo shibao, 23&24 August 1996. 55 Zili zaobao, 21 August 1996). 56 China News, 3 September 1996; Jane’s Intelligence Review, 1 December 1998. 57 Zhongguo shibao, 7 September 1996. 58 In 1998, 55 per cent of Taiwan’s total import volume of steel plates came from Ukraine (China Economic News Service, 7 February 1999). 59 In early 1992, for example, the ROC officials floated the idea of investing in a phar-­ maceutical company in Ukraine. This idea was under consideration until ­ mid-­1995 (Zili zaobao, 21 August 1995). 60 Zili zaobao, 21 August 1995. 61 Interview with Luo ­Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002. 62 Belapan News Agency, 18 February 1997, in BBC Monitoring Service: Former USSR, 20 February 1997. 63 Lianhe bao, 7 February 1992. 64 Ming pao, 21 March 1992. 65 Xinhua, 1 January 2004. 66 Yet, by 2004, Chinese investments in Ukraine still totalled US$10 million, while Ukrainian investments in China did not exceed US$1 million (China Daily, 7 Septem-­ ber 2004). 67 The Belarussian firms invested over US$13 million in China, more than the Chinese invested funds in Belarus (People’s Daily ­On-­line, 18 July 2001). 68 Reuters, 22 August 1996. 69 ­ Itar-­Tass, 21 August 1996; South China Morning Post, 22 August 1996; Reuters, 22 August 1996; Zhongyang ribao, 22 August 1996. 70 China News, 22 August 1996; Intelnews, 22 August 1996, in ­FBIS-­SOV-96–164. 71 Reuters, 22 August 1996; Sin Tao Daily, 23 August 1996; Zili zaobao, 23 August 1996. 72 China News, 24 August 1996; Ziyou shibao, 24 August 1996. 73 Chang ­Ya-­chun, ‘Beijing’s Reaction to ­Vice-­President Lien Chan’s Trip to Ukraine’, Issues and Studies, 32, 8, August 1996, pp. 131–133. 74 Xinhua, 28 November 1996, in ­FBIS-­CHI-96–231. 75 Segodnya, 3 April 1997. 76 Central News Agency, 21 April 1997, in ­FBIS-­CHI-97–111. 77 Belapan News Agency, 29 October 1996. 78 Xinhua, 11 September 1998 and 15 September 2001. 79 Belarusian Radio, Programme 1, 7 March 1999, in BBC Monitoring Service: Former USSR, 10 March 1999. 80 Xinhua, 20 July 1999. 81 Interview with Keng Chung-­yung, Department of West Asian Affairs, MOFA, Taipei, 15 June 2005. 9  Taiwan’s economical diplomacy 1 European Bank for Reconstruction and Development, Taipei China and the EBRD; interview with Pearl Hsu, Division Chief, Banking and Finance Department, Taiwan-­ ICDF, Taipei, 30 August 2006. 2 The ROC Ministry of Economic Affairs. Online, available at: www.moea.gov.tw (accessed 14 October 2006). 3 Homin Chen and ­Meng-­chun Liu, ‘Noneconomic Elements of Taiwan’s Foreign Direct Investment’, in ­ Tain-­Jy Chen (ed.), Taiwanese Firms in Southeast Asia: Networking Across Borders (Cheltenham and Northampton: Edward Elgar, 1998), p. 99. 4 Susan Strange, ‘States, Firms and Diplomacy’, International Affairs, 68, 3, July 1992, pp. 1–15.

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Periodicals Asian Wall Street Journal Asiaweek Baltic Times Beijing Review Business Taiwan Business Times (Singapore) Capital Weekly Central European China Daily China Internet Information Centre, www.china.org.cn China News China Post Christian Science Monitor Dahua wanbao Ecotass eTianxia zazhi Far Eastern Economic Review Financial Times Free China Journal Free China Review Gazeta Wyborcza Gongshang shibao Huaqiao ribao International Herald Tribune Izvestia Jane’s Intelligence Review Japan Times Jingji ribao Kommersant Lianhe bao Liaowang Lifa Yuan Gongbao Los Angeles Times Ming pao Moscow Times New Times

