Why Palau is a diplomatic prize for US, Taiwan and China - Asia Specific podcast, BBC World Service

You have Chinese businessmen coming in, leasing land close to the US military sites. But none of that land has been developed yet, and that is causing concern in Washington. Imagine living on a remote island in the Pacific Ocean. and being in a tug of war between much bigger powers. That's what life is like in Palau, a tiny nation of just 18,000 people. It might be out of sight, out of mind for many, but for China, it's a diplomatic prize to be pursued.

And there are some strange things happening there which are making some. of the locals very uncomfortable. I'm Mariko and from the BBC World Service. This is Asia Pacific. Twice a week we bring you. Asia Pacific stories unpacked by those who know them best. And today I have Shawn Yuan one from the BBC's Global China unit. Not many people have been to Palau, but he has. And I also have Bill Birtles from our Asia Specific podcast team.

He's also been a correspondent in both Beijing and Taiwan. Thank you both. I want to start this episode with exactly where Palau is. because Shawn, Bill and I had to actually look it up. It looked amazing. But for those who are listening to us, can you just describe where exactly Palau is? It is very far away. I mean, as you said, if you actually look. at the map, you have to zoom in real close to see where it is exactly. It's this string of islands in the western Pacific.

It's quite close to the Philippines and quite close to Taiwan as well. And for me, I'm based in London, so traveling from London. to Palau took me ages. I had to fly from London to Bangkok, first Bangkok to Taipei, and then Taipei to Palau. So it was a very long journey. But there are only very few countries that actually had direct flights. to Palau, and Taiwan is one of them. And it is, as you said, it's absolutely fantastic. It's beautiful. And I went diving there for. for a few times, and yeah, it was absolutely gorgeous.

Uh, Shawn, I'm just kind of picturing you. as this intrepid BBC reporter going around Palau. What did the locals make of the fact that a journalist had come so far to. to their small series of islands? What did they make of that? So, upon landing, you can see pretty much everyone coming in from. from other countries was a tourist, you know, the go there for the diving sites, they go there for for snorkeling and stuff like that.

So when I first went there and I told people that I'm with the BBC, loads of them thought I was there for making documentaries. National Geographic have been there before as well. So that shows that this is what place is known for. You know a lot, lot of film crews came in to talk. about how great the environment is. So when I told them that I was there for this kind of geopolitical story, they were quite surprised because, obviously they knew. how important Palau is strategically, but still, for someone.

who can't come all the way from London to Palau, it's just for them. It's still a bit surprising. Maybe you could have done both. Or maybe this is your pitch to the BBC managers that you want to go back. and make a travel documentary. You mentioned Taiwan. I mean, tell us why you decided to go to Palau. There are a few reasons, right? Um, as you said earlier, we Palau is sort of caught in the middle of this tug of war. Taiwan only has about 12 diplomatic allies right now,

which means that only 12 countries in the world that recognize it. as a sovereign state and Palau is one of them. And that sort of triggers China's response because it is one. of the more important issues for China's foreign policy. But at the same time, Palau sits at a very strategic location, and the US sees Palau as one. of the most important points for its line of defense as well. But, Bill, I guess this is a familiar story, not just about Palau, isn't it? You know, all of the Pacific Islands.

You know, Shawn talked about how their locations are strategically important. for the United States. Can you just tell us why that is? Well, for the United States and for China, because if you look at the map, you've got all these many of them. are referred to as micronations because their populations are so small. They're dotted all the way from basically the central eastern Pacific, right to the west, countries from Fiji, Vanuatu, the Solomon Islands, they're all seen as being strategic in one way or another.

because China's navy navy is growing at a tremendous speed. The US still at the moment remains the dominant naval power. And so if you do have future conflict, these small Pacific nations are located in in places. where it would be very strategic to refuel or even have bases there. So I think for people on Palau I went to Guam a couple of years ago. for a reporting trip. It's a very different situation.

It's a US unincorporated territory, but nonetheless, I think. people in that part of the world now are pretty cluey. that they are very valuable pieces on a much bigger chessboard, whether. or not they want to be seen to be pieces on a chessboard, that's another matter. Of course, Palau did become independent from the United States in 1994. But Shawn, you talked about how there are. only 12 countries which recognize Taiwan as a sovereign nation. I understand that in the region there are only three,

and there's quite a lot of pressure on Palau. Also to flip side, isn't there? Yeah, yeah. Of course. I mean, the whole issue. of Taiwan is one of the pillar issues of China's foreign policy, and that is one of the more important things. that China is looking at when it comes to Asia Pacific region. Um, as you said, there are only three countries right now. that still recognize Taiwan as a sovereign state. Over the past few years, we have a few countries that have flipped recently already. And Bill, you were a correspondent in China when some of those countries.

started to flip sides and I mean multiple times as well as well. Can you just tell us, like, what kind of pressure. those countries are under and why they flip? Well, is it pressure or is it opportunity? Because all the big nations of the world. long ago recognized China, the People's Republic of China. You know, the United States, Australia, all of Europe, you know, so it's really just these countries remaining 12. at the moment in total around the world, three in the Pacific.

