The United States and Taiwan have maintained a remarkable security partnership in the Western Pacific for over a half century, but today this partner­ship is in peril.

In Washington, there is considerable concern and confusion about Taiwan's commitment to its own defense. In Taiwan, a much deeper uncertainty among the citizenry about the Washington-Taipei relation­ship threatens to undermine their determination to keep democratic Taiwan separate from Communist China. This uncertainty is compounded by the cur­rent political turmoil in Taipei surrounding allega­tions of corruption by members of the president's family. Beijing's relentless campaign to isolate Taiwan internationally and Washington's constant pressure to abjure "independence" have persuaded influential political leaders in Taiwan to seek an accommodation with Beijing that easily could have the effect of plac­ing the island's security in China's hands.

Taiwan's political leaders across the partisan spec­trum now must make a decision. One choice will lead to effective disarmament and ultimate union with China. The other will lead to effective deterrence and a potential future beyond Beijing's rule. As Taiwan makes its choice, Washington must contemplate how its position in Asia would look should Taiwan fall firmly into China's hands.

Taiwan: Part of China?

Among Taiwan's moderate politicians, there is hope that Beijing might accept a "one China, differ­ing interpretations" formula for ties across the Taiwan Strait, which would not challenge Beijing's claim that Taiwan is part of the People's Republic of China (PRC) but would allow Taipei to interpret "one China" as something quite dif­ferent.[1] However, Taiwan's politicians cannot decide on which interpretation would best keep Taiwan out of Beijing's hands. Some say that "one China" is the old Republic of China, while others say that "one China" is merely a "historic, cul­tural and geographic term within which are two sovereign, independent, mutually non-subordi­nate states."[2] Taiwan's current President Chen Shui-bian eschews any suggestion at all that Tai­wan is part of China.[3]

Washington still hints obliquely that it does not recognize China's sovereignty over the island, as demonstrated by President Ronald Reagan's pledge to Taiwan President Chiang Ching-kuo in 1982.[4] Yet in recent years, official Washington has fallen into the habit of averting its gaze whenever Beijing declares its right to retake Taiwan by force.[5] This has led pro-China politicians in Taiwan's opposi­tion parties to proffer their visions of a new era of peace across the Taiwan Strait buttressed by an interim agreement with China that would exchange Taiwan's recognition that it is legally part of China for Beijing's pledge not to launch a military attack against the island.[6]

But Taiwan's debate over the interpretation of "one China" is moot: China rejects any interpreta­tion that suggests anything less than Beijing's com­plete sovereignty over Taiwan. Meanwhile, the fact that most of the international community pro­claims that it "does not support Taiwan indepen­dence" (as if Taiwan were not already independent) is portrayed by Taiwan's pro-China politicians as tacit international consent to China's demands.

Taiwan's Strategic Value

A political union of Taiwan with China would be contrary to U.S. interests. Taiwan is a crucial ele­ment in the geostrategic structure of the Asia- Pacific region as the magnitude of China's military might catches up with its economic and trade power. Taiwan is democratic Asia's third largest trading power. Its population is slightly larger than Australia's. If Taiwan were a member of the 10-nation Association of Southeast Asian Nations, it would be ASEAN's biggest economy and largest military spender.

In other words, Taiwan is a significant Asia- Pacific power in its own right. This means that America's stake in Taiwan has far-reaching eco­nomic, political, military, and strategic dimensions.

Economic. Taiwan is America's eighth largest trading partner and sixth largest agricultural trad­ing partner, with bilateral trade expected to exceed $60 billion in 2006. Additionally, Taiwanese com­panies have invested some $200 billion in China over the past two decades and, largely at the behest of foreign customers, assemble a significant amount of their export products in plants in China.

Taiwan is America's second largest supplier of semiconductors and fifth largest supplier of ad­vanced technology products (ATP, which include optoelectronics, computer systems, and informa­tion systems) after China, Mexico, Japan, and South Korea.[7] Taiwanese-owned firms are said to control over 70 percent of China's ATP pro­duction,[8] which accounted for $52 billion in ATP exports to the United States in the first nine months of 2006. In 2005, China outpaced the United States as the top global exporter of infor­mation technology products.[9]

China's sudden emergence as a global ATP pow­erhouse is a direct result of massive foreign invest­ment, especially from Taiwan, but also from Europe, Japan, South Korea, and the United States. This is not because of any cost difference between Chinese facilities and Taiwanese facilities. Manu­facturing microchips costs 7 percent more in China than in Taiwan--clear evidence that economic fac­tors are not driving the migration of Taiwan ATP-manufacturing to China.

