Downtown Koror, Palau's largest city. Photo: RNZ Pacific
Palau's President Surangel Whipps Jr claims China is "weaponising tourism" in a bid to get the nation to sever its ties with Taiwan.
Whipps said he has been told by Beijing "the sky is the limit" if they ditch their association with Taipei.
"At the end of the day we have a relationship with Taiwan and of course that relationship is something that China's openly told us is illegal and we should not recognise Taiwan," he said on Wednesday during a press briefing with the New Zealand Deputy Prime Minister and Foreign Minister Winston Peters, who is on a tour of the North Pacific this week.
Solomon Islands and Kiribati ditched Taiwan for China in 2019 and 2020 with Nauru becoming the latest Pacific island nation to switch alliance in January of this year.
Palau, Tuvalu and the Marshall Islands has only three allies left in the Pacific.
Whipps said the Red Dragon is putting pressure on Palau to do the same.
More than half of Palau's GDP comes from tourism and Whipps said China has been reducing the number of its visitors.
"I think most recently in Chinese news is that Palau is an unsafe place and you should not go visit, that was early on this summer."
Palau’s President Surangel Whipps Jr with New Zealand’s Deputy Prime Minister Winston Peters during a gift exchange. 14 August 2024 Photo: RNZ Pacific / Caleb Fotheringham
Palau was also unable to attend the Pacific Asia Travel Association's annual summit hosted in Macao earlier this year because it does not have "diplomatic relations with China".
Earlier this year, Massey University's Centre for Defence and Security Studies, associate professor Anna Powles, described the "increased Chinese pressure" as an "offensive to effectively dismantle Taiwan's diplomatic allies" in the region.
'We have values'
Whipps said Taiwan has increased the number of flights to support Palau's tourism industry.
"China has said, 'with us, the sky is the limit'. We can give you everything you need. We need economic development but at the same time we have values and we have partnerships and the relationship we have with Taiwan we treasure.
"It's something that we have said very clearly, that we are their friend and nobody else should say that we cannot be their friend.
"Of course, because of that, we have seen different things happen...weaponising tourism...is something that is a reality that we face."
Peters said it was not the first time he heard about the increasing pressure from the Asian superpower.
But he refrained from saying if he was concerned about the situation when asked.
New Zealand Defence Force’s Boeing 757 landing in Palau, Foreign Minister Winston Peters last stop in the North Pacific tour and country number 14 of Pacific Island Forum nations his visited. Photo: RNZ Pacific / Caleb Fotheringham
Palau, alongside the Federated States of Micronesia and the Marshall Islands, have what is called Compact of Free Association (COFA) agreements with the United States.
Financial support is given to the three nations and in return the US is given military access and control.
The latest of tranche was held up being passed but were eventually signed into law by US President Joe Biden in March.
Prior to it passing, the three compact nations in a letter penned to the US Senate said the delay "resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific".
Marshall Islands President Hilda Heine has said she was nervous for a period but so far it has worked out.
"Funding has been flowing under the compact, we still have a number of issues that we're trying to work out that has to do with our federal program and services, but for the most part the agreement is being fully implemented," she said this week.
Palau is Peters last stop in the North Pacific tour and country number 14 of the Pacific Island Forum.
The Deputy Prime Minister is aiming to visit all 17 of the forum countries with Kiribati, New Caledonia and French Polynesia still to go.
Peters said he should visit them all before mid-October.
