Security Implications of Taiwan's Presidential Election of March 2008

Security Implications of Taiwan’s Presidential
Election of March 2008
April 4, 2008
Shirley Kan
Specialist in Asian Security Affairs
Foreign Affairs, Defense, and Trade Division

Security Implications of Taiwan’s Presidential Election
of March 2008
This CRS Report analyzes the security implications of Taiwan’s presidential
election of March 22, 2008. This analysis draws in part from direct information
gained through a visit to Taiwan to observe the election and to discuss views with a
number of interlocutors, including those advising or aligned with President Chen
Shui-bian and President-elect Ma Ying-jeou. This CRS Report will discuss the
results of Taiwan’s presidential election and symbolic yet sensitive referendums on
U.N. membership, outlook for Taiwan’s stability and policies, implications for U.S.
security interests, and options for U.S. policymakers in a window of opportunity.
This report will not be updated.
The United States positioned two aircraft carriers near Taiwan. Thus, there was
U.S. relief when the referendums, as targets of the People’s Republic of China
(PRC)’s condemnation, failed to be valid. Kuomintang (KMT) candidate Ma Ying-
jeou won with a surprising and solid margin of victory (17 percent; 2.2 million
votes), against Democratic Progressive Party (DPP) candidate Frank Hsieh.
The near-term outlook for Taiwan’s future is positive for stability and in policy-
making on defense. However, in the longer term, the question of Taiwan’s identity
and sovereignty as separate from the PRC remains unsettled. Moreover, the People’s
Liberation Army (PLA) has continued to build up its forces that threaten Taiwan,
raising the issue of whether the military balance already has shifted to favor the PRC.
The results of March 22 sapped the PRC’s alarmist warnings about the election
and referendums, although it might still warn about instability until the inauguration
on May 20 while Chen is still president. Nevertheless, cross-strait tension is greatly
reduced. Chen is effectively weakened and concentrating on the transition. Ma is
less provocative towards Beijing than Chen. Ma gives pro-U.S. assurances. There
is future uncertainty, however, as the KMT could choose to accommodate Beijing,
challenge Beijing, or seek a bipartisan consensus on national security.
In one view, there is an opportunity to turn U.S. attention from managing the
cross-strait situation to more urgent priorities that require the PRC’s improved
cooperation, such as dealing with nuclear proliferation in North Korea and Iran, the
crisis in Darfur in Sudan, repression in Burma, the crackdown in Tibet, etc.
Alternatively, a window of opportunity is presented for the first time in years to take
steps to sustain U.S. interests in security and stability in the Taiwan Strait.
Considerations include whether to counter perceptions in Beijing of “co-
management” with Washington and rising expectations about U.S. concessions to
PRC demands, notions denied by the Administration. An issue for policymakers is
what approach to take in a window of opportunity. U.S. policymakers have various
options to: continue the existing approach; engage with president-elect Ma (including
a possible U.S. visit before his inauguration); strengthen ties for Taiwan’s military,
political, and economic security (including a possible consideration of its request for
F-16C/D fighters); promote a new cross-strait dialogue; and conduct a strategic
review of policy toward Taiwan.

Presidential Election and Referendums.................................1
Relief at Results...............................................1
Implications for PRC and U.S. Concerns...........................2
Outlook for Taiwan’s Stability and Policies.............................3
Mature Democracy but Declining DPP.............................4
Separate Identity and Military Imbalance...........................5
KMT’s Policies on National Security..............................5
KMT’s Options on Defense Issues................................7
Accommodate the PRC.....................................7
Challenge the PRC’s Demands...............................9
Forge a National Consensus..................................9
Implications for U.S. Security Interests................................10
Objectives for U.S. Interests....................................10
Considerations for Policy.......................................11
Window of Opportunity: Policy Options?..............................12
Continue the Existing Approach.................................12
Engage with President-elect Ma.................................12
Strengthen Ties with Taiwan....................................13
Promote Cross-Strait Dialogue..................................15
Conduct a Strategic Policy Review...............................15

Security Implications of Taiwan’s
Presidential Election of March 2008
This CRS Report analyzes the security implications of Taiwan’s presidential
election of March 22, 2008, including the implications for U.S. assessments, security
interests, and options for policymakers in Congress and the Bush Administration.
This analysis draws in part from direct information gained through a visit to Taiwan
to observe the election and to discuss views with a number of interlocutors, including
those advising or aligned with President Chen Shui-bian and President-elect Ma
Ying-jeou. This CRS Report will discuss the results of Taiwan’s presidential
election and symbolic yet sensitive referendums on U.N. membership, outlook for
Taiwan’s policies, implications for U.S. security interests in Taiwan, and options for
U.S. policymakers presented with a window of opportunity. For details on U.S. arms
sales, Taiwan’s missile program, a possible withdrawal of missiles by the People’s
Liberation Army (PLA), Taiwan’s defense budgets, etc. mentioned below, see CRS
Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley Kan.
Other relevant reports on the election and U.S. policy toward Taiwan are: CRS
Report RS22853, Taiwan’s 2008 Presidential Election, by Kerry Dumbaugh, CRS
Report RL30341, China/Taiwan: Evolution of the “One China” Policy — Key
Statements from Washington, Beijing, and Taipei, by Shirley Kan, and CRS Report
RL33510, Taiwan: Recent Developments and U.S. Policy Choices, by Kerry
Presidential Election and Referendums
Relief at Results
Days before Taiwan’s presidential election on March 22, 2008, in a sign of U.S.
anxiety about peace and stability, the Defense Department had two aircraft carriers
(including the Kitty Hawk returning from its base in Japan for decommissioning)
“responsibly positioned” east of Taiwan to respond to any “provocative situation.”1
Perhaps more so than the election, two referendums on Taiwan’s membership in the
United Nations (U.N.) were of crucial concern to U.S. policymakers. Partly to turn
out more supporters for legislative and presidential elections in January and March
2008, the ruling Democratic Progressive Party (DPP) proposed a referendum on
whether to join the U.N. as “Taiwan.” For political cover, the opposition Nationalist
Party, or Kuomintang (KMT), reluctantly followed with its proposed referendum on
whether to “rejoin” the U.N. using Taiwan’s formal name of “Republic of China
(ROC)” or another name (for membership that the ROC lost in 1971). The People’s
Republic of China (PRC) issued strident warnings about even the symbolic

