Taiwan Visit Bill Passes US House Unanimously

Forbes and other media outlets are reporting some good news out of Congress (IHT, longer article, same info):

The US House of Representatives passed a resolution calling for the lifting of US government curbs on visits by top Taiwanese leaders.

The House passed the measure by a unanimous voice vote, which supporters said would send a message to China over Taiwan, which the United States is legally bound to defend in any military conflict.

US transit stops by Taiwanese politicians, such as one by President Chen Shui-bian en route to Central America in January, provoke complaints from Beijing, which regards the nationalist island as a renegade province.

The resolution noted that when 'high-level visitors from Taiwan, including the President, seek to come to the US, their request results in a period of complex, lengthy and humiliating negotiations.'

'Lifting these restrictions will help bring a United States friend and ally out of its isolation, which will be beneficial to peace and stability in the Asia-Pacific region,' the text added.

Don't get too excited, though. This is just the kind of thing that leaps through the House, but which the Senate looks at and says "OK, message sent, now we'll let the measure fail." Keep your fingers crossed, knock on wood, and say some sutras. It just might get passed.

Now they need to work on getting more US senior government people out here.

Media notes: Observe those two common formulations -- "the US is legally bound to defend Taiwan" (it isn't) and "China, which considers Taiwan a renegade province." How come nobody ever asks what Taiwan thinks of China?

[Taiwan] [China] [US] [media]

Shung Ye Monograph Series at SMC

For those of you into Taiwan books, the Southern Materials Center has both reprints and new stuff on Taiwan. Their bookstore is at: 羅斯福路三段 283 巷 14 弄 14 號 (14 Roosevelt Rd. Lane 283, Alley 14). It's the lane behind McDonalds across from the side gate of National Taiwan U.).(website)

One of the series they have put out is a monograph series from the Shung Ye Museum of Formosan Aborigines that contains some really great material. I have two of the books, In Search of the Hunters and Their Tribe: Studies in the History and Culture of the Taiwan Indigenous People, and Natives of Formosa: British Reports of the Taiwan Indigenous People, 1650-1950. The first consists of academic articles that range across a variety of topics, from aboriginal peoples in the 19th century, to Japanese anthropology in the service of colonialism, to naming patterns and boat design. Really great stuff, hugely informative. The other volume I have contains excerpts from British consular officials, missionaries, sailors, and travelers who visited Taiwan for one reason or another. For example, the sea cliffs of the wild east coast were widely held to be among the world's most beautiful sights. Here one seaman quotes himself, and another writer:

"When that most prosaic but useful publication, the China Sea Directory, ventures upon superlatives, there is generally some tolerably good reason for it. (here follows my description as above), and then "the highest sea precipice in the known world lay unveiled before our eyes. It was superb...the studendous cliffs of the Yosemite Valley in California,...the grand sea-wall of Hoy, in the Orkneys,...the glories of the iron-bound coast of Norway, all fade into nothingness beside the giant precipices of Formosa. We kept close to the land, the appearance of which if anything, increased in grandeur. The gigantic wall of rock was cleft every few miles by huge gorges...forming as they did a practicable highway into the interior, which is otherwise well-nigh inaccessible, owing to the denseness of the vegetation."

In the nineteenth century Sauo was among the few places that were accessible on the east coast, so everyone ended up at Suao at one point or another in their journey. Hence there are many descriptions of Suao:

"I proceed now to give a brief sketch of Suao Bay and vicinity....On the western side of the bay, on a small stream, lies the Chinese town of Su-ao, or Saw-o, in the local pronunciation. It is a wretched town of about fifty houses. I had hitherto always held Kelung to be the filthiest town in the universe, not deeming it within the bounds of possibility that a place could be worse than it; but a visit to Suao forced me to confess my mistake."

Relations with the aborigines of the interior were marked by violence on both sides. From the report above:

"We were told that the Chinese had on three previous occasions, in 1858, 1862, and 1866, made attempts to form a settlement in the valley, but had in time been driven out by the savages. Shortly after the second of these attempts was made, the settlers were surprised by night, and about a hundred were killed. A low enclosing wall of earth, surrounded by a ditch, and which had formerly been crowned with a bamboo stockade, remained as evidence of the Chinese occupation; and the European leader of the latest colonizing scheme, referred to in the extract above, was greeated on his first landing by the sight of some thirty-five skull-less skeletons, arranged in a row on the beach -- a striking evidence of the failure of the last preceding attempt at Chinese colonization."

At NT$600 each, these are quite affordable, by comparison with the hefty prices out there for the latest academic works (how can profs ever build a library nowadays? By skipping meals for months at a time?). Next time you're in Taipei, drop by SMC and have a look.

[Taiwan]

Taiwan Rulz in E-Gov

According to this librarian blogger....

The Taubman Center for Public Policy at Brown University in Rhode Island has just released its 7th annual ranking of e-government initiatives.