And they're all relatively small. And you can't help but think that one of the reasons why they remain is. because Taiwan is able to offer them whatever it is, development funding. or aid or support at a level that is satisfying enough. for them to maintain that relationship with Taipei. But you look at 2019, for example, a couple of these South Pacific nations. changed to China. One of them, the Solomon Islands. At the time, the then government was very up front,

basically said, look, China can just offer us more. when it comes to development, funding, infrastructure funding, all that sort of stuff. You know, they can build sports stadiums, help us host the Pacific Games. And the government was very kind of transactional and practical. and said, this is something that the Taiwanese are just not able to match. And then we saw last year when Nauru changed from Taiwan. to China, Nauru has a very small population. It's something like 12,000 people. It's really tiny.

But again, this was seen as something practical. that the government could do to get more money to fund whatever they needed. So I guess in a way, we used to call. this chequebook diplomacy back in the day. And both sides, China and Taiwan play it. And in countries like Australia, play it too, when it comes. to trying to have security influence in parts of the South Pacific. But then I look at a country like Palau where Shawn's been. And for now at least, they seem quite satisfied to remain.

in their diplomatic relationship with Taipei. Why do you think that is, Shawn? Oh, yeah. I think it's very important that you just mentioned Solomon Islands, for example. That's one of the the bigger prizes, quote unquote, in the Pacific, for China. And it did win that. But for Palau, based on my conversations with people, the situation is actually quite different. Uh, since the independence of Palau in 1994, Taiwan sort of really moved fast to secure this diplomatic ally. And as you said, it's a very small nation.

So for countries like Solomon Islands, they might need those big ticket items. For Palau, on the other hand, they have a such small population. and the sort of community-based service. is way more visible and important for the country's leaders and, uh, just politicians and its own civilians as well. So be able to for for Taiwan to be able to send, for example, medical teams to work in clinics, to send agricultural experts to work alongside local farmers, and to invite students from Palau to study in Taiwan on full scholarship.

Those things matter a lot more than just those big ticket items. So I think that's one of the main reasons. why Palau is still kind of securing this diplomatic alliance with Taiwan. But Shawn, I guess, you know, for Palau, joking aside about you making a travel documentary there, you know, tourism is a huge part of the economy, isn't it? And Chinese tourists used to visit quite a lot now. Not so, you know.

So how do locals feel about the fact that. the government's decision to kind of align itself with the US and Taiwan. is kind of resulting in the loss of business opportunities for those locals? So back in 2015, 2016, 2017, those couple of years, Chinese tourists, especially state sponsored tour packages coming. from China, made up more than half of the visitors to Palau. And that was a very big, important sort. of carrot of the carrot and stick strategy.

They were sending a lot of tourists going into Palau, and that really boosted Palau's economy. And I was talking to like, for example, dive shop owners or fishermen, they were saying that, oh, they had to buy extra boats, for example, to accommodate the influx of tourists coming in from China. And then the fishermen, they were dealing directly with the hotels. because, you know, the restaurants were full, hotels were full. They didn't have to go through middlemen to sell their to sell their catch. But in 2017, towards the end of the year,

China reportedly, ordered all the tour operators. to stop selling packages to Palau. And China never really gave a reason on exactly why they did that. But I was talking to Palau and officials that I was talking. to the president of Palau, for example. They were telling me that this is the reason behind that is political. It is exactly because Palau refused to stop recognizing Taiwan. to sort of sever its ties with Taiwan to align with Beijing. And after 2017, the number just completely got slashed.

Uh, you still have a lot of tourists coming in from other countries, but the number of tourists coming from China. just completely plummeted, basically. Um, there have been a lot of pressure coming from local communities, of course, to switch ties for, for the government to switch ties. because they, they did taste the sweetness of, um, the influx of tourism. Why does China care about such a small country? You would think that they have bigger fish to fry.

