On June 12, the small Central American nation of Panama announced it was severing diplomatic ties with Taiwan so that it could establish relations with the People’s Republic of China. Now, only 19 countries and the Vatican recognize Taiwan. Why did this happen? How does it affect Taiwan’s relationship with the mainland? Should the United States get involved in preventing the further diplomatic isolation of Taiwan? 

The Democratic Progressive Party (DPP) took back power last year on an upbeat campaign that it would “Light up Taiwan” (點亮台灣), but President Tsai Ing-wen must be feeling anything but sunny at this moment.

The president continues to struggle in opinion polls, with the economy remaining a point of deep concern: compared with many of Taiwan’s formal diplomatic allies, Panama was a fairly large trading partner. Yes, the loss of diplomatic relations with Panama will have a small effect on Taiwan’s total foreign trade. Yet it is notable as another straw on the proverbial camel’s back, building on other economic pressure from Beijing, such as moves to curb mainland visitors that provide crucial tourism revenue in Taiwan.

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