The findings are based on the analysis of 1,687 government websites in 198 different nations. The types of websites analysed included executive offices (president, prime minister, ruler, party leader, or royalty), legislatures, major courts, and major agencies and ministries.

Among the major findings:

• 28 percent of government websites offer services that are fully executable online, about the same as last year
• 96 percent of websites this year provide access to publications and 80 percent have links to databases
• 29 percent (up from 26 percent in 2006) show privacy policies, while 21 percent have security policies (up from 14 percent in 2006)
• 23 percent of government websites have some form of disability access, meaning access for persons with disabilities, the same as last year

On a ranking scale of 0 to 100, the study concluded that South Korea offered the best e-government services of any country with a score of 74.9%.

Other countries in the top 10 were, in descending order: Singapore, Taiwan, United States, Great Britain, Canada (6th place with a score of 44.1%), Portugal, Australia, Turkey and Germany.

Taiwan has actually come in first three times in this survey. These largely successful e-government initiatives date back to the Lee Teng-hui era, to that most important of policymaking bodies you've never heard of, the RDEC.

[Taiwan]

Waldron, CFR, China

The Council on Foreign Relations (CFR), the Establishment think tank that conspiracy theorists love to hate, is out with a new report on China that's upbeat on China's rise. Not so fast, says Arthur Waldron, longtime Taiwan friend and China watcher (commentary from this right-wing site):

The report contains much useful factual material and some worthwhile recommendations. Its basic approach, however, tends to discount concerns about China, though not completely by any means, and search for the key to peace in the Pacific in Washington's actions, rather than in changes in Chinese behavior and political system.

Therefore Professor Waldron found himself in disagreement on a series of key points. These included the failure of the report to deal with the fundamental nature of the Chinese regime, a dictatorship having no legal or electoral processes and thus fundamentally wanting in legitimacy; the report's overly optimistic assessment of China's military build up, which he believes is dangerous and clearly targeted on U.S. forces and U.S. allies; an upbeat assessment of the Chinese economy that fails to deal searchingly with the lack of market mechanisms or genuine private entrepreneurship, state allocation of capital through political bank loans leading to bad debt, stock market and property market bubbles, and unwillingness to make the currency convertible. He also noted the report's failure to deal with Taiwan realistically, as a state that will continue to exist as it has, independently now, for more than sixty years, and the need for the world to make a place for it.

Above all, Professor Waldron deplored the reluctance to look forward. Many members of the Task Force believed that China today is stable and on a track of economic and political development that will continue in the future as it has over the past several decades, and that the United States should take an active and affirmative approach to Beijing. While Professor Waldron opposes confrontation and believes that the relationship must be carefully managed in the interests of peace, he is also persuaded that because of the many internal problems China faces, Communist rule there will face a crisis sooner or later, as the Soviet Union did. The West, and Washington not least, were entirely unprepared intellectually and emotionally for the end of the USSR; indeed had not even considered the possibility of Soviet collapse and how we should respond, with the result that it was handled extemporaneously and badly.

Professor Waldron believes that it is essential that the rest of the world be prepared for a likely regime crisis in China. Indeed, thinking about and preparation for this likely eventuality are perhaps the most important and pressing task faced at present by the rest of the world with respect to China.

Waldron's had a couple of really good pieces in the Taipei Times recently, and it is good to see him take a strong stand on the Taiwan issue. When Ma Ying-jeou visited the CFR in '06, they handed him softball questions, whereas conservatives pointed out that his longterm plans were a threat to regional security.

The Council on Foreign Affairs did not publish Waldron's full dissent. It is well-written and informative and worth a read. There are two pages on Taiwan. The scary part is that Waldron's dissent makes it clear that US Establishment thinkers have quietly decided that Taiwan is going to be sold out to China.


[Taiwan] [US] [China]

UN 2758 says Taiwan is part of China? Nepal thinks so...

Last week Taiwan's application to enter the UN under the name "Taiwan" was rejected by the UN Sec-General. The reason?

Taipei - UN Secretary General Ban Ki-moon has said that Taiwan cannot join the United Nations because UN members consider Taiwan part of China, the Central News Agency (CNA) said on Saturday.

CNA said that Ban made the remark - his first open statement on Taiwan's controversial application for UN membership - on Friday while visiting a US company in San Jose, California.

Ban made the remark in response to a question posed by a CNA reporter about whether a rejection of Taiwan's application would pose a violation of the UN Charter which upholds the principle of 'universality of membership.'

In reply, Ban said when the UN passed Resolution 2758 in 1971 to expel Taipei and accept Beijing, that resolution recognized China as the sole legitimate representative of China and that Taiwan was part of China.

'The UN's decision (on rejecting Taiwan's application) is based on this,' he told CNA, adding that the UN observes the 'one China' policy.

