Positioning Taiwan’s Middle East Policy in its National Development Plan

Positioning Taiwan’s Middle East Policy in its National Development Plan

Positioning Taiwan’s Middle East Policy in its National Development Plan

In recent months, Taiwan reached two agreements on economic and humanitarian issues in the Middle East in a sign of enhanced cooperation with the region. In November 2020, Taiwan signed a funding arrangement with the American Institute in Taiwan (AIT) to provide stabilization assistance to central areas of Syria. The next month, Taiwan signed an agreement with Saudi Arabia on avoiding double taxation of income tax and preventing tax evasion. Both developments invite a closer look at Taipei’s relations and policy concerning the Middle East. While Taiwan has been disadvantaged on its diplomatic front, particularly since the 1970s due to China’s pressures, its economic and trade ties with the Middle East remain strong. Xi Jinping’s (習近平) global economic and foreign policy initiative, the Belt and Road Initiative (BRI, 一帶一路, formerly known as “One Belt, One Road”), launched in 2013, could further affect Taiwan’s status in the world and its ties with the Middle East. Simultaneously, the role of the United States in the Middle East will continue to evolve, particularly following the transition from the Trump to the Biden administration. In a region that is filled with domestic challenges, area conflicts, and external interference, Taiwan’s Middle East policy should work to support the nation’s economic upside in that region.

Diplomatic and Trade Ties

Taiwan’s current relationships with countries in the Middle East fall into three groups. First are countries in which Taiwan has an economic and cultural representative office or a commercial office. These countries include Bahrain, Israel, Jordan, Kuwait, Oman, Saudi Arabia, Turkey, and the United Arab Emirates (UAE). These offices handle Taiwan’s trade, economic, cultural, and educational activities across the region. Second are countries in which Taiwan currently does not have a representative office. These countries include Iraq, Lebanon, Qatar, Syria, and Yemen. The nearby representative offices cover these countries. Third are countries that only host Taiwanese non-profit organizations. Iran, which currently does not host Taiwan’s representative office, belongs to this category. The Taiwan External Trade Development Council (TAITRA, 中華民國對外貿易發展協會)—a nonprofit trade-promoting organization—has an office in Tehran.

The following table offers an overview of Taiwan’s diplomatic interactions and the locations of its representative offices:

CountryOfficial Diplomatic RelationsCurrent Office
BahrainFormal relations were never established.Taipei Trade Office
IranDiplomatic ties were terminated in 1971.No representative office; in lieu of Taiwan Economic & Cultural Representative Office (TECRO) in Dubai; the Taiwan External Trade Development Council (TAITRA) has an office, Taiwan Trade Center, in Tehran.
Iraq1942-1958No representative office; in lieu of TECRO in Jordan.
IsraelFormal relations were never established.TECRO in Tel Aviv
Jordan1957-1977TECRO in Jordan
Kuwait1963-1971Taipei Commercial Representative Office
Lebanon1954-1971No representative office; in lieu of TECRO in Jordan.
OmanFormal relations were never established.TECRO in Oman
QatarFormal relations were never established.In lieu of TECROs in Saudi Arabia and Kuwait
Saudi Arabia1946-1990TECRO in Riyadh
SyriaFormal relations were never established.No representative office; in lieu of TECRO in Jordan.
Turkey1934-1971Taipei Economic and Cultural Mission in Ankara
United Arab EmiratesFormal relations were never established.Commercial Office of Taipei in Dubai
YemenFormal relations were never established.No representative office; in lieu of TECRO in Riyadh
Source: Ministry of Foreign Affairs in Taiwan.

Taiwan maintains active trade relations with the Middle East. According to the 1989-2020 trade data of the Directorate General of Customs of the Ministry of Finance, Saudi Arabia is Taiwan’s 10th largest trade partner, followed by Kuwait (19th), the UAE (21st), Iran (28th), Qatar (30th), Oman (34th), Turkey (36th), Iraq (37th), Israel (38th), Bahrain (65th), Jordan (67th), Syria (79th), Lebanon (88th), Yemen (99th), and the Palestinian territories (240th).

According to the data of Taiwan’s Ministry of Economic Affairs from 1982-2019, Saudi Arabia, Kuwait, and Oman have been steady oil exporters to Taiwan. The UAE began exporting oil to Taiwan in 1984. In 2019 alone, Saudi crude oil exports to Taiwan exceeded 102 million barrels (31 percent of the overall imports), followed by Kuwait’s 63.8 million barrels (20 percent), the UAE’s 36.7 million barrels (11 percent), and Oman’s 21 million barrels (6 percent). Since 1998, Iraq has also been exporting oil to Taiwan annually, with exports reaching 33 million barrels at their height. In 2019, its share was 13.6 million barrels (4 percent of Taiwan’s total crude oil imports). Iran began more consistently exporting oil to Taiwan in 1990, and in 2003 reached a peak of 59.7 million barrels. Over the following decade or so, Iran’s oil exports continued to decline and ultimately halted under the Trump administration’s oil sanctions that began in late 2018. Qatar, on the other hand, has provided Taiwan with between half a million and close to 10 million barrels from 1982 to 2019, with small intermissions in between.

