Given their validation of Taiwan’s sovereignty and geostrategic importance, these small and oft-overlooked countries can punch above their weight. 

On January 15, the Pacific island nation of Nauru abruptly terminated its diplomatic relationship with Taiwan and re-established ties with the People’s Republic of China (PRC). The timing of Nauru’s move was no coincidence – it announced the rupture with Taipei two days after Taiwanese voters elected incumbent Vice President Lai Ching-te as president. The PRC was unhappy with the election result, given its long history of deep distrust of the ruling Democratic Progressive Party (DPP).  

The loss of Nauru – which had previously recognized Beijing but switched over to Taipei in 2005 – marked the 11th time a country has derecognized Taipei since President Tsai Ing-wen was elected in 2016. During her presidency, the number of Taiwan’s diplomatic allies has almost halved from 23 to 12, a result of unflagging efforts by the PRC to squeeze Taiwan’s international space.  

China’s poaching of Taiwan’s official allies aims to isolate the island democracy and “force it into having no option but to move towards Beijing’s preferred outcome – unification,” says Timothy Rich, a political science professor at Western Kentucky University. “No one believes that the lack of diplomatic recognition from a microstate with effectively no political or economic influence somehow undermines China’s sovereignty. Rather, this is a means to squeeze out any remaining means for Taiwan to be treated like other states.”  

Nauru likely re-established ties with Beijing because it “was enticed by the amount of money the PRC was willing to provide with promises of more assistance in the future,” says John Hennessy-Niland, former U.S. ambassador to the Republic of Palau and now a professor at the Bush School of Government & Public Service at Texas A&M University. The tiny Pacific island nation nearly went bankrupt in the early 2000s and has since “tried all sorts of schemes to augment the government’s coffers,” Hennessy-Niland says.  

Taiwan’s diplomatic allies are predominantly small, developing countries with limited economic and geopolitical weight. Yet they play an underappreciated role in affirming the international standing of the Republic of China (ROC), as Taiwan is known officially. The Chinese Communist Party contends that Taiwan is a part of the PRC, citing United Nations Resolution 2758 – which expelled the ROC and recognized the PRC as the representative of “China” in the UN – as evidence of Taiwan’s subordination to the PRC. This interpretation distorts the UN resolution, which does not mention Taiwan’s status.  

Given the high costs of exclusion from the UN, Taiwan has been trying for years to rejoin. Its diplomatic allies have been the only countries directly lobbying on its behalf. At the 2023 general assembly, King Mswati III of Eswatini – Taipei’s last African diplomatic ally – said Taiwan should be included in the UN system to “emphasize the principle of ensuring that no one is left behind.”  

Echoing this sentiment, Palauan President Surangel Whipps Jr. said that “we also advocate for change regarding the Republic of China, Taiwan, being unjustly excluded from UN systems,” while then Guatemalan President Alejandro Eduardo Giammattei highlighted Taiwan’s contributions to science, technology, and healthcare development, lamenting that “yet we exclude its citizens from having a voice in this forum.”  

Taiwan’s diplomatic allies maintain their ties with Taipei at their peril. “It takes personal courage and a commitment to your country remaining free to continue recognizing Taiwan,” says Cleo Paskal, a researcher focusing on the Indo-Pacific region at the Washington-based think tank Foundation for Defense of Democracies (FDD). “If you don’t recognize China, China tries to make it very difficult for you in multilateral organizations – you have problems in a lot of places.”  

In the case of Palau, the PRC’s coercion has sometimes been blatant. In November 2017, Beijing ordered tour operators to stop selling package tours to Palau. Violators of the ban could be fined. At the time, more than half of visitors to the tiny Pacific Island nation were Chinese tourists.  

More recently, Beijing has tried to woo Ngerulmud with financial incentives. In February, Whipps sent a letter to a U.S. senator whose name was redacted from the copy that alleged the PRC had offered to “fill every hotel room” in Palau as well as provide US$20 million a year for a “call center.”  

Geostrategic rationale  

Apart from Eswatini and the Vatican, Taiwan’s remaining diplomatic allies are concentrated in the Latin America-Caribbean region, as well as the Pacific Islands. Poaching Taiwan’s allies in the former allows the PRC to gain a stronger foothold at the United States’ doorstep. It also impedes the ability of Taiwan’s leaders to openly meet American officials on U.S. soil, as they tend to visit the United States on so-called “transit stops” to and from visits to Latin American countries.  

In August 2023, for example, Vice President Lai Ching-te stopped in New York City while on his way to Paraguay and in San Francisco on the way back to Taiwan. While the details of Lai’s stopovers were not revealed – probably to minimize the chances of a strong PRC response – he stated that he planned to have “confident exchanges with world leaders and speak with representatives from like-minded countries.”  

On a previous U.S. stopover in January 2022 en route to Honduras, Lai met virtually with 17 U.S. lawmakers from his Los Angeles hotel. Honduras broke ties with Taiwan in March 2023. Taiwan’s Foreign Minister Joseph Wu has alleged that Honduras’ decision came because Taipei refused to meet Tegucigalpa’s demand for US$2.45 billion in aid. Honduras has denied the allegations.  

Ross Darrell Feingold, a Taipei-based lawyer and political risk analyst, notes that the Latin American nations that have broken ties with Taipei since 2016 (also including Panama, the Dominican Republic, El Salvador, and Nicaragua) have in common a “struggle to be treated with respect both within the region and by the international community.” He says that  one thing these countries can rely on when partnering with China is that China generally won’t comment on the domestic situation in these countries but still offers aid, investment, and a large potential market for exports.”  

