Taiwan condemns China for undermining Palau ties with crime activities

Taipei, March 2 (CNA) Taiwan's government has condemned China's ongoing attempts to sabotage Taiwan's diplomatic ties with Palau through alleged illicit activities by criminal organizations there, following a recent think tank report that made public such efforts.

In a statement Sunday, the Ministry of Foreign Affairs (MOFA) said it has noticed that the People's Republic of China (PRC) has used Chinese businesspersons and/or criminal organizations with Chinese backgrounds to infiltrate Palau for many years under the guise of land development and investments.

MOFA said those criminal rings are allegedly engaging in money laundering, gambling and fraud and other illicit activities to economically infiltrate and coerce Palau, for which MOFA issued a "stern condemnation."

MOFA was responding to a CNA request for comment on an American think tank's recent warning that China is using transnational criminal organizations to advance its political agenda in Palau, which it said could undermine Taiwan's diplomatic ties with the country.

In the recent report, Pacific Economics said transnational criminal organizations have been making investments in Palau, which is but one of the tactics being used by China to exert influence on the island nation.

A Palau media outlet, the Island Times, cited the report as warning that the infiltration of criminal enterprises into Palau's economy could deter legitimate investors, damaging the country's investment reputation and tourism industry.

PRC-affiliated projects seeking to secure land and infrastructure could also undermine Palau's sovereignty and disrupt its strategic role in the Pacific, the think tank said, according to the Island Times.

Jarod Baker, co-founder of Pacific Economics, told CNA on Saturday that while Palau formally recognizes Taiwan and does not adhere to the "one China" policy, criminal organizations can help Beijing fill the gaps in areas where China's foreign ministry's efforts might fall short.

"[The crime syndicates] are used to covertly bring in money, people and other elements," he said.

One example Pacific Economics cited in its report was the Prince Group, a Chinese-Cambodian conglomerate founded by Chinese businessman Chen Zhi (陳志).

The group has been implicated in money laundering, online scams and human trafficking, drawing scrutiny from both the Chinese government and Radio Free Asia, according to Pacific Economics.

The Prince Group has proposed resort investments in Palau of over US$1 billion, the report said. Similarly, many recent hotel investments in Palau have ties to China, the think tank said.

In its statement, MOFA contrasted Taiwan's engagement with Palau against China's, saying it has worked closely with Palau by encouraging Taiwanese businesses to invest in the Pacific ally, boosting "more prosperous development of Palauan businesses."

Palau is one of 12 countries around the world that maintain diplomatic relations with Taipei instead of Beijing.

Palau President Surangel Whipps, Jr., who began his second term in January, has been supportive of Taiwan since he first took office in 2021 and has repeatedly accused China of pressuring Palau to switch sides by weaponizing tourism.