107-year-itch

Varela says adios to Taipei

Taiwan has endured “all kinds of humiliation” because of the island’s diplomatic ties with Panama, China Times reported this week. A Panamanian foreign minister once called up Taiwan’s ambassador at 3am, the Taipei-based newspaper said, just because the official was drunk and wanted to play a practical joke. The Taiwanese diplomat put up with it, rather than sully the relationship.

Why does Panama matter so much to Taipei? The Central American country is Taiwan’s most important overseas ally (besides the Vatican). Bilateral relations date back more than a century to imperial China in 1910. A year later when the Republic of China was founded, Panama was also one of the first nations to recognise the new republican government, with the KMT retaining that diplomatic recognition even after it fled the mainland for Taiwan in 1949.

Therefore Panama’s defection to Beijing has stoked shock and anger on the island. Rubbing salt in the wound, China Times reported, the decision was relayed to Taipei only 40 minutes before the official announcement on Tuesday.

“The Government of the Republic of Panama recognises that there is only one China and that Taiwan is an inalienable part of the Chinese territory. The Government of the Republic of Panama today breaks its ‘diplomatic relations’ with Taiwan, and undertakes to leave any official contact or relationship with Taiwan,” the communique signed between Panama City and Beijing said, carefully deploying quote marks around “diplomatic relations” so as not to confer any legitimacy on the government in Taipei.

Panama is the second country to shift its diplomatic allegiance since Tsai Ing-wen became leader of the self-ruled island in early 2016 (Sao Tome and Principe, an African island nation, did so in December).

During the rule of her predecessor Ma Ying-jeou, Beijing had stopped courting Taiwan’s allies as reward for Ma’s conciliatory attitude to the mainland.

Tsai’s party, however, has historically supported the idea of Taiwanese independence, leading Beijing to be suspicious of her. Since coming to office she has refused to endorse the so-called “1992 Consensus”, which states that there is only “One China”, even though Beijing and Taipei disagree on who rules it.

Panama’s switch had been looking inevitable given mainland China’s increasing economic influence in the Caribbean and Central America, Taiwan’s Liberal Times said, although the island’s politicians were still caught off guard by the decision. Tsai’s office released a statement saying her government felt “betrayed”. David Lee, the island’s foreign minister, said Panama had hoodwinked Taipei and kept it in the dark “till the last minute”.

In a television address announcing his decision, Panamanian President Juan Carlos Varela said he had no other choice as a “responsible leader”. China is the second largest user of the Panama Canal, he noted, and the leading provider of merchandise to a free trade zone in the Panamanian city of Colon on the country’s Caribbean coast.

“China accounts for 20% of the world population and is the world’s second largest economy,” Varela said, adding that he had to put his country on the “correct path” .

His decision now leaves Taiwan with 20 fully-fledged diplomatic allies – 19 nation states and the Holy See. China Times believes the move could trigger a domino effect – with Taiwan’s remaining 11 allies in the region such as Nicaragua, Paraguay and Haiti switching ties too.

The Chinese media warned that Beijing would not stop courting other allies if Tsai did not recognise the 1992 Consensus. “Tsai claimed she would win dignity for Taiwan from the international community, but Taiwan has ended up having less space on the world stage. The people of Taiwan have been taught a lesson,” the Global Times quipped.

Meanwhile the People’s Daily pointed out that acknowledging the 1992 Consensus allowed Beijing to tolerate certain other actions such as Taiwan participating in international forums under the name Chinese Taipei.

No more. For the first time in eight years Taiwan was not invited to the annual assembly of the World Health Organisation last month and last year it was excluded from a global forum of the International Civil Aviation Organisation.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.