The Chinese-language China Times daily quoted the Panamanian media yesterday as reporting that Taiwan was donating a US$40 million aid package, including a US$22 million plane, to the country in order to please its new president, Ricardo Martinelli, who took office last July.

Past Taiwanese administrations often came under fire for spending large amounts of money overseas in efforts to prevent the country's rare diplomatic allies from switching recognition to China.

The plane in question is reportedly a Brazilian-made Embraer Legacy 600 which costs about US$27.45 million and can carry 16 passengers. According to the Panamanian newspaper La Prensa quoted in the China Times, the plane could be used to transport President Martinelli or members of his administration but was unsuitable for relief operations.

President Ma Ying-jeou always opposed waging checkbook diplomacy as spending money on unclear objectives, but did not rule out normal aid to allies, presidential spokesman Wang Yu-chi told reporters yesterday. If the aid was spent according to clear plans, the president would not oppose it, he said. Such financial assistance could improve relations between Taiwan and its allies, according to Wang.

Foreign Minister Timothy Yang said the donation of the plane would be accompanied by public ceremonies and would be listed as an official event.

Yang responded to questions from opposition Democratic Progressive Party lawmakers Tsai Huang-liang and Hsueh Ling that he would investigate whether corruption had been involved in the deal, but that he didn't believe there had.

The request for the plane came from Panama's new government and was motivated by the fact that its emergency relief helicopters were old and had to be replaced, Yang said. Remote parts of Panama needed new aircraft to provide effective medical aid, he told lawmakers. Taiwan's government approved the request after a review and was booking the aircraft as an asset of the Panamanian government.

Both Yang and Taiwanese ambassador to Panama Simon Ko emphasized that the aid corresponded to the country's three basic principles for foreign aid, namely normal objectives, legal process and effective execution. Ko said Taiwan was prepared to help out with medical care, education, basic construction, law and order, and social welfare according to its capabilities.

Talks about the plane had not been finalized yet, Ko said, adding that the aircraft could also be used in the fight against drug smuggling.

The DPP's Tsai described the case as an example of checkbook diplomacy and as a scandal. Lawmakers questioned an apparent discrepancy between the US$40 million cost of the aid package and the widely mentioned US$28 million price tag for the Brazilian plane.