Naturally, UN 2758 nowhere says Taiwan is part of China. Take a look for yourself:

United Nations General Assembly Resolution 2758 (XXVI)

THE GENERAL ASSEMBLY,

Recalling the principles of the Charter of the United Nations,

Considering the restoration of the lawful rights of the People's Republic of China is essential both for the protection of the Charter of the United Nations and for the cause that the United Nations must serve under the Charter.

Recognizing that the representatives of the Government of the People's Republic of China are the only lawful representatives of China to the United Nations and that the People's Republic of China is one of the five permanent members of the Security Council,

Decides to restore all its rights to the People's Republic of China and to recognize the representatives of its Government as the only legitimate representatives of China to the United Nations, and to expel forthwith the representatives of Chiang Kai-Shek from the place which they unlawfully occupy at the United Nations and in all the organizations related to it.

In addition to scoring at the UN, China also received another ally in the form of Nepal, with which it has increasingly close relations:

Nepal's official media Saturday carried a statement issued by its foreign affairs ministry saying Nepal 'firmly opposes attempts by the Taiwan authorities to push for joining the UN under the name Taiwan'.

Nepal is also opposing Taiwan's decision to hold a referendum on joining the UN to bolster its application.

'Such attempts by Taiwan under any name or by any means would only lead towards destabilisation in the region,' Nepal's foreign affairs ministry said.

'Nepal believes that peace and stability must be maintained in the Taiwan straits to contribute to peace and stability in the Asia-Pacific region and international community at large.'

After King Gyanendra ascended the throne in 2001 and began vying for an active part in the government, exceeding the role given to him by the constitution, the government, under his influence, began asserting public support for Beijing's 'One China' policy.

Why did Nepal take this step? Money talks:

After the king declared himself head of the government, though the move was condemned by the international community, China supported the regime, calling the coup an internal matter of Nepal. It also supplied arms to the royal government though Nepal's other arms donors suspended lethal supplies in protest.

In return for the support, the then royal government issued a public statement, expressing support for the One China policy.

The fresh support now comes after a 12-member Chinese team visited Nepal this week and signed an agreement worth RMB 50 million.

Headed by Assistant Commerce Minister Wang Chao, the Chinese team said the assistance was meant to build the Syafrubeshi-Rasuagari road in northern Nepal and to provide logistic support to the crucial election, to be held on Nov 22.

China has also reportedly shown interest in extending a line of credit worth Nepali Rs. 8 billion to build a 61 MW hydropower project.

Nepal has requested the visiting delegation to increase Chinese aid for building infrastructure in Nepal and give duty-free access to over 400 Nepali trade items.

Scenting an opportunity in China's doubled bid to win over the new Nepal government after its controversial support to King Gyanendra, Nepal also asked the minister to modify an aircraft sale contract which is causing Nepal a huge loss.

King Gyanendra's regime had ordered two aircraft at inflated prices from China, a deal that is both embarrassing and loss-making for the cash-strapped new government.

Earlier, though the eight-party government asked China to cancel the deal, Beijing opposed it firmly. Now Nepal is asking China to reconsider the deal and sell one aircraft instead of two.

China's influence extends further into the Himal, a key but little-recognized flashpoint, in this case between China and India. The King's policy follows Beijing's in claiming that Tibet and Taiwan are both part of China. This is probably not a wise policy for a small buffer state trapped between China and India, especially one that recognized tributary status to the Qing Dynasty in the 1850s.

[Taiwan] [Nepal] [China] [UN]

Checking out the Bells and Whistles

Saturday dawned bright, so I hit the trails above my house to try out the new Canon on some old subjects.

DPP Chairman calls for Plebescite should China invoke Anti-Succession Law

Here's a brainy move:

Ruling Democratic Progressive Party Chairman Yu Shyi-kun said Friday he will ask President Chen Shui-bian to call a plebiscite on Taiwan's destiny if China cites its anti-separation law to obstruct the island's plan to vote on its United Nations membership bid.

Yu also faulted the United States for painting the planned UN referendum as a unilateral design to upset the status quo across the Taiwan Strait, saying the vote is intended to tell the world Taiwan is a sovereign country.

The Presidential Office responded by saying it will take note of Yu's opinion and urged the public to back the UN referendum.

Yu told a news conference his party will press Chen to call an independence referendum if Beijing indeed labels the proposed UN vote as an attempt by Taiwan to alter its status quo, in defiance of the anti-separation law.

The law at issue says Beijing may legally use force to bring Taiwan to heel if the island seeks to separate from China. A Chinese scholar said Beijing is likely to invoke the law if Taiwan persists with the UN referendum that will ask voters to decide if the country should seek UN membership under the name of Taiwan.

Yu said Chen's pledge not to call a referendum on Taiwan independence will not hold once Beijing makes the move.

The DPP chair insisted the UN vote is intended to show the world the resolve of Taiwan people to be included in the international community, which he noted will have no practical impact on cross-strait reality.

