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potential offered by this cooperation. The article summarizes the most important agreements and events between Taiwan and Slovakia after the opening of the representative offices up to the date of its publication.
2.3 Economic diplomacy
When it comes to economic diplomacy that works as a substitute for official diplomacy as for instance in Taiwan's case, certain approaches point out the inextricable linkage between economic diplomacy's tools, especially foreign aid and the concept of country's self-promotion that is sometimes also called propaganda or public diplomacy.
According to Nye's definition, public diplomacy conveys public information, sells a positive image of a country and builds long-term relationships that create an enabling environment for government's policies (Nye, 2005). Public diplomacy is in academia generally connected to the term of soft power. According to Nye (2005), who first coined the term, soft power includes all the elements except what belongs to the “hard power” (military power, economic sanctions, etc.). However, Alexander (2014) in his work called China and Taiwan in Central America, Engaging Foreign Public in Diplomacy, argues that in international relations, hard power factors can be part of an attraction, and public diplomacy despite being a tool for gaining more soft power, should not be thought of as exclusively an instrument for soft power generation. He points out that since engaging in development assistance helps governments to improve their domestic and international public image, it is highly attractive to marginalized governments concerned with international and domestic sovereign legitimacy. Moreover, despite these governments often are not members of certain international organizations, development assistance allows them to take part on shaping global policies such as for instance the UN Millennium Development Goals. As Alexander (2014) points out, “This in turn provides the government with international and domestic authority and prestige because of their conformity to the prevailing values of the international system.”
Batora (2006) agrees with this proposition in his writing on Public Diplomacy between Home and Abroad: Norway and Canada, by stating that “for small and medium–sized states, public diplomacy represents an opportunity to gain influence
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and shape the international agenda in ways that go beyond their limited hard power resources”. Similarly, Rawnsley (2010) in his book about Taiwan's Informal Diplomacy and Propaganda, argues that foreign aid reinforces the benevolent image of the donor and ties it politically to the recipient through a relationship of loyalty and dependence. Rawnsley considers foreign aid an act of propaganda of the deed, i.e. an instrument of publicity in contrast to diplomatic communications, which may be private or public and more formal. He suggests that economic diplomacy and propaganda are closely linked as economic diplomacy has the power to reinforce the informality of relations.
Likewise, Larus (2008) in her study about Soft Power versus Hard Cash makes use of constructivism to explain why some countries have chosen diplomatic relations with Taiwan over China. According to social constructivism, a state's behavior depends on both its self-constructed identity and the relations it has with other countries. Larus shows that Taiwan's key identifier in the international community has been democracy and Taiwan has positioned itself as a political and economic model for developing countries. With China's growing influence and its growing economic assistance in the world, these values helped Taiwan to project a positive image abroad and combined with the economic diplomacy – a key factor in diplomatic relations of Taiwan – helped Taiwan to retain its diplomatic allies.
Tubilewicz (2000, 2004, 2005, 2007) as well acknowledges that in the 1990s, Taiwan's booming economy and democracy helped to promote the country's name internationally, especially in contrast to the anti-democratic and economically backward China. Tubilewicz argues that Taiwan relying on this asset adopted economic diplomacy in Central Europe with the purpose either to identify new diplomatic allies or, if this proved impossible to achieve, to establish semiofficial
„substantive‟ relations. In order to achieve its goals, Taiwan aimed at constructing the so-called asymmetrical interdependence between itself and the potential ally. This kind of relationship was supposed to place Taiwan in such a dominant position that the dependent country would have no other choice than comply with Taiwan's policy preferences (in exchange of economic rewards) (Tubilewicz, 2007).
This very concept of allocating economic rewards in exchange of political concessions or recognition has been the reason why sometimes in media and academia economic diplomacy has been referred to as 'dollar diplomacy'. Although this term originally refers to the US practice in Central America and the Caribbean as
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pointed out for instance in Financial Missionaries to the World, The Politics and Culture of Dollar Diplomacy (Rosenberg, 1999), it has been often associated with the ROC practice, especially in the context of the zero-sum diplomatic game with the PRC (Rawnsley, 2010), for instance in Africa as seen in Taiwan's Foreign Policy and Africa: The limitations of dollar diplomacy (Taylor, 2010) or even in Europe as pointed out in Taiwan's Balkan option: A new chapter in Republic of China „dollar diplomacy‟ (Tubilewicz, 2001). Although these books were not fundamental for this thesis, they can provide the readers with an interesting insight of Taiwan's economic diplomacy practice in specific regions of the world.