Predatory Chinese government policies are driv­ing the migration of advanced technology away from Taiwan (and from the United States, for that matter).[10] Ultimately, leading-edge research, devel­opment, and design functions are drifting away from the U.S., and the United States will soon con­front the erosion of the basic institutional and human infrastructure necessary to sustain world leadership in nanoelectronics.[11] A major factor in this challenge has been the inability of the Taiwan and U.S. governments to advocate effectively for their citizens who come under tremendous pres­sures and threats from the Chinese government to make advanced technology investments in China rather than import Taiwanese or American ATP for China-based customers.[12]

There are also indications that the Pentagon has become alarmed at the rapid migration of advanced computing technologies to China and the increas­ing U.S. reliance on Chinese-manufactured PCs and notebook computers because of the possibility that those machines might be compromised by maliciously designed microcircuits.[13]

Taiwan's economy is already overexposed in China. China is now Taiwan's largest primary export market, which means that Taiwan's export performance is centered on primary exports of components that are assembled in China for re-export to third countries. About 500,000 Taiwan­ese businessmen and families reside in China.[14]

Exploiting this phenomenon, the Chinese gov­ernment regularly pressures Taiwanese businesses in China to be attentive to Beijing's--not Taipei's-- political goals. In October 2006, Ambassador Stephen Young, director of the American Institute in Taiwan, observed that the "United States is cer­tainly not interested in neglecting our economic relationship or seeing Taiwan marginalized in East Asia, or globally."[15] Indeed, it is not in America's interests at all. As a matter of national security, the United States should be extremely wary of encour­aging its eighth largest trading partner and one of its major sources of advanced technology products to fall under the control of a potential military superpower and peer competitor in Asia.

Political. Taiwan is a poster child for democracy in Asia. Unlike the democratic revolutions in the Philippines, South Korea, and Latin America dur­ing the 1980s and the Indonesian experience in the 1990s, Taiwan's evolution was nonviolent. In 1991-1992, after 15 years of insistent encourage­ment from the U.S. Congress and executive branch, Taiwan made a peaceful, constitutional transition from a one-party dictatorship to a fully representa­tive democracy, and in 1996, it held its first free presidential elections. With democracy came the abolition of press censorship and realization of full freedoms of assembly, speech, and labor--all of which have resulted in a rather colorful and vibrant political culture.

Taiwan's democratization is an American success story. The new culture of democracy in Taiwan has perforce opened the island's political debate to the vocal advocacy of a number of issues that distress Americans, not the least of which is the debate about the island's future. It is a culture that Ameri­can diplomats and policymakers can view as a major accomplishment in the "global expansion of democracy."[16]

Because of America's peculiar relationship with Taiwan, embodied in the Taiwan Relations Act of 1979, Taiwan is seen throughout East Asia-- including Beijing--as the measure of America's commitment to democratic Asia against the pres­sures of undemocratic China. All Asia understands (whether they admit it or not) that Taiwanese do not seek a political union with China[17] and that U.S. support for Taiwan has enabled Taiwan to pre­serve its identity separate from the Beijing regime.

However, Asians now see authoritarian China as the emerging power in the region and democratic America as the receding one. Most share former Secretary of State Colin Powell's concern: "Whether China chooses peace or coercion to resolve its dif­ferences with Taiwan will tell us a great deal about the kind of relationship China seeks not only with its neighbors, but with us."[18] They fear that timo­rousness in the face of Beijing's threats will only encourage Beijing to adopt in the future the same peremptory posture in the region that it exhibits now in the Taiwan Strait.

International trepidation in the face of China's threats to Taiwan also leads Beijing to expend a great amount of money on developing a military force that it believes will give the U.S. a face-saving excuse (i.e., avoiding war) for not intervening in a Taiwan conflict. Indeed, the received wisdom of classical China's supreme strategist, Sun Tzu, avers that "to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fight­ing."[19] Hence, after the Taiwan problem resolves itself, China will have a modern military force that can be used elsewhere.

