The UAE: An Oasis for Trade and Friendly Ties with Taiwan

The UAE: An Oasis for Trade and Friendly Ties with Taiwan

The UAE: An Oasis for Trade and Friendly Ties with Taiwan

When Chinese President Xi Jinping visited the United Arab Emirates (UAE) in July last year, he was the first head of state from the People’s Republic of China (PRC) to travel to the tiny Arab Gulf country in 29 years. His visit upgraded bilateral relations from a “strategic partnership,” forged in 2012, to a “comprehensive strategic partnership.” Xi called the UAE an “oasis for development in the Arab world,” underscoring the Arab state’s regional importance and strategic value to China. The UAE has the distinction of being China’s second largest trading partner and the largest export market in the Arab world, host of the largest Chinese expatriate community in the Middle East, and the Arab country with the most investment projects in China. Xi also regards the UAE as a key pivot in implementing the Belt and Road Initiative (formerly known as “One Belt, One Road”), connecting China to Africa and Europe.

“Abu Dhabi is becoming strategically important to China. The relationship is really thickening. The UAE is the load-bearing wall of China’s Middle East policy now; that would definitely limit Taiwan’s gains in the Emirates beyond trade,” said Jonathan Fulton, assistant professor of political science at Zayed University, in Abu Dhabi, UAE. [1] Fulton said the UAE would not jeopardize its relations with China, particularly as the United States is becoming less reliable, and the UAE is also looking towards East Asia and China in particular. [2] 

Yet, aside from the flurry of economic activity between China and the UAE, the oil-rich Gulf state also has a surprising history of close relations with Taiwan, despite the absence of formal diplomatic relations. While the UAE and China established diplomatic relations in 1984,  Taiwan’s historically friendly relations with Arab Gulf states can be traced back to Chiang Kai-shek’s era. For several decades, Taiwan and Saudi Arabia enjoyed strong relations that were influenced by energy trade, development assistance, and the hajj diplomacy of Taiwan’s Muslims. [3]

Past Taiwanese administrations have made an intention to strengthen ties with Middle Eastern countries. During a time when Taiwan’s leaders made frequent—and sometimes secret—trips abroad (known as “vacation diplomacy”) to non-diplomatic allies, the UAE and other Middle Eastern countries have been on Taipei’s travel itinerary. In 1995, former President Lee Teng-hui (李登輝) visited the UAE and Jordan, marking the first visit to the Middle East by a Taiwanese president in 18 years. [4] This was followed by Vice President Lien Chan’s (連戰) 1998 visit to the UAE, Bahrain, and Jordan, aimed at promoting Taiwanese trade and investment in the Middle East. [5] These visits were meant to be unofficial and low-key but were met with solemn protests by the Chinese government, which also successfully pressured some countries, such as Lebanon and Israel, against meeting with Taiwan’s leaders. [6]

Perhaps the most notable time when the UAE was caught in the crosshairs of cross-Strait tensions was when Taiwan’s President Chen Shui-bian (陳水扁) transited through Abu Dhabi on his return to Taiwan following a visit to diplomatic allies in Latin America. In September 2005, Chen was received at the airport by the UAE president’s younger brother Sheikh Hamed bin Zayed Al Nahyan with Taiwan’s flags flying. “I was really moved to see ROC national flags flying over the airport, particularly given that China has never stopped trying to prevent Taiwan from joining the international community and strengthening its relations with other countries,” Chen said in Abu Dhabi. [7] “Some say that this is a very significant breakthrough in relations between Taiwan and the UAE. […] I’ll treasure this,” Chen said. [8] Over Beijing’s protests, Chen met with UAE President Sheikh Khalifa bin Zayed Al Nayhan and other officials. Taiwan’s government reportedly gave the UAE 10,000 rifles in exchange for Chen’s visit. The PRC Foreign Ministry criticized the UAE for hosting Taiwan’s president, saying “the move is a violation of the UAE’s ‘One-China’ policy and has made a negative impact on China-UAE ties.” Chen made another transit stop in Abu Dhabi in May of the following year on his way to visit Paraguay and Costa Rica.

Taiwan’s officials have also paid homage to UAE leaders. In January 2006, Taiwan’s Foreign Minister Chen “Mark” Tang-shan (陳唐山) made a secret visit to UAE to convey condolences for the death of UAE Vice President and Prime Minister Sheikh Maktoum bin Rashid Al Maktoum. Foreign Minister Chen also congratulated Sheikh Maktoum’s younger brother and successor, Crown Prince Sheikh Mohammed bin Rashid Al Maktoum, in an effort to launch ties with the new UAE leader.  The foreign minister had made several visits to the UAE in 2005 to discuss plans for a new representative office in Abu Dhabi.

