By Kirsty Needham
(Reuters) - The Federated States of Micronesia held talks with Taiwan in February about switching diplomatic ties for $50 million in assistance after growing frustrated at China, the outgoing president of the Pacific island nation has said in a letter.
Tensions between the United States and China for security influence in the Pacific islands are rising, and FSM President David Panuelo was a prominent critic of China's attempt to strike a 10-nation security and trade pact.
Panuelo lost his seat in Tuesday's national poll, election officials confirmed.
In a letter sent to state governors viewed by Reuters, Panuelo said he met with Taiwan's foreign minister Joseph Wu in February to discuss switching diplomatic recognition.
"I was transparent with Foreign Minister Wu; we project we need an injection of approximately $50,000,000 to meet our future needs. We can and will receive this, over a three year period, if and when we establish diplomatic relations with Taiwan," he wrote.
"Taiwan assures me that they will simply 'pick up' any and all projects that China is currently undertaking.".
The aid would come on top of "greatly added layers of security and protection that come with our country distancing itself from the PRC, which has demonstrated a keen capability to undermine our sovereignty, reject our values, and uses our elected and senior officials for their own purposes," he added.
An interim $15 million annual assistance package was also offered, he wrote.
A spokesperson from the FSM president's office declined to comment and Taiwan's foreign ministry said it was working on a statement.
The letter, a copy of which has been viewed by Reuters, was dated March 9 and first reported by The Diplomat.
In the letter, Panuelo accused China of waging "political warfare" in his country, and bribing his government's officials.
Panuelo wrote he had blocked the appointment of China's choice of new ambassador because the person had a background in security and overseas police operations.
Panuelo said China's previous ambassador had urged an official to sign an MOU between China and FSM despite Panuelo rejecting it, telling the official the president didn’t need to know.
China's foreign ministry did not immediately respond to a request for comment about the ambassador or allegations of bribery.
Beijing and Taiwan have a history of competing in the Pacific islands, where four of Taiwan's 14 diplomatic allies are located. Two Pacific island nations, Kiribati and Solomon Islands, cut diplomatic ties with democratically ruled Taiwan in 2019 after offers of aid from China, which views Taiwan as its own territory.
FSM's official election results will be announced later on Friday. A new government will take power in May, with the next president to be chosen by Congress from four elected senators.
The country - made up of more than 600 islands spread across the Western Pacific - is close to finalising a renewed compact of free association with the United States, under which the U.S. provides defence and economic support.
(Reporting by Kirsty Needham in Sydney; Additional reporting by Ben Blanchard in Taipei and Beijing newsroom; Editing by Lincoln Feast.)
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