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Interviews Interview with a GIO officer, Taipei, 24 May 1999. Interview with a Taiwanese diplomat, MOFA’s East European Section, Taipei, 28 May 1999. Interview with a Polish diplomat, Warsaw Trade Office, Taipei, 28 May 1999. Interview with a Polish diplomat, Warsaw Trade Office, Taipei, 25 September 2000. Interview with a Russian diplomat, Representative Office for the MTC, Taipei, 28 Sep-­ tember 2000. Interview with Luo ­ Jin-­ru, Secretary, Representative Office for the TMC, Moscow, 29 August 2002. Interviews with ROC officials, Taipei Economic and Cultural Office, Warsaw, 22 January 2004. Informal conversation with a Czech diplomat, Hong Kong, 7 February 2004. Interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005. Interview with a Czech diplomat, Czech Economic and Cultural Office, Taipei, 14 June 2005. Interview with a Slovak diplomat, Slovak Economic and Cultural Office, Taipei, 14 June 2005. Interview with a Hungarian diplomat, Hungarian Trade Office, Taipei, 14 June 2005. Interview with Keng ­Chung-­yung, Department of West Asian Affairs, MOFA, Taipei, 15 June 2005. Interview with Winsdon J.H. Hsiao, Section Chief, Department of European Affairs, MOFA, 15 June 2005. Interview with a Russian diplomat, Representative Office for the MTC, Taipei, 17 June 2005. Interview with Tomasz Wrzosinski, Deputy Representative Director and Head of Com-­ mercial Division, Warsaw (Poland) Trade Office, Taipei, 17 June 2005. Interview with Jaromir Cernik, Director of Southeast Asia Operations, Czech Investment and Business Development Agency, Hong Kong, 11 August 2006. Interview with Slawek Strazewski, Chief Representative, Warsaw (Poland) Trade Office, Taipei, 28 August 2006. Interview with Sergey N. Gubarev, Representative, Representative Office for the MTC, Taipei, 29 August 2006. Interview with Winsdon J.H. Hsiao, Section Chief, Department of European Affairs, MOFA, 29 August 2006. Interview with Keng ­Chung-­yung, Second Secretary on Home Assignment, Department of West Asian Affairs, MOFA, Taipei, 29 August 2006. Interview with Gabriella Gulyas, Trade Officer, Hungarian Trade Office, Taipei, 30 August 2006. Interview with Pearl Hsu, Division Chief, Banking and Finance Department, TaiwanICDF, Taipei, 30 August 2006.

Index

Tables are indicated by italic page numbers and figures by bold. 9/11, relations between Russia, Taiwan and China after 119–21 Aero Vodochody 58, 70 Afanas’ev, Yevgeny V. 36 aid, foreign 2–3 Albania: cash donations to from ROC and China 142; continued ‘one China’ policy 145; first contacts with Taiwan 129; hostility ended 32; eligibility for loans from OECDF 32; meetings regarding trade with 129–30; policies towards China 131; ROC promises to 144–5; trade with 126 Alpert, E.J. 7 Arase, David 5 arms sales: to China from Russia 110–11, 118; to Taiwan, rumours concerning 109–11, 165–6 Armstrong, Adrienne 4, 5 asymmetrical interdependence 3–4, 17, 179, 189, 197n101 aviation agreement: Czech consideration of 62; talks with Belarus about 158; talks with Hungary about 49, 53; with Bulgaria 128–9; with Latvia 82; with Russia 99, 105–6, 107, 115–16, 120 Baldwin, David 2, 4 Balkan states: attachment to ‘one China’ principle 130; China friendship seen as critical 132–3; Chinese influence in 130–3; initial Taiwanese attitude to 124; interest following Macedonian agreement 142–3; no interest in contacts on official level 130; ROC and opposition parties 130; trade contracts from China 132; trade with 126; see also individual states Baltic states: agreements with Taiwan 80–1; as candidates for diplomatic partnerships

76–8; Chinese visit after independence 78–9; low-key communication with 77; and PRC–ROC rivalry 76, 77; relations with China 76, 78–9, 88–93; ROC approaches after independence 78; trade with Taiwan 83; see also individual states barter trade with Soviet Union 44 Belarus: agreement on offices 158–60; attitudes to China 167, 169, 171; closure of Taiwanese office in Minsk 160, 171; difficult trading market 166–7; early contacts with Taiwan 38; indifference to Taiwanese investment 167; links with 40–1; ROC economic assistance 158, 160; ROC humanitarian assistance 158; ROC relations with 158–60; ROC suspension of economic assistance 159; trade with 168 Belousov, Anatoly 34–5 Bernstein, S.J. 7 Berthelemy, J.-C. 18 bilateral relations, models of 177–9 Bosnia: influence of China 131; trade with 126 Budapest see Hungary Bulgaria: aviation agreement 128–9, 133; CETRA’s visit to 30; continued economic relations 151; eligibility for loans from OECDF 32; loyalty to China on Taiwan issue 150–1; reaction to Taiwan’s relations with Macedonia 142, 150–1; relations with 128–9; trade with 126; United Democratic Forces 130 buses, purchase from Hungary 47 Calovski, Naste 139 Caporaso, James A. 3, 4 CEE see Central and Eastern Europe Ceka, Neritan 145 Central African Republic 11, 15