1 As stated by an unnamed Defense Department official to Reuters, March 19, 2008.

referendums as nonetheless a step for Taiwan’s “de jure independence.” Agreeing
with Beijing, the Bush Administration harbored concerns about the DPP’s
referendum as proposed in June 2007 by Chen Shui-bian, the President of the ROC
since 2000. Washington perceived President Chen’s referendum as the latest in a
series of provocative moves to change the “status quo” that have vexed the Bush
Thus, there was U.S. relief when the referendums, as targets of U.S. and PRC
condemnation, failed to become valid after only 36 percent of voters participated in
both the referendums (50 percent participation was required for validity). The KMT
had urged voters to boycott the DPP’s referendum. Voters said they viewed them as
cynical political gimmicks, since it is “impossible” for Taiwan to join the U.N. (The
PRC’s opposition to Taiwan’s membership is backed by veto power at the U.N.)
KMT presidential candidate Ma Ying-jeou won, as expected, but with a
surprising and solid margin of victory (17 percent; 2.2 million votes). He won 58.5
percent of the votes, while DPP candidate Frank Hsieh won 41.5 percent. The
turnout rate was 76 percent. Ma’s inauguration will be on May 20, 2008. With the
KMT’s victory in the legislative elections on January 12, 2008, it will control both
the Legislative Yuan (LY) and Executive Yuan (EY), or Cabinet, in the government.
Upon the smooth and credible counting and announcement of results in the
evening of the election, there was a renewed and widespread sense of relief and
optimism among a majority of Taiwan’s people, although the campaigning elements
of the DPP were emotionally upset. As expected, on the Monday after the election,
Taiwan’s stock market rallied 4 percent higher, after gaining 4.5 percent the previous
week with wide expectation of Ma’s victory. President Bush immediately issued his
personal congratulation to Ma Ying-jeou, calling Taiwan a “beacon of democracy”
to Asia and the world.2 KMT interlocutors were pleased with Bush’s prompt and
warm message and use of the phrase “beacon of democracy.” Indeed, representatives
from 28 countries around the world observed Taiwan’s election.
Implications for PRC and U.S. Concerns
One implication concerns whether Beijing’s assessment of a “highly dangerous
period” involving the referendums and legislative and presidential elections in
Taiwan was well-founded or alarmist. Concerned about cross-strait stability, the
Bush Administration agreed with the PRC’s warnings and sought to derail the
referendums. The Administration believes that it was correct and effective in
managing the cross-strait situation. It escalated its criticism of President Chen Shui-
bian’s referendum as a unilateral step to change Taiwan’s “status,” as promptly stated
by the State Department’s spokesman in June 2007. Then, in August, Deputy
Secretary of State John Negroponte opposed the referendum as “a step towards a
declaration of independence of Taiwan.” Deputy Assistant Secretary of State
Thomas Christensen followed with a harsh speech in September that stressed U.S.
opposition to this referendum as “an apparent pursuit of name change.” While
President Bush did not issue a public rebuke as Beijing desired, the most senior

2 White House, “Statement by the President on Taiwan Election,” March 22, 2008.

criticism came from Secretary of State Condoleezza Rice, who called the referendum
“provocative” in December.3 The PRC Foreign Ministry promptly expressed
appreciation for the Bush Administration in working together with China against
Critics charged the Administration with agreeing with Beijing’s unnecessary
over-reaction, with justifying its alarmist case against Taiwan as moving towards de
jure independence and being the provocative party, with working in concert with
Beijing to “co-manage” Taiwan, and with interfering in Taiwan’s democracy.
Representative Tom Tancredo wrote a letter on August 30, 2007, to Secretary Rice,
rebuking Negroponte’s comments. Co-chairs of the Senate and House Taiwan
Caucuses wrote to President Bush on February 29 and March 5, 2008, expressing
concern about the criticisms of Taiwan’s referendum by the State Department’s
officials as “provocative” and “a mistake.” They urged the Administration to remain
silent for the remainder of Taiwan’s presidential campaign, declaring that “the U.S.
should not be perceived as taking sides” in Taiwan’s democracy.4 Critics contended
that those stances undermined U.S. support for a key friend, fed Beijing’s
belligerence, exacerbated dangerous miscalculation of weakened U.S. interest in case
of a PLA attack, and lacked understanding of Taiwan’s democracy. Even if the
referendums passed, Taiwan’s membership in the U.N. is impossible due to the
PRC’s opposition in the U.N. Finally, the Administration’s stance fostered rising
expectations in Beijing that the United States would accede to PRC demands for
restricting defense and other support to Taiwan.
Outlook for Taiwan’s Stability and Policies
There are a number of alternative futures for Taiwan in the near and longer
terms, including scenarios that are conducive to stability and policymaking, and
scenarios that would challenge consensus-building and effective governance in
Taiwan, with implications for U.S. security interests in stability and deterrence.
Greater Stability:
KMT controls LY and EY; DPP is divided and weak.
KMT stays unified; DPP rebuilds; and stable two-party democracy is sustained.
Greater Instability:
KMT dominates politics and integrates with PRC; DPP’s supporters demonstrate.
KMT splits into factions (LY out of control); DPP re-organizes as strong challenge.
KMT splits into factions; DPP stays divided between moderates and hardliners.
Third party is formed that precludes majority rule by any one party.

