US embassy cable - 04TAIPEI3667

C O N F I D E N T I A L SECTION 01 OF 06 TAIPEI 003667 
 
SIPDIS 
 
STATE PASS AIT/W 
HAGUE ALSO PASS AMSTERDAM 
FRANKFURT ALSO PASS DUSSELDORF 
 
E.O. 12958: DECL: 11/11/2029 
TAGS: PGOV, ECON, TW, Cross Strait Politics 
SUBJECT: BEIJING ACCELERATING GLOBAL CAMPAIGN AGAINST 
TAIWAN 
 
 
Classified By: AIT Director Douglas Paal; Reasons: 1.4 (B/D) 
 
1.  (C) Summary. Taiwan officials say Beijing is effectively 
leveraging its growing international clout to orchestrate a 
global campaign to isolate Taipei.  Officials assert that 
Beijing's recent efforts have become increasingly 
coordinated, organized, and creative.  Taiwan MOFA officials 
maintain that the PRC's most recent tactic has been to cite 
Taiwan's non-participation in international forums, such as 
the Chemical Weapons Convention (CWC) to pressure some 
Taiwanese companies into supporting Beijing's interests.  In 
Europe, officials claim that Beijing has offered substantial 
economic carrots to France and Germany in exchange for 
leading the charge to lift the EU arms embargo.  In Latin 
America, the PRC has upped the stakes in the PRC-Taiwan 
diplomatic chess match by employing surrogates like Venezuela 
and Brazil to pressure Taiwan's diplomatic partners in the 
region and increasing aid.  Beijing has continued effectively 
to block Taipei's efforts to join international 
organizations.  Taiwan believes that its international 
position is only getting worse, and it sees little hope of 
countering Beijing's efforts in light of the PRC's growing 
international clout.  Most Taiwan officials believe Taipei's 
only option is to rely on the U.S. for support.  End summary. 
 
Beijing's Full-Court Press More Unified 
--------------------------------------- 
 
2.  (C) MOFA officials report that Beijing has stepped up its 
full court press around the world to isolate Taipei.  MOFA 
International Organizations Deputy Director General (DDG) 
Jieh Wen-chieh told AIT that what concerns him most is that 
it has only been in the last couple of years that the PRC's 
efforts have become so focused, unified, and global in scope. 
 He said that it seems all PRC officials and organizations 
around the world are working in unison to pursue Beijing's 
goal of isolating Taiwan.  Jieh remarked that he has never 
seen such an effective campaign before.  Jieh said that this 
is occurring on all fronts -- politically, economically, and 
through international organizations. 
 
A Dangerous New Tactic? 
----------------------- 
 
3.  (C) MOFA officials say that the PRC has adopted a new 
tactic of approaching Taiwanese companies and asserting that 
Taipei cannot effectively represent their interests abroad. 
DDG Jieh told AIT that he believes this has the potential to 
be Beijing's most powerful weapon.  For example, Jieh said 
Beijing has started to warn Taiwanese chemical companies 
about the negative impact on their business interests that 
has resulted from Taiwan's lack of membership in the CWC. 
Jieh said that in order for certain chemicals to be traded or 
bought on the market legally, the company's host government 
must be a member of this organization.  Jieh told AIT that 
because Beijing has blocked Taipei from joining the CWC, 
Taiwanese firms are having difficulty acquiring or selling 
certain chemicals on the open market.  An Industrial 
Development Bureau official told AIT separately that it is 
very difficult for Taiwan entities to acquire Category I and 
Category II chemicals because CWC member countries are not 
permitted to export such chemicals to non-members.  However, 
Taiwan can import Category III chemicals if the importing 
company applies to the Bureau of Foreign Trade (BOFT) for an 
end-user certificate (Note: The BOFT reports that some CWC 
members may be selling chemicals to Taiwan in violation of 
the CWC and some non-CWC members may be selling CWC 
restricted chemicals to Taiwan.  End note). 
 
4.  (C) Jieh told AIT that this PRC strategy is a huge and 
growing concern because it is not just a matter of political 
face and prestige, but of economic survival.  He said it is 
increasingly difficult to protect Taiwan's own basic economic 
interests as well those of individual companies.  Jieh added 
that some Taiwanese corporations, which are involved in joint 
ventures with PRC firms, are also feeling the heat from 
Beijing.  Jieh expressed concern that if current trends 
continue, more of Taiwan's firms will be at a disadvantage 
and may look to Beijing rather than Taipei for support out of 
necessity.  Jieh said that Taiwan's membership in certain 
organizations is essential for its economic and business 
interests and as long as Beijing continues its present 
course, the future is bleak. 
 
Using Carrots to Lift the Embargo in Europe 
------------------------------------------- 
 
5.  (C) Taiwan officials note that the PRC is equally 
aggressive in using its economic prowess in Europe to 
convince EU nations to overturn the embargo on weapon sales 
to Beijing.  Although it is not expected to be lifted this 
year, MOFA officials believe some form of the ban could be 
lifted as early as next year.  MOFA DDG for European Affairs, 
Hsieh Chun-teh, told AIT that he felt by next year there is 
no way to predict what will happen, and he was not 
optimistic.  Hsieh said that Beijing has adeptly convinced 
Germany and France, who often champion human rights causes, 
to take the lead in convincing other EU member states to lift 
the embargo.  Hsieh noted that French President Jacques 
Chirac, during a recent visit to the PRC, pledged to work 
hard to lift the embargo and was rewarded by billions in 
business deals.  Hsieh added that in December, German 
Chancellor Gerhard Schroeder is scheduled to visit Beijing 
and will likely sign similar trade pacts. 
 