Index   237 Central and Eastern Europe (CEE): composition of 21–2, 21; first trade tour 28; impact on ROC of political changes in 30; improving links with 28–9, 198n12; language training for ROC diplomats 201n2; relations with China 29, 186–8; restrictions lifted 31–2; separation of trade from politics by ROC 28; trade with 43; see also individual states Central Europe: achievements of economic diplomacy with 75; and China 46; composition of 21, 21; grants and loans to 68; high level ROC visit 49; image of Taiwan for 47; lack of diplomatic strategy towards 54; low profile aid diplomacy towards 73–4; membership of European Union 70; obstacles to trade with 71; offices in Taiwan 56; proposed Taiwanese industrial zones 57; quid pro quo strategy regarding 73; reaction of China to links with Taiwan 68; recession after communism 47; ROC investments 69–71, 71; ROC’s lack of knowledge of 46; Taiwanese offices in 48; threats of economic sanctions on 68; trade deficits 72–3; trade with 67, 71–3; see also individual states CETRA see China External Trade Development Council Chang, Chun-hsiung 120 Chang, Chun-hung 117 Chang, John 37, 42, 78, 80, 81, 96, 156–8 Chang, Keenan K.H. 82 Chang, Shih-liang 49, 51 Chang, Wen-chung 111, 112 Chao, Tze-chi 101 Chechnya 112 Chen, Che-nan 114 Chen, Chien-jen 87, 145 Chen, Chu 115 Chen, Jie 14 Chen, Li-an 130 Chen, Rong-jye 113 Chen, Sheng-hung 111, 165 Chen, Shui-bian 13, 61, 107–8; 111, 112–14, 119, 147, 163, 181 Chen, Tan-sun, Mark 62 Chen, Wu-hsiung 115 Cheng, Peter P.C. 145 Chi, Haotian 154 Chiang, Ching-kuo 7, 9, 27 Chiang, Chung-ling 58, 60 Chiang, Fang-liang, Faina 158 Chiang, Kai-shek 26, 27 Chiang, Pin-kung 28, 29, 39, 52, 57, 60, 64, 68, 106, 115, 125, 128, 129, 157–8 Chien, Fu 42, 46, 55, 96

Chien, Yu-hsin 115 China (PRC): and Central Europe 46, 63–6; competition with Taiwan for allies 7, 9, 11, 12, 13; concern over ROC humanitarian diplomacy 144; concerns over ROC contact with Soviet Union 38–40; cost of alienating 74–5; diplomatic relations with Macedonia 134–5, 149; economic development of 12; importance of for Russia 41; influence in Balkan states 130–3; interest in Yugoslavia 151–2; isolation after Tiananmen events 10; Latvian reversal of policy on 84; opposition against ‘dollar diplomacy’ 10, 12; reaction to break-up of Yugoslavia 134; reaction to CEE links with Taiwan 63–6, 68; reaction to presidential elections in Yugoslavia 152; relations with Baltic states 88–93; relations with CEE 29; relations with Macedonia 134–5; relations with Montenegro 142; relations with post-communist states 186–8; relations with Russia 106–9; relations with Russia and Taiwan post 9/11 119–21; relations with Serbia and Montenegro 153; relations with Slovenia and Croatia 153–4; relations with Western Europe 11–12; strategies towards Belarus and Ukraine 167–71; trade contracts with Balkan states 132; trade with Macedonia 135; visit to Baltic states 78–9; withdrawal of UN forces in Macedonia 138–9 China External Trade Development Council (CETRA) 10, 28, 30, 31, 33, 37, 39, 40, 46, 51, 52, 64, 78, 96, 97, 105, 125, 127, 162 China factor 20, 197n100; see also China: relations with individual states Chiou, Jong-Nan 86 Chou, Shu-kai 26 civil war in Yugoslavia, effect on trade 127 Commonwealth of Independent States (CIS): ROC diplomatic strategy towards 42–3; see also individual states Constantinescu, Emil 130, 132 consular model, (Latvia) 178 Crimea: China’s position on 170; Lien Chan’s visit to 161; relations with 164–5; Taiwanese pilots in 166 Croatia: influence of China 131; relations with China 153–4; trade with 126, 127–8 Crumm, Eileen 4, 6 Crvenkovski, Branko 136–7 Czech Republic: agreement with Aero Vodochody 58; continued links 62;

