This week Nicaragua broke off formal diplomatic relations with Taiwan in favor of relations with China, leaving Taiwan with recognition from 14 states. Taiwan once had diplomatic relations with all seven countries in Central America and the region was considered one of Taiwan’s last remaining diplomatic strongholds. With Nicaragua breaking relations, Taiwan is down to three, with Costa Rica leaving in 2007, Panama in 2017, and El Salvador in 2018.

Nicaragua announced its diplomatic switch at a time when President Biden’s Summit for Democracy event included representatives from Taiwan but not Nicaragua. Regardless of whether the timing was intentional, Nicaragua’s shift can be seen within a broader context of competition between the United States and China in the region, where, despite U.S. pressure on countries to remain with Taiwan, China’s economic incentives have won out.

The impact of Nicaragua’s shift should not be overstated. Taiwanese officials and media alike historically have referred to these relations as “diplomatic allies” rather than what is simply a formal diplomatic partnership. In doing so, each switch of recognition to China is treated as a loss, suggesting a substantive shift in sovereignty claims or Taiwan’s security.

This is far from accurate. Framing diplomatic switches as a loss may also encourage rash behavior to maintain current diplomatic partners through ever increasing aid packages, often derisively labeled “checkbook diplomacy.” Such policies may temporarily placate diplomatic partners that are hoping to start a bidding war. But China has the means and willingness to outspend Taiwan.

Furthermore, my previous research finds the Taiwanese public sensitive to maintaining recognition if it requires giving more international aid to these countries. In addition, my previous cross-national research highlights the appeal of economic relations with China. And it may be self-defeating. Counterintuitively, Taiwanese aid that helps countries expand their exports may incentivize switching to China. In short, one of the main ways of maintaining Taiwan’s diplomatic partnerships is not sustainable in the long-term.


Photo Credit: Reuters / TPG

Tsai Ing-wen speaks during a meeting with businessmen in Managua, Nicaragua on Jan. 10, 2017.

Nicaragua’s switch is also unlikely to lead to a wave of Taiwan’s diplomatic partners leaving as well. Such predictions often emerge with each diplomatic gain by China. This is unlikely for several reasons. First, Taiwanese aid already budgeted for a country that breaks relations is likely to be reallocated to remaining countries.

Second, rhetoric aside, it is unlikely to be in China’s interests to see Taiwan’s remaining partners leave en masse, even with discussion that Honduras could switch after the election of a pro-China presidential candidate. Each diplomatic switch garners attention and allows China to put additional pressure on Taiwan over time, without expecting a substantive change in Taiwanese policy. A sudden diplomatic shift of many states could increase discussions within Taiwan about constitutional change, for example formally changing the country’s name from the Republic of China to the Republic of Taiwan.

Taiwan’s unofficial relations with countries like the U.S. provide far more to Taiwan’s political and economic security. Taiwan has been particularly adept at establishing these relations and blurring the line between official and unofficial relations. In doing so, Taiwan receives most of the benefits for formal relations short of offices called embassies and officials called diplomats.

This diplomatic shift provides Taiwan with an opportunity to focus international attention on how China is attempting to limit Taiwan’s international space, appealing to democratic sympathies at a time when concern about China’s global influence is increasing. Admittedly, some of Taiwan’s current and recent diplomatic partners do not share Taiwan’s commitment to democracy, whether that be the last absolute monarchy in Africa (Eswatini) or a democratic backsliding seen in Central America, including the arrest of several opposition candidates in Nicaragua leading up to this year’s presidential election. One could argue that the loss of these partners may help Taiwan generate a more coherent pro-democracy narrative.

Nicaragua’s shift is an opportunity for Taiwan to reassess its strategies for maintaining an international presence. Formal and informal diplomatic relations should only be one piece of this. Taiwan has yet to use soft power to its full effect, including in areas where concern about China’s influence suits Taiwanese interests. Taiwan is uniquely positioned to replace Confucius Institutes and expand person-to-person diplomacy through investments in education. The shift only underscores the importance to Taiwan of these forms of diplomacy that are less subject to shifts in geopolitical winds.

Read Next: By the Numbers: The Challenges to Building Trust Between Taiwan and China

Editor: Nicholas Haggerty (@thenewslensintl)

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