In the presidential elections held in Taiwan on 13 January 2024, the ruling Democratic Progressive Party (DPP) candidate William Lai emerged victorious. This marked a record third term at the helm for any Taiwanese party and comes after the current President Tsai IngWen lays down office after two four-year terms and thus was ineligible to run.

What brought the election outcome back to the limelight notwithstanding China’ claim on the island as one of its own provinces was that just 48 hours after the announcement that the ruling party had secured the presidency, the south-west Pacific Ocean island of Nauru, with a population of 12,500, dropped a bombshell by announcing it was cutting formal diplomatic ties with Taipei and was establishing relations with Beijing.

Nauru is one of the world’s smallest countries located about 4,000 km northeast of Sydney and has a total land area of 21 sq km. How did it transpire? On 15 January, Nauru’s President David Adeang announced in a national address his country’s decision to end its decades-long ties with Taiwan to recognise China. He also said that the move was in the “best interests” of the island nation and its people. It transpired that henceforth Nauru would be moving to follow the “One-China principle” and was seeking a resumption of full diplomatic relations with the People’s Republic of China.

This meant that the Republic of Nauru will no longer recognise the Republic of China (Taiwan) as a separate country but rather as an inalienable part of China. Further, the government statement called this “a significant first step in moving forward with Nauru’s development.”

As regards China, it continues to claim Taiwan despite the fact it has not ruled the island nation for the past 70 years and sees it as having no right to establish state-to-state ties. Taiwan rejects such a position. Nauru first established diplomatic ties with Taiwan in 1980. In 2002, it cut ties with Taiwan in favour of Beijing. But relations with Taipei were re-established three years later in 2005, only to switch allegiance back to China again now.

China had dubbed the DPP candidate even before the elections as a “splittist”. He was further described as a troublemaker” and “dangerous separatist”. By poaching another of Taiwan’s diplomatic allies, Beijing was expressing its displeasure with William Lai. Nauru’s announcement coincided with a visit to Taiwan by an unofficial delegation from the USA, much to Beijing’s displeasure. While the announcement brought Nauru into international limelight, the US trip was not the trigger.

Taiwan alleged that China had engaged in “money diplomacy”, by offering Nauru far more money that what Taipei provides to allies. Beijing disagreed, saying that as a sovereign country, Nauru independently made the right choice and that the One-China principle is where global opinion trends and where the arc of history bends. Both China and Taiwan have consistently accused each other of engaging in “dollar diplomacy” to poach allies.

The impact of Beijing’s consistent effort to internationally isolate Taiwan is not expected to be harsh on Taiwan as even without formal diplomatic ties, Taiwan maintains representative offices focusing on economic and cultural activities in many countries. These are seen as de facto embassies. With Nauru gone, the self-ruled island of Taiwan is left with just 12 diplomatic allies.

Most are small, less-developed nations in Latin America and the Caribbean: Belize, Guatemala, Haiti, Paraguay, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, Eswatini, Marshall Islands, Palau, Tuvalu and the Holy See, which is the central administration of the Roman Catholic Church.

After Tsai Ing-Wen took power in 2016, Taiwan has become increasingly isolated internationally and has lost 10 diplomatic allies, including Nauru. In 2023, Honduras made the diplomatic switch from Taipei to Beijing, following in the footsteps of Nicaragua in 2021 and Kiribati and the Solomon Islands in the space of a week in 2019. Soon, a war of words followed between Taipei, Beijing and Washington.

Briefing the media, the Taiwan foreign ministry lamented Nauru’s move and alleged that Beijing had intentionally timed it after the election. While Taiwan’s deputy foreign minister Tien Chungkwang called Nauru’s move as a “blatant attack on democracy”, China’s foreign ministry appreciated and welcomed the decision. It announced that Beijing stands to work with Nauru and that a new chapter now opens in Nauru-China bilateral relations.

The US reacted by saying Nauru’s “sovereign decision” was a “disappointing one”. It was a pity that Nauru failed to understand Beijing makes promises in exchange for diplomatic relations that ultimately remain unfulfilled. Beijing quickly hit back, with foreign ministry spokeswoman Mao Ning saying the US statement undermines a sovereign nation’s independent decision and supports Taiwan in expanding its “international space.” She said the US statement was a serious violation of the One-China Principle.

She urged the US to handle Taiwan-related issues cautiously and restrain itself from making statements that could be provocative. Since Lai would assume office in May, Beijing is likely to wait and assess before it accelerates its push to cajole and intimidate Taiwan further. Military intimidation however is likely to continue. PostMay, cross-strait tensions are likely to rise with the intention of forcing Lai to come close to Beijing’s demands.

That however is unlikely to happen. Though the DPP has said that it favours maintaining the status quo, with Taiwan having its own government, and has refused to acknowledge Taiwan as part of China, Beijing’s response has remained a bit muted. It is possible that Beijing has chosen less overt and forceful measures so that it can avoid attention or condemnation from the international community. The DPP is aware that China’s economic levers did not have an impact on Taiwan’s polls.

The DPP adheres to the warnings of Beijing that it could suspend tariff cuts on more Taiwanese products. It is up to Beijing to assess how it is going to optimise economic sanctions to bring Lai to accept its line of thinking without unduly alienating Taiwanese society. As the poll outcome revealed, Taiwanese people are keen to maintain, protect and defend their identity. If Beijing decides to go overboard in its efforts to bring Taiwan into submission, its people are not expected to sit idle and as mute spectators. It is in Beijing’s best interest to realise this aspect of nationalism and not precipitate a crisis unnecessarily

(The writer is former Senior Fellow at Pradhanmantri Memorial Museum and Library (PMML), New Delhi. Earlier he was ICCR Chair Professor at Reitaku University, Japan, and Senior Fellow at the MP-IDSA, New Delhi)