Problems with current U.S. policy.

Key Problems

* The balance of power in the Taiwan Strait is shifting in China's favor. Washington fears that this trend may tempt Beijing to seek a military solution.

* Domestic politics in Taiwan are exacerbating strains between the United States, China, and Taiwan.

* The Bush administration has failed to take a sufficiently active role in reducing tensions in the Taiwan Strait.

There are two key developments aggravating the risk of a conflict over Taiwan. The first is a shift in the balance of power in the Taiwan Strait in favor of China. The second is the continued strength of Taiwanese political parties seeking to change Taiwan's status. Both developments undermine Washington's long-term goal of maintaining the status quo until Taiwan and China can peacefully resolve their differences. These developments also pressure Washington to abandon its policy of deliberate ambiguity and clearly commit to Taiwan's defense.

The balance of power shift from Taipei to Beijing stems from Chinese military modernization, increased diplomatic leverage, and a long-term decline in Taiwanese defense spending. The Pentagon estimates that China has 650-730 short-range ballistic missiles aimed at Taiwan with about 100 being added every year. The accuracy of these missiles has improved, and they could be used against a variety of military and political targets in Taiwan. China already has a quantitative edge over Taiwan in air and naval assets, and the acquisition of new weapons systems means that China will soon have a qualitative edge as well.

Meanwhile, Taiwan's defense spending has declined in real terms over the past ten years reducing its ability to maintain an effective deterrent. It does not appear that this trend will be reversed in the near term. In 2001, the Bush administration offered a $20 billion arms package designed to enhance Taiwan's anti-submarine and anti-missile defense. Taiwan has balked at its share of the cost and has yet to approve a reduced ($15.3 billion) arms package consisting of Patriot PAC-III air defense systems, P-3C Orion anti-submarine aircraft, and diesel-electric submarines.

China's rise as a diplomatic and economic force enables Beijing to increasingly apply political pressure to isolate Taiwan, although it still lacks the ability to launch a full-scale invasion of the island. Policymakers in Washington are concerned that the increased capabilities may prompt China to use force against Taiwan, precipitating a crisis with the United States. A weaker Taiwan is more dependent on the United States for security, and this places pressure on Washington to make a stronger and less-ambiguous commitment to Taiwan's defense. No U.S. president wants to be seen as abandoning a democracy. Yet a stronger commitment to Taiwan would cause an immediate and severe deterioration in U.S.-China relations and could increase the likelihood of armed conflict.

Concerns over the changing balance of power are further complicated by the current state of domestic politics in Taiwan. There is a highly partisan split between the "blue" parties, the Kuomintang (KMT) and the People's First party (PFP), which favor the status quo and some form of eventual integration with China on a democratic basis, and the "green" parties, President Chen Shui-bian's Democratic Progressive Party (DPP) and the Taiwan Solidarity Union (TSU), which assert a separate Taiwanese identity and lean toward eventual independence. Although President Chen has stopped short of advocating Taiwanese independence, Beijing fears that President Chen's plans to reform the constitution and other policies are leading to "de-sinicization" and eventual Taiwanese independence. If anything, these suspicions have hardened since Chen's re-election. More ominously, many hawks in Beijing believe that the Bush administration secretly supports the idea of Taiwanese independence. China will not hesitate to use force if it thinks its fears are about to be realized, and there is a constant risk that "green" politics may eventually provoke a Chinese attack.

Meanwhile, the leaders of the KMT and PFP have met with Chinese leaders and have signed agreements with the Chinese Communist Party. Though this has improved relations between China and the blue parties, it has exacerbated Taiwan's already highly partisan politics, isolating Chen from China and holding up much-needed defense appropriations from Washington. Beijing is currently more involved in Taiwanese domestic politics than ever before, and President Bush's arms sales policy to Taiwan is being skewed by partisan politics between the KMT and the DPP. The problem for Washington is that Taiwanese domestic politics largely determine the likelihood of conflict between the United States and China. Washington must take the initiative in improving crossstrait relations if U.S.-China relations are not to be held hostage to internal Taiwanese politics. A conflict over Taiwan is in no one's interests. The United States and China have several foundations on which to build a constructive relationship, and that potential should not be jeopardized by Taiwan's political squabbles. Washington can and should do more to lower the risks of a conflict over Taiwan by encouraging a more positive relationship between Beijing and Taipei.