In order to understand better the meaning of economic diplomacy, it is important to provide its conceptual definition. The emergence of the concept of economic diplomacy in the study of diplomacy can be dated to the 1980s. However, as Woolcock (2011) argues, to provide a suitable theory of economic diplomacy might be challenging due to the number of variables that can shape international economic negotiations at any one. Literature review on this topic shows that since 1980s, very few works attempted to provide a sounder understanding of the meaning and scope of the concept. Among the most influential there is for instance Baldwin's (1985) Economic statecraft, Bayne's and Woolcock's (2003) The New Economic Diplomacy, Blanchard's and Ripsman's (2008) A political Theory of Economic Statecraft and more recent Maaike Okano-Heijmans' (2011) paper on Conceptualizing Economic Diplomacy.
In his authoritative writing about Economic Statecraft, Baldwin (1985) refers to an ancient foreign policy tool that has been defined as governmental influence attempts directed at other states and non-state actors in the international system relying essentially on tools which have a reasonable pretense of a market price in terms of money. As Baldwin argues, these resources can be either categorized as positive or negative economic sanctions, such as trade embargoes as well as aid programs by states and other actors such as the United Nations to coerce other states to cooperate. A similar definition has been provided by Berridge and James (2003) in their A Dictionary of Diplomacy, where economic diplomacy can be “a diplomacy which employs economic resources, either as rewards or sanctions, in pursuit of a particular foreign policy objective.” However, the dictionary entry is further expanded by a definition that sees economic diplomacy concerned with economic policy
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questions and work related to monitoring and reporting on economic policies and development in the target state and advising on how best influence them.
These authors conceptualized economic diplomacy using realist and neorealist frameworks which resulted in a traditional state-centric analysis where it is conducted by officials with the objective of advancing the economic interests of the state in foreign countries and the world economy (Lee and Hudson, 2004). However, with a growing influence of the process of globalization and regionalization on diplomacy, scholars have gradually started highlighting the importance of understanding international relations outside the narrow state-centric security framework. The new framework, as it has been defined by Lee and Hocking (2011) is the one that
“involves the social, economic, cultural and political relations among networks of political actors in formal and informal domestic and systemic environments.” The authors argue, that in this context, the study of diplomacy has moved from emphasizing the economic tools of statecraft to the study of economic diplomacy in which two themes emerge: 1) That of diplomat as agent in International Relations (IR) and International Political Economy (IPE) and 2) How to fit state and non-foreign ministry officials into diplomatic agency.
Indeed, these developments fragmenting the concept of a traditional state-to-state economic diplomacy are reflected in research of many scholars of the 21st century. Bayne and Woolcock (2003) promptly show how economic diplomacy evolved in reaction to the end of the Cold War and globalization. They give an account of these changes in The New Economic Diplomacy that shows the growing impact of non-state actors, such as private businesses and civil society on the practice of the state. The authors acknowledge that economic diplomacy is usually carried out by the state, but they also emphasize the importance of the domestic context in which the state operates. Therefore, they conceptualize economic diplomacy as a set of activities related to investment, export, import, lending aid and migration pursued by state and non-state actors in the real world.
The involvement in international economic relations by an increasing number of non-state actors is discussed as well in Saner's and Yiu's (2003) paper on International Economic Diplomacy: Mutations in Postmodern Times. Their research emphasizes the importance of economic diplomats, whose contribution comes from
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overseeing and reporting on economic policies in foreign countries and giving the home government directions on how to best influence them. In this context, Saner and Yiu define economic diplomacy as diplomacy dealing with economic policy issues, e.g. work of delegation at organizations such as WTO and Bank of International Settlements (BIS). The authors stress the importance of acquiring the additional competences to engage constructively in political dialogue for the different actors involved in today's complex political and economic realities and at the same time for MOFA's and state's diplomats to learn to reshape their traditional roles and functions in the enlarged sphere of postmodern diplomacy (Saner and Yiu, 2003).