Yu said the United States should not voice objection to the UN referendum plan as the practice runs counter to its longstanding advocacy of freedom and democracy.

"The US must not seek to please Beijing at the cost of hurting the feelings of Taiwan people,” Yu said.“By doing so, the country falls short of its reputation as the world's leading democracy.”

A-gu had a China Times article up the other day that said that China was so concerned about the UN entry referendum it would attack Taiwan if the referendum passed -- maybe it has finally dawned on China that Taiwan is growing ever more distant, not resigned, as time passes, and that Ma Ying-jeou could lose. After all, you know the KMT told its pals in Beijing to relax, because they had the DPP in the bag. Must have cost them a lot of face with Beijing when Chen beat them twice....

I'm not sure what move DPP Chairman Yu is making in calling for such a thing -- perhaps he is serious, perhaps he is only giving Hsieh and Chen a chance to quash him and appear moderate -- but talk like this, even just to blow off steam, is just the kind of thing that commentators in the US pick up and say to each other "See! I told you these guys are crazy!" Stupid.

Meanwhile, you gotta love writing that says the Anti-Succession Law gives Beijing the legal right to attack Taiwan. Sure. Just like the US had a legal right to invade Iraq, and Italy a legal right to annex Ethiopia. See, they passed a law, a resolution, something, so that gave them the right....the Anti-Succession Law was really a neat bit of propaganda.

[Taiwan] [US] [China]

Insider Trading and Financial Markets in Taiwan

Insider trading, a way of life in our business world. Recently, it seems there's a new case every week:

Taiwan prosecutors have asked the court for permission to detain an executive of Fubon , Taiwan's No. 5 financial holding firm, amid a probe into possible insider trading involving Standard Chartered's acquisition of a Taiwan bank.

Fubon's shares plunged by the daily 7 percent limit on Friday to T$31.45, their lowest intraday level since July 6. The financial sub-index fell 4.45 percent, lagging the broader market's <.TWII> 3.06 percent slide.

Chiang Kuo-liang, Fubon's chief investment officer, had been questioned by prosecutors on suspicion of reaping profits of more than T$100 million from insider trading, said Lin Chin-chun, a prosecutor of the Taipei District Court.

"This is an insider trading case that involved Standard Chartered's acquisition of Hsinchu International Bank," Lin told Reuters by telephone.

Chiang and some of his relatives were suspected of buying shares of Hsinchu, a medium-sized bank in Taiwan, before Standard Chartered's announcement, Lin said.

Back in May, it was top executives at BenQ, including the President and Chairman:

Top BenQ executives were indicted yesterday, May 8, on charges of money laundering and insider trading. The Taoyuan Prosecutors’ Office released a statement accusing chairman KY Lee, president Sheaffer Lee, vice president Eric Yu and two senior financial executives of said crimes. The Commercial Times reports that the Chairman, President, and VP instructed a group of financial employees to sell bonus shares, worth $25.5 million to a BenQ branch in Malaysia, Creo Ventures. The revenue from the sale of these bonus shares were then transferred back to BenQ’s coffers, which can be construed as money laundering.

BenQ asserts that Creo Venture has been used to distribute bonus shares to its overseas employees, a fact that the Taoyuan Prosecutors’ Office had not taken into account.

The BenQ indictments are connected to something larger:

Prosecutors are investigating two Taiwanese information and communication technology companies suspected of insider trading. BenQ Corp. and Veutron Corp.--part of the semiconductor manufacturer Powerchip Group--were raided March 13 and 15 respectively, with evidence seized and a suspect taken into custody.

BenQ's headquarters in Taipei City and Taoyuan County were raided March 13, with three BenQ employees and four company executives summoned to the Taoyuan District Prosecutors Office for further questioning. The prosecutors' latest move follows information received from the Financial Supervisory Commission last December stating that BenQ was involved in insider trading, TDPO spokesman John Chang said in a March 14 report in the Taipei Times. Chang elaborated that the company was suspected of selling around 7 million of its shares between January and March 2006. This was just a few months before BenQ's earnings report was issued last March, which revealed losses in the fourth quarter of 2005.

Using information from the FSC and the bourse, prosecutors discovered that most of the proceeds from the transactions were deposited into the accounts of four of the company's human resources department employees before being remitted overseas. BenQ Chief Financial Officer Eric Yu claimed during questioning that he was entrusted to handle these shares. He failed to elaborate on where the proceeds were distributed, however, said a March 26 report by the Chinese-language Business Today magazine. Yu was taken into custody after questioning, while six other employees were released on bail ranging from about US$6,000 to US$154,000.

And May brought us Chunghwa Telecom as well:

The statement was issued in response to comments by Chinese Nationalist Party (KMT) Legislator Lwo Shih-hsiung, who on Monday voiced his suspicions about the unusual rally in shares of Senao International Co before Chunghwa Telecom's board approved the acquisition on Dec. 26.