3 State Department, “Daily Press Briefing,” June 19, 2007; “Deputy Secretary of State John
Negroponte’s Interview with Phoenix TV,” August 27, 2007; “Deputy Assistant Secretary
of State Thomas Christensen’s speech to the Defense Industry Conference,” September 11,

2007; “Press Conference by Secretary of State Condoleezza Rice,” December 21, 2007.

4 Senators Tim Johnson and James Inhofe, letter to President Bush, February 29, 2008;
Representatives Shelley Berkley, Steve Chabot, and Dana Rohrabacher, letter to President
Bush, March 5, 2008. The fourth co-chair, Representative Robert Wexler, did not sign.

Mature Democracy but Declining DPP
The near-term outlook for Taiwan’s future is positive for stability and progress
in policy-making, including policies on defense that previously faced partisan
bickering in Taiwan’s polarized political environment. The March 2008 presidential
election was Taiwan’s fourth direct, democratic presidential election held without
disastrous problems since such elections began in 1996. A mature democracy,
Taiwan is experiencing its second democratic turnover in power (from the KMT to
the DPP in 2000, and from DPP to the KMT in 2008). At a meeting with visiting
former Senator Frank Murkowski two days before the election on March 22,
President Chen reversed his remarks that threw doubt on a smooth transfer of power
and promised to support a peaceful and constitutional transition. The election results
were not close nor contested, as some in Taiwan thought. With the large margin of
Ma’s victory, the DPP was resigned to its defeat in the presidential election, and no
major protests or rioting occurred in the streets. Hsieh promptly offered his
concession, and DPP leaders talked of reflection and reform. With Ma as president,
the KMT will solidly dominate both the LY and EY (Cabinet) with power to push
through policies, in contrast to the gridlock of the past eight years of divided
government in which the KMT controlled the LY and DPP controlled the EY. Ma
is seen as a unifying leader, in contrast to the divisive politics of Chen.
The prospects for the DPP as a viable opposition to check KMT power in
policymaking is uncertain, although the DPP remains potentially powerful. The
DPP’s dramatic defeat in this presidential election was the latest in a declining trend
in its political power over at least the last three years.5 Moreover, the DPP that
previously presented politicians younger than the traditional KMT politicians (“old
guard”) has found it a challenge to pass on leadership to a new generation. Ironically,
the DPP’s current leadership who rose in power in the 1980s lost to Ma, who
represents the next generation of leadership in the KMT and attracts younger voters.
The DPP has failed to adjust to regain greater support among centrist voters who
cared about effective governance (particularly in the north of the island and among
younger voters), despite electoral losses, President Chen’s unpopularity, and the
demise of the Taiwan Solidarity Union (TSU) (the DPP’s hardline ally in the “Pan-
Green” coalition). A DPP official, who also was one of the moderate incumbent
legislators attacked as a “pro-China bandit” in the DPP’s own primary for the
legislative elections in January 2008, warned on the morning of the presidential
election on March 22 that a defeat for DPP candidate Frank Hsieh would prompt a

5 In December 2005, the DPP suffered major setbacks in the local county- and city-level
elections, giving up seats in the north to the KMT and retreating to its base in the south. In
November 2006, President Chen and his wife were accused of embezzling public funds,
while Chen received immunity while serving as president. (The KMT’s Ma Ying-jeou also
was accused of corruption in use of public funds as mayor of Taipei.) In December 2006,
the KMT’s candidate for mayor of Taipei, Hau Lung-bin, beat the DPP’s candidate, Frank
Hsieh, by 13 percent. Even in the southern city of Kaohsiung, the DPP’s candidate won by
only 0.1 percent. In its primary to select legislative candidates in May 2007, DPP extremists
attacked moderate DPP legislators as “bandits” and “pro-China,” including incumbent
legislators favorable to the U.S.-Taiwan relationship. Then, in the crucial legislative
elections in January 2008, the DPP again suffered a humiliating defeat, winning 27 out of

113 seats (24 percent), while the KMT won 81 seats (72 percent).

