Palau being one of Taipei’s 18 remaining global allies is now under pressure to switch alliances as China moves to expand its clout in the Pacific. The popular tourist destination is a casualty of diplomatic tug of war between Taiwan and China.
Last year China issued an order banning residents to tour the islands of Palau, declaring the tiny Pacific nation illegal due to its diplomatic status.
Jeffrey Barabe who owns Palau Central Hotel and Palay Carolines Resort in Koror believes China is using tourism as a weapon to strong arm Palau:
“There is an ongoing discussion about China weaponizing tourism. Some believe that the dollars were allowed to flow in and now they are pulling it back to try and get Palau to establish ties diplomatically.”
Before the ban took effect, Chinese tourists accounted for the bulk of the visitors in Palau. Of the 122,000 visitors in 2017, 55,000 were from China and 9,000 from Taiwan, official data showed.
Hotels, restaurants and other establishments are mostly empty. Travel agencies located in the island have been severely affected by lack of tourists and closed down.
“While Taiwan faces serious diplomatic challenges, the government will not bow down to pressure from Beijing,” Taiwan’s ministry of Foreign Affairs said on its website. “Taiwan will work with friendly nations to uphold regional peace and stability and ensure our rightful place in the international community.”
Palau president Tommy Remengesau Jr. said in an interview with Reuters, “It is not a secret that China would like us and the diplomatic friends of Taiwan to switch to them, but for Palau it is not our choosing to decide the one China policy.”
He also added that his administration’s “principles and democratic ideals” are closely aligned with Taiwan. His government is now more focused on higher spending visitors rather than mass tourism which took its toll on the environment.
Palau’s president said “The reality is that numbers did not mean big revenues for Palau. It actually made us more determined to seek the policy of quality versus quantity. ” In 2015 Remengesau declared most of Palau’s territorial waters as big as California, a marine sanctuary.