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This article outlines the evolution of Taiwanese aid policy, the consistent driving forces behind it, and potential future directions within these parameters. Recent years have seen the discrediting of dollar diplomacy to secure recognition by both the Taiwanese voters and the OECD countries. It is also apparent that Taiwan cannot outspend the People's Republic of China to secure diplomatic recognition. Taiwan cannot assume the current diplomatic truce with China will last, and must therefore use the current period of good relations with the PRC to rethink its full range of foreign engagements. Within the Pacific Islands, increasing emphasis is being placed on lessening dependence on aid and the price that goes along with this, and especially developing the blue (ie maritime) economy as Big Ocean nations rather than small island nations. This idea is particularly relevant to four of Taiwan's six Pacific allies who are small population, big ocean Micronesian nations, as is neighbouring Tuvalu. All are also at the forefront of climate change with Tuvalu, Kiribati and the Marshall Islands the first to go underwater as archipelagos of atolls without high islands. Taiwan has competitive advantages in agriculture, green technology, and healthcare-all vital to its allies and all potentially politically neutral as health and environment issues with which it can further increase its contribution to multilateral development institutions. Taiwan's engagement with Micronesia is a way to become seen as an increasingly global good citizen, especially in partnership with Japan and the USA, the two former colonial powers and largest aid donors to Micronesia and close allies of Taiwan. The small island nations of the Pacific are also potential stages to explore greater cooperation with the PRC in the future, but only if it is in true partnership with Pacific nations.
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