Many American policymakers and academics view China as an unstoppable force of nature. Dur­ing an intense grilling by the House International Relations Committee on May 10, 2006, Deputy Secretary of State Robert Zoellick said:

But we have to be very careful, you see. And this is the balance, is that we want to be supportive of Taiwan, while we are not en­couraging those that try to move toward independence. Because I am being very clear: Independence means war. And that means American soldiers.[20]

Zoellick's sentiments are valid and understand­able, but the "independence means war" formula­tion is a purely Chinese invention, designed as a threat and not as a postulate of immutable fact.[21] Avoiding war is a reasonable concern, but modern war-avoidance theory centers on the proposition that democracies do not make war on each other, but rather are themselves the targets of aggression.[22] An international system that makes peace the high­est priority is "at the mercy of the most ruthless, since there [is] a maximum incentive to mollify the most aggressive state and to accept its demands, even when they [are] unreasonable." The result inevitably is "massive instability and insecurity"[23]

Such a model predicts that China will be relent­less in threatening war as a way to get what it wants from influential forces in the U.S. and other nations that value peace more than they value Taiwan. Given how much China has enmeshed itself in the international manufacturing supply chain, war is clearly no more in the interests of the Chinese Communist Party's leadership--for the time being, at least--than it is in U.S. interests. One reasonable U.S. counterresponse could be to present China with a calculus showing that military action against Taiwan would cause the regime in Beijing far greater pain than would leaving Taiwan alone-- independent or not independent.

Of course, for this response to be effective, Beijing must believe that Washington is prepared to sanction China severely for military action. In addi­tion, if Washington were to suggest that the United States would likely recognize the de jure indepen­dence of an invaded Taiwan, Beijing would be faced with an even more unpalatable conundrum: How could it be sure that threatening military action against Taiwan would not itself ultimately result in an internationally recognized independent Taiwan?

Nor does the argument that Taiwan is excep­tional in Beijing's strategic calculations hold water. If Beijing's threats of war were successful in break­ing Washington's commitments in the Taiwan Strait, what would prevent China from declaring at some point that Japan's continued occupation of the Senkaku Islands means war? Would that threat also warrant international timidity?

Is this an exaggeration? On November 13, 2006, the week before Chinese President Hu Jin­tao visited New Delhi, China's ambassador to India declared flatly that "In our position, the whole of what you call the state of Arunachal Pradesh is Chinese territory and Tawang (dis­trict) is only one place in it and we are claiming all of that--that's our position."[24] If China can unexpectedly lay a territorial claim on an entire Indian state and India can respond with equa­nimity (as it did),[25] one is tempted to ask just where its limits are.

In this sense, Taiwan is a concrete test of Amer­ica's commitment to democracy in Asia.

Military and Intelligence. Taiwan is also an important (albeit unofficial) American defense partner in Asia. Taiwan has a quasi-alliance with the United States by virtue of America's Taiwan Relations Act (TRA), which articulates a formal defense commitment to Taiwan[26] that is arguably as binding now as the defunct U.S.-Republic of China Mutual Defense Treaty was in its time.[27] While the TRA is not a formal bilateral commit­ment--Taiwan has no conditional obligations under the TRA to defend U.S. troops who come under attack in the region--Taiwanese and Ameri­can defense forces must coordinate their operations in the event of hostilities in the Taiwan Strait.

The United States already gains from Taiwan's surveillance, intelligence, and reconnaissance poten­tial. In recent years, mature and robust cooperation on intelligence collection between the two countries has reportedly been invaluable to the U.S. in process­ing real-time data on Chinese military operations.

Since the Taiwan Strait missile crisis of March 1996, the U.S. Navy has been collecting hydrographic data in the Taiwan Strait, Bashi Channel (between Taiwan and the Philippines), northern Taiwan, and the deep ocean Ryukyu Trench, which drops off into the Philippine Sea on Taiwan's east coast. Apparently with Taiwan military cooperation, the U.S. Navy utilizes Nowcast, a system for surface and subsea measurements, to produce "range-dependent acoustic propagation profiles, sound channel positions, bottom bounce path profiles, submarine diving depth surveys and undersea ter­rain studies" in a three-dimensional forecast for U.S. Naval operational movements. During the 1996 cri­sis, the U.S. Navy found that it had little familiarity with the hydrographic environment of the Taiwan Strait and vowed not to be blindsided in future Tai­wan Strait deployments.[28] In October 2002, a Chi­nese intelligence surveillance vessel loitered inside Taiwan territorial waters, apparently developing seabed maps for Chinese submarine operations.[29]

Over the past several years, the Taiwan press has reported sporadically about intelligence coopera­tion arrangements between the United States and Taiwan that have been in place for over 20 years, including a "major signals intelligence facility in co­operation with the US National Security Agency (NSA) on Taipei's suburban Yangmingshan Mountain," which is identified as a "data processing center."[30]

