TAIWAN NEGLECTING CENTRAL AND EASTERN EUROPE

C O N F I D E N T I A L SECTION 01 OF 04 TAIPEI 001796

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 04/13/2015
TAGS: PREL PGOV TW
SUBJECT: TAIWAN NEGLECTING CENTRAL AND EASTERN EUROPE


Classified By: AIT Director Douglas Paal; Reasons: 1.4 (B/D)


1. (C) Summary: Taiwan is neglecting Central and Eastern
Europe in favor of traditional European Union (EU) members in
the west. Despite substantial efforts by Central and Eastern
European governments to promote ties with Taipei, Taiwan
Ministry of Foreign Affairs (MOFA) officials told AIT that
these nations have little influence in the EU and Taipei has
no plans to significantly engage Central and Eastern Europe.
Diplomats from new EU member countries in Taipei assert that
Taiwan is making a significant strategic miscalculation and
say that growing economic ties between Taipei and Central and
Eastern Europe are primarily due to their own government's
initiatives. Taiwan's relationship with new EU members has
also been stymied by the Chen Shui-bian administration's
independence rhetoric and eagerness to publicize Taipei's
foreign policy victories for political gain, which has drawn
the ire of Beijing. As a result, Taipei appears to have lost
an opportunity to counter the PRC's growing influence in the
EU as Central and Eastern European nations have distanced
themselves from Taiwan in favor of Beijing. Taiwan's foreign
policy towards Central and Eastern Europe is yet another
example of Taipei's inability to formulate a viable strategy
to counter the PRC and advance its own diplomatic standing
around the globe. End summary.

MOFA Ignoring New EU Members
--------------


2. (C) MOFA officials are focusing their European foreign
policy strategy on Western Europe on the grounds that Central
and Eastern Europe have little influence in the EU. MOFA's
Section Chief for Central and Eastern Europe, Patrick Chu,
told AIT that Taipei is not devoting many resources to new EU
members in the east because they have little power when
compared to France and Germany. Chu assured AIT that Taiwan
has many initiatives focused on Europe. He said there are
five Taiwan friendship groups in the EU Parliament and Taipei
annually invites about 300 legislators from Europe to visit
Taiwan. However, when asked if any of these initiatives are
specifically tailored towards Central or Eastern Europe, Chu
said they were focused on Western Europe and hardly mentioned
Central and Eastern Europe. Chu told AIT that Taiwan
maintains some representatives offices in Central Europe, but
that there are no plans to open new offices in Eastern
Europe. He added that PRC pressure is increasing in Europe
and now EU nations will not allow high-ranking Taiwan
political officials to visit.

Central/Eastern Europe Taking the Initiative
--------------


3. (C) Central and Eastern European diplomats in Taipei
assert that Taiwan has foolishly paid scant attention to the
region. The Hungarian Trade Office's Chief Representative,
Sandor Matyus, told AIT that Central Europe has been
substantially more proactive than Taiwan in working to
establish ties and argued that Taiwan needs to pay more
attention to Central and Eastern Europe. Poland's Chief
Representative, Tomasz Nowacki, echoed Matyus and said that
Taipei has never offered much to Central and Eastern Europe.
He said this is a serious mistake on Taiwan's part and he
opined that Taipei overly relies on the U.S., which is, in
his mind, a "poor" foreign policy. Slovakia's Economic and
Cultural Office Representative, Jan Bratko, agreed with the
other diplomats and told AIT that although his office only
opened last year in Taipei, there is not yet any direct
investment from Taiwan in Slovakia. He added that Central
and Eastern European governments believe that they should be
closer to Taipei, but that Taiwan is not engaging the region.
Even MOFA's Chu said that Central and Eastern European
countries are very proactive towards Taiwan and are
sympathetic to Taiwan's emerging democracy and anti-Communist
stance.

Also Hurt By Chen's Foreign Policy
--------------


4. (C) Central and Eastern Europe's desire for closer ties
with Taiwan is also being hindered by the Chen
administration's practice of publicizing Taipei's foreign
policy activity for domestic political gain. Hungary's
Matyus told AIT that the Democratic Progressive Party's (DPP)
practice of leaking information to the press has made a close
relationship with Taipei difficult for Budapest. Matyus said
in 2002 Vice President Annette Lu was permitted to visit
Budapest for a conference on democracy as long as Taipei
agreed to be discreet. However, Matyus said the Chen
administration loudly publicized the visit as a victory for
Taiwan, which caused many problems for Hungary. Matyus told
AIT that Beijing protested and retaliated against Budapest.
Matyus added that Budapest was burned by the DPP and that
such a visit will not be permitted ever again. He said that
Hungary wants more contact with Taiwan, but that this is not
possible because the DPP will not be discreet in its foreign
policy, which is necessary to avoid problems with the PRC.