purge of moderates inside the DPP. Nonetheless, if, instead of remaining divided and
weak, the DPP is able to regroup and rejuvenate to attract more support, then a
stronger opposition would be conducive to a stable two-party democracy in Taiwan.
Despite its troubles, the DPP still commands at least 40 percent of votes.
In any case, checks and balances plus the politics of moderation have been
institutionalized in Taiwan, favoring U.S. interests in stability and security. Both the
DPP and KMT presidential candidates moved towards centrist positions concerning
Taiwan’s policies and identity. Both Ma and Hsieh presented moderate positions of
their respective parties, including the common objectives of stronger defense, closer
economic ties with the PRC, and repairing the relationship with the United States.
Taiwan’s voters demonstrated once again that they support moderate policies,
without veering to extreme directions (such as declaring independence or
surrendering Taiwan’s status). Based on polling data over the years, a majority of
Taiwan’s people consistently prefer the status quo (Taiwan’s current de facto status
without unification or independence).6
Separate Identity and Military Imbalance
However, in the longer term for Taiwan (for both the DPP and KMT), the
question of Taiwan’s identity and sovereignty as separate from that of the PRC
remains unresolved. Some question whether there is any “status quo.” This situation
will continue to challenge U.S. management of peace and stability in the Taiwan
Strait. Even though the current situation is stable and tensions are reduced with
Beijing less alarmist about Taiwan, the PRC’s insecurity about the Taiwan question
is unlikely to disappear. Taiwan’s democratic model poses a threat to the PRC’s
Communist regime. Taipei’s government, whether under the KMT or DPP, claims
sovereign status. (U.S. policy states that Taiwan’s status is unsettled.) The PLA has
continued to build up its forces that threaten Taiwan, raising the question of whether
the military balance already has shifted to favor the PRC. Although the election is
over, the potential remains for instability in the longer term. Moreover, while
Taiwan’s people have shown that they will not undertake extreme acts to upset peace
and prosperity, the PRC does not have the moderating factor of a democratic system
to restrain its decisions. Finally, there remain concerns about PRC misperceptions
and changing dynamics in the relationships among the United States, PRC, and
Taiwan. Aside from the PLA buildup, the PRC also has become the largest
economic partner of Taiwan, surpassing the past U.S. role. Looking across the strait,
Taiwan faces both a military threat and economic dependence or coercion.
KMT’s Policies on National Security
The KMT has fostered skepticism about its commitment to Taiwan’s strong
self-defense, including concerns about anti-American attacks on U.S. arms sales. As
KMT chairman, Ma Ying-jeou was non-committal on Taiwan’s defense policy and
U.S. arms sales in 2005 and 2006, as shown in a disappointing visit to Washington,
DC, in March 2006 that also avoided meetings with Members of Congress. For
years, the KMT frustrated U.S. efforts to have Taiwan’s LY pass higher defense

6 Survey data provided by Taiwan’s Mainland Affairs Council (MAC).

budgets and approve U.S. arms sales. Information indicated KMT efforts in the LY
hindered progress on U.S. arms programs until the latter part of 2007.
Ma finally issued his defense policy in September 2007.7 That policy stressed
a defensive “Hard ROC” (a pun on rock and ROC standing for “Republic of China”).
Ma supported the same goal as the DPP government: increase military spending to
3 percent of GDP. However, Ma’s policy has stressed the need to increase the
portion of the budget on personnel in order to transition to an all-volunteer,
professional military by eliminating conscription in four to six years. There is also
discussion in the KMT of reorganizing the military. These announced changes have
raised anxiety in the military about upcoming organizational, leadership, and
personnel changes, at a time when President Chen already imposed frequent turnover
of commanders and shortened the conscription period (now at 12 months) that have
challenged military reforms, recruitment and retention, and training. An advisor to
Ma estimates that transition to a professional military would cost $2 billion.
Ma’s defense policy indicated that he would continue to acquire U.S. weapons
in the face of the PLA’s modernization and threat toward Taiwan. While his policy
did not explicitly discuss a sensitive submarine sale (which has been subject to delays
due to KMT concerns since President Bush approved a sale in 2001), other acquired
information indicated that Ma’s stance was to support the purchase of submarines.
His advisors have been divided on the submarine program, but he seems to have
sided with supporters. They also look to buy new U.S. fighters and destroyers.
In addition, Ma called for efforts to ensure peace and stability with the PRC:
!withdrawal of the PLA’s missiles targeting Taiwan;8
!military contacts and confidence building measures with the PLA;
!negotiation of a peace accord with the PRC;
!no possession of nuclear weapons or other weapons of mass
In February 2008, Ma issued his national security strategy, stressing “soft
power.”9 Like the September 2007 defense policy, he stressed the need for
deterrence and defense, and opposition to “offensive” weapons. He called for a
“Hard ROC” defense by building an integrated defensive capability that would make
it impossible to “scare us, blockade us, occupy us, or wear us down.” He also
repeated his call for ensuring the status quo: his “Three Noes” policy (no negotiation
of unification, no attempt to push de jure independence, and no cross-strait use of
military force).
Again, Ma did not explicitly call for support of submarine procurement, while
he did call for buying F-16C/D fighters in that statement on national security.

7 Ma Ying-jeou, “A New Military For a Secure and Peaceful Taiwan,” September 2, 2007.
8 A catalyst for this debate among policymakers in Washington and Taipei arose out of the
U.S.-PRC summit in Crawford, TX, on October 25, 2002. PRC ruler Jiang Zemin offered
in vague terms a freeze or reduction in deployment of missiles targeted at Taiwan, in return
for restraint in U.S. arms sales to Taiwan.
9 Ma Ying-jeou, “A SMART Strategy for National Security,” February 26, 2008.

Nonetheless, other acquired information indicates that since the “Hard ROC” defense
policy was issued, Ma has focused on maritime capabilities, including greater
attention to the navy and shipbuilding. In his campaign literature on defense,
presidential candidate Ma supported the use of military procurement as well as
commercial procurement to “quickly and reliably acquire advanced weapons from
abroad” to face the PRC’s military modernization.
At a press conference the day after the election, Ma stated his goals of:10
!“peace agreement” after a PLA missile withdrawal to end hostilities;
!more cross-strait economic ties for tourism, transportation, and
!free trade agreements (FTAs) with the United States, Japan, and
!membership in the U.N.;
!boycotting the Beijing Olympic games if Tibet’s situation worsens;
!“mutual non-denial” (of the co-existence of the ROC and PRC);
!repairing the relationship with the United States;
!restarting quasi-official cross-strait dialogue using Taipei’s Strait
Exchange Foundation (SEF) and Beijing’s Association for Relations
Across the Taiwan Strait (ARATS) based on what the KMT now
calls the “1992 Consensus,” which involved a vague formula for
talks called “one China, respective interpretations” (“PRC” for
Beijing and “ROC” for Taipei).
KMT’s Options on Defense Issues
With President Ma Ying-jeou and control of the LY, the KMT will have various
options. Ma declared a “Three Noes” policy: no unification, no independence, and
no use of force. Nonetheless, aside from those excluded routes, the KMT could
choose approaches of accommodating Beijing, challenging Beijing, and seeking a
bipartisan consensus on national security. The KMT might have to resolve internal
disputes about its defense policy and ties to Beijing, raising future uncertainty.
Accommodate the PRC. Ma and the KMT are known to desire closer
economic integration with the PRC, including his vice presidential running mate’s
proposal of a “common market” that was attacked by the DPP as surrender to a “one
China.” The KMT is expected to support direct transportation links, more PRC
tourists visiting Taiwan, and greater investments, with optimism that lessened
tensions and inter-dependence will foster peace and stability. Supporters say that the
issue is not whether to increase economic ties with the PRC, which are already
substantial, but whether to normalize them to remove unilateral restrictions faced
only by Taiwan’s businesses in a competitive global economy. For example,
Taiwan’s companies are prevented from investing more than 40 percent of net worth
in the PRC, and their efforts nonetheless to invest there have come at the expense of
further gains for Taiwan’s economy. Taiwan’s people still travel to the mainland to
work, but they have to expend extra money and time to travel indirectly through