In August 2000, a delegation of Pentagon spe­cialists, advisers, and defense contractors made a low-key visit to Taiwan to review how Taiwan could best deploy a long-range radar system that the United States had approved during an earlier defense consultation session in Washington. The radar system would apparently be linked with U.S. satellite data to provide additional ballistic missile launch warning, perhaps as much as seven min­utes, to U.S. national missile defense assets in the Pacific.[31] Chinese missile launch telemetry pro­cessed in Taiwan would presumably be integrated with telemetry from U.S. and Japanese monitors to produce redundant and reliable missile defense battlespace surveillance throughout the Western Pacific Rim. The U.S. Pacific Command will also benefit (if it does not already) from early-warning air and missile defense coverage of mainland China provided by advanced radar stations in Taiwan.[32]

The United States enjoys other advantages from its defense relationship with Taiwan. American defense industries benefit from the pay-as-you-go relationship with Taiwan's military, which has been America's second best cash customer (after Saudi Arabia) for defense equipment and services every year for the past 10 years, including $1.4 billion in deliveries in fiscal year (FY) 2002, $592 million in FY 2003, and $962 million in 2004.[33]

If Taiwan ever decides to finance the "Big Bang" arms package announced by President George W. Bush in April 2001, the U.S. Administration would be in a position to consider more advanced defense articles and services for Taiwan, including the AEGIS destroyer system.[34] There is every indica­tion that the United States would welcome Taiwan's participation in the next-generation Joint Strike Fighter program as a security assistance partner.[35] Taiwan should also be in the market for a "gap filler" fighter aircraft as its F-5E/F fleet reaches the end of its service life.[36]

However, Washington must also face up to the reality that limiting Taiwan to a purely defensive posture vis-à-vis China is horrifically--and need­lessly--expensive. For example, the Pentagon seems to believe that 380 Patriot PAC-3 missiles, which cost roughly $3 million per missile launch, are an adequate response to China's 900 short-range bal­listic missiles (SRBMs), which are estimated to cost China less than $1 million each to manufacture and deploy. Given a 50 percent kill rate with the PAC-3, Taiwan would spend six times as much to kill an incoming Chinese SRBM as China would spend to produce the SRBM. While fielding a PAC-3 defense shield makes sense for high-value Taiwan targets, the calculus of deterrence also requires that Taiwan develop a limited offensive capacity to inflict seri­ous pain on Chinese targets.[37]

Taiwan has a capacity for research, development, and manufacture of weapons systems with an offensive capability. The Hsiung Feng III super­sonic cruise missile is one example of Taiwan's vir­tuosity in missile design. It has a range of several hundred miles and can hit targets on China's coast. However, the United States is said to have put con­siderable pressure on Taiwan not to manufacture the weapon, apparently fearing that it would some­how offend China.[38]

In December 1999, Kuomintang (KMT) presi­dential candidate Lien Chan insisted that Taiwan must establish a credible deterrent military force, specifically developing a potential for a long-range ballistic missile force to convince China that it should not dare to attack Taiwan. At the time, Lien said that China's missile threat made it imperative that Taiwan strengthen its anti-missile early warn­ing, target acquisition, and interception capabili­ties. Further, an effective deterrent force would make it impossible for any foreign country to accept the cost of striking Taiwan. Lien said that Taiwan must develop a "second strike" capability to guarantee national security.[39]

Geostrategic. There are obvious geographic advantages in having Taiwan as a "virtual ally." Tai­wan occupies 13,000 square miles of strategic real estate in what General Douglas MacArthur once called America's "littoral defense line in the western Pacific."[40] It sits astride the major sea lanes between East Asia and the U.S. West Coast and on Japan's vital sea lanes along the East Asian littoral through the South China Sea to the Middle East. Six decades ago, MacArthur articulated a key tenet of America's security strategy in the Western Pacific: The United States, as the world's preemi­nent maritime power, must be able to secure the Pacific Ocean against hostile forces and can do that only by keeping "Island Asia" out of the hands of "Mainland Asia."[41]

Each day there are roughly 600 to 700 scheduled and chartered international maritime transits of the Taiwan Strait and a comparable number of civilian air transits.[42] Beginning in 1999, Chinese People's Liberation Army (PLA) Air Force aircraft made an average of 1,379 sorties per year (nearly four sorties per day) over the Taiwan Strait (but not in eastern Taiwan's Pacific Ocean airspace), while the PLA Navy conducted 6,825 sorties through the strait and five off eastern Taiwan.[43]

Taiwan's central mountain range is among the highest in East Asia, including Yu Shan (Mount Morrison) at 13,000 feet, and provides upper ele­vation locations for defense surveillance and mon­itoring facilities. Its eastern coast drops precipitously into the Ryukyu Trench, which is over three miles deep, an ideal environment for submarine operations. For the three decades fol­lowing World War II, U.S. military planners con­sidered Taiwan an "unsinkable carrier tender,"[44] and U.S. planners in the 21st century would undoubtedly blanch at the idea that Taiwan would ever be made available to a major Asian power hos­tile to the United States.