"After being alerted by a lawmaker, we dispatched prosecutors to investigate whether there may have been insider trading," said Lin Jinn-tsun, a spokesman for the Taipei District Prosecutors' Office.

Chunghwa announced on Dec. 26 that its board had given the go-ahead to purchase a 32.5 percent stake, or 72.52 million shares, in the local handset retail chain.

Chunghwa said at the time that it would buy Senao shares at NT$15.10 each to boost its lukewarm third-generation (3G) telecom service business.

The Economic Daily News yesterday printed allegations by a board director that Chunghwa had doctored its board meeting record last November to hide evidence of insider trading.

The report, citing Simon Chang, head of the company's labor union who is also one of the board directors, said the company erased the records on board members discussing a plan to buy Senao shares.

And one of the world's most important golf equipment firms, just this month:

Shares of Fu Sheng Industrial Co (復盛公司) yesterday dropped to their lowest level in almost two months, shaken by an insider-trading probe that could dampenforeign private equity investors' interest in acquiring local firms.

On Wednesday, prosecutors searched the headquarters of Fu Sheng, the world's top supplier of golf-club heads, and questioned several officials on suspicion of using insider information to profit from the company's planned takeover by US equity fund investor Oaktree Capital Management LLC.

Fu Sheng said in a filing to the Taiwan Stock Exchange on May 9 that Oaktree had offered to purchase at least 51 percent of the company's outstanding shares at NT$37.5 each from the open market during the period ending June 27.

Fu Sheng shares yesterday closed down 1.9 percent to NT$36.2, the weakest since it closed at NT$34 on May 8.

The company denied any wrongdoing yesterday.

"We have made all efforts to prevent any confidential information about the deal from leaking. The company does not have anything to do with any possible illegal transactions made by any individual to make profits using the info," Fu Sheng spokesman Hsiao Chia-shih (蕭家適) told the Taipei Times by telephone yesterday.

The government has long standing plans to make the island an international financial center, dating back to the abortive Asia-Pacific Regional Operations Center (APROC) that sank without a trace after 2001. Though APROC is history, the idea lives on. The current moves against insider trading are part of this operation. In 2005 the Taiwan Journal reported:

Although there is still a lot of planning to be done, Thomas Yeh is confident that with further liberalization, there will be more room to develop financial products in insurance fund and banking services. He believes Taiwan can replace Hong Kong as a regional financial center in three to five years. This presumption, however, is too optimistic for some. Yang Ya-hwei, a researcher at Chung-Hua Institution for Economic Research and director of the organization's Center for Economic and Financial Strategies, thinks the plan still has a long way to go.

Yang says that a regional financial center needs to be equipped with a strong economy and financial power, the free flow of capital and manpower, competitive tax rates, sound infrastructure and sufficient professional expertise. She says Taiwan's advantages, a rapidly growing market, service providers, and plenty of foreign reserves and domestic savings, are all key to the government's goals. However, she also warns that Taiwan faces challenges from home and abroad that are not likely to be overcome in a short period of time.

In order to attract international capital, Yang says, Taiwan must first have a capital market that is competitive with those of existing regional financial centers such as Hong Kong and Singapore. Currently, however, the Taiwanese market is still rather small compared to its competitors. Although Taiwan is in the process of liberalizing, it has regulatory restrictions that limit the flow of capital and manpower. Such restrictions have led international investors to regard Taiwan's reputation, when it comes to capital markets, as less than stellar. In the 2004 IMD World Competitiveness Report, the reliability of Taiwan's stock market information ranked 34th--much lower than Singapore (3rd) or Hong Kong (22nd). Insider trading is more of a problem in Taiwan than in those places. To attract more investment, Taiwan needs to improve its image.

Professional manpower is another concern. The weakness of Taiwan's financial professionals is their English language skills, which are crucial to international financial operations when communicating with clients or researching global financial markets. To compete with the region's existing centers, Taiwan needs to expedite steps to upgrade domestic financial service professionals' skills, as well as recruiting foreigners.

Cross-Strait relations are also a pressing issue and political stability is always a key factor in any business' evaluation. It is Taiwan's policy to maintain a stable and peaceful development in cross-Strait relations so that political interference in the financial market can be minimized. There is no guarantee, however, that China--who does not want to see Taiwan becoming any kind of regional center--will adopt the same policy.

The problem is the old government-business intertwining. Commonwealth Magazine observed earlier this year:

In the past, lower-level financial investigators have uncovered problems at Taiwan's financial institutions quite early on and promptly reported them to higher authorities. Unfortunately, once notified, the higher-level officials would deal with the reported problems only passively. Behind all of this could be seen the highly entangled personal relationships between finance officials, elected representatives, and business groups. "The key problem is people. No matter how good the financial-supervision system is, once the people in government and business develop close connections, everything comes to naught," says Taipei District Court Judge Liang Yao-bin, who specializes in reviewing financial crimes.