In continuity with previous administrations, Taiwan’s President Ma Ying-jeou (馬英九) underscored the importance of Taiwan’s relations with the UAE. In 2010, he received a visit from Jordan’s Princess Haya Bint Al Hussein, a wife of Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai. Ma thanked the princess of Jordan for helping Taiwan obtain the right to host the 2010 Federation Equestre Internationale (FEI) General Assembly, the international governing body of equestrian sports. [9] On his return from a visit to ROC’s diplomatic allies in Africa, Ma had a layover at Dubai’s International Airport in 2012. 

Ma regarded the UAE as an important traffic hub between Europe, Asia, and Africa, and said both Taiwan and the UAE are striving to become “two important links that cannot be ignored in the move towards globalization.” Due to the UAE’s liberal economic policies, Taiwanese companies in the shipping, petrochemical engineering, electronics, communications, and tire industries, have invested and become active in the UAE. In February 2014, the opening of Emirates’ nonstop Dubai-Taipei flight marked the first Middle Eastern carrier to operate a direct flight to Taiwan, opening the door to expanded exchanges between the two sides.

There have not been any known high-level exchanges between Taiwan and UAE leaders during Tsai Ing-wen’s (蔡英文) administration, yet Taiwan’s trade ties with the UAE continue to expand to the present day. The UAE ranks among Taiwan’s largest trade partners in the Middle East. Bilateral trade reached more than USD $4.5 billion in 2018, with Taiwan facing a USD $2.5 billion deficit due to large purchases of energy supplies from the UAE. Taiwan also has large trade deficits with other Middle East oil producers such as Saudi Arabia and Kuwait. Politically, there appears to be a bit of a chill. In 2017, under pressure from Beijing, Abu Dhabi forced Taipei’s representative office to change its original name, the Commercial Office of the Republic of China to Dubai, to the Commercial Office of Taipei, Dubai, UAE (駐杜拜臺北商務辦事處).

In 2018, Taiwan’s main oil trade partners and their respective contributions to the island’s total oil imports were Saudi Arabia (30.9 percent), Kuwait (20.7 percent), the United States (13.6 percent), the UAE (8.4 percent), Iraq (7.6 percent), and Oman (6.6 percent). The same year, Taiwan imported 27,003,000 barrels of crude oil from the UAE, down from 30,887,000 barrels in 2017. Over the past two years, a major change in Taiwan’s overseas oil portfolio has been the ascendance of the United States as a major oil supplier. Taiwan crude oil imports from the United States grew dramatically from 2,583,000 barrels in 2017 to 43,900,000 barrels in 2018, skyrocketing from 0.8 percent to 13.6 percent of Taiwan’s total crude oil imports.

After President Donald J. Trump withdrew the United States from the Iranian nuclear deal, or Joint Comprehensive Plan of Action (JCPOA), in May 2018, and later re-imposed sanctions on Iran, his Administration also terminated its waivers in April 2019 on eight economies, including Taiwan, that consume Iranian oil. Under the previous arrangement, Taiwan, China, India, Japan, South Korea, Turkey, Greece, and Italy could import certain levels of Iranian oil without being slapped with US sanctions. Most of these countries that enjoyed the US exemption have significantly reduced or ended their Iranian crude oil imports. In 2018, Taiwan imported less than 2 percent of its crude oil from Iran, and now looks towards other regional suppliers such as the UAE.

Moving forward, Taiwan should continue to build upon the historical friendship and step up economic and trade cooperation with the UAE amid the expansion of China-UAE ties. The UAE remains an important source of energy supplies and a market for Taiwanese electronics, auto spare parts, machinery, and textiles. The UAE and other Middle Eastern countries are potential markets for Taiwan’s solar energy technology. Taipei can also leverage its unique relationship with the UAE as a gateway to the region in order to help diversify its foreign relations. 

The main point: Taiwan and the UAE have a history of friendly relations based on diplomatic support and bilateral cooperation in energy, trade, and investments. Taiwan should continue to closely work with the UAE to expand not only economic relations, but also sustain closer diplomatic and political contact.

[1] Author’s interview, August 5, 2019.

[2] Ibid.

[3] Makio Yamada, “Islam, Energy, and Development: Taiwan and China in Saudi Arabia, 1949-2013,” American Journal of Chinese Studies, Vol. 22, No. 1 (April 2015): 80-85.

[4] “Taiwanese President Sees Summit with China After Deng Dies,” Agence France Presse (April 4, 1995). Retrieved from Nexis Uni. 

[5] “Report: Taiwan Vice President Visiting UAE,” Associated Press International (March 1, 1998). Retrieved from Nexis Uni.

[6] Ibid.; “President Lee Teng-hui to Visit Israel, Greece,” Deutsche Presse-Agentur (April 13, 1995). Retrieved from Nexis Uni.

[7] “Taiwan President Says UAE Visit ‘Significant Breakthrough,’” BBC Monitoring Asia Pacific (October 1, 2005). Retrieved from Nexis Uni.

[8] Ibid.

[9] “President Ma Meets FEI President and Princess of Jordan Haya Bint Al Hussein,” Targeted News Service (November 2, 2010). Retrieved from Nexis Uni.