10 International Herald Tribune, China Post, and Lien-ho Bao [United Daily News], March

24, 2008.

Hong Kong. Those in the DPP have warned that economic integration will threaten
Taiwan’s security, including economic and military security. Some also fear the
increased potential for PRC coercion and insertion of forces for sabotage in the event
of conflict. There is concern in Taiwan about over-dependence on the PRC’s
economy. The PRC is Taiwan’s largest trading partner. Taiwan sends about 40%
of exports to mainland China (including Hong Kong). About 1-2 million of
Taiwan’s citizens live there. Taiwan has invested as much as $300 billion in the
PRC.11 This dependence on the PRC’s economy has stoked fears that the KMT
would capitulate to Beijing, appease the Communist regime, or negotiate even
unification of China, bringing instability to the regional balance of power.
The KMT includes elements that seek much closer and accommodating ties with
the PRC and continues to see Taiwan as a part of China, albeit called the “Republic
of China.” Despite the PRC’s adoption in March 2005 of the belligerent “Anti-
Secession Law” that triggered concerted criticism in the United States (particularly
in Congress) and Europe (which then stopped efforts to end the arms embargo against
the PRC), KMT Chairman Lien Chan flew to Beijing for a historic meeting with
Communist Party of China’s General-Secretary Hu Jintao the very next month.
As for U.S. security assistance, although the KMT reaffirmed continued interest
in F-16 fighters, a foreign policy advisor to Ma urged U.S. approval before his
inauguration. That stance is significant as a reversal of the KMT’s position in past
years of trying not to give credit for progress in U.S. security ties to the DPP and a
signal that the KMT might not want or be able to withstand PRC pressures to forgo
F-16C/D fighters under Ma. Since the Bush Administration has refused since 2006
to accept a formal Letter of Request from Taiwan for new F-16 fighters, the new
KMT government could stop efforts to submit a request altogether. That advisor had
said in September 2007 that if Ma won the election, the KMT might submit a “new
list” of arms requests to the United States. The KMT could continue to complicate
U.S. arms acquisitions as it had done for years before the run-up to the presidential
election, including refusing to approve or freezing the release of defense funds for
U.S. weapons acquisition programs. For example, on missile defense, the opposition
KMT and People’s First Party (PFP) objected to acquiring U.S. PAC-3 missiles for
three years, arguing that a referendum in 2004 “vetoed” the proposal. (A referendum
on buying more missile defense systems failed to become valid with a lower than 50
percent participation rate.) In December 2007, the KMT-controlled LY decided to
fund four sets of PAC-3 missiles but to freeze the funds for two more.
On the question of whether to continue to develop and deploy Taiwan’s HF-2E
long-range land-attack cruise missiles, a program that brought quiet opposition and
then public criticism by the Bush Administration a year ago, the KMT might restrict
this program at the military’s research and development Chung-Shan Institute for
Science and Technology. A defense policy advisor to Ma said that he would restrict
the range of the missile for counter-strike against only military targets on the coastal
areas of mainland China directly across the strait (to degrade the PLA’s sites for
command and control, missile attacks, and surface-to-air missiles that threaten

11 Data from the American Chamber of Commerce, Taiwan Business Topics, February 2008;
and Kathrin Hille, “Straitened Times,” Financial Times, March 26, 2008.