Established in July 2004, the FSC is charged with targeting large business conglomerates run by influential families that have formed political connections with Taiwan's financial authorities. These business groups are often made up of powerful financial institutions and numerous subsidiaries. To carry out this mission, the commission was supposed to integrate the originally separate investigation systems for the banking, insurance, and securities sectors in order to develop the capability to supervise Taiwan's entire financial market across sectors.

..........

The FSC Financial Examination Bureau, formerly the sole government unit with the power to conduct financial investigations, has lost its ability to function, due to the involvement of its former director general in the "Stock Vultures" insider-trading scandal. Furthermore, the decision-making power of the FSC lies in its Board of Commissioners, which may have great authority, but is composed for the most part of academic types and lacks people with battlefield experience in the real world of financial supervision. A top finance official who has been through numerous financial bailouts likens this situation to that of a medical student who has never been an intern entering an operating room to perform surgery. How will he be able to make the crucial incision and remove the chronic disease?

After assuming the chairmanship of the FSC in August 2006, Jun-ji Shih set out to rebuild its authority and prestige. He entrusted greater responsibility to the commission's existing operational unit directors, but due to the high level of specialization and complexity in financial markets, Shih was unable to demonstrate his talents within the five short months before he resigned.

Besides the obstacles presented by the connections between government and business and the unproven performance of the FSC, the commission's inability to cooperate closely with other governmental investigative agencies provides further opportunities for business conglomerates determined to commit embezzlement.

Cooperation Breakdown

The Ministry of Justice has permanently assigned prosecutors to the FSC. However, this has become a mere formality, as the commission has been unable to either establish direct lines of communication with the MOJ or make good use of the judicial capabilities of its personnel. This goes far in explaining why the last straw that set off the run on The Chinese Bank – the announcement on January 4 that China Rebar Co. and Chia Hsin Food and Synthetic Fiber Co. had filed for insolvency protection with the courts – appears to have caught the Securities and Futures Commission and Taiwan Stock Exchange unaware, allowing Rebar executives to casually flee abroad.

The Taipei District Prosecutor's Office has also assigned some of its prosecutors to the FSC. Though the prosecutors participate in the investigations of financial crimes carried out by the commission's task force, this collaboration is a mere courtesy, and the two organizations have failed to achieve a higher degree of cooperation. Moreover, ever since the conviction in June 2006 of Lee Chin-cheng, former director general of the FSC Financial Examination Bureau, for his involvement in the "Stock Vultures" scandal, the state of cooperation between the two governmental bodies has become further clouded.

With the FSC having employed officials of such dubious integrity as former spokesperson Lin Chung-cheng and Lee Chin-cheng, the reputation and capabilities of the FSC have suffered even more. Prosecutor Eric Chen of the Taiwan High Prosecutor's Office Investigation Task Force for Criminal Profiteering Crimes does not mince words when he asserts, "There are still stock vultures that have yet to be caught. I'm afraid similar insider-trading scandals will arise in the future."

One senior prosecutor notes that in Taiwan, "There are far too few prosecutors that truly comprehend financial crimes." The FSC Financial Examination Bureau employs no more than three hundred personnel, and these personnel must keep track of the more than 5,000 branches of banks and credit cooperatives in Taiwan. It is therefore no wonder an exasperated FSC acting chairperson Susan Chang says, "We were fooled too!"

The FSC is further stifled by limited resources. Units within its organization presently employ around 800 personnel. Forty-four percent hold undergraduate degrees, while forty-six percent hold masters or doctorate degrees. This means that, among government bodies, the FSC has the highest percentage of people with university degrees or higher, even higher than that found among Ministry of Foreign Affairs personnel that are dispatched overseas. Nonetheless, a person with a PhD that has been newly hired by the commission as an associate researcher will receive a monthly salary of less than NT$62,000. [MT: a PHD in the university makes about $65K -- working 20-25 hours a week, not 50] That this is a lower pay rate than that of a secretary to the general manager of an international securities firm means that the FSC faces a great challenge in attracting and keeping talented personnel.

In a society where ethics are relational, and guanxi relationships fed and watered by reciprocal exchanges of favors, insider trading is probably the norm. Although both the KMT and the DPP accuse each other of corruption, the situation is more complex and business officials cultivate politicians from both sides. Consider the opening to the Commonwealth magazine article, about Wang You-theng, the head of Rebar, who fled overseas a few months ago when his company collapsed, and wandered from country to country like the Shah of Iran (Wang is currently in the US):

Wang You-theng's son, Gary Wang, was elected to the Legislative Yuan in 1989, while Wang himself was elected to the Central Standing Committee of the Chinese Nationalist Party in 1994. Members of the Wang family occupy the chairperson seats on the boards of over thirty business associations in Taiwan.

