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By Giff Johnson

MAJURO, Marshall Islands (December 10, 1998 - Agence France Presse)---The Marshall Islands is making the most of its unique and perhaps short-lived status as the only country in the world with embassies of both the People' Republic of China and Taiwan.

The newly established diplomatic link with Taiwan is producing a flurry of business and government activity.

In fewer than three weeks since the two nations recognized each other, Taiwan formally opened a new embassy here this week.

Foreign Minister Phillip Muller said that a trade delegation of Taiwan government and business officials is expected to arrive next week to explore investment possibilities, while preparations are being made for President Imata Kabua to make a state visit to Taiwan next year. "We are moving really fast," he said. "We want to show tangible results."

Diplomatic relations with Taiwan were established because "the social and economic well being of the Marshall Islands takes priority over everything else," he said. "Our government is looking at ways to bring up the country economically. Relations with the Republic of China offer a good opportunity for growth."

Only three other Pacific nations, Nauru, Tuvalu, and the Solomon Islands have diplomatic ties with Taiwan, said Leo Fu-tien Liu, the director general of the Taipei Economic and Cultural Office in Guam who opened Taiwan's embassy here.

The new relations provide the foundation for development of many opportunities between the two countries, he said, adding that Taiwan government agencies and private sector companies will "pay a lot of attention to the Marshall Islands which is now among only 27 countries that have diplomatic relations with Taiwan.

The Marshalls wants to maintain a "two Chinas" policy, with friendly relations with both Taiwan and China. Beijing, however, is enraged by the Marshalls' diplomatic link with Taiwan.

It has regarded Taiwan as a renegade province since the defeated Nationalist government fled to the island in 1949 at the end of a civil war which brought the Chinese communists to power.

The Marshalls is downplaying the problem, saying the move was not intended to slight China. "We want to be friends (with the PRC), and strengthen relations," Muller said.

But Chinese ambassador Zhou Lianyi met with Muller earlier this week, repeating his statements to the media that the Marshalls "must correct its mistake" and withdraw recognition of Taiwan. China does not have relations with any of the nations that recognize Taiwan.

Beijing has yet to indicate what its response will be to the Marshalls' refusal to follow the PRC's advice, and flags of the two rival nations continue flying over their respective embassies that are located just 100 meters (330 feet) apart in this small island capital.

Muller said that establishment of diplomatic ties with Taiwan will lead to a wide range of cooperation between the two nations. He indicated that a delegation of Taiwanese officials will arrive soon to set in motion an "investment plan" that will explore buying and management of hotels, development of eco-tourism facilities in the remote outer islands, and investments and other assistance in marine resources and agriculture.

The Taiwanese government has also agreed to open its lending institutions to both government and private businesses, and will consider opening a commercial bank in the Marshall Islands.

"Taiwan is interested to make money available and be a partner in development," he said. The two governments also reached "an understanding" under which Taiwan has agreed to participate in developing the government's new trust fund.

Muller said that people should expect "a lot of economic activity" during the next six to eight months as the relationship with Taiwan moves into high gear.

Michael J Field, Agence France-Presse, Auckland, New Zealand Tel: (64 21) 688-438; Fax: (64 21) 694-035; E-Mail: WWW:

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