In a similar fashion, the above mentioned authors Lee and Hocking (2010) in their paper on Economic Diplomacy conceptualize economic diplomacy as a series of formal and informal activities and ties between public-private networks encompassing state and non-state actors. They as well put a special emphasis on the role of diplomats, who with their direct involvement in trade and finance negotiations, as well as commercial activities create and regulate markets and capital.
Moreover, reflecting the above mentioned changes in economic diplomacy, Lee and Hocking (2010) see the necessity of redefining the concept of the discipline.
They focus on key strands of economic diplomacy that reflect and are relevant to the contemporary globalization. These are: trade diplomacy, commercial diplomacy, finance diplomacy, and consular visa services associated to increased migration flows.
Adopting a different method, Maaike Okano-Heijmans (2011) in the article called Conceptualizing Economic Diplomacy: The Crossroads of International Relations, Economics, IPE and Diplomatic Studies, discerns five strands of economic diplomacy that are often overlapping and distinctions between them are often unclear. The concepts are: economic diplomacy, economic statecraft, economic security, trade diplomacy, commercial diplomacy and financial diplomacy. These strands can be either perceived as more commercial/economic or political in essence and are thereby closer to the 'business end' or 'power-play end' of economic diplomacy.
Indeed, the purpose of economic diplomacy is generally perceived as of economic nature, i.e. to enhance economic growth (be it domestic or foreign) (Tubilewicz, 2007), to promote and/or influence international trade and investment and to increase economic security (Van Bergeijk, Moons, 2009). However, economic diplomacy does not only aim at economic ends, but it sometimes uses economic tools for non-economic purposes, such as to consolidate the right political climate or to
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advance personal foreign policy objectives, be they diplomatic, military or expressive (Holsti, 1995).
Now that a brief introduction of the literature on economic diplomacy has been given, for the purpose of this thesis, economic diplomacy will be defined as follows:
● Economic diplomacy is a series of formal and informal activities and links carried by state actors and state actors directed at other states and non-state actors in the international system.
● Economic diplomacy employs economic activities, such as export, import, investment, lending, aid programs etc.
● These activities can be either categorized as positive or negative and are therefore used either as rewards or sanctions.
● The goals of economic diplomacy can be either closer to power-play end or closer to business end. Thus economic diplomacy can be used when pursuing a particular foreign policy objective, to promote and/or influence international trade and investment, to enhance performance of markets and/or to deal with market shortages and to reduce costs and risks of cross border transactions; to increase economic security.
From the above mentioned literature results that most of the theoretical works on economic diplomacy focus on the actors of the economic diplomacy and its effectiveness, however, not that much on the target states and the conditions for success of economic diplomacy. If they do so, they usually elaborate on sanctions and incentives and tend to focus on the regime-type of the target state (Brooks, 2002;
Lektzian and Souva, 2007) and neglects the other domestic factors relevant for the evaluation of conditions for success of economic diplomacy (Blanchard and Ripsman, 2008). For instance, the paper on An Institutional Theory of Sanctions Onset and Success argues that the relationship between the cost of sanctions and regime type is dependent, and sanctions are more successful when they are addressed to the target‟s winning coalition (Lektzian and Souva, 2007). Similarly, Woo and Verdier (2013) in their paper on Sanctions, Rewards and Regime Types, work with the regime type proposition and conclude that both sanctions and incentives are most effective when
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used simultaneously. However the authors identify the intermediate regimes (neither quite democratic, neither absolutely autocratic) to be the least responsive to either type of incentive.
On the other hand, Blanchard's and Ripsman's (2008) A political Theory of Economic Statecraft analyzes the conditions of economic sanctions and incentives that lead to successful achievement of important political objectives as well as the reasons why do they fail. The authors argue that the success of economic statecraft depends on whether it succeeds to translate the economic pain or gain into political costs or opportunities, rather than its economic magnitude. The degree of the sanctions' or incentives' success depends on what the authors define as the target state‟s level of stateness. Stateness is conceptualized as composed of three components: 1) autonomy, or a state‟s ability to take decisions under the pressure of domestic political opposition; 2) capacity, or the state‟s capability either to compensate or coerce the ones that will lose from going against the sender; and 3) legitimacy, or the ability of the state to reunite dissatisfied domestic groups.