As for other natural resources, Qatar has also been a major Middle Eastern supplier of liquefied natural gas (LNG) since 2006. In 2019, its exports reached 4.7 million metric tons, or 28 percent of Taiwan’s overall LNG imports.

In turn, Taiwan exports a wide variety of materials to the Middle East for industrial, commercial, medical, and household purposes. These items range from vehicles and parts; screws, nuts, and bolts; instruments and appliances used in medical, surgical, or dental sciences; electrical and electronic parts; home appliances; motorcycles; sewing machines; chemical materials; telephone sets; data processing machines, monitors, and projectors; plastic articles; air and vacuum pumps; knitting and crocheted fabrics; centrifuges; and base metal for furniture. The following chart offers a quick glance at Taiwan’s 2019 export volume in the Middle East by country.

Although Taiwan holds large trade deficits with the Gulf countries, particularly Saudi Arabia, business opportunities in the region remain lucrative. Currently, for instance, several major Taiwanese companies maintain a presence in Saudi Arabia, such as Taiwan Fertilizer Co. Ltd. (台灣肥料股份有限公司), CTCI Corporation (中鼎集團), and TECO Electric and Machinery Co. Ltd. (東元集團). The number of small businesses could also further increase under the encouragement, guidance, and protection of the Taiwanese government.

Opportunities via Policy and Strategy

In the complex geopolitical terrain of the Middle East, Taiwan has managed to establish an economic foothold in some areas and has yet to explore opportunities in others. With the advent of China’s BRI, Taiwan is likely to face more competition from China. China plans to build closer ties with the Middle East through the BRI’s China-Central Asia-West Asia Corridor (中國-中亞-西亞經濟走廊), as this region is a key midpoint between China and the final destination for exporting its products and services—the affluent European market. While keeping a critical eye on this initiative, Taiwan should develop countermeasures in at least two respects. First—policy wise, Taipei should proactively define its objectives and roles specific to the region, covering such aspects as politics, economy, science and technology, education, and cultural exchange. To pursue a more comprehensive foreign policy toward the Middle East, the government should tap into Taiwan’s academia and think tanks focusing on Middle Eastern studies—in combination with other relevant academic disciplines—and conduct regional and country-specific analyses and assessments for the purposes of comprehensive policymaking.

Subsequently, Taiwan should more clearly define its policy goals, objectives, and anticipated outcomes, and use these to devise a region-focused strategy. The Middle East policy implementation strategy could resemble the New Southbound Policy (NSP, 新南向政策). Announced in 2016, the New Southbound Policy aims to enhance cooperation with countries in Southeast Asia, South Asia, and Australia. As part of its Middle East policy implementation strategy, Taiwan should proactively pursue enhanced bilateral or multilateral relationships through mutually beneficial cooperation programs. In implementing the BRI, one of China’s strategies has been to seek strategic alignment with Middle Eastern countries’ national development plans, including Saudi Arabia’s Vision 2030, Kuwait’s Vision 2035, and Qatar’s Vision 2030. A central goal of all of these plans is economic diversification and reducing dependency on oil. Taiwan’s recent national development plan, known as the 5+2 Industry Innovation Plan (五加二產業創新計畫), could link to the national plans of these Middle Eastern countries by offering expertise in the fields of information and communications technology, green energy technology, biotechnology, and medicine—areas for which Taiwan is known globally.

In terms of dealing with countries facing political turmoil, economic hardships, or wars, Taiwan has been active in supporting international relief efforts and recovery initiatives. One example of this is Taiwan’s interest in the US Congress’ passing of the BUILD Act (Better Utilization of Investment Leading to Development) in 2018. Reuters reported in September 2020 that Taiwan is teaming up with the United States to promote international infrastructure investment projects in developing countries. Although the role of the United States continues to evolve in the Middle East and Taiwan generally hews closely to US Middle East policy, the region’s needs for contributions to humanitarian crisis relief and infrastructure recovery are ongoing and require international support. Offering such international assistance could help Taiwan strengthen its relationships and expand its economic links in the region.

In sum, the Middle East is important to Taiwan not only because its rich natural resources are essential to the island’s domestic needs, but also because the region offers potential for international cooperation and economic development that could aid Taiwan in implementing its own national development plan. Furthermore, a comprehensive Middle East policy, accompanied by feasible implementation strategies, could better prepare Taiwan for countering potential challenges presented by China’s BRI in this region.

The main point: A comprehensive Middle East policy, supplemented with implementation strategies, is important to Taiwan in two ways. First, it could counter the potential challenges brought by China’s BRI in the region. Second, and more importantly, Taiwan could advance its own national development plan by strategically furthering business prospects in the Middle East.