Philippa Brant is a Lowy Institute Research Associate.

Gambia recently announced it had terminated diplomatic ties with Taiwan after eighteen years. This marks the first diplomatic ally Taiwan has lost since Malawi in December 2007, and leaves Taipei with only 22 states with which it has an official relationship. Only three — Swaziland, Sao Tome and Principe, and Burkina Faso — remain in Africa.

Both Taiwan and China are playing down the significance of this move, indicating the maturing of the China-Taiwan relationship and the mutual recognition that their relationship is not worth jeopardising by squabbling over relations with a small, low-income state.

Taiwan has stated that China had no role in Gambia's decision. Hong Lei, Chinese Foreign Ministry spokeswoman, claimed that China learned of the move through the media and that 'before that, China was not in contact with Gambia'. In fact, the announcement seems to have caught everyone by surprise, including, perhaps, the people of Gambia themselves.

Taiwan's Minister of Foreign Affairs, David Lin, revealed the likely genesis of the decision: that Gambian President Yahya Jammeh had made an 'exorbitant demand' for aid (reportedly for more than US$10 million in cash) in January, one that Taiwan could not fulfil as it contravened the project-based principle of its foreign aid policy. The Taipei Times also reports that after making the announcement, President Jammeh posted a statement on Facebook further explaining his move:

…the People's Republic of China will be only the only China to be recognized diplomatically by The Gambia going forward…This decision has been taken in our strategic national interest in order to bring further opportunities and prosperity to Gambian citizens. This step will have concrete results in terms of advancing Vision 2020 for The Gambia.

It won't be a surprise if China does establish diplomatic relations with Gambia, though Beijing has purportedly said it will not. If it does, there's no guarantee it will offer the level and kind of support the Gambian president wants. Like other developing countries, Gambia will realise it is foolhardy to over-rely on China.

After years of so-called 'chequebook diplomacy' in which China and Taiwan vied for each other's diplomatic partners through a game of one-upmanship that had negative ramifications for all, a tacit agreement was negotiated in 2008. Both sides promised not to try to poach the other side's partners.

In 2009, the agreement passed its first test when Beijing, not wanting to risk strengthened cross-Strait relations, rejected a Panamanian request to switch from Taiwan to China. And in the Pacific in 2011 Vanuatu threatened to open a trade office in Taiwan in an attempt to pressure China to provide funds to meet its US$32 million budget shortfall. A notably annoyed Chinese ambassador agreed to provide 'part of' the funds on the condition Vanuatu upheld the One China policy and didn't make moves towards Taiwan.

Gambia's abrupt severing of ties with Taiwan technically doesn't affect the Taiwan-China 'agreement', but it does increase pressure on Taiwan to retain its remaining diplomatic allies. As such, it will be worth keeping an eye on developments in the South Pacific. The region now features six of Taiwan's remaining 22 partners. And of the 14 countries in the Pacific Island Forum (excluding Australia and New Zealand) the split is a narrow 8-6 to China.

There have already been murmurings in the Solomon Islands about a desire to access Chinese concessional loans. Despite being in the Taiwan camp, trade with the People's Republic is strong. But Solomon Islands cannot access Chinese foreign aid loans without diplomatic recognition. Like Gambia, domestic politics in the Solomons will be the key factor.

It is unlikely we will see a ratcheting up of chequebook diplomacy in the region. Neither China nor Taiwan (nor Pacific Island countries) want to return to the days of wasteful white elephant aid projects. So China will not pursue Taiwan's allies. Only moves by Pacific Island countries themselves, or a change in government in Taiwan, will challenge the status quo.

Photo by Flickr user Ross@Texas