Taiwan’s fighters). A foreign policy advisor to Ma has voiced objections to what he
called “offensive” weapons in Taiwan’s military. Another option is for Taiwan to
cancel the HF-2E program and stop deployment. If the KMT negotiates with the
PRC on its “withdrawal” of missiles targeting Taiwan, Taiwan’s military
deployments and missile programs could be subject to PRC demands. The KMT’s
decision could affect the issue of what U.S. actions to take in response to Taiwan’s
missile program. Some view that counter-attack capability as destabilizing, and
others see tactical utility.
The KMT could distance itself from the United States as well as Japan. There
have been concerns that the KMT would shift its strategic orientation to pursue ties
with Beijing and Washington with equal distance, or even secure a closer relationship
with the PRC than that with the United States and Japan. The KMT has a legacy of
fighting Japan in the 1930s and 1940s, whereas DPP leaders and President Chen’s
Administration forged close ties with Japan. Some are concerned that the KMT
would be less pro-Japan than the DPP. The KMT has tended to assert its sovereignty
over islands with disputed claims among Japan, Taiwan, and the PRC (called
Senkakus by Japan, Tiaoyutai by Taiwan, and Diaoyudao by the PRC). Japan has
historical, security, and economic interests in Taiwan due to its status as a Japanese
colony from 1895 to 1945 and geographical proximity.
Challenge the PRC’s Demands. Nonetheless, upon winning the election,
Ma and the KMT signaled that they will stand up to Beijing. When asked about his
priorities, a probable candidate to be Ma’s national security advisor said that he
would first repair the relationship with the United States and secondarily improve ties
with the PRC, placing Washington before Beijing. Ma immediately announced his
wish to visit the United States as well as Japan before his inauguration —
significantly not the PRC. A KMT interlocutor said that senior KMT officials
recently met quietly with retired Japanese admirals known as strong supporters of
Taiwan. KMT officials also said that they support Taiwan’s military in trying to
submit a request to the United States for new F-16C/D fighters (to replace aging F-5
and IDF fighters). After stalling for years, KMT politicians also said that they are
now committed to U.S. arms sales, including submarines and Patriot missile defense.
However, a KMT politician expressed concerns about the Po Sheng command and
control program.
Reasons for the credibility of the KMT’s current pro-U.S. assurances include:
(1) the KMT would no longer fear giving credit to President Chen for progress in
policies or encouraging his pro-independence steps; (2) the second party in the KMT-
led “Pan-Blue” coalition, the pro-China PFP, has been eviscerated (with its leader,
James Soong, no longer a challenge to Ma); (3) the KMT would now take over the
governing responsibility for the country; and (4) the KMT understands that the
premise for Taipei to engage in dialogue and other ties with Beijing has been a strong
negotiating position that includes self-defense and security links with Washington.
Forge a National Consensus. In any case, whether the KMT
accommodates or stands up to the PRC, Taiwan’s institutionalized democracy and
established separate identity (that the KMT does not deny and Taiwan’s people
broadly uphold) will challenge the PRC’s Communist authoritarian rule. In pursuing
alternative approaches, the KMT also has the option of forging a new consensus with

the DPP on national identity and security that have been lacking under Chen.
Moreover, the KMT could stop the politicization of the debate over defense issues,
a problem the Defense Department has lamented for years. Such steps would result
in a more resilient Taiwan to counter coercion or conflict inflicted by Beijing.
Alternatively, a new consensus could help the KMT to negotiate ties with the PRC,
with closer economic and political integration. U.S. policy has declared support for
a resolution of the Taiwan question with the assent of Taiwan’s people.
Upon discussions in the days following the election, KMT interlocutors
highlighted Ma’s goal of reconciliation after the long political fight. However, there
was little discussion of forging a new national consensus on national security with
the DPP. Some seemed receptive to the possibility, but one KMT leading lawmaker
on defense policy dismissed the DPP as “that defeated party.” Options for the
majority KMT include working meaningfully with DPP lawmakers in the LY,
particularly in the Foreign Affairs and Defense Committee. (The newly reorganized
committee has 11 KMT legislators, 3 DPP legislators, and 1 independent legislator.)
Another option would be to appoint DPP members in major ministries, including the
Ministry of National Defense. A sensitive option for Ma would be to grant a
presidential pardon of Chen who will lose immunity when he steps down as
president. Fighting corruption in defense programs and decision-making could be
another step to take.
Implications for U.S. Security Interests
The results of March 22 sapped the PRC’s alarmist warnings about the election
and referendums, although it might still warn about instability until the inauguration
on May 20 while Chen Shui-bian is still president. Nevertheless, cross-strait tension
is greatly reduced. Chen is effectively weakened and concentrating on the transition.
President-elect Ma and KMT interlocutors give pro-U.S. assurances. As president,
Ma is expected to be less provocative towards Beijing than Chen.
In one view, there is opportunity to turn U.S. attention from managing the cross-
strait situation to urgent problems that require the PRC’s improved cooperation, such
as dealing with nuclear proliferation in North Korea and Iran, the crisis in Darfur in
Sudan, repression in Burma, the crackdown in Tibet, etc. Alternatively, a window
of opportunity is presented for the first time in years to advance U.S. securityth
interests in Taiwan’s self-defense, democracy, economy (as the United States’ 9
largest trading partner), and role as a responsible global citizen (for example, in
weapons nonproliferation).
Objectives for U.S. Interests
Given the results (of the election and referendum) and outlook for Taiwan as
discussed above, there are a number of U.S. objectives that might be pursued with
renewed vigor to further U.S. interests. U.S. policymakers in the Congress and the
Administration might strengthen engagement with the KMT as well as the DPP to
shape the outcome of certain clear goals that are consistent with U.S. interests in
Taiwan’s sustained stability and security. These goals might include:

