Taiwan was once acknowledged by most member states of the United Nations as representing China, including the mainland. In 1969, the ROC was recognized by 71 countries, while its communist rival, the People's Republic of China, had diplomatic relations with 48 countries.
But once the PRC was admitted to the U.N. as the legal representative of China in 1971 and was recognized by the U.S. in 1979, Taiwan saw a precipitous decline in diplomatic status. The history of the last 40 years is the saga of one country after another abandoning Taiwan, as each accepted the reality of a more powerful China. By 1990, only 28 countries recognized Taipei, while 139 had ties with China, and that number has since increased to 175.
Beijing has been able to entice countries to switch their support from Taiwan because of its pervasive economic clout which enables "checkbook diplomacy" to reward defecting nations from the Taiwan camp with aid or investments.
With a population of only 23 million, Taiwan is a much richer territory than China on a per capita basis, but lacks the foreign exchange reserves to purchase continued loyalty. The last holdouts supporting Taiwan have been in Central America and the Pacific islands. But Beijing has been active in wooing them with generous economic aid packages. Panama, for example, decided to switch its support to Beijing after being promised $1 billion for infrastructure upgrades around the expanded Panama Canal.
For a long time, Taiwan was able to compete with China when it came to gaining the support of mini-states because the sums involved in buying their support were not daunting. This led to back-and-forth swings in recognition. For example, Nauru derecognized Taiwan in 2002 and then restored ties in 2005. Nicaragua cut ties with Taiwan in 1985 before returning to the fold in 1990. But Taiwan can no longer afford to maintain this bidding war.
Recent developments are forcing Taiwan to rethink its strategy, core identity and role in the world. Dependence on the U.S. for protection against an invasion by China remains the cornerstone of Taiwan's security doctrine. The implied promise that the U.S. military would come to Taiwan's defense has helped deter China and preserved the island's freedom.
A weak hand
But the defection of Panama is a reminder to Taiwan that the U.S. cannot halt China's diplomatic offensive to isolate Taiwan. Washington has not pulled strings with Central American or Pacific countries to keep them in Taiwan's camp, and will be even less inclined to do so under President Donald Trump.
Trump briefly raised hopes in Taipei just before his inauguration when he called the Taiwanese president in a move that suggested he might use the "one-China policy" as a bargaining chip in winning concessions from Beijing. But he quickly backed down after meeting Chinese President Xi Jinping and affirmed respect for China's core concerns, including Taiwan, in return for Chinese cooperation to curb North Korea's nuclear and missile programs.
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