238   Index Czech Republic – contd. disappointment with investments by ROC 55; economic relations with 57–8; favourable climate for dialogue with 54; friendship with Beijing 62; government visits to Taiwan 55; grants and loans to 68; gravitation towards China 59; ideological model 178; Lee Teng-hui visit 61; office in Taiwan 55, 56; Pilsen Industrial Zone 57, 57–8; PRC investments 65; reaction to ROC success with Macedonia 60–1, 143; relations with ROC and PRC after Havel 62; ROC investments 54–5, 57, 58, 69–70; Skoda contracts 55; student exchange agreement 57; support of ROC’s bid to join UN 55, 58, 59; Taiwan’s largest investors in 70; visit of Lien Chan 55, 57; Wen Jiabao visit 65 Czechoslovakia 32; Dalai Lama’s visit to 50; ‘first ladies’ diplomacy 51; recession after communism 47; relations with PRC 50–51, 58, 64; Taipei Economic and Cultural Office 48, 53 Dai, Bingguo 216n1 Dalai Lama’s visit to Czechoslovakia 50 Democratic Progressive Party (DPP): and economic diplomacy 12–13; diplomacy in Crimea 164–5; reaction to Kosovo Plan 147, 148; support for Chechnya 112, White Paper 112 Deng, Xiaoping 12 Dimitrov, Aleksandar 136, 137, 138, 139, 146 diplomatic model, (Macedonia) 178–9 Djourov, Venelin 128 dollar diplomacy see economic diplomacy domestic politics of target states 19 DPP see Democratic Progressive Party (DPP) Dzasokhov, Aleksandr 36 East Germany: relations with 50; trade with 43 Eastern Europe see Central and Eastern Europe (CEE) economic diplomacy: achievements with Central Europe 75; analytical framework for 15–20; and asymmetrical interdependence 3–4, 17; and the China factor 20; cost for Taiwan 11; debate in ROC about 150; defined 2–3; and the DPP 12–13, 112; disbursements 18; domestic politics of target states 19; early efforts by Taiwan 6–9, 7; effectiveness of 4–6, 14–15, 189; and feasibility of objectives 19–20; and foreign aid

4–6; generosity in 17–18; positive and negative 2; in Central Europe 66–74; in post-communist Europe 22–4; reliance on 1; request by ROC legislators to stop 155; and trade 4–6; trade based 18–19; as way to achieve diplomatic objectives 179–81 Estonia: Chinese visit 79, 89; John Chang’s visit to 80; relations with China 89, 90, 91, 92; relations with pre-1949 Republican China 76; trade with 83 European Union: and Macedonia 148; membership of CEE states 70; Taiwanese investments in 71 ‘first ladies’ diplomacy 51, 59, 61, 63–4, 128 fishing: agreement 44; disputes 37, 44; rights 118 flexible diplomacy 9–12, 27–8 foreign aid: effectiveness for recipient 18; generosity of 17–18; motivations for 4–6, 191n24; and positive economic diplomacy 2–6 foreign policy objectives 14, 174–5 Foundation of Soviet–Far Eastern Exchanges 37, 41 Gailis, Maris 77, 84–5, 90 Geldenhuys, Deon 15 Georgievski, Ljubco 136, 139, 140, 141, 149 geostrategic model, (Russia) 178 Gerashchenko, Viktor 40 Gerasimov, Gennady 35 Gjoka, Sokol 144 Gligorov, Kiro 134, 136 Godmanis, Ivars 79, 81 Gorbachev, Mikhail 29, 35, 39, 102 Granic, Mate 127, 130 grants: and loans to Central Europe 68; to Latvia 81; to Macedonia 141–2 Hasanaj, Ramadan 145 Hau, Pei-tsun 37, 49 Havel, Dagmar 59, 61, 64–5 Havel, Vaclav 50–1, 54, 55, 57, 58–9, 61, 62, 64, 73 Havlova, Olga 51 He, Li 14 Hirschman, Albert 3 Ho, Mei-yueh 63 holiday-makers from Soviet Union 36–7 Hook, Steven 5 Horvat, Feri 127 Hsieh, Chiao Chiao 7, 14, 15 Hsieh, Hsin-ping 65 Hsu, Hsin-liang 207n56