Perhaps a more suitable perspective for the analysis on when and under what conditions economic diplomacy can achieve foreign-policy objectives is offered by the theory on the so-called asymmetrical interdependence. The term itself is perhaps known thanks to the Power and Interdependence by Koehane and Nye (2011), who defined it as a relationship where one party is more dependent on another for a certain commodity. However, it was Caporaso (1978) who defined the concept in a strictly economic term as a relation where actor A depends on actor B for large amount (expressed as proportions of total consumption) of important goods which are not easy to be replaced at bearable costs. On the other hand, B obtains small quantities of unimportant goods from A that are replaceable. Caporaso suggested three conditions facilitating the formation of a dependent relationship: 1) size of the reliance relationship, 2) importance of goods on which one relies, and ease, 3) availability and cost of the replacement alternatives (Caporaso, 1978). This argument has been refined and expanded by Tubilewicz (2007), who analyzes the asymmetrical interdependence on the case of Taiwan as a donor and the post-communist European countries as target states. The conditions that the author identify as necessary for establishing a dependent relationship between actor and target state are as follows: 1) the dependent relationship, 2) generosity, 3) disbursements, 4) economic effectiveness of assistance,
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5) economic cooperation, 6) domestic politics, 7) feasibility of diplomatic objectives;
and particularly relevant for the Taiwan‟s case 8) the China‟s factor.
From the above reviewed literature, we learned that one of the frequent diplomatic tools adopted by Taiwan to enhance its international presence is economic diplomacy. There have been several approaches to economic diplomacy. The earlier ones emphasize its close linkage to the state. Recently, with the changes of international sphere resulting from growing influence of globalization and regionalization on diplomacy, new approaches stressing the role of new non-governmental actors have emerged. Understanding the engagement of various actors in economic diplomacy is particularly relevant for the case of Taiwan. Government actors such as the Ministry of Economic Affairs (MOEA, 中華民國經濟部), the Ministry of Finance (中華民國財政部), the Council of Agriculture (行政院農業委員 會), Central Bank of China (中央銀行) or several governmental aid funds, such as the International Cooperation and Development Fund (ICDF, 國際合作發展基金) as well as the Chiang Ching-kuo Foundation for International Scholarly Exchange (蔣經 國 國 際 學 術 交 流 基 金 會) are important channels of Taiwan‟s investments (Tubilewicz, 2007). On the other hand, Taiwan relies on around 3000 NGOs to promote its image of aid donor and at the same time to enhance its status in the like-minded international community (Taiwan Today, 2017).5 Taiwanese transnational companies and business communities also play an important role in Taiwan's economic diplomacy. For instance, export of capital is a way how to strengthen Taiwan's ties with countries receiving its capital investments. The export of capital has been one of the successful ways Taiwan elevates bilateral relations to a higher footing. As Timothy Ka-Ying Wong (1999) points out, with the growing bilateral economic and trade relations both the Taiwan's government and the government engaged in economic activities with Taiwan gradually agree on mutual conveniences that often result in the establishment of representative offices or granting of certain rights and privileges that only formal diplomats are given.
5Among the most prominent Taiwan's NGOs there is for instance the Red Cross Society of the Republic of China (Taiwan) (中華民國紅十字會) or the religious NGOs, such as Fo Guang Shan (佛 光山慈悲基金會) and Tzu Chi Foundation (慈濟基金會).
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From the available literature on economic diplomacy it is thus possible to understand how actor states engage in economic diplomacy. Rather few of the works, however, elaborate on the perspective of the target states. For the purpose of this thesis‟ research it was of particular relevance to incorporate the approach towards economic diplomacy of a target state as well. Despite the contribution of Tubilewicz's books on Taiwan's diplomatic activities in Central Europe, the information on the case of Taiwan‟s economic diplomacy adopted on Slovakia still remains rather limited.
From the available literature on economic diplomacy it is thus possible to understand how actor states engage in economic diplomacy. Rather few of the works, however, elaborate on the perspective of the target states. For the purpose of this thesis‟ research it was of particular relevance to incorporate the approach towards economic diplomacy of a target state as well. Despite the contribution of Tubilewicz's books on Taiwan's diplomatic activities in Central Europe, the information on the case of Taiwan‟s economic diplomacy adopted on Slovakia still remains rather limited.