Analysis

Taiwan's president Chen Shui-bian announced Jan. 18 that he will accept an invitation to visit Libya and meet with Libyan leader Moammar Gadhafi. Libya and Taiwan hold no official diplomatic ties but are expected to open trade offices in each other's capitals after the meeting. Mainland China, which already has diplomatic ties with Tripoli, does not like Chen negotiating for more political recognition -- but Beijing lacks the economic clout in the Middle East to prevent it.

For Taipei the issue is twofold -- or perhaps more like one-and-a-half-fold, with the primary goal being diplomatic recognition of its nation-state. The second and much smaller goal is to invest in the energy field and take advantage of the energy crises in Europe. Libya is home to 39.1 billion barrels of crude oil -- 3.3 percent of the world's proven oil reserves -- and much of the country remains unexplored. Production in the country stands at 1.6 million barrels per day (bpd), but rising surges of foreign investment mean that it could well reach 5 million bpd within 10 years, far exceeding its 1971 peak of 3.3 million bpd. Taiwan, however, has no domestic energy conglomerate of its own and so must be satisfied with simply financing outside operations in Libya.

Beijing has been ever wary of Taiwan gaining international recognition and has consistently -- and successfully -- used its position and leverage in the world community to prevent that recognition. Only 25 nations recognize Taiwan as an independent nation, and most of those are tiny countries in either Africa or South America. Unfortunately for China, it seems that Chen just might secure a 26th -- and one that actually matters at that. Libya will by far be the largest economic power to recognize Taiwan, and also the only nation that can claim any amount of standing, however miniscule, on the world stage. Libya, on the other hand, can just as easily choose the route of many other nations and simply maintain trade ties with Taiwan without actually acknowledging its sovereignty.

And there is little Beijing can do to stop it. The economic ties between China and Libya are minimal, with China importing negligible amounts of oil and Libya importing food, clothing and light manufactured goods. Libya has no interest in the Chinese markets, preferring instead to trade mostly with Europe, and Taipei's proposed investment fits perfectly into those plans. China is also stripped of the option of moving its own energy companies in to develop Libyan fields, as Libya is already saturated with European and U.S. firms that -- unlike Chinese firms -- have extensive experience in exploiting the heavy oil deposits predominant in Libya. Include Gadhafi's free-agent attitude just to add spice to the scenario, and Beijing finds itself without a leg to stand on.

So although China disapproves and denounces the meeting, that is just about all it can do. Taiwan will continue its campaign for international legitimacy, and considering Libya's oil-dependent economy, Taipei just might find itself investing even more into the European energy supply network.