5. (C) Poland's Nowacki agreed that dealing with Taiwan has
become more difficult under the Chen administration. He said
that the Chen administration too often uses Taipei's foreign
policy for public relations. For example, Nowacki told AIT
that previously under the KMT, Poland and Taiwan had
unpublicized and discreet legislative and political
exchanges. However, he lamented that such visits are
virtually impossible now because they would be publicized in
advance by the Chen administration and loudly touted as a
political victory, which would draw protests from Beijing.
Nowacki added that under the KMT, Taiwan's foreign policy was
more pragmatic and realistic. Under the DPP, however,
Taiwan's foreign policy methods are counterproductive and
Chen's independence rhetoric is hurting Taiwan. Nowacki said
that Taipei's lack of a pragmatic foreign policy makes it
difficult to help Taiwan, not just in Europe, but throughout
Asia. He said many of his colleagues say Taiwan is a trouble
maker and privately admitted that Warsaw would offer more
support to Taiwan if Taipei took a more moderate approach and
paid more attention to Poland.

PRC Taking Advantage
--------------


6. (C) Beijing is capitalizing on Taiwan's decision to snub
Central and Eastern Europe and the region's dissatisfaction
with the Chen administration. Central and Eastern European
governments are looking to the PRC for economic ties and
political accords at Taiwan's expense. Hungary's Matyus told
AIT that after the fiasco caused by Vice President Lu's visit
in 2002, Budapest began looking to Beijing. He said Hungary
and the PRC have exchanged official visits, and in 2004,
Budapest and Beijing and signed a joint communiqu in which
Hungary pledged not to have any official contact with Taiwan.
Slovakia's Bratko argued that Taiwan's foolish European
foreign policy has caused Central and Eastern Europe to look
to Beijing because the PRC is paying more attention to the
region than Taipei. He added that the value of Taiwan's
commercial expertise, one of its most valuable bargaining
chips, is declining. According to Poland's Nowacki, Taiwan
should have taken advantage of Central Europe's sympathy to
Taiwan and lamented that Taipei is doing everything not to
survive.

Economic Ties Still Growing
--------------


7. (C) Despite Taipei's almost exclusive focus on the west,
economic ties between Taiwan and the east are growing because
of Central and Eastern Europe's efforts. Each of the
European diplomats AIT met with agreed that their own
government was the main driver in the economic relationship
with Taiwan. According to Poland's Nowacki, Taipei exports
to Poland last year totaled around $250 million USD. For
Hungary, trade is also growing and last year the total value
of trade between Taiwan and Hungary was about $400 million
USD. Matyus said that Hungarian exports consist mostly of
electronics and that Budapest is seeking Taiwanese Foreign
Direct Investment (FDI). He said last year there was
$150-200 million USD of FDI in Hungary from Taiwan. While
Slovakia's Bratko has had little success thus far luring
Taiwanese FDI, he expects to spend much of his time in Taipei
lobbying Taiwan businesses and encouraging investment.
Bratko said that the high-tech industry is very important for
Bratislava and the future of the Slovak economy.

Czech Republic Lone Bright Spot
--------------


8. (C) Taipei's relationship with the Czech Republic is the
lone bright spot for Taiwan in Europe. According to Michal
Kral, the representative from the Czech Republic's Economic
and Cultural Office in Taipei, however, the strength of the
relationship is primarily due to Prague's efforts to engage
Taiwan and encourage close ties. Kral told AIT that after
the fall of communism, Prague believed that Taiwan's economy
was complementary to the Czech Republic and Prague adopted a
very focused campaign to improve ties. As a result, Taiwan
invested a significant amount in the Czech Republic and
remains one of the largest foreign investors in the country.
Kral told AIT that the eighth largest company in the Czech
Republic is Taiwanese (Hon Hai Precision) and that Prague is
looking to Taiwan for high-technology cooperation since 40
percent of the computers in Europe are produced in the Czech
Republic.


9. (C) Kral told AIT that although Prague has a consistent
One-China policy, his government also wants a balanced policy
towards Taipei. Kral said the Czech Republic understands
that the PRC is a global power, but does not believe Beijing
deserves special treatment. Kral added that Prague does not
wish to be dictated to by China and in June 2003, the Czech
Republic allowed MOFA to hold its European regional
conference in Prague. Other European nations had denied
Taipei's request, but Kral said that Prague believed this was
not a political issue despite PRC protests. However, he said
there are limits to the relationship, pointing to former
Czech President Havel's refusal to allow President Chen to
visit Prague while Havel was President because of the
consequences from the PRC.

Comment: A Lost Opportunity
--------------


10. (C) Why Taipei continues to emphasize Western Europe over
nations in Central and Eastern Europe is a mystery.
Logically, Taipei should seek allies among the new
democracies in Central and Eastern Europe rather than
focusing its resources lobbying unsympathetic nations like
France and Germany in the west. Central and Eastern Europe
clearly want to engage Taipei economically because of
Taiwan's high-tech expertise and FDI potential. The region,
moreover, is already politically sympathetic to Taiwan
because of its shared experiences with anti-Communism and
democratization.


11. (C) Yet the Chen administration appears to have alienated
many governments in Central and Eastern Europe, leaving
Beijing opportunities to make inroads in a region where its
political system and foreign policy orientation might have
otherwise reduced its potential influence. Once again, as
Taipei ignores Central and Eastern Europe, Taiwan is
demonstrating that it lacks a foreign policy strategy to
counter Beijing, which is particularly unwise as the decision
to lift the EU arms embargo against the PRC draws near.
PAAL