Index   239 Hsu, Li-teh 159 Hu, Jason 55, 59, 60, 66, 73, 136, 140, 142, 143, 183 Hu, Jintao 65, 66, 119 Huang, Chih-fang, James 164 humanitarian: assistance for Belarus 158; assistance for Russia 96; assistance for Ukraine 156–8; diplomacy to Macedonia 143–4; see individual states Hungary: benefits to of links with ROC 47, 49; CETRA Investment and Trade Centre 30–31, 48; Congress of the Europe–Sun Yat-sen Association 49; disappointment with Taiwan 49; exchange of trade offices 30–1; growth of links with 29–30; landing visas 49, 50; office in Taiwan 56, 73; parliamentary visit to ROC 49; problems with air links with 54; promised loans to 53; purchase of buses from 47, 50, 68; reaction to ROC success with Macedonia 61; recession after communism 47; ROC firms in 49; ROC investments 69; substantive model 177–8; Taipei Trade Office 47, 48; tendering for purchases 32; visit by Annette Lu 61–2; visit by Hu Jintao 65–6; visit by Lien Chan 55 ideological model, (Czech Republic) 178 Ilic, Zoran 125 Import–Export Association of Taiwan 32–3 industrial zones: in Central Europe 57; in Macedonia 142, 146 International Economic Cooperation and Development Fund 10, 159 International Cooperation and Development Fund 10, 68, 158 investments: CEE 69–71; Czech Republic 69–70; in Czechoslovakia 54–5; difficulties with 167; in Europe 182; in the European Union 71; Hungary 69; indifference to by Belarus 167; in Macedonia 140–1; Poland 69; projects in Hungary 53–4; Taiwan’s largest investors in Czech Republic 70 Jiang, Zemin 39, 90, 107, 117, 132, 132, 142, 152, 171 Joei, Bernard 14 Kegley, Charles 4, 5 Kehris, Ojars 77 Keohane, Robert 3 Keng, Chung-yung 209n8 Kim, Samuel 14 King, Shu-chi, Charles 112–13 Klaus, Vaclav 54, 55, 57, 62, 64–5 Klimovski, Savo 136, 139

Knorr, Klaus 15 Koo, Chen-fu 51 Koo, Jeffrey 59, 79, 117 Koo, Yen Cho-yun, Cecilia 51 Kosovo 141, 142–4, 147, 148, 151 Kostunica, Vojislav 152, 153 Kovac, Michal 62 Kozyrev, Andrei 38 Krueger, A. 18 Ku, Chung-lien 135 Ku, Samuel 14, 15 Kuchma, Leonid 160, 161, 163, 164 Kwasniewski, Aleksander 59, 66 Lambrev, Vladimir 128 landing visas: in Hungary 49, 50; in Poland 60; in Yugoslavia 125 language difficulties with Soviet Union 33 Latvia: aviation agreement 82; and China’s reaction to policy on ROC 89–90; consular agreement 80–81, 84, 89; consular model 79–84, 178; departure of ROCs political allies 82; diplomatic recognition by China 79; investment agreement 81, 85; joint venture with ROC 81–2; official partnership with 42; promised ROC investments 81; relations with ROC 79–86; response to approach from ROC 78; reversal of policy on PRC 84; ROC economic assistance 81–2, 86; ROC success with 38; Taipei Mission in Riga 85; trade with ROC 82, 83, 85 Lee, Ta-wei, David 136, 138, 148 Lee, Teng-hui 9, 27–8, 61, 65, 135–6, 142, 143, 171 Lee, Wei-chin 14 Lehman, Howard 5 Leifer, Michael 15 Lesi, Nikolle 145 Li, Huan 32 Li, Lanquing 132 Li, Peng 39, 92, 154, 169 Li, Tieying 170 Li, Zhaoxing 153 Liberal Democratic Party (Russia) 100–1 Liberia 15 Lien, Chan 8, 31, 37, 51, 55, 57, 61, 102, 161–2, 169–70, 217n9 Lin, Shou-shan 41 Lin, Teh-chang 14 Lithuania: diplomatic recognition by China 79; relations with China 91–3; relations with ROC 86–8, trade with 83 Liu, Binyan 51 Liu, Guchang 142 Liu, Tai-ying 138 Lo, Chih-cheng 116

