US embassy cable - 04TAIPEI3666

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003666 
 
SIPDIS 
 
STATE PASS TO AIT/W AND USAID 
BEIJING ALSO PASS TO CHENGDU 
 
E.O. 12958: DECL: 10/25/2014 
TAGS: PREL, EAID, TW 
SUBJECT: ICDF: TAIWAN'S USAID 
 
REF: A. SAN JOSE 02803 
 
     B. TAIPEI 03430 
 
Classified By: AIT Director Douglas Paal 1.5 (B/D) 
 
1.  (C) Summary: Taiwan's International Cooperation and 
Development Fund (ICDF) is one of the foreign policy tools 
used to advance Taiwan's standing with nations that recognize 
Taipei.  Taiwan publicly parades the ICDF as a global 
humanitarian organization which seeks to combat poverty and 
provide technical assistance around the world.  Privately, 
however, ICDF officials admit the bulk of the ICDF budget is 
geared towards rewarding those nations that continue to 
recognize Taiwan diplomatically over China.  The foundation 
serves Taiwan's Ministry of Foreign Affairs (MOFA) and is 
largely self-financed through investments from its original 
endowment.  The ICDF serves as the "public face" for Taiwan's 
international aid and is not likely a vehicle used by Taipei 
for the direct cash payments that are often provided to 
Taiwan's diplomatic partners.  The recent embarrassment over 
the on-again off-again relationship with Vanuatu (reftel) is 
a vivid reminder of the role of direct cash payments.  The 
ICDF is also making efforts to increase its leverage with 
NGOs and other aid organizations to increase Taipei's 
visibility and diplomatic efforts abroad.  End summary. 
 
Used to Advance Diplomatic Ties 
------------------------------- 
 
2.  (C) Despite Taipei's best efforts to classify the ICDF's 
mission as assisting developing countries throughout the 
world, in reality the organization serves as an arm of MOFA 
to disperse aid to Taiwan's diplomatic partners.  Taiwan 
works hard via international conferences, glossy brochures, 
and professional video productions to tout the ICDF as a 
global organization that promotes international cooperation 
and as a mechanism for Taiwan to express its gratitude for 
the foreign aid it received before it became an economic 
success story.  ICDF Deputy Secretary General, Liao 
Shih-chieh, told AIT that Taiwan is particularly concerned 
with Beijing's efforts to usurp Taipei diplomatically.  When 
asked where the bulk of ICDF money and aid is focused, Liao 
admitted that the vast majority does go to Taiwan's 
diplomatic partners.  In 2003, of the approximately $57 
million that was approved for direct financing, all but about 
$6 million was earmarked for countries that maintain formal 
relations with Taiwan.  There is some small scale funding and 
projects geared towards Taiwan's non-diplomatic partners, but 
this is largely window dressing and done for publicity 
purposes.  Liao told AIT that if one of Taiwan's aid 
recipients were to switch recognition to China, then all ICDF 
aid would immediately be halted. 
 
Self-Financed, Supports MOFA 
---------------------------- 
 
3.  (C) The ICDF is almost completely self-funded for its 
activities and mirrors MOFA directives.  In the wake of 
Taiwan's declining diplomatic support around the world, the 
ICDF was formed in 1996 with a government grant of 
approximately $880 million (NT$30 billion) to promote both 
humanitarian and technical assistance programs.  Liao told 
AIT that a Board of Directors is responsible for making 
policy, approving aid projects and dispersing the budget. 
Members of the board are composed of prominent government and 
private sector officials including Foreign Minister Mark 
Chen, Economic Minister Ho Mei-yueh, and Perng Fai-nan, 
Governor of the Central Bank.  These officials ensure that 
ICDF aid support MOFA foreign policy goals and is used 
effectively to bolster ties with countries that recognize 
Taipei.  Liao said that in addition to some government 
grants, most of ICDF funding comes from investments financed 
from its endowment, which currently total about $440 million 
(NT$15 billion).  At the end of 2003, the ICDF's pledged 
investment and lending amounted to a total of approximately 
$495 million. 
 
4.  (C) Liao said that the foundation largely provides what 
the recipient country wants and offers a range of development 
and technical assistance programs.  According to Liao, ICDF 
holds consultations with each country and once a desire or 
need is expressed, the ICDF works to meet those goals.  For 
African allies, the ICDF is mostly focused on providing 
technical assistance to increase agricultural productivity as 
well as to promote investment to encourage education and 
promote worker training.  In Latin America, the ICDF funding 
is more geared towards assisting these nations promote 
economic investment and expand small and medium enterprises. 
The ICDF is involved with actual aid projects and does not 
appear to be involved with direct payments abroad.  The 
organization's books are open for the public to see and AIT 
was given a copy of last year's audit report. 
 
Increasing NGO Cooperation 
-------------------------- 
 
5.  (C)  ICDF is also working to increase its cooperation 
with NGOs and other international aid organizations to 
improve its international prestige and status.  AIT officials 
attended a conference that focused on the ICDF's role in 
cooperating with aid organizations and NGO's.  The ultimate 
goal of this cooperation is to advance Taiwan's foreign 
policy goals through a variety of new mechanisms and increase 
access to other countries through international 
organizations.  ICDF and MOFA officials admitted to AIT that 
Taiwan must find a way to break free of Beijing's efforts to 
isolate Taiwan in the global community and this could be a 
new path.  (Comment: Taipei has been blocked from virtually 
all organizations and has little leverage to practice 
multi-lateral diplomacy abroad.  End comment). 
 
Final Thoughts: Concern Over Beijing 
------------------------------------- 
 
6.  (C) At the end of the meeting, Liao expressed concern 
with Beijing's increasing efforts to counter Taiwan's aid 
efforts with nations that maintain diplomatic relations with 
Taipei, particularly in Latin America.  Liao mentioned his 
particular dismay that the Organization of American States 
(OAS) granted China observer status and not Taiwan.  Liao 
also said that Beijing uses this observer status to ensure 
that Taiwan's interests are left out of OAS discussions and 
programs.  However, Liao noted that Taiwan enjoyed good 
relations with OAS under former Secretary General Miguel 
Angel Rodriguez, who was a supporter of Taiwan when he was 
president of Costa Rica.  (Comment: Rodriguez now stands 
accused in his native Costa Rica of taking money from, among 
others, Taiwan while serving as president.  End comment). 
 
Comment: Uphill Battle 
---------------------- 
 
7.  (C) The ICDF may play an increasingly central role in 
Taiwan's diplomatic strategy given a growing backlash at home 
and abroad over less ethically acceptable forms of foreign 
assistance in places like Costa Rica and 
Nicaragua--particularly because the ICDF is largely 
self-sufficient and involved in legitimate aid work.  The 
Chen administration is also eager to use Taiwan's foreign aid 
program to enhance its relations both with international 
organizations and major non-diplomatic partners such as Japan 
and the United States.  Over the past six months, Taiwan has 
actively expanded contacts with Japanese Overseas Development 
Assistance experts and have expressed interest to AIT in 
forming consultative relationships with USAID.  It is likely 
Taiwan is reaching out to NGO organizations because they have 
been unsuccessful in their bids to join international 
organizations because of the PRC's influence and Taipei the 
ICDF as a possible avenue for multi-lateral diplomacy.  While 
Taiwan targets its assistance programs to further its 
diplomatic agenda, the island does have much to offer the 
developing world in the areas of agricultural technology, 
microfinance, technical education, and small business 
development. 
PAAL