When power switched from the KMT to the DPP in 2000, the Wang family's influence remained as strong as ever. Wang You-theng continued to work hard at maintaining his relationships with officials at the highest levels of government. The Rebar CEO has accompanied President Chen Shui-bian on seven of the ten overseas visits the president has made while in office.

Why all this interest in financial enforcement in Taiwan? Well, part of it is to clean up the financial markets so Taiwan can move forward with its plans to be a regional operations center, an event that will probably occur at about the time a virgin graduates from my high school. Another reason? The island is negotiating with the US over an investment agreement...

The U.S. and Taiwan are considering a bilateral investment agreement after a recent round of trade meetings, U.S. trade officials said Wednesday.

This investment agreement, if it moves forward, would aim to increase investor protections and regulatory transparency, said Deputy U.S. Trade Representative Karan Bhatia, on a conference call with reporters. Senior officials from the two governments met this week under the auspices of a trade and investment framework agreement.

Good luck, Taiwan.

[Taiwan]

Feel the Powershot

Say good-bye to the Olympus C-770 (above): the Powershot is in the house! It was a good camera for 2004, but it's a generation behind now. Taken a beating too, as the dent there in the bottom of the U/V filter attests. I was so impressed with my buddy Jason's S3 that I went out and bought the next one up, just out this summer, the Canon Powershot S5 IS. Whoa! Ready to go when you hit the on button. Zero shutter lag. 12X telephoto. Great pics, handles the white balance really well. Huge LCD for composing shots. Functions all accessible in one/two-touch design. Image stabilization. Sensuous, solid camera feel -- the Olympus was too small and boxy to feel like a camera. Clearly a lot of skull-sweat went into this camera. [Camera]

Say hello to my Powershot. $13,200.* One year guarantee. Another $1,100 for the 2GB high speed SD card. I didn't bother with any other accessories, although I was sorely tempted by the Gorillapod from Joby on sale there. The store, Hwa Yang, is located at #315-1, Sec 3 of Dz You (Freedom) Road, directly across from the huge armed services PX, just across the street from the main park downtown.

Just down the road there is a flea market/junk market that is open most mornings, so we dropped in there to test out the camera.

Very nice.

Plenty of complex tatoos around.

In the low light conditions of the market, every shot was crisp and clear, though in a couple of shots there was graininess caused by high ISO. Although I deleted some images because I didn't like the composition, I didn't delete any because they were unclear due to camera shake in low light. Sweet.

I was particularly pleased with the camera's performance in shots like this. Note how the bright background is still reasonably detailed. Lots of times with the Olympus the backgrounds were simply lost in a vast sea of brightness.

Of course, we stopped by 85C to celebrate with their delicious sugar-free mango slushy.

[Taiwan]
*By the way, if anyone asks where I am for the next two years, I'll be washing the dishes.

Daily Links, Friday, July 27, 2007

Yummy stuff on the blogs today.

J. Michael Cole on historical revisionism in Taiwan. He publishes regularly in the Taipei Times.

Taoyuan Nights with an extensive, great discussion on how Taiwanese are screwed economically.

David with a very long post on transitional justice in Taiwan.

Scott Sommers has a good article on the politics of examinations.

Corbett discovers an academic article on club culture in Taiwan.

Andres has some great pics. Go look.

MEDIA: Jamestown Foundation has an article reviewing Taiwan's policy to use missiles against China, and its related doctrines, as well as the US position. A top US admiral criticizes the UN referendum plan. Taiwan showcases its biotech skills with exhibition. Taiwan Review has a great article by Brian Kennedy on the changing roles of attorneys in Taiwan, and another one on disaster and rescue agencies on the island. The Taiwan Journal offers selections on the changing role of the Youth Corps, and an article about election culture in Taiwan.

[Taiwan]

Hsieh's Journey to the West

Former Secretary of State Colin Powell met with DPP presidential candidate Frank Hsieh, currently on a trip to the US. Hsieh described the meeting:

Hsieh, who is on a“love and trust”in the US, related Powell said he understood China has been waging psychological warfare against Taiwan for the past 50 years but his country will hold onto the“one China”policy despite its flaws.

Powell painted the policy as the most effective means to avoid regional tensions, according to Hsieh, adding the former US official encouraged Taiwan to be more confident in itself without altering the status quo across the Taiwan Strait.

Hsieh replied there is apparently a gap between the two sides on the definition of the status quo. The DPP presidential nominee and President Chen Shui-bian have argued that the plan to call a referendum on whether Taiwan should seek United Nations membership under the name of Taiwan will not upset the island's status quo with China.

But US State Department has voiced objection to the referendum plan, warning it will heighten cross-strait tensions while having no practical impact on the island's UN status.

