Thursday, June 12, 2014

Taiwan-Ukraine: A Cautious Relationship

Relations between Taipei and Kiev have often been complicated by the policies of their larger neighbors.

Walk along leafy Grushevskogo Street in the center of Kiev and you can’t miss the elegant mansion housing the embassy of the People’s Republic of China. In contrast, Taiwan’s Economic and Cultural Office is conspicuous by its absence. Ukraine strictly adheres to the “one-China” principle, holding that there is but one China and Taiwan is part of China, and that the government of the People’s Republic of China is the sole legal government of China. The former Soviet Republic has had diplomatic relations with Beijing (which, besides having an embassy in Kiev, also established a Consulate-General in Odessa in 2006) since 1992. Notably, Ukraine never did what many other countries have done, namely recognize China but keep an economic and cultural office in Taipei. Indeed, until the outbreak of the Crimean crisis, Ukrainian nationals in Taiwan used to call at the Russian Representative Office in Taipei for assistance.

Yet the first years of Taiwan-Ukraine interaction in the 1990s seemed very promising. Ukrainian authorities continued to communicate with Taiwan even after recognizing the People’s Republic in January 1992. In fact, Ukrainian officials made Taipei aware that Kiev looked positively at “substantive” relations with Taiwan and would welcome the island’s economic assistance. Promptly, Taiwan dispatched humanitarian aid and sent its vice foreign minister, John Chang, on an unofficial visit to Kiev. By mid-1996 Taiwan had been visited by Ukraine’s ministers of Education, Health, Light Industry and Economics, vice ministers of Economics and Culture, the vice-speaker of Parliament, and chairman of the Association of Foreign Trade. Alongside political dialogue, cultural synergies were created. Ukrainian students attended Taiwanese universities and young Taiwanese began studying in Ukraine. Meanwhile, the Institute of International Relations at Taipei’s National Chengchi University inaugurated a partnership with Kiev State University, the Chinese Culture University offered a basic Ukrainian language course, performing arts groups paid visits, and numerous arts exhibitions were held.

So rosy appeared the prospects that, in August 1996, then Taiwanese Vice-President and Premier Lien Chan very discretely visited Ukraine for three days as a guest of Kiev State University’s Rector, where he was given an honorary degree. In his report to Taiwan’s President and KMT Chairman Lee Teng-hui, Lien acknowledged meeting Ukraine’s President Leonid Kuchma, the prime minister, both vice prime ministers, the vice speaker of Parliament and Kiev’s mayor. Mr. Lien reportedly made some “interesting proposals” to his interlocutors. Such proposals were to come into effect provided that Kiev switched recognition to Taipei. However, the Ukrainians declined and, seeking to reassure a piqued Beijing about their loyalty, reiterated through their foreign minister that “Kiev regards Taiwan as an inseparable part of China.” Then, to soothe feelings in Beijing, the Ukrainians promptly denied Taiwanese news reports that they had met Lien.

Kiev’s hasty backtracking signaled that Ukraine was neither going to change allegiance to Taipei nor had a long-term strategy for cross-Strait brinkmanship. Rather, the Ukrainians were utilizing the opportunistic but convenient tactic of cultivating economic relations with Taiwan while punctiliously abiding by the “one China policy.”

“After Lien’s visit Ukraine became very cautious,” two Taiwanese foreign affairs officers told us on May 15. Notably, in April 1997, Taiwan Info – an electronic platform managed by Taiwan’s Ministry of Foreign Affairs (MOFA) – lamented that “due to pressure exerted by the Chinese Communists in Peking […] the Ukrainian government eventually rejected the idea of Taiwan’s Minister of Economic Affairs Wang Chih-kang joining a Taiwanese trade delegation to Ukraine. Wang was supposed “to explore the possibility of setting up a Taiwan trade office in Kiev.”

Yet, given Taiwan’s significance as an investor and trade partner, as the foreign affairs officers pointed out, Ukrainian-Taiwanese relations continued to maintain a semi-official complexion under the pragmatic formula of “practical and substantive relations.” In fact, the same Taiwan Info report noted that, in December 1996, Wang had met with his Ukrainian counterpart in Singapore during the first ministerial meeting of the World Trade Organization (WTO) and highlighted that Ukraine was “rich in natural resources and its scientific technology is more advanced than that of neighboring countries,” and that “research show(ed) that several kinds of Taiwan products” had “strong market potential” there. The list included “computers and peripherals, medicine, sports equipment, motorcycles, electrical products and textiles.” Eventually, after years of little progress, the low-key dialogue between Taipei and Kiev bore some fruit. In January 2005, Taiwan shortened the visa processing for Ukrainians from three weeks to three days and, in October 2006, the Taiwan External Trade Development Council (TAITRA) – a body jointly sponsored by the government, industry associations, and several commercial organizations – opened an office in Kiev as the harbinger of revitalized economic relations with Ukraine after its accession to the WTO, which was finalized the following year.

