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In battle of `dollar diplomacy,' Taiwan losing ground to China

TAIPEI, Taiwan—For decades, Taiwan and China have tussled with each other in far corners of the globe, fighting for allies through "dollar diplomacy." Now, it seems, China may be gaining the upper hand, sustained by deeper pockets, growing global clout and an unlikely ally: members of Taiwan's parliament.

Prying Taiwanese legislators want to know how the Foreign Ministry spends its money, putting a crimp in the practice of quietly handing out cash to foreign politicians and sweetheart foundations abroad.

Diplomatic switches occur routinely. Taiwan's latest headache: The Vatican is making overtures to China, threatening the island's only diplomatic outpost in Europe.

"The Holy See really, really wants to establish ties in China. It's been a long time in the works," said Shen Tung-bai, an 86-year-old parish priest in Taipei.

Some scholars say the number of Taiwan's allies is likely to diminish.

"We are looking at these numbers. They already are dwindling, and they will diminish further," said Bonnie S. Glaser, a China expert at the Center for Strategic and International Studies, a research center in Washington.

Taiwan retains diplomatic recognition from 26 countries—mostly small South Pacific, African, Central American or Caribbean nations—enough to press its claim that it's a sovereign nation. China says the independently ruled island isn't sovereign but part of China.

China uses coercion to prevent other nations from recognizing Taiwan as sovereign. Beijing thwarts the island from joining global organizations and badgers allies over any warmth toward Taipei.

China and the Vatican broke relations in the early 1950s, and Beijing doesn't recognize papal authority to appoint bishops and oversee other church activities. The death in April of Pope John Paul II, a critic of communism, gave new impetus to talks over renewing Sino-Vatican relations, unsettling Taiwan.

In mid-June, Guatemala agreed to allow China to open a commercial office in its capital, retaining diplomatic links to Taipei but heightening Taiwan's concern that alliances with the six Spanish-speaking Central American republics might be shaky.

"If we lose Central America, we won't have much left," said Jason Hu, a former foreign minister.

Taiwan's apparent diplomatic practices in Central America have left the region simmering in scandal.

Former Costa Rican President Miguel Angel Rodriguez remains under house arrest amid a criminal probe into allegations of bribes from French and Spanish firms and $1.5 million from the Taiwanese government.

In Panama, prosecutors said late last year that they were investigating any mishandling by former President Mireya Moscoso of a $45 million Taiwanese donation to a private foundation she set up for hospitals.

Until the late 1990s, most expenses by Taiwan's Foreign Ministry were labeled "confidential," off limits to legislative oversight. Even today, 20 percent of the ministry's budget remains off the books, said Lo Chih-cheng, a political scientist who once worked as a Foreign Ministry adviser.

A senior Taiwanese diplomat, speaking on condition of anonymity, noted with a touch of bitterness that "Now, everything has to be so-called transparent with the parliament. They want to know, `How did you spend the money?'"

"The checks and balances from the Legislative Yuan (the legislature) on foreign aid have become greater," said Lo, who now heads the Institute for National Policy Research, a Taipei research center.

Taiwan has given money not only to the rulers of nations, but also to their opponents, hedging its bets in case there's a sudden change of power but keeping it all hush-hush.

Leaders of some tiny nations try to play China and Taiwan against each other, seeking better deals for their citizenry—or themselves. When Grenada switched recognition to China in January, Taipei charged that the Caribbean nation was trying to profit from cross-strait frictions, saying Grenada was shaking it down for a $245 million aid package.

Since coming to office in 2000, President Chen Shui-bian's government has lost diplomatic ties with Macedonia, Grenada, Liberia, Dominica and Nauru. His government later won back Nauru and Kiribati, both minuscule Pacific nations, from China.

In the cases of Nauru, an island of only 12,800 people, and Kiribati, coral atolls with 96,000 people, aid packages and other inducements played a huge role.

"There is dollar diplomacy. It's a fact. I don't think anyone who knows the South Pacific can deny it, except the Taiwanese and the Chinese," said Ben Reilly, a senior lecturer at the Australian National University in Canberra.

Hu, who served as foreign minister in the late 1990s, recalled how one Latin president asked Taipei for a helicopter, ostensibly to carry out his duties. "It is hard for you to say no," Hu said.

Some members of the Taiwanese intelligentsia are distressed by what the island does to fight off China's efforts to suffocate it diplomatically.

"It is disgraceful that we have to buy our diplomacy, but people understand that there's no other alternative," said Andrew Yang, a defense analyst in Taipei. "This is a dilemma. On the one hand, you want to maintain this diplomacy. But on the other hand, you don't want to finance corrupt foreign governments to maintain the diplomacy."

China's efforts to deny Taiwan diplomatic legitimacy deeply nettle the island's residents.

"My husband was invited to give a speech in Thailand regarding public health. But Thailand denied the visa because of pressure from China. My husband was very angry," said Lo Fongping, a Taipei resident who's married to a public health expert.

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(c) 2005, Knight Ridder/Tribune Information Services.

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