Well, Palau is a pretty big fish to fry at this moment. Palau sits on the so-called second island chain that stretches all the way. from Guam to Palau to Indonesia. And, uh, Washington sort of enjoys exclusive military access. to this country under the, uh, the special agreement. Um, so all that to say that it is a very strategic location. And I talked to the president of Palau himself, and this is what he told me. I think working with the United States is an ally that believes.

in freedom and democracy and respects the rule of law. We ensure that we continue the peace and prosperity that we've enjoyed. So, uh, to think that that is somehow creating, uh, a more, uh, unstable situation for Palau is probably a false reality. If anything, I believe it makes us more stable, more secure. Shawn, one of the things we've seen in your reporting in Palau is this issue.

of land of land leases or people coming from abroad purchasing land. What's going on there? Yeah, it's a very interesting aspect of the, uh, the reporting, actually, Palau laws do not allow foreign nationals to purchase land, but it does allow 99 year lease of this land. So over the past few years, Washington has been planning to upgrade. the main port of Palau in Koror, for example, called Malakal Harbor,

to try to enable access of larger military vessels, and at the same time also building this radar site called Tacamo. Basically, what it does to is to monitor China's military activities. across the region. So you have those things, military infrastructure dotted across the islands. And then over the past few years, you see some strange things that's been happening. You have Chinese businessmen coming in, uh, leasing land close to the US military sites.

But none of that land has been developed yet. And that is causing concern in Washington. Yeah, yeah, this is what I always wonder. Um, when you hear about, um, Chinese plans or speculation. about Chinese plans in the South Pacific nations, there was talk. There still is talk in Vanuatu. about the potential for China to build a military base there, or a naval base in the Solomon Islands, where China actually has. a concrete security agreement with the Solomon Islands.

Why do they do that? Is that a long term plan to potentially try and build a naval outpost? That's the sort of speculation. But what's always really difficult is concrete proof. And what I obviously you were looking for that proof. while you were there in Palau. Um, did you walk away from your visit. under the impression that this was fair speculation, or that people in Palau are suspicious, but maybe they're joining the dots a little bit before there's the evidence?

The US ambassador, he did previously mention to other, uh, other media outlets, for example, that it is quote unquote, not. a coincidence that you have all this Chinese businessmen coming in. to lease land close to this key US military sites. I mean, I get where he comes from, right? Like if China built, uh, some radar system in in in another country in a very remote island. And the US businessmen coming in and leasing land close to the sites. It's difficult not to raise an eyebrow when it, when it, when it comes to that kind of situation.

So Shawn, do you think I mean, you told us how close Palau is still. to Taiwan and obviously the United States as well. But eventually, I mean, the US doesn't recognize Taiwan as a sovereign country. You know, not many countries do anymore. So is it inevitable that those three countries in the region, are they eventually going to just flip and side with Beijing? I would say the from my understanding,

with, local Palauans, um, the most important thing in this economy and. there's not enough job opportunities in, uh, in Palau and a lot of moving to the US, for example, under the the compact for them, um, they might not be able for, for the government, they might not be able to resist the sort. of temptation coming from Beijing that they're going. to be able to create a lot of jobs, they're going to be able to, you know, send a lot more tourists to prop up the tourism industry again. Uh, so on that front, there's a chance.

that China might be able to make Paluans, flip. But on the other hand, Palau is still very. it's still very close to the US. So for Palau to be able to continue to enjoy the sort of aid. and all this access, uh, afforded to Palauan citizens coming from the US, they might have to listen to what the US and Washington says. You know, you talk to any taxi driver, for example. Uh, and then they have like, oh, how are your kids? 'Oh, my kids are in the US right now. I don't think. they're coming back because we don't have any job opportunities'.

You know, as the blood of the country is getting drained. Um, and you have this new, new idea that, oh, maybe this country, when it comes to own population, is not as important anymore, and they're all moving to the US. And what does that mean for the future of this country? And maybe, uh, instead of being the country of its own, it just becomes a pawn of this tug of war. Again, it's only be only be discussed in on the world stage as China. versus the US, China versus Taiwan, Taiwan, the US, all those geopolitics.

And that is a quite dangerous position for this country to be in. I guess for all the locals that you've been speaking to, Shawn, I love the fact that you spoke to taxi drivers who are always. the perfect barometer of how locals are thinking in that country, but for them, it's a tricky situation where they see business opportunities, but obviously they wouldn't want another conflict in their country. Really interesting stuff. Thank you so much, Shawn and Bill. We'll leave it there. Click like and subscribe and please.

if you have any questions on what we covered today or anything else. from the Asia Pacific region, please leave us a comment below. Or you can also send us an email Asia Pacific at bbc.co.uk. But for now, thank you. See you.