Taiwan also occupies two strategically significant island reefs in the South China Sea: Pratas (Dong­sha) in the northern waters and Itu Aba (Taiping) in the Spratly chain, the largest island in the South China Sea's southern waters. The 15-mile-wide Pratas reef is garrisoned by the Taiwan coast guard and a small air force contingent, but their primary duties are manning a weather station and protect­ing the reef's pristine coral ecology. Itu Aba is also manned by a small Taiwan garrison.[45]

Chinese warships have regularly haunted the waters surrounding Itu Aba since mid-2005, mak­ing Taiwan's Ministry of National Defense exceed­ingly nervous. Its response to the tightening noose around the strategic island was to "avoid war" by replacing its marine garrison with a Taiwanese coast guard detachment.[46] In December 2005, in an effort to cope with a prospective Chinese harass­ment of Itu Aba, Taiwan's defense ministry announced plans to build a 1,150-meter runway and a control tower on the island suitable for resup­ply by C-130 aircraft, but insisted in public that the airstrip was intended for "humanitarian purposes" such as emergency rescue efforts for sick or injured merchant seamen or fishermen who might encoun­ter difficulties in the treacherous waters.[47] In early 2006, Beijing eventually decided to reassert itself in the Itu Aba area, claiming that it had a "tacit under­standing" with Taipei on sovereignty and referring to a 1993 statement from Taiwan's defense ministry that "did not rule out joint development with China" of the island's waters.[48]

China's aggressive presence in the South China Sea, and Itu Aba in particular, clearly warrants the concern of U.S. defense planners. The prospect of a Chinese military occupation of the largest island in the South China Sea should also wonderfully con­centrate minds in Tokyo and in capitals on the Southeast Asian littoral. If one assumes that Chi­nese military occupation of Itu Aba would give Beijing control over international maritime naviga­tion through the South China Sea, Taiwan's occupa­tion of the island helps to maintain a stable balance in the region.

Elsewhere in the Pacific, Taiwan's curious diplo­matic footprint in the Pacific offers geostrategic advantage in a different way. In November 2003, Taiwan's establishment of diplomatic relations with the Pacific Island nation of Kiribati led to China's hurried dismantling of an elaborate space tracking station on Kiribati's Tarawa Atoll.[49]

In sum, Taiwan is an important American trad­ing partner, a model democracy, and a critical, albeit unofficial, security ally. Assessing U.S. inter­ests in Taiwan will require reexamining--perhaps behind closed doors and in a confidential way-- many long-held but obsolete policy assumptions about the benefits of allowing Taiwan to be nudged into the embrace of China.

The Prospect of a Taiwan-China Defense Arrangement

Until recently, the idea that Taiwan would some­time soon be co-opted into a joint security arrange­ment with China was considered farfetched. Today, a substantial--but still very much a minority-- view holds that Taiwan's defense interests are best served by reaching accommodation with the PRC. This view is represented by the People's First Party (PFP), which holds 36 seats in the 225-seat Legis­lative Yuan (LY) and has influence over the KMT party, the leader of the majority Blue Coalition.

On May 12, 2005, Chinese Communist Party General Secretary Hu Jintao and PFP Chairman James Soong (who was very nearly elected presi­dent of Taiwan in 2000 and vice-president in 2004) issued a joint news communiqué in Beijing declar­ing that "Military conflicts shall be effectively avoided so long as there is no possibility that Tai­wan moves toward 'Taiwan independence.'"[50] At a September 2005 "peace conference" in Shanghai, Soong explained that Hu had given him a commit­ment not to attack Taiwan and that Taiwan there­fore did not need to defend itself from China.[51]

Taiwan's KMT party has suggested that by 2012, Taiwan should negotiate a peace agreement with China under which Taiwan would pledge not to pursue independence in exchange for Beijing's promise of "no use of armed force" against Taiwan. Under this proposal, negotiations would be held in the framework of the 1992 Consensus, which calls for Taiwan to agree that it is part of an undefined "one China." Negotiations would begin only after China withdraws all of the 900 short-range ballistic missiles that are aimed at Taiwan.[52] However, the proposal does not seem to take into account the fact that China's M-9 and M-11 missiles are mobile and can be redeployed within range of Taiwan with little difficulty.