Upping the Stakes in Latin America 
---------------------------------- 
 
6.  (C) Beijing has expanded the scope of its diplomatic 
pressure on Latin American nations that recognize Taiwan. 
MOFA DDG for Latin America, Wu Chin-mu, noted that the PRC is 
leveraging its new found clout to redouble its efforts to 
erode Taiwan's last bastions of international diplomatic 
influence.  Wu cited the case of Dominica, which earlier in 
the year switched diplomatic relations from Taiwan to China 
after Beijing offered a $112 million aid package over 5 
years.  In addition, Wu believes the situation in Panama, 
arguably Taipei's most important diplomatic partner, is 
clouded as Panama City did not support Taiwan's recent bid to 
become a member of the UN as it had in previous years.  The 
new Torrijos administration in Panama has pledged that it 
will increase ties to Beijing and Wu noted that the PRC is 
looking to increase business activities there.  National 
Security Council (NSC) Deputy Secretary General Parris Chang 
told AIT that Beijing has offered Panama advisors and 
engineers who worked on the Three Gorges dam project to widen 
the Panama canal in exchange for diplomatic recognition. 
 
7.  (C) Beijing is also using its clout with other countries 
in the region to pressure nations that recognize Taiwan.  Wu 
asserted that in a recent visit to Beijing, Brazilian 
President Luiz Inacio Lula promised to encourage Paraguay to 
switch diplomatic recognition to Beijing in exchange for 
trade concessions from the PRC.  Wu said that Taiwan is 
concerned over Paraguay's ability to resist the PRC's 
regional pressure.  He noted that Beijing is also linking 
free trade negotiations with MERCOSUR to the Taiwan issue. 
Beijing has reportedly warned that Paraguay's ties to Taiwan 
are an obstacle to finalizing any PRC-MERCOSUR free trade 
framework.  Chang told AIT that Beijing also encouraged 
Argentinean President Nestor Kirchner to lobby Paraguay to 
recognize the PRC after Kirchner visited the PRC earlier this 
year and the two countries signed billions of dollars worth 
of commercial contracts.  The NSC's Chang added that PRC 
President Hu Jintao will likely reinforce this pressure 
during his upcoming state visit to Buenos Aires. 
 
8.  (C) Chang noted that the PRC is increasingly looking to 
Venezuela as its surrogate in the region.  He asserted that 
Venezuelan President Hugo Chavez has recently pressured the 
Dominican Republic on the Taiwan issue.  According to Chang, 
Chavez has threatened to cease its sale of oil at so-called 
"friendship prices" to the Dominican Republic if Santo 
Domingo does not sever ties with Taipei.  Chang added that 
Taiwan is also concerned that the PRC peace-keepers deployed 
to Haiti may be used as a tool to influence the upcoming 
election campaign there. 
 
Blocking International Organization Bids 
---------------------------------------- 
 
9.  (C) Taipei officials say they see no let-up in the PRC's 
efforts to block Taipei's membership in all forms of 
international organizations.  MOFA International 
Organizations DDG Jieh told AIT that Beijing views Taiwan's 
membership in international organizations as a "zero sum 
game."  Jieh remarked that in the PRC's eyes, if Taipei gains 
membership to any international organization, then it is the 
same as diplomatic recognition.  To illustrate how serious 
Beijing is, he cited a recent APEC meeting where the PRC 
delegation approached Taipei's delegation and bluntly warned 
Taiwan that its position on the cross-Strait issue will have 
a negative impact all over the world and demanded that Taipei 
accept its "proper position," as defined by Beijing.  The 
NSC's Chang noted that Beijing appears eager to call for a 
vote in the Organization of American States to reject 
decisively Taiwan's bid for observership. 
 
10.  (C) Jieh said that Beijing's efforts are having dire 
consequences for Taiwan politically and economically in an 
increasingly globalized economy.  According to Jieh, no 
organization is too obscure for Beijing to keep Taiwan out 
of.  Jieh told AIT that Taiwan recently was interested in 
becoming a member of the Indian Ocean Tuna Commission, which 
is composes of nations that have fishing interests in the 
Indian ocean.  Despite the fact that Beijing does not have 
even one fishing vessel in the Indian ocean, the PRC sought 
membership so it could block Taiwan's own entry, just in case 
Taipei might seek to join.  He commented that Beijing's 
hard-line is also preventing Taipei from implementing key 
international law enforcement commitments such as money 
laundering, narcotics trafficking, and terrorism.  Jieh 
remarked that this will impact the international community at 
large, not just the PRC-Taiwan competition.  Jieh illustrated 
the case of Beijing's efforts to keep APEC from working 
counter-terrorism issues because the PRC did not want Taiwan 
involved in any type of global law enforcement issues that go 
beyond economics.  Jieh lamented that with the importance of 
membership to international organizations growing, Taiwan is 
increasingly at a disadvantage. 
 
Comment: Time to Face the Music 
------------------------------- 
 
11.  (C) Taiwan officials seem to have concluded that there 
is little they can do.  Practically every MOFA official that 
AIT met with pleaded for increased U.S. support.  It is clear 
they do not have an effective plan for how to deal with the 
quandary they face.  There is some debate within MOFA circles 
over whether this chess match can be continued.  Taiwan has 
continued to do all it can diplomatically and financially to 
maintain its diplomatic partners, but no one is confident 
over how long can Taiwan keep its 27 formal diplomatic 
relationships in the face of Beijing's money diplomacy and 
pressure tactics.  On the home front, legislators and the 
public are also growing weary of blank checks being offered 
to third world nations simply to maintain formalistic 
diplomatic ties.  The embarrassing ongoing scuffle over 
Vanuatu will only increase that sense.  However, no one seems 
to willing to contemplate what happens if it loses what 
minimal space it has carved out for itself. 
PAAL