!reverse delays of past years in upgrading Taiwan’s self-defense;
!bolster Taiwan’s will to fight in face of PRC coercion or conflict;
!restore Taiwan’s confidence in U.S. support and balance in the two
relationships with Taipei and Beijing;
!improve Taiwan’s critical infrastructure protection, a stated goal of
U.S. interests since 2004 for Taiwan to expand its efforts from
national defense to national security, by protecting national
command centers, telecommunications, energy, water, media,
computer networks, etc.;
!strengthen Taiwan’s crisis-management and ensure prior
consultation with the U.S. in the event of tensions or conflict to
secure U.S. escalation control;
!repair Taiwan’s weakened efforts to maintain international space;
!improve Taiwan’s ties with U.S. allies and friends, including
!keep Taiwan separate from PRC control and manipulations;
!promote Taiwan’s consensus-building on national security,
particularly in de-linking defense questions from political disputes;
!return to a situation with cross-strait dialogue (suspended in 1998);
!support the goal of Taiwan’s officials and businesses to maintain
U.S.-Taiwan economic ties (e.g., with an FTA) to balance links with
the PRC.
Considerations for Policy
Consideration of U.S. policy options in the relationship with Taiwan would
depend on the timing of certain events: the inauguration of Ma Ying-jeou as the new
president on May 20, President Bush’s attendance at the Olympic Games in Beijing
(opening on August 8), and the end of Bush’s term on January 20, 2009. KMT
officials said that Beijing is unlikely to make negative actions against Ma at the start
of his term and has an interest in Ma’s ability to show voters that he can gain results
for Taiwan in order to sustain KMT rule. New engagement with Taiwan after Ma’s
inauguration could remove the distaste in the Administration for dealing with current
President Chen Shui-bian. President Bush’s attendance at the Olympic games could
offer leverage and a diplomatic damper for any U.S. initiatives toward Taiwan.
Sensitive steps taken near the end of Bush’s term could allow the current
administration to bear the brunt of Beijing’s ire and to preclude a difficult start to the
next U.S. president’s term in the U.S.-PRC relationship. Lastly, decisions could be
delayed until the next U.S. administration.
The Bush Administration’s criticism of Taiwan’s referendum on membership
in the U.N. in addition to the refusal since 2006 of acceptance of a formal request
from Taiwan for new F-16C/D fighters have raised concerns that the Administration
has given Beijing the perception of “co-management” in handling Taiwan as well as
rising expectations that Washington would continue to accede to Beijing’s demands,
for example, to forgo a sale of F-16s. Thus, one significant consideration for U.S.
policymakers is whether to take steps to dispel notions of “co-management” (as
Administration officials have firmly denied) and to counter any rising expectations
from Beijing.

Window of Opportunity: Policy Options?
Ma Ying-jeou’s election presents a window of opportunity in the cross-strait and
U.S.-Taiwan relationships. The issue is what options might be pursued by U.S.
policymakers in Congress and the Bush Administration to advance U.S. interests.
(CRS takes no position on the options discussed here.)
Continue the Existing Approach
One approach in continued management of peace and stability in the Taiwan
Strait is for the Administration to “run out the clock” through the end of President
Bush’s term rather than pursue initiatives with Taiwan that might meet Beijing’s ire.
In this approach, the lessened cross-strait tension presents an opportunity to focus on
other U.S. priorities requiring more robust PRC cooperation.
An alternative would be for the United States to continue its existing policy of
resisting policy initiatives through the presidential inauguration on May 20, 2008
(until current President Chen Shui-bian leaves office). New initiatives with Taiwan
might be pursued after Ma takes office. The United States could wait until the KMT
resolves internal debates and clarifies its national security policy, including decisions
on military programs, organization, personnel, leadership, and spending. Those
decisions could provide greater certainty about whether the KMT has changed its
attitude toward acquisitions of U.S. arms, given its record in the past few years.
Engage with President-elect Ma
A second approach would respond to president-elect Ma with these options:
!Allow Ma Ying-jeou to visit Washington, DC, or another U.S. city
before his inauguration. Ma expressed a desire to visit the United
States before becoming president (when U.S. policy would deny him
a visa and allow only transits). Congress could invite and host Ma.
Another option is a video conference with Ma. In August 2005,
Co-chairs of the House Taiwan Caucus had written to Ma as the new
KMT chairman, in part to invite him to visit. In 2007, the House
passed H.Con.Res. 136 to support visits by Taiwan’s officials.
!Work with Ma’s transition team in ensuring a smooth power
transition, as was done for Chen’s transition team in 2000.
!Discuss the substance of Ma’s inauguration address, including his
policy intentions in dealing with the PRC and Taiwan’s security, to
convey critical near-term and long-term U.S. interests.
!Send a senior delegation to attend Ma’s inauguration.
(Representative James Leach, then Chairman of the House
International Relations Subcommittee on Asia and the Pacific, was
the U.S. representative at Chen’s second inauguration in 2004.)

Strengthen Ties with Taiwan
A third approach to take (either before or after Ma’s inauguration) with
comprehensive or certain options would strengthen U.S.-Taiwan relations in military,
political, or economic security. However, careful consideration could include the
question of whether such steps would seriously risk other U.S. priorities that require
PRC cooperation. Policy options include:
!Set positive objectives to achieve in the relationship with Taiwan.
While U.S. officials list many goals to pursue with Beijing, they are
often at a loss when asked to identify objectives in the relationship
with Taipei. Chen’s departure could change this U.S. stance.
!Accept Taiwan’s formal letter of request for U.S. consideration of
whether to sell new F-16C/D fighters. The removal of Chen as a
factor in negative U.S.-Taiwan and PRC-Taiwan relations presents
a fresh situation for acceptance of the letter. In October 2007, the
House passed H.Res. 676 to urge the President to consider security
assistance “based solely” upon the legitimate defense needs of
Taiwan (citing Section 3(b) of the Taiwan Relations Act (TRA), P.L.
96-8). On March 19, 2008, the Co-Chairs of the Senate Taiwan
Caucus, Senators Tim Johnson and James Inhofe wrote a letter to
Defense Secretary Robert Gates, offering their “assistance” in his
receipt of Taiwan’s request.
!Reach out to moderate, pro-U.S. elements of the KMT. Ma Ying-
jeou as well as some of his defense and foreign policy advisors are
English speakers with familiar ties to the United States. Ma was
educated at Harvard University, and his daughters are studying at
U.S. universities. U.S. efforts might bolster the long-term influence
of such pro-U.S. leaders in the KMT over the influence of pro-PRC
ones. U.S. efforts are more likely to succeed if undertaken early,
while Ma enjoys the initial “honeymoon” period and before the PRC
can influence its allies in the KMT.
!Reach out to the moderate, pro-U.S. elements of the DPP. The
DPP’s electoral defeats have demoralized its members, particularly
the moderates, with feelings of betrayal by Washington. A viable
opposition DPP would check the KMT’s power.
!Support Taiwan’s bipartisan efforts to gain observership, if not
membership, in the World Health Organization (WHO). On April

21 and May 6, 2004, the House and Senate passed H.R. 4019 and S.