Since then, Ukraine has remained an appealing but challenging new business frontier for Taiwan. Today, Taiwan’s main exports to Ukraine are information and telecommunication equipment, steel and car components. In return, Kiev sells chemicals, oil, metals and agricultural products to Taipei. True, bilateral trade – $363 million in 2013, leaving Taiwan with a surplus of $43 million – represents less than 1 percent of Taipei’s total foreign trade of $50.66 billion, but “there are numerous Taiwanese entrepreneurs willing to make business with Ukraine and investing in that market” according to Dr. Borhan Fu, chairman of the Taipei-based B. Happy Corporation, which serves as a hub for Taiwanese investments in the Russian Federation and the other former Soviet Union republics.

In an April interview, Fu continued: “Actually, apart from raw materials like graphite for Taiwan’s nuclear power plants, industrial machinery, light-emitting diodes (LED) components and pharmaceutical products, because of the Ukrainian legislation (or absence of it) there are several Taiwanese going to Ukraine for stem-cell therapy or to hire surrogate mothers.” Sipping coffee in an immaculate meeting room in central Taipei, he added with a smile,  “There are even Taiwanese men looking for a Ukrainian wife.”

On a more serious note, Fu observed that even though the Ukrainian market appears very promising and Kiev’s corporate income tax rate is 18 percent, well-intended Taiwanese companies could find it very difficult to successfully operate in Ukraine due to ignorance of Ukrainian business culture and legislation. “Unlike the Japanese and the Koreans who have been systematically exploring and preparing the ground for more than twenty years, we Taiwanese do not really know how to engage that market. Especially in case one wants to create a partnership with local companies,” Fu argued. This was echoed by sources at MOFA, who contended that the real hurdle for Taiwanese businesses hoping to pierce into the Ukrainian market is the cultural and language barrier, plus poor governance.

Of course, the current crisis in Ukraine does not help. Not surprisingly, the aggravation of the Ukrainian crisis, Crimea’s secession, and the serious civil unrest in Ukraine’s Eastern regions have troubled the Taiwanese government, which has officially voiced concerns in two diplomatically worded and balanced MOFA press releases issued in March 2014. In essence, Taipei declared that it was “deeply concerned by rising tensions in the country,” and urged the parties to “begin negotiations as soon as possible […] and work together to advance peace and stability in the region.” On the other hand, in the same week of the first MOFA press release, the Taiwan’s Central New Agency reported that Taiwan’s Bureau of Foreign Trade had stated that “thanks to a steady economic recovery in Europe and the united States, the tense situation in Ukraine has had no immediate impact on Taiwan’s export and imports.” Also, the Bureau confirmed that those Taiwanese nationals known to be in Ukraine were “not believed to be in any danger.”

When asked about the political developments and the presidential elections in Ukraine, our respondents at MOFA said that the Taiwanese government was going to “wait and see,” observed that Taiwan would like to have with Ukraine “the same kind of relations it has with the Russian Federation” (Russia is the island’s 20th largest trade partner and has a representative office in Taipei), and expressed the hope that the new presidency in Kiev “will usher in a new chapter of Taiwan-Ukraine relations.”

In fact, the victory of pro-West billionaire Petro Poroshenko appears to be good news for Taiwan. The new Ukrainian president, a successful entrepreneur, is business savvy and minded. As such, he is expected to foster trade and implement policies aimed at attracting foreign investors. Poroshenko will also plausibly seek a closer association with the European Union (EU). For Taiwanese companies and officials that are already familiar with EU legislation and practices, it would be much easier to interact with and operate in a Europeanized Ukraine. Finally, the new Ukrainian administration could decide either to use the European Economic and Trade Office in Taipei as its interface with Taiwan or, at the risk of displeasing Beijing, establish a representative office and allow Taiwan to open a long coveted economic and cultural office in Kiev.

Should Ukraine’s Eastern regions of Donetsk and Lugansk – which have declared their independence as the Novorossiya Union – do eventually achieve statehood, it is extremely unlikely that Taipei will pursue diplomatic ties with the new state. That would destabilize the equilibrium of the cross-Strait “diplomatic truce,” which is of capital value to Taiwan. Rather, Taipei would most likely seek “practical and substantive relations” with the new country, provided this does not irritate Taiwan’s Western friends. Finally, it can be surmised that while Taiwan would look upon Ukraine’s integration with the EU positively, it might consider Kiev’s NATO membership as a geopolitical complication in the region. Not per se, but because tension and polarization are bad for business and, in light of its peculiar and delicate international situation and willingness to expand its ties with Russia while nurturing its relations with the West, because Taiwan prefers not to give even the impression it takes sides.

Fabrizio Bozzato and Tatiana Komarova are PhD candidates at GIIASS, Tamkang University and Associate Researchers at the Center for Advanced Technology, Tamkang University, in Taiwan


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