240   Index loans: to Belarus 158, 159, 160; Central Europe 68; Macedonia 141–2; Latvia 81–2, 86 Lobov, Oleg 96, 98, 99, 113 Lodz Industrial Zone 57, 60 Loh, I-cheng 146 Louis, Victor 26 Lu, Hsiu-lien, Annette 13, 61–2 Lukin, Alexander 36, 103 Macedonia: as affordable ally 137; agreement on avoidance of double taxation and investments 141; agreement on mutual diplomatic recognition 136; aid and investments in 140–1, 146; and aid to Kosovo 141; Chinese vote on withdrawal of UN forces from 138–9; Democratic Alternatives (DA) 135–6; deteriorating relationship with 145–8; diplomatic model 178–9; diplomatic success with 60–1; economic motivations of Taiwan policy 137; elections 146; end of relationship with 148–50; export processing zone 142, 146; first step to conquering Europe 138; government restructure 148; humanitarian diplomacy by ROC 141, 143–4, 148; influence of China 131; loans and grants to 141–2; medical relief effort in 141; press opposition to agreement 137; promised aid by Taiwan 136, 137; re-establishment of diplomatic relations with China 149–50; reaction in Taiwan to agreement with 137–8; reaction to diplomatic agreement 136–7; relations with China 134–5, 138–9, 149; ROC and opposition parties 130; ROC breaks official ties 149; talks with opposition leaders 135–6; trade with 126, 135, 135, 146–7, 147 Mao, Zedong 88 Mastanduno, Michael 6 Meciar, Vladimir 62–3 Meidani, Rexhep 142 Mengin, Francoise 14 Menkhaus, Kenneth 4 military cooperation with Ukraine 165–6 Milo, Maskal 145 Milosevic, Slobodan 152 Ming, Chu-cheng 7 Modanu, Vera 145 Moeller, Kay 14 money diplomacy see economic diplomacy Montenegro: founding of 153; relations with China 142, 153; support of ‘one China’ principle 153 Moon, Bruce 4, 55 Moscow–Taipei Coordination Commission 96, 97, 98, 99, 118

Myashita, Akatoshi 5 negative economic diplomacy 2 Newnham, Randall 5 North East European Trade and Manufacturing Association 28 Nye, Joseph 3 objectives, diplomatic 174–5 official assistance (OA) 3, 190n10 official development assistance (ODA) 3, 190n10 Orange revolution 164 Overseas Economic Cooperation and Development Fund 10, 32, 40, 52, 124, 125 Pan, Zhanlin 152, 170 Pavlov, Valentin 35 People’s Republic of China (PRC) see China Peng, Guangqian 214n131 Peng, Ming-min 66 Petkovski, Tito 145 Pilsen Industrial Zone, 57, 57–8 Pilv, Mehis 78 Poland: appeal for loans 30; failure of diplomatic hopes for 52; grants and loans to 53, 60, 68; Hu Jintao visit 66; initiation of Polish–Taiwanese conferences 52; landing visas 60; loan for development of SMEs 53, 60; Lodz Industrial Zone 57, 60; office in Taiwan 56, 59, 61, 65; reaction to ROC success with Macedonia 61; recession after communism 47; ROC investments 57, 60, 73; sister-city agreement 59, 65; Taipei Economic and Cultural Office in 48, 53; Taiwan Club 60; as Taiwan’s largest trading partner 59–60; Taiwan Trade Centre in 48, 60; taxation agreement 60, 65; tendering for purchases 32; visit by Chiang Pin-kung 52 politics of target states 19 Popov, Gavril 36, 39–40, 101 positive economic diplomacy 2–6 post-communist Europe: background and definition 20–2; economic diplomacy in 22–4; map 21; see also Balkan states; Central and Eastern Europe (CEE); Central Europe; individual states Primakov, Evgeny M. 35 Putin, Vladimir 117–19 Qian, Qichen 58, 64, 84, 90, 170, 204n80 Ray, J.L. 5–6 Richardson, Neil 3–4, 5 Roeder, Philip 5 Roman, Petre 132 Romania: continued economic relations