When it comes to allies in the Pacific, Beijing has somewhat different calculations, though analysts say these nations also feel they have been disrespected and overlooked by the international community – particularly by Australia, which has historically viewed the Pacific islands as part of its backyard. Canberra once operated a large refugee detention camp in Nauru, the conditions of which the NGO Human Rights Watch in 2016 described as “appalling.”  

The United States is a vital partner to Palau, the Marshall Islands, and the Federated States of Micronesia (FSM) but has been inconsistent in providing support. Important amendments to Washington’s relationship with the countries, governed by the Compacts of Free Association (COFA), were held up for months in Congress before lawmakers finalized them in March. The amendments provide US$6.5 billion in economic assistance over 20 years.  

“U.S. attention to and engagement in the region has come and gone over the years like the ocean tides,” says Texas A&M’s Hennessy-Niland. “The PRC, however, has focused on the ‘second island chain’ and Oceania both to break through what it describes as an encirclement of its mainland and efforts to contain it.”  

In 2019, the Solomon Islands severed ties with Taiwan and has since engaged in a close security partnership with the PRC. In July 2023, Beijing and Sogavare signed an agreement to collaborate on “law enforcement and security matters.” While the Solomon Islands has said it will not allow the construction of a Chinese military facility on its territory, concerns remain given its geographic location and Beijing’s great power ambitions.  

Hennessy-Niland says the Pacific islands have always been of strategic importance. As an example, he points to Imperial Japan’s use of the islands to provide anchorage and basing for its air and naval forces during World War II. In a 2020 report, Princeton University’s Wilson Center noted that if “Japan had achieved uncontested control over the South Pacific islands, Imperial Japanese Navy and Imperial Japanese Army air forces could have intercepted and strangled the sea lines of communication between the United States and Australia.”  

“If you are a PLA planner, Palau [located between Guam and the Philippines] is a problem for you,” says FDD’s Paskal. She notes that by 2026, Palau will host an over-the-horizon radar that will enhance the U.S.’s early warning capabilities in the Western Pacific.  

Boding well for Taiwan is that the United States has been stepping up its engagement in the region, both with the renewed COFA pact and otherwise. At a Senate committee hearing in March, Daniel Kritenbrink, assistant secretary of state for East Asian and Pacific affairs, said the United States works “very carefully and closely with [Pacific island countries] to make sure their needs are met. And we try to close off any opportunities that China could exploit.”  

Risk management  

With Lai Ching-te assuming the presidency, Beijing is likely to pressure his new administration in various ways, including probing for opportunities to poach Taiwan’s remaining diplomatic allies. While some analysts argue that Taiwan’s many strong unofficial relationships keep it from becoming isolated internationally even as it loses diplomatic recognition, there is no substitute for being recognized as a sovereign state. Without diplomatic allies, it would be harder for Taiwan to counter Chinese propaganda narratives, as Beijing could argue that the entire international community endorses its One China principle.  

Given Beijing’s growing clout in Latin America, it will be important for Taiwan to manage its remaining official relationships in the region prudently. Political risk consultant Feingold notes that the PRC “probably won’t be able to offer the prospect of more imports from Guatemala as an incentive – China isn’t eager to buy anything from Guatemala.” While Beijing imports a small amount of raw sugar from Guatemala, it also sources coffee and bananas – Guatemala’s other major exports – from various other countries, he observes.  

However, given the Central American country’s dependency on multilateral organizations, Guatemala might need China to assist it in dealing with those institutions. “It would be understandable if, to obtain China’s support in multilateral organizations, new President Bernardo Arévalo decides to switch relations to China from Taiwan,” Feingold says. 

Regarding Paraguay, Feingold notes that the government and its ruling Colorado Party have “a legacy as anti-communists that still influences” their decision-making. “Although ranchers and farmers only marginally benefit directly from the relationship with Taiwan, aid from Taiwan boosts Colorado Party politicians, which thus mitigates against switching relations,” he says.  

In March, Paraguayan Foreign Minister Rubén Ramírez Lezcano told Nikkei Asia that while he hopes to boost economic ties with Beijing, Paraguay will not accept “any conditions” from Beijing for that relationship, reaffirming the country’s intent to maintain diplomatic relations with Taipei. “Taiwan is quite important to Paraguay,” he said.  

Earlier in the year, there were indications that Tuvalu might consider switching its diplomatic recognition to Beijing. However, after Tuvalu’s new government was sworn into office in late February, it released a Statement of Priorities affirming its commitment to maintain ties with Taipei, which have been in place since the Pacific island nation gained independence in 1978.  

“I think this concern has abated somewhat for the time being,” Hennessy-Niland says.  

As to Palau, FDD’s Paskal says Beijing is trying to influence the outcome of the island nation’s November elections. “There are strong PRC political warfare efforts” to persuade the winners – both presidential and in Palau’s parliament – to break ties with Taipei,” she says.  

Hennessy-Niland agrees, noting that Chinese media are promoting a narrative that the increasing U.S. military presence in Palau makes it a target rather than enhances its security. 

One thing is for certain: The PRC will not relent in its efforts to isolate Taiwan. According to Paskal, securing Pacific island embassies is a high priority for China because it uses them as forward operating bases for unrestricted warfare tactics, including espionage and surveillance. With that in mind, she urges Taiwan to invest more time and resources in its relations with these allies. While the Taiwanese government often highlights the financial aid provided, Paskal says that “it’s not just about money.”