2092 in support of Taiwan’s efforts to gain observer status in the
WHO. In signing S. 2092 into law (P.L. 108-235), President Bush
stated support for Taiwan’s observer status in the WHO. The next
meeting of the WHO’s governing body, the World Health Assembly,
will start on May 19 (the day before Ma’s inauguration) in Geneva.

!Engage with the KMT to more quickly reduce uncertainties and
anxieties in the military about changes to personnel, programs, and
organization expected under Ma. One option would be to allow
Taiwan’s defense minister to visit for a conference in September

2008 (as was done in 2002).

!Conduct a meaningful and genuine dialogue with Taiwan’s military
to establish a new understanding if not agreement about the sensitive
HF-2E cruise missile program to remove an irritant in defense ties.
!Allow U.S. naval port visits to Taiwan, particularly after the dispute
in November 2007, when the PRC disapproved a number of port
calls at Hong Kong by U.S. Navy ships, including two minesweepers
in distress seeking to refuel in face of an approaching storm and an
aircraft carrier planning on family reunions for Thanksgiving.
!Support Taiwan’s senior-level representation at the summit of the
APEC (Asian Pacific Economic Cooperation) forum. Although
Taiwan is a full member of APEC, its representation has been
downgraded due to PRC demands. The next summit will be held in
Lima, Peru, in November 2008.
!Support Taiwan’s inclusion in the Proliferation Security Initiative
(PSI). Taiwan already is a cooperative member of the Container
Security Initiative (CSI). As shown by the Defense Department’s
announcement on March 26, 2008, of Taiwan’s own notification to
the Pentagon of a mistaken shipment of parts for warheads in U.S.
intercontinental ballistic missiles to Taiwan in 2006, it can be
considered a responsible weapons nonproliferation partner.
!Engage more meaningfully with Taiwan’s government in its
relatively new exercises to ensure continuity of government, critical
infrastructure protection, and crisis-management. Such engagement
could be conducted through comprehensive channels (including
Congress, Secret Service, National Security Council, as well as
Departments of Homeland Security, Defense, Energy, and Treasury).
!Negotiate an FTA as Taiwan has sought unsuccessfully for years, in
recognition of its status as one of the top ten trading partners of the
United States and its dominance in the global information
technology (IT) industries. S.Con.Res. 60 and H.Con.Res. 137
would urge the start of negotiations with Taiwan on an FTA.
Another option would be to pursue an FTA in the services sector,
since this sector dominates Taiwan’s economy. Senator Baucus had
suggested a services FTA with the European Union and Japan.12

12 Max Baucus, “A Democratic Trade Agenda,” Wall Street Journal, January 4, 2007.

!Send a Cabinet-level official to visit Taiwan. The Bush
Administration has refused to allow Cabinet officers to visit Taiwan,
in a reversal of policies pursued by the George H. W. Bush and
Clinton Administrations. The last such officer to visit Taiwan was
Secretary of Transportation Rodney Slater (in 2000).
Promote Cross-Strait Dialogue
A fourth approach concerns the U.S. role in renewed cross-strait dialogue. For
decades, an issue for U.S. policy has been what role the United States should play to
ensure a peaceful dialogue across the Taiwan Strait. As part of U.S. policy, President
Reagan issued his “Six Assurances” of 1982, including one of no mediation between
Taipei and Beijing. Short of whether that policy should change, there are various
possible U.S. roles. In one view, the United States should seize this first window of
opportunity presented in a decade to effectively ensure a cross-strait dialogue for
sustainable peace and stability that would be worthwhile to help prevent a war
between two nuclear powers. The United States could also shape the cross-strait
dialogue to focus on functional cooperation, rather than premature political
integration, national unification, or concessions on Taiwan’s security.
In another view, the United States should continue to stay out of any PRC-
Taiwan negotiations, beyond a spectator’s encouragement of dialogue. Indeed, in his
congratulatory message to Ma, President Bush stated that “it falls to Taiwan and
Beijing to build the essential foundations for peace and stability by pursuing dialogue
through all available means and refraining from unilateral steps that would alter the
cross-strait situation.” President Bush also called PRC ruler Hu Jintao on March 26,
to stress that the election “provides a fresh opportunity for both sides to reach out
and engage one another in peacefully resolving their differences.” In response, Hu
Jintao appeared to state explicitly for the first time that the “1992 Consensus”
involved “one China, different interpretations,” a point that National Security
Advisor Stephen Hadley also noted to the press on that day.13
Conduct a Strategic Policy Review
A fifth approach would be for Congress to require a strategic review of policy.
There has been no major policy review since 1994, one conducted by the Clinton
Administration. Some say that a coherent strategy is needed to sustain U.S. interests
in Taiwan, including peace and stability. Others say that the last year of a presidency
leaves little time or energy to undertake such a review. A February 2008 report by
the Taiwan Policy Working Group chaired by former Bush Administration officials
Randy Schriver and Dan Blumenthal offered a comprehensive “common agenda”14
with Taiwan. An alternative is to forge a strategic approach in coordination with
allies in Europe and Asia (e.g., Australia, Japan, South Korea), plus Singapore.

13 White House, “Statement by the President on Taiwan Election” and “Statement by the
Press Secretary,” March 22 and 26, 2008. However, official PRC media reported Hu’s
remarks on “one China, different interpretations” only in English and not in Chinese.
14 AEI and Armitage International, “Strengthening Freedom in Asia,” February 22, 2008.