A Taiwan administration that opens up full air traffic to China, allows unlimited Chinese business visits or tourism on the island, and acquiesces to the hollowing out of the island's advanced infra­structure as it decamps to the People's Republic will likely be inclined to seek ways to ease military ten­sions in the Strait. This would involve negotiating confidence-building measures that would likely include reciprocal goodwill visits by ships of each side's navy to the other's ports. One can easily see how this would allow China gradually to assume defense responsibilities in the Taiwan Strait and eventually for the island itself.

Taiwan's military has degraded over the past several years as a result of gridlock over defense spending. Taiwan's new Kidd-class destroyers have been armed with only half of their full complement of air defense missiles, with the other half possibly to be included in future year defense budgets.[53] Air force readiness stands at 63 percent mission capa­ble, a peacetime posture that does not reflect ten­sions in the strait. The Taiwan Army's Cobra helicopters engage in only one live-fire training mission per year.[54]

With Taiwan's defenses already becoming obso­lete while China's military modernization contin­ues at an alarming pace, 2005 marked a tipping point in the strait. Taiwan's military can no longer rely on its technological edge to defeat a Chinese attack.[55] Recently, Taiwan's Legislative Yuan Defense Committee passed to the floor a defense budget of NT$311,547,768,000 (nearly $10 billion), raising military spending from 2.4 percent of GDP to 2.85 percent, approving the purchase of 12 P-3 Orion anti-submarine warfare aircraft and a modified ver­sion of the Patriot GEM-PAC-2 missile defense sys­tem, and allocating a small amount for submarine design. A joint legislative committee failed to reach agreement on the budget by adjournment on December 7. The defense budget faces a mid-Janu­ary deadline for passage in the opposition-domi­nated legislature and still faces the prospect of major program cuts.[56]

If Mr. Soong or other politicians with similar views ever come to power advocating a "one China" framework for Taiwan's security relation­ship with China, such a framework would cer­tainly have no room for a security relationship with the United States or other Asian democra­cies.[57] The KMT also supports a new cooperative relationship with China and often points to Amer­ican policy statements to justify its policies.[58] In­stead, Taiwan would come under intensified pressure from Beijing to abandon cooperation with Washington as the price for such a relation­ship. If "one China" politicians were in power, Taipei would likely be no more able to resist such demands than it would be to resist China's de­mands that Taiwan abandon its attempts to define its own view of "one China."[59] If Taiwan's govern­ment cannot make needed changes in the island's defense posture, Taiwan risks becoming a defense liability.

Without a robust U.S.-Taiwan security rela­tionship--or, worse still, if Taiwan were under the military sway of the PRC--America's strategic position in Asia would be severely weakened. China is already the world's fourth largest econ­omy and is a rising military superpower and peer competitor with the United States for preemi­nence in the Asia-Pacific region. Hedging Amer­ica's collective bets on China's future requires a coherent strategy to prevent democratic Taiwan from being forced into a relationship with author­itarian China that the majority of Taiwanese peo­ple do not want and then having to implement policies consistent with that strategy.

What the United States Should Do

Recognizing Taiwan's strategic significance to America's position in Asia, the U.S. Congress included an explicit defense commitment in the Taiwan Relations Act of 1979. At the time, Con­gress believed that Taiwan's freedom from Chinese control was obviously in America's interests.

As recently as 2004, Assistant Secretary of Defense Peter Rodman pointed out in congres­sional testimony that President Bush's National Security Strategy calls for "building a balance of power that favors freedom." Mr. Rodman added that "Taiwan's evolution into a true multi-party democracy over the past decade is proof of the importance of America's commitment to Taiwan's defense. It strengthens American resolve to see Tai­wan's democracy grow and prosper."[60] To sustain these interests, the U.S. should:

Counter Beijing's relentless campaign to iso­late Taiwan economically and politically by strengthening U.S.-Taiwan trade ties and strongly encouraging allies and other democracies to include Taiwan in international efforts on health, transportation, nonproliferation, coun­terterrorism, and disaster relief. A U.S. free trade agreement (FTA) with Taiwan would be a good place to start.

Participation--even as an "observer"--in other formal and informal international organizations (e.g., the World Health Organization, Interna­tional Civil Aviation Organization, and Interna­tional Maritime Organization); the various informal nonproliferation groups (e.g., Austra­lia Group on chemical weapons and the Missile Technology Control Regime); and refugee and relief "core groups" would benefit the interna­tional community and give Taiwan enhanced international legitimacy. In turn, Taiwan's enhanced legitimacy would provide extra deterrence against China's constant threats of force against Taiwan.

