TCS Daily

Dire Straits

By John McKay - March 23, 2004 12:00 AM

The victory by the narrowest of margins of incumbent President Chen Shui-bian in Saturday's presidential elections has underlined just how divided the people of Taiwan are about their future and how to achieve it. Only 30,000 votes separated Chen from his challenger, Kuomintang (Nationalist) leader Lien Chan, and a legal challenge to the result has already been mounted.

On the eve of the election, President Chen and his Vice President Annette Lu survived an "assassination" attempt, although the details of the actual shooting incident are not yet clear. The KMT is deeply suspicious, and all manner of conspiracy theories are sweeping the island. Certainly the opposition party feels that the shooting, and the sympathy vote that seems to have resulted, robbed it of victory after most independent opinion polls predicted a KMT success. Also, a very large number of votes (around 337,000 or twice the average in previous elections) were declared invalid. The electoral authorities have ordered the sealing of the 13,000 ballot boxes pending a legal enquiry.

Whatever the outcome of these challenges, it is clear that Taiwan is in for a good deal of instability in the coming months. The Taipei Stock Exchange lost nearly 7 percent of its value shortly after trading opened on the Monday morning after the election, and the central bank is rumored to have intervened heavily to prevent any run on the Taiwan dollar.

But there are longer-term divisions that have been highlighted by this election. Most basic of all, Taiwanese are clearly at odds about how to manage their crucial relationship with China. They are agreed, as recent polls show overwhelmingly, that they do not want to re-unify with China, at least on the "one country, two systems" terms now on offer. Recent events in Hong Kong have made them doubly suspicious of Beijing and its motives. But there the unity ends. With the aging and gradual death of the 14 percent or so of the population that fled from the mainland in 1949 following the Communist takeover, many of the old ties -- along with a determination to "recover" China -- are weakening. A steadily increasing number of residents, especially among the young, see themselves as Taiwanese rather than Chinese, and this group gives strong support to President Chen.

On the other hand, Taiwan's economy is increasingly enmeshed with China, where Taiwan is easily the largest foreign investor. Some one million Taiwanese have moved to the mainland along with the billions of dollars of investment by Taiwanese companies, most of them to the region around Shanghai. Also, many Taiwanese are afraid that President Chen's assertion of Taiwanese identity may lead to a full declaration of independence, producing a very strong reaction from China, which has threatened military action in such an event. This group, which provided the main support for the KMT, is generally in favor of maintaining the status quo, one which has given so much material benefit to the island's inhabitants.

Fears about antagonizing China may also explain the defeat of the two referendum questions that were posed at the time of the election. Around 90 percent of those who voted in the referendum supported the two propositions -- that Taiwan should increase its military spending if China continued to threaten the island with its missiles and other forces, and that Taiwan should open negotiations with China from a "position of equality". But in order for the questions to be approved, a minimum of 50 percent of voters needed to be in favor, but in fact only 45 percent picked up the referendum papers.

China's reaction to the poll has been very muted. The "assassination" attempt hardly rated a mention, nor did the result of the presidential election itself. However, the official Chinese news agency greeted the failure of the referendum, noting that any attempt to divide the motherland was bound to be defeated. But it has long been known that the Chinese government hates President Chen, and was very hopeful that he would be defeated, although it carefully avoided the heavy-handed tactics that stirred up so much resentment in Taiwan in the 1996 elections. The longer-term strategies that China will now adopt are far from clear. A number of commentators have urged the Chinese government to be much more conciliatory in its approach, allowing Taiwan to participate in a number of international organizations such as the WHO, and reducing the threatening stance adopted in its military deployments. Notably, there have been calls to remove many of the 500 or so missiles now deployed in areas close to Taiwan. However, there seems little likelihood of such developments.

The United States government has also been privately disappointed by the result. It has consistently cautioned the government in Taipei against any kind of provocation of China by declaring independence, or even making any preliminary moves in that direction. The result now brings into question the future calibration of US policy on Taiwan. President Bush's approach involving a clear affirmation of a "one China" policy along with a quiet restraint of Taipei, but with a guarantee of Taiwan's security, has been well received in Beijing. By contrast, John Kerry's promise of a return to the deliberate ambiguity of earlier approaches has caused some dismay. This would not seem to be the time for any misunderstandings about intentions. The stakes are too high, and the possibilities for serious instability in relations across the Taiwan Straits are too real.

Let us hope that the economic ties now enmeshing the United States, China and Taiwan in an ever closer web of mutual advantage are now strong enough to prevent any rash actions from any side. But the close and bitterly contested result in the Taiwanese presidential elections has ensured that we will have to endure some months or years of intense instability.

John McKay is Director of the Australian APEC Study Centre.


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