Index   241 151; Democratic Convention of Romania 130; eligibility for loans from OECDF 32; importance of relations with China 132; policies towards China 131–2; ROC humanitarian assistance 31–2; support for ‘one China’ principle 151; tendering for purchases 32; trade with 126, 129 Rubin, James 139 Russia: academic cooperation 101–2; agreement on exchange of offices 96–8; arms sales to China 110–11, 113, 118; arms sales to Taiwan rumours 109–11; attitude to Taiwan 106, 107; aviation agreement 99, 105–6, 107, 115, 116, 119; charter flights 114, 115, 119; and Chechnya 112; Chen Shui-bian visit 107–8; core objectives of diplomacy with 113–14; cultural exchanges with Taiwan 120–1; decree on relations with Taiwan 98–9; difficult trading market 166–7; Foundation of Soviet–Far Eastern Exchange 41; geostrategic model 178; ROC humanitarian assistance 96, 114, 116–7; importance of China for 41; intelligence cooperation 109; investment difficulties 167; investments in China 103, 210n40; Liberal Democratic Party 100–1, 113; links with 40–1; lobbying of intellectuals and general public by ROC 101–3, 209n29; maritime agreement 105; office in Taiwan 96, 97, 98, 99, 118; parliamentary friendship group 101; potential for diplomatic relations with 95; PRC diplomatic recognition 42, 96; public perception of Taiwan 102–3; Putin’s Taiwan policy 117–19; relations with China 106–9, 122–3; relations with China and Taiwan post 9/11 119–21; relations with Taiwan 114; rice donation to 96, 208n6; ROC early contacts with 38; ROC lack of knowledge of 112–13; ROC support building campaign 100; secret communication with Taiwan 109; sistercity agreement 121; strategic partnership with PRC 108; student exchange 102; support of Taiwan 95–6; Taipei–Moscow Coordination Commission (TMC) 96, 97, 98, 99, 120; ‘Taiwan Relations Act’ 100, 113; Taiwan–Russia Association 114–17; Taiwanese offices in 97; Taiwanese policy on as failure 121–2; trade with ROC 103–6, 104; World League for Freedom and Democracy 101; see also Soviet Union Sadonkov, Kiril 128 Savisaar, Edgar 78 Serbia: founding of 153; importance of

relations with China 132; relations with China 153 Shevardnadze, Eduard 37 Shieh, Samuel C. 79 Shin, Shueiling 15 Shullazi, Pellumb 145 Siew, Vincent 68, 141, 143 Siew, Wan-chang, Vincent 40 Sinitsyn, Leonid 159, 160 Sino-Russian Association for International Humanitarian Dialogue 111 Siradovic, Djordje 132 Skoda contracts 55, 65 Slovakia: allegedly promised aid to 62; grants and loans to 68; office in Taiwan 56, 63; parliamentary exchanges 63; Taipei Economic and Cultural Office 48, 63; wakening relations with Taiwan 62–3 Slovenia: importance of relations with China 132; relations with China 153–4; trade with 126, 127 South Pacific Islands 15 Soviet Union: barter system with 44; calls for lifting of trade ban 34; Chinese concerns over ROC contact with 38–40; difficult trading market 166–7; diplomatic relations with not sought 37; direct shipping links to 44; first trade visits to 32–3; fishery agreement 44; fishing disputes with 37, 44; Foundation of Soviet–Far Eastern Exchange 37, 41; holiday-makers from 36–7; language difficulties with 33; lifting of trade ban with 34; maritime agreement 44; no promises of aid for 38; ‘one China’ policy 35–6, 39; opposition to direct commercial relations with ROC 35–6; reaction of ROC to anti-Gorbachev coup 40; relationship with ROC (60s to late 80s) 26–7; ROC humanitarian assistance to 34; ‘Soviet card’ 26–7; Taiwan studies in 36; trade visits to 34–5; trade with 43, 43–4; USA concerns re links with 198n12, 199n37; visas for Soviet visitors 34; visits to ROC from 36–7; working group to further unofficial relations with 37 student exchange agreement with Czech Republic 57 ‘substantive’ achievements 181–4, 189 substantive model (Hungary) 177–8 Sun, Yuxi 65, 152 Taipei China–EBRD Cooperation Fund 66, 68, 140, 182 Taipei–Moscow Coordination Commission (TMC) 96, 97, 98, 99, 120 Taiwan External Trade Development Council (TAITRA) 46, 151, 164