However, the problem is far more complex and requires a more comprehensive solution than sim­ply opposing Beijing's attempts to isolate Taiwan. The first step in rethinking the Taiwan Strait must be to adjust existing policies. To this end, both the Administration and Congress should:

Confront Beijing's policy of "independence means war" with quiet suggestions from Wash­ington that war might just as easily mean inde­pendence. Some argue that such a stance would encourage some irresponsible Taiwanese lead­ers to advocate independence in order to start a war that would lead to diplomatic recognition. Nonetheless, Taiwanese politicians and the Tai­wanese people already are effectively restrained by their conviction that any war with China would devastate Taiwan, and no one wants to avoid war in the Taiwan Strait more than the Taiwanese people do.

Maintain the "island chain" hedge against a hostile continental Asian power as a broad stra­tegic goal of the United States. The island chain concept is especially relevant in the context of a new, continental Asian naval power seeking unrestricted access to America's sea lines of communication across the Pacific Ocean.

Enhance official exchanges. Defense coopera­tion is already at a high level, but the Adminis­tration should quietly enhance it by lifting the self-imposed ban on visits to the island by flag-rank U.S. military and naval officers. It should encourage visits by Cabinet-level officials, a practice that was common in the Clinton Administration. Senior U.S. State Department officials up to the rank of undersecretary should be able to visit Taiwan without placing undue stress on ties with Beijing.

Lend moral support to Taiwan's democracy. The Administration should cease justifying the U.S. commitment to Taiwan as merely an obli­gation under the Taiwan Relations Act and instead admit publicly that the United States has a stake in the survival and success of democracy on Taiwan, regardless of China's ter­ritorial claims on the island.

Encourage diplomatic ties. The State and Defense Departments and U.S. diplomatic mis­sions abroad should quietly and discreetly encourage the preservation of third-country diplomatic ties with Taiwan, especially in the Pacific, but also with Central American and Caribbean countries where China seeks a more assertive presence, such as Panama, which owns and operates the Panama Canal. Appar­ently, the State Department does this now on a limited basis.[61]

Revisit Taiwan's offensive military capacities. The Pentagon should admit that Taiwan's stra­tegic planning, which is based on purely defen­sive weapons systems, is horrifically expensive and lacks the deterrent efficiency of a robust second-strike, counterforce capability. The Pentagon should consult with Taiwan on sup­plementing its defensive strategy with weapons systems of a "limited offensive capacity" such as JDAMs (Joint Direct Attack Munitions), cruise missiles, HARMs (High-speed Anti-Radiation Missiles), and submarine-launched Harpoons. Quietly encouraging Taiwan to develop an offensive tactical missile force would also give Washington leverage over Beijing's penchant for supplying offensive missiles (and perhaps more) to rogue states from North Korea to Iran.

Conclusion

America's strategic position in Asia is now reach­ing a tipping point vis-à-vis China. In February 2006, the Pentagon's Quadrennial Defense Review warned that "of the major and emerging powers, China has the greatest potential to compete militarily with the United States and...over time offset traditional U.S. military advantages absent U.S. counter-strategies." The review then pointedly asserted that "the pace and scope of China's military buildup already puts regional military balances at risk."[62]

For Taiwan, the balance has already tipped. The Pentagon's 2006 annual report on Chinese military power stated flatly that "China's expansion of mis­sile and other military forces opposite Taiwan has continued unabated, with the balance of forces shifting in the mainland's favor."[63]

Some believe that America's only interest in Tai­wan is to ensure that the Taiwan issue is resolved peacefully, but such a policy reflects the triumph of process over outcome--a woeful shortcoming of American foreign policy thinking. China's rapid modernization is eerily similar to Japan's Meiji Res­toration a century ago, and its new ideology of "one China" nationalism resonates with the "one Ger­man nation" rhetoric heard during the first half of the 20th century. In a totalitarian China, the United States and the Asian democracies now face a similar challenge.

In 1945, President Harry Truman declared that a "strong, united and democratic China" was in "the most vital interests of the United States."[64] Two out of three is not good enough. Until China is democratic, the most vital U.S. interest will be to maintain and strengthen America's strategic posture in the Western Pacific, and Taiwan is essential to that strategy.

John J. Tkacik, Jr., is Senior Research Fellow in China, Taiwan, and Mongolia Policy in the Asian Studies Center at The Heritage Foundation.

