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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Taiwan Looks to Russia to Secure Energy Imports and Independence from China

Taiwan Looks to Russia to Secure Energy Imports and Independence from China

A number of nations live in a diplomatic “twilight zone,” largely bereft of global diplomatic recognition. These include the Turkish Republic of Northern Cyprus, whose unilateral declaration of independence in 1983 has only been recognized in the last 29 years and only by Turkey.

Former Yugoslavian republic of Kosovo has fared somewhat better; following its unilateral declaration of independence in 2008 after nine years of UN occupation, Kosovo has attracted diplomatic recognition from 90 countries.

But Taiwan, the self-styled “Republic of China,” is a unique case. As the “last stand” bastion of Chiang Kai-Shek’s Kuomintang, which fled there in 1949 after Mao Tse Tung’s Communist Party triumphed, during the Cold War it was regarded as the “legitimate” Chinese government, but since its loss of China’s United Nations seat in 1971, its diplomatic recognition has slowly dwindled as nations line up to court Beijing’s Red Mandarins in hopes of economic concessions. As of 2011, only 23 nations continue to maintain official diplomatic relations with Taiwan.

But Taiwan, decades before the mainland embraced capitalism, strived to position itself as one of Asia’s “little tigers” of advanced technology, and the island accordingly runs a large trade surplus, with foreign reserves that are the world's fourth largest, behind China, Japan, and Russia.

But the Achilles heel of the Taiwanese economy remains energy imports, and given its increasingly marginalized status, has sought hydrocarbons where it can, including increasingly pariah state Iran.  In 2005, Saudi Arabia became the No. 1 supplier of crude oil to China, Japan, Korea and Taiwan.

In 2010 Taiwan purchased $2.16 billion in oil products from Iran.

Now Taiwanese diplomacy is pursuing other options to safeguard its energy imports, engaging one of China’s largest energy suppliers, the Russian Federation.

On 11 March Moscow-Taipei Coordinating Commission for Economic and Cultural Cooperation Moscow head  Antonio Chen told reporters, "A delegation will be sent to Russia in the near future for negotiations for the possible purchase of crude oil, natural gas and other materials. In addition, in the trade structure, there are options for increasing supply of metals, chemical production, as well as information technologies, electronics, semiconductors, engineering products, including components for cars, and other production."

Chen added that bilateral Russian-Taiwanese trade in 2001 totaled $4 billion in 2011, noting, "If one adds trade between Russian and Taiwanese investors in continental China to this figure, Taiwan-Russia trade reached $8 billion," with bilateral Russia-Taiwan trade increasing by 120 percent annually.

The Russian Federation considers Taiwan an integral part of China, having signed on to Beijing’s “One China” policy and does not support political and diplomatic contacts with Taipei. However, economic and humanitarian ties between Russian and Taiwan exist.

The Russian Federation’s policy, as the successor state to the USSR, has a historical legacy, as the Soviet Union was the first state to recognize Mao’s Peoples Republic of China on 3 October 1949. Unofficial contacts between the USSR and Taiwan in the late 1960s after the U.S. Nixon administration’s initiatives towards a U.S.-PRC rapprochement had become evident.

So, who benefits from this?

Taiwan, locating alternative energy sources after supporting U.S. and UN initiatives on isolating Iran, safeguarding Taipei’s energy imports.

Russia?

A new market, and reminding Beijing that there are alternatives to its increasing domination of East Asia.

The immediate loser is China – in its python squeeze to isolate Taiwan, its new “best buddy” Russia is cozying up to Taiwan, a development that must be causing consternation in Beijing, as Russia is also an increasingly major energy supplier to China.

Finally, the ultimate winner is Washington, Taiwan’s most stalwart supporter, who has acquired a new ally in its covert campaign to prevent Beijing’s leadership from inhaling Taiwan.

A checkmate for the moment to Beijing – but analysts must remember that their chessboard runs on a different temporal octane. After all, when asked about the French Revolution, China’s former Premier Chou En Lai reportedly said, “It’s too soon to tell.”

By. John C.K. Daly of Oilprice.com




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  • Panos El. Bathrelo on March 16 2012 said:
    Well all nicely said, however, two remarks I could not resist mentioning.
    1)The above mentioned Turkish Republic of Northern Cyprus is hardly a nation in it's own respect since the island of Cyprus was invaded from Turkish troops on 20 July 1974, this resulted to one quarter of the population of Cyprus to be expelled from the occupied northern part of the island where Greek Cypriots constituted 80% of the population. Since then Turkey planned a well structured political confusion,and anybody can understand why the very bad stated unilateral declaration of independence in 1983 has only been recognized in the last 29 years and only by Turkey. Real native Cypriots were killed in this invasion for the fake Turkish substate to have its "independence" an independence did not deserve. Please show some respect to the dead even when you are talking oil. The state is just spoils of war from an ever warfriendly state called Turkey. And Turkey is responsible for its energy suffisient state. Since the real Cyprus is opening up contracts for oil extruction to its sector in cooperation with Israel I see why the turks are in a difficult situation.
    2) Taiwan is one of the four Asian Tigers, along with Hong kong, Singapore and Korea. Taiwan's relation with Russia are not so developed the last century compared to the great leap Taiwan and China put forward with the bilateral economic agreement ECFA signed in 2010 that will boost US$110 billion bilateral trade between both sides. Furthermore, Taiwanese people elected President Ma Ying-jeou's Kuomintang party in 2012 elections. This is the party that wants and desires unification with mainland China. Hence, I would discomfort the writer by saying that Taiwan is closer to China and not Russia, if the great bear do not understand that... well history might repeat itself.
  • Philip Andrews on March 17 2012 said:
    As history goes we could argue that the invasion of Cyprus was payback for the Greek invasion of Turkey in 1919-1922. People out there have long memories...

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