Can U.S. transform Iraq? Consider Taiwan

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By Sol Sanders

Sol W. Sanders

August 7, 2003

As Washington undertakes the monumental task of reinventing Iraq, American policy architects have no better argument for past achievements than Taiwan in 2003. The island’s 23 million people have proved that with Chinese celebrated entrepreneurial talents. But, more, they have also created their own model of representative government, going a long way toward that much more difficult concept of democracy. The impetus traces largely to Taiwan’s leadership itself and its hardworking people, not the least the Kuomintang refugees who did learn their lessons from their defeat in the Chinese civil war on the Mainland. But the U.S. from its economic and military aid programs to its welcoming door to Chinese students in American universities played a crucial role in the success.

Now when Taiwan’s economy is in eclipse with record unemployment, when some believe its industry may becoming hollowed out by its massive investment in the Mainland [and the drain of some of its best executive talent Ý a half million in Shanghai alone guiding the $60 billion investment], the picture may seem less bright. China is now the No. 1 destination of Taiwan exports replacing the U.S. Not a few Taiwanese worry Mainland competition in new products, cheaper R&D, as well as cheap labor for Taiwan’s lower grade exports, will destroy its economy. There is also concern these new Mainland ties place Taiwan at Beijing’s mercy in its effort to reassert sovereignty.

Taiwan’s politically shrewd President Chen Shui-bian, under pressure from business for access to Mainland markets and as a base for exports, has sought to boost morale: "There is no so-called 'sunset industry'; there is only a 'sunset product' or 'sunset management'. Only if you have the spirit of creation, speed and ambition can traditional industry find a new vision again," he told clothing manufacturing unionists. Chen has backed his words with massive government to aid the effort to follow Western industrial countries by moving up the food chain to more sophisticated products. Public funds are used for venture capital, to lift restrictions on investment including foreign executives and engineers, to train workers in biotechnology; and to promote ultraprogressive industrial parks complete with dormitories, bilingual schools. For example, the government has committed $290 million a year for the next five years on building biotechnology and has approved National Chiao Tung University’s program to hone the country's IC design capabilities, still a world leader and a generation ahead of the Mainland. In fact, Taiwan is probably moving faster than either South Korea, and possibly even Japan, to meet the challenge of Mainland competition.

But, as it has been for 50 years, the real problem in Taiwan is political. And, ironically, it has been complicated by a democratic system that pits powerful contending political parties. Next year’s election didn’t look good for Chen when his two principle rivals, representing two streams of the former ruling Kuomintang, appeared to unite against him. Despite the fact that Chen as a Taiwanese has caste appeal for the 70 percent of the “native” Taiwanese against the Mainland “refugees” who dominated Island politics for 50 years, he only won the last election because of the KMT split.

But suddenly the winds have shifted again. Beijing’s clumsy efforts to put through new Hong Kong “security” laws Ý and the unprecedented public protests Ý as well as the SAR’s coverup debacle, has again brought home to Taiwan what closer Communist ties might mean. The “one country, two systems” formula foisted on Hong Kong was supposed to be the model for a reunification of Taiwan with the Mainland. Chen is exploiting the new situation against his KMT opponents who have waffled on the “One China” formula with which Beijing cloaks its appeals to Taiwan.

Now, Chen says he wants next March’s presidential elections not only to decide who is to be the next president, but a referendum on building a controversial fourth nuclear power plant. Earlier on, enraging Beijing, he had suggested perhaps Taiwan should vote on whether it would move to formal independence Ý the program of his Democratic People’s Party [DPP] when it swept into office in the first peaceful transfer of power in China’s long authoritarian history.

With its hands fullÝ the debris left by the Hong Kong crisis, the transfer of power from the Third to the Fourth Generation of Communist leadership, its role as interlocutor in the North Korean nuclear weapons crisis, the growing pressure for reevaluation of the Ren Min Bao currency [increasingly demanded by China’s trading partners to halt China’s runaway competition] Ý Bejing has taken a softly, softly line toward Taipei. And it has sent two emissaries to Washington to talk to the U.S., among other things, about the move toward referenda in Taiwan. It would be the greatest of ironies [and a reversal of the long years of U.S. lobbying for Taiwan democracy under Generalissimo Chiang Kai-shek and his successors] if Washington were to do that.

But there are the thousands of missiles sitting on the Fukien coast opposite Taiwan, underlining Beiiing’s refusal to renounce force in its effort to bring “the renegade province of Taiwan” to heel. There is President Bush’s pledge Ýbacking up so many other earlier U.S. guarantees Ý that he “would do whatever necessary” to prevent the use of force to force Taipei’s hand. And there is Washington’s growing urgency to persuade the reluctant Chinese to use their considerable clout to help “solve” the North Korean issue.

The claims on U.S. diplomacy and statecraft in the Taiwan Strait are not less than elsewhere to draw that fine line between idealism and pragmatism.

Sol W. Sanders, (, is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International. He writes weekly for World

August 7, 2003

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