Appendix

Items in Taiwan's Special Arms Procurement Budget

There is considerable finger-pointing in Taiwan over who is responsible for the interminable delays in processing Taiwan's special arms procurement budget. However, Taiwan's Ministry of National Defense (MND) clearly did not cause any of the delays.

The process began in April 2001, when President Bush approved a number of longstanding arms requests made by Taiwan's KMT-ruled government. That package, called the "Big Bang," included 12 P-3 Orion antisubmarine warfare aircraft, eight diesel electric submarines, and six batteries of upgraded the­ater ballistic missile defense systems.

To accommodate the enormous costs of several major new weapons systems, the three most expensive programs were originally to have been funded under a special budget separate from the MND's annual budgeting cycle. The MND completed its budgeting work in early April 2004, and the budget was formally submitted to the Legislative Yuan in early June 2004. In November 2006, the legislature's Procedures Committee blocked movement on a new supplemental budget for preliminary expenditures--the 66th time in two and a half years that the committee had blocked funding for the program. At the insistence of the opposition parties, the MND has reincluded these programs in the regular defense budget for 2007.

P-3 Orions. At the time of the April 2001 decision, the Lockheed Martin production line had been dormant, and the Taiwan military had to rethink its procurement preference for new aircraft. The initial intent was to offset the startup costs by linking Taiwan's order with a separate one from South Korea. However, when the U.S. Navy began to review U.S. needs for a multimission maritime aircraft (MMA) based on a Boeing 737 airframe to replace the P-3, both Taiwan and Korea considered plans for a possible MMA buy.

When it became clear that an MMA would not be available for five to 10 years and would be far more expensive than the P-3s, Taiwan requested pricing and availability (P/A) data for the P-3s in early 2003 and managed to get the project into the FY 2004 budget submission. The first pricing data included costs for restarting the P-3C production line. This yielded a price of about $333 million per plane for a mere 12 aircraft. When the MND finally settled on upgrading mothballed P-3Cs, which brought the price down to under $60 million, Taiwan's legislature had already begun to dig in its heels against the purchase.

Taiwan's formal letter of request (LOR) for refurbished P-3Cs was issued in early 2004, after the U.S. Navy informed Taiwan that surplus P-3Cs had become available. (Taiwan had previously been working under the assumption that only aging P-3Bs would be available.) The MND worked overtime to rewrite its new budget submission for the legislature.

Patriot Advanced Capability (PAC-3). The MND also delayed submitting an LOR for P/A data on the PAC-3 until April 2003 because it was essentially an unproven weapon system. After the system's effec­tiveness was demonstrated during Operation Iraqi Freedom, the MND submitted the LOR.[65] The Penta­gon turned around the P/A data in time for Taiwan to finish its budget plan by February 2004.

The MND initially requested six batteries of new PAC-3 systems and an upgrade of the three existing PAC-2+ batteries already in service on Taiwan. Pricing data were delayed until early 2004 as the MND successfully negotiated eliminating research and development cost-sharing from the pricing, thereby sig­nificantly reducing the unit cost of the PAC-3 missiles.

Diesel Electric Submarines. On submarines, the key pricing issue was the impasse over the indepen­dent cost estimate of more than $11 billion for eight boats--enough to make anyone choke. Because the U.S. has not made diesel electric subs in over 40 years, the Pentagon was obliged to consult with third countries about producing them for Taiwan. Chinese pressure on these countries obliged the U.S. Navy to outline production proposals for the boats in the United States. There is reliable U.S. reporting that the U.S. Navy wittingly sabotaged Taiwan's efforts to procure modern diesel electric boats from U.S. shipyards by hyperinflating the costs in order to prevent U.S. yards from building anything but nuclear boats.[66]

The high-priced submarine plan prompted 130 of Taiwan's 225 legislators to sign a letter to President Chen Shui-bian in 2002 saying that they would not appropriate funding unless there was significant domestic content or role in the program--a proposal that the Pentagon killed in mid-2004 by ruling out any local industry role in the submarine's design and development. Then the U.S. Navy insisted that the Legislative Yuan appropriate the full $11 billion before issuing an RFP to potential shipyards.[67]

After repeated requests by Taiwan's MND, aided by the threat of a U.S. congressional investigation into the U.S. Navy's management of the Taiwan submarine program, the Pentagon finally agreed in June 2006 to a two-phased approach in which an RFP would first be issued for the submarine design to establish cost for the program before the construction phase would have to be funded. The funding commitment required for Phase 1 is now $360 million, which is much lower than the $11 billion originally demanded by the U.S. Navy.