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The PRC and Taiwan are competing to gain diplomatic recognition from Pacific Islands states, a number of which recognise Taiwan and serve as a barrier to its international isolation. Since much of Oceania is in Australia's sphere of influence, this struggle has often involved Canberra. This paper focuses on the intensifying conflict--with conclusions about the local political economic situations of the countries in Oceania that are most likely to switch recognition, the dilemmas that the issue poses for Australia and its alliance with the US, and the game theory of these auctions of diplomatic recognition. The rental of recognition is analysed as a "sovereignty business" in which some Pacific Islands states engage—similar to the offshore financial centres which are prevalent in the region. [ABSTRACT FROM AUTHOR]

Although the government and society of the Republic of China's (ROC or Taiwan) have changed markedly in the new millennium, the fundamentals of US policy toward the island remain intact. This study outlines recent developments in Taiwan and shows how they represent challenges to the US. It also discusses American policy toward Taiwan and examines several proposals for change that an American administration may wish to consider. In conclusion, the paper explains why the current policy, albeit contradictory and ambiguous, is in the best interest of the United States. There is a strong possibility that any major change in policy would succeed only in undermining peace and stability in the Asia-Pacific region. [ABSTRACT FROM AUTHOR]