Official or unofficial? How Taiwan is rethinking diplomatic engagement.

By cutting Honduras from Taipei’s already dwindling list of diplomatic allies over the weekend, China is adhering to its well-worn playbook of seeking to isolate Taiwan. But fears of being internationally ostracized have forced Taipei to think of creative new ways to circumvent diplomatic obstacles.

Solutions, experts say, may already be in the works as the self-ruled island expands unofficial ties with like-minded democracies, particularly regional powers and does not rule out the possibility of forging stronger relationships with countries that also recognize China, despite Beijing’s firm opposition.

This, however, will be easier said than done.

The pull of economic opportunities

While efforts to retain diplomatic recognition continue — particularly to enable participation in international organizations — Taipei acknowledges that it cannot pursue official ties at all costs, especially given Beijing’s much deeper pockets and greater economic inducements.

Money seems to have played an important role in Honduras’ decision to end several decades of official relations with Taiwan, with Tegucigalpa reportedly claiming that Taipei had turned down requests for $2.45 billion in loans.

However, Cathy Wu, an assistant professor at Old Dominion University in Virginia, said the rationale for the move was likely a more comprehensive one rather than just the immediate cash benefits. Honduras has faced a spate of challenges in recent years, including natural disasters, inflation and COVID-19, resulting in the country requiring more than the agricultural assistance currently offered by Taiwan.

"They needed opportunities for infrastructure development, expanded markets and investment," Wu said.

In February, Tegucigalpa announced it was negotiating with China on the construction of another hydroelectric dam after Beijing invested around $300 million in an initial dam project.

Taiwan had diplomatic ties with 56 states when the United Nations switched recognition to Beijing and booted out Taipei in 1971. That number has now shrunk to 13, with most remaining countries being small states in Latin America and the Pacific. Amid Chinese pressure, that figure may continue to shrink.

Experts point to Paraguay as potentially next to cut off ties, depending on the results of an April general election. The main opposition candidate has vowed to switch recognition in a bid to access China's huge soy and beef markets.

“Beijing can dangle promises of cash and investment to countries that are considering the switch and make life easier for them in various world bodies if they drop Taipei," said Sean King, a Taiwan expert and senior vice president with New York-based advisory firm Park Strategies.

Business communities in some of these countries, he added, may even weigh in with their national governments, fearing that recognition of Taipei makes it harder for them to crack the Chinese market.

While investments and access to China's huge market have played an important role in luring away countries, Beijing also resorts to “checkbook diplomacy,” donating $11.3 million to the Solomon Islands for rural development when it severed ties with Taipei in 2019, and 1 million doses of a COVID-19 vaccine to Nicaragua in 2021.

Following Honduras' decision, the ninth country to sever diplomatic ties with Taipei in seven years, Taiwan President Tsai Ing-wen stressed that her government would "not engage in a meaningless contest of dollar diplomacy with China."

Besides being outmatched in this arena, analysts say another important reason why checkbook diplomacy is increasingly less of an option for Taiwan is that using taxpayer dollars to buy recognition for potentially unclear gains is seen as less acceptable in the young democracy.

“Trying to outbid Beijing to keep diplomatic partners is like paying ransom for hostages,” King said. “It only encourages more such demands for cash.”

But the battle for recognition is not one that Taipei has been fighting alone.

Washington has played a crucial role in persuading governments with official relations with Taiwan from cutting ties by, among other things, providing economic assistance through the 2019 Taipei Act.

Washington’s support, however, can only go so far, since the U.S. itself doesn’t have formal ties with Taiwan. Indeed, U.S. pressure was not enough to deter Honduras from aligning with China.

Looking for new engagement

As a result, Taiwan appears to be considering a more pragmatic approach.

Asked Sunday if Taipei would encourage countries to recognize both Taiwan and China, Foreign Minister Joseph Wu told reporters that the government "has not ruled out any possibility of engagement."

If any country wants to bolster relations with Taiwan, whether in politics, diplomacy, culture or trade, Taipei will not consider their relations with Beijing as something that precludes this, Wu said, without explicitly stating if Taipei was open to dual recognition.

Beijing firmly opposes dual recognition, and uses this opposition as a key component of its efforts to isolate the island.

“China tends to force states it enters into official diplomatic relations with to take on some version of a declaratory 'One China' position that tends to exclude official recognition of Taipei,” said Ian Chong, a political science professor at the National University of Singapore.

Official recognition provides Taiwan with partners that can speak up for it and make proposals on its behalf at key international institutions. Maintaining them also helps counter Beijing's claim that the island is a Chinese province.

However, Taipei’s engagement with the international community cannot solely rely on the few, small countries that still recognize it.

“Most governments that officially recognize Taiwan as the Republic of China are not allies in the true sense of the term,” Chong said. “There are no security guarantees and, at most, they provide useful, if symbolic, votes at the United Nations and U.N.-related bodies that remind these institutions of Taiwan’s existence.”

The Tsai government is well aware of this, which is why it has been focusing instead on bolstering unofficial ties — including longtime relationships with countries such as Japan and the U.S. — as a more practical and efficient way of engaging with nations.

“We also need to go out to the world to cultivate relations with fellow democracies,” Wu told The Japan Times in a recent interview, adding that ties with other democracies “have been making tremendous progress” in recent years.

More meaningful ties

Compared with its existing set of diplomatic partners, Taipei seems to be finding even more meaningful returns in its unofficial ties with like-minded governments in Europe, North America, and Asia, according to Chong.

“There is more substantive cooperation and there is higher value in trade, investment and technological exchanges — including on those that may aid Taiwan's defense,” Chong said, noting that these countries, particularly Japan and the U.S., may also push for meaningful Taiwanese participation in international bodies.

The success of the approach has even led some to question whether Taipei wouldn’t be better off cutting off all formal diplomatic allies, which they say would free it from a competition with China that it simply cannot win.

While having no diplomatic allies may not look good on paper, this would not necessarily undermine Taiwan's de facto independence, said Chen Yu-Hua, an assistant professor at Akita International University.

What matters most is whether countries that recognize Beijing fully agree that Taiwan is an inalienable part of China — a stance at the core of Beijing’s One China principle, he added, pointing out that only 51 out of about 180 countries that recognize China have agreed to this view without reservations.

Only time will tell if Taipei will opt for this more radical approach, observers say. For now, though, the fight for official recognition continues to be high on the Tsai government’s diplomatic agenda.