242   Index Taiwan–Russia Association 114–17 Taiwanese offices 48, 97, in Belarus 159–60; in Czechoslovakia 51, 53; in Hungary 31, 38, 47, 73; in Latvia 80–1; 85; in Poland 53, 59, 60–1; in Russia 40, 99; in Slovakia 63; in Yugoslavia 125, 127 Takamine, Tsukasa 5 Tang, Jiaxuan 145, 153, 154, 170 Taylor, Ian 14 Tian, Zengpei 78–9, 90, 158, 170 Tiananmen events, isolation of China after 10 Tichit, A. 18 Tien, Hung-mao 13, 114, 147–8, 149 Titarenko, Mikhail 35 total diplomacy 7–8, 9, 11 trade: with Balkan states 83, 126; with Belarus 168; with CEE 43; with Central Europe 67, 71–3; with Central Europe, obstacles to 71; Chinese contracts with Balkan states 132; contracts from China to Balkan states 132; with Croatia 127–8; deficits with Central Europe 72–3; deficits with Russia 104–5; difficult markets 166–7; diplomacy 184–6; disagreements with Yugoslavia 125, 127; exchange of offices with Hungary 30–1; first tour to CEE 28; first visits to Soviet Union 32–3; Hungarian office in Taipei 47; imports from and exports to Central Europe 71; with Latvia 82; with Macedonia 135, 135; meetings with Albania 129–30; Poland as Taiwan’s largest trading partner 59–60; and positive economic diplomacy 4–6; with Romania 129; with Russia 103–6, 104; separation of from politics by ROC with CEE 28; with Slovenia 127; with Soviet Union 43–4, 43; with Soviet Union, lifting of ban 34; with Ukraine 168; visits to Soviet Union 34–5 trade based economic diplomacy 18–19 Trajkovski, Boris 145–6, 148, 149 Tsai, Cheng-wen 7 Tseng, Wen-fui 61 Tuapse 26, 32 Tupurkovski, Vasil 135–6, 142, 145–6 Ukraine: agreements with ROC 157, 158; attitudes to China 167, 169–71; arms sales rumours 165–6; continuing communication with 160–1; demands seen as excessive by ROC 162–3; difficult trading market 166–7; diplomatic ties with 41; humanitarian assistance for 157–8; initiatives regarding ROC 163; investment difficulties 167; links with 40–1; low-key dialogue 160–1;

military cooperation with 165–6; Orange revolution 164; private initiatives 163; relations with Crimea region 164–5; relations with PRC 156, 160, 167, 169–71; restart of low-key dialogue 164; trade with 166–7, 168; visit by Lien Chan 161–2, 169–70, 217n9 UN forces in Macedonia: 131, withdrawal of 134–5, 138–9 Vladislavlev, Aleksander 37 Walesa, Lech 51–2, 59, 73 Wan, Runnan 51 Wang, Chih-kang 162, 170 Wang, Jin-pyng 61, 87, 207n48 Wang, Jinqing 156 Wen, Jiabao 65 Western Europe, relations with ROC 11–12 White Paper on Foreign Policy for the 21st Century 112 Working Group on Relations with the Soviet Union 37, 42 World League for Freedom and Democracy 53, 101 Wu, Bangguo 170 Wu, Ching-tang 53 Wu, Linjun 14 Wu, Rong-I 115, 213n105 Wu, Shu-chen 61 Wu, Yi 171 Wuer, Kaixi 36 Xu, Yuehe 138 Yahuda, Michael 14 Yakovlev, Aleksandr 35 Yang, Shangkun 92 Yasutomo, Dennis 5 Yeltsin, Boris 38, 95, 98, 107–10 Yin, Tsung-wen 109 Yugoslavia: CETRA’s office in 125, 127; CETRA’s visit to 30; Chinese interest in 151–2; Chinese reaction to break-up of 134; dissolution of 153; effect on trade of civil war in 127; importance of relations with China 132; influence of China 131; only economic relations with ROC 125; presidential elections in 152; support for ‘one China’ policy 153; tendering for purchases 32; trade disagreements with 125, 127; trade with 126 Zhang, Guang 5 Zhang, Qiyue 138, 144 Zhu, Rongji 150 Zlatku, Rexhep 139