Powell, who said Taiwan is not a sovereign country before leaving the State Department in 2004, then expressed the hope Taiwan can continue to strengthen its democracy and enjoy more freedom, according to Hsieh.

Powells' remarks point up the gathering flaws of the US One China position:

it is increasingly defining violations of the status quo as "anything that angers China."

it lauds Taiwan's democracy while simultaneously denying the Taiwanese any say in the configuration of "One China."

it places the burden of enforcing the status quo on the US, meaning that while China obtains the benefits of an enforcement that favors China, it pays none of the costs, in terms of lost prestige or economic growth. Instead, these costs are transferred to the US-Taiwan relationship.

I essayed on this issue for CSIS in response to David Brown's piece on Hsieh -- which the recent trip has comprehensively refuted -- thusly:

What does it mean to say Beijing "is provoked"? Well, recently, Russia was "provoked" by the US and tore up a treaty. The UK was "provoked" by Russia and expelled four diplomats. Kennedy was "provoked" by missiles in Cuba and a quarantine was duly implemented. Generally, when nations are "provoked," costly, concrete action follows. By contrast, when Beijing is "provoked," nothing happens. Taiwanese businessmen and tourists flow into the mainland unmolested. The military does not go on alert, diplomats are not expelled, shots are not fired, the stars continue in their courses and the earth still swings around the sun in 365 days. In short, "being provoked" is something that does not take place in the real world, where concrete action signals the sharp edge of ire. It takes place only in the media.

What "provokes" Beijing? The quick answer would be to say "moves toward independence" but that is not quite correct. Numerous constitutional and political changes have taken place in Taiwan over the last two decades, all of which have tended to make the island independently self-governed, but Beijing responds only to those that involve certain actors -- in fact, since 2000, only to those that involve President Chen and people from the DPP. For example, as Brown notes, the KMT is also proposing a referendum in the upcoming election, but Beijing complained in public only about Chen's UN referendum, and sent a private warning to the KMT. Since 2000 the National Assembly has been shut down, the legislature streamlined, and various other moves taken, all without a peep from Beijing. "Being provoked" is thus not a visceral reaction. It is a policy choice.

Why has Beijing adopted this policy? The answer is obvious: to discredit Chen Shui-bian and paint him as "radical" who is dangerous for cross-strait relations, and to acquire leverage over the discourse and deployment of US foreign policy. As a result of this very successful policy move on Beijing's part, in the discourse of cross-strait relations a "moderate" has become someone who does not advocate democracy and independence for Taiwan, at least in a way that angers Beijing -- which, come to think of it, is just about any advocacy of those important principles at all -- whereas a "hardliner" is someone who advocates democracy for Taiwan (note how, in this construction, Beijing's own military build up and hardline policy have completely disappeared). In essence, this cloud-cuckoo-land discourse, and the way that the US State Department and many observers and commentators have bought into the rhetoric of Beijing "being provoked," gives Beijing enormous leverage over US China policy.

In sum, why is Beijing "provoked"? Because being provoked in the media gets Beijing results, without it having to take costly, concrete actions that might have catastrophic effects on its economy or relations with other nations. For Beijing, "being provoked" is win-win situation -- it wins because Chen and his pro-democracy allies are often portrayed as "radical" -- and it wins because other nations leap to do its bidding, at no cost to itself. No wonder it gets provoked so often.

Given this understanding of both China and Hsieh, it is easy to predict what the future will be. Hsieh will enter office full of conciliatory rhetoric. China will respond, probably positively at first, but then with expressions of "puzzlement" and "anger" over the "stubbornness" of Taipei. Within a year or two, however, a spate of articles will appear in the foreign media, expressing disappointment in how un-moderate Hsieh has turned out to be in office. Perhaps "sympathetic" commentators will blame the awful bogeyman Chen Shui-bian and his cabal of "fundamentalists" who continue to circumscribe poor Hsieh's range of action. Then another year or two will pass, and like Chen before him, Hsieh will morph into Mad Frank, the Crazed Independence Radical: Watch out! He can declare independence at any moment! Meanwhile Beijing will continue to take a hard line on Taiwan, increasing the hundreds of missiles it points at the island, building up its military, suppressing Taiwan's international presence, and coordinating policy with the KMT and its allies to fight a rearguard action against the advance of democratic politics in Taiwan (in that context, one reason Beijing wants the UN referendum suppressed is because it is helping out the KMT). It goes without saying that none of these actions will be presented as violations of the "status quo" by observers in the US -- that only occurs when those mad "fundamentalist hardliners" in Taiwan do something really serious, like change the name of the gas stations, abolish a useless government organ with an annual budget of thirty bucks, or put forward a referendum on entering the UN that has no chance of success. It goes without saying that none of these events had, or will have, tangible consequences.

The State Department's position does have one saving grace -- since State is helping it suppress Taiwan, China may well feel it does not have to take military action.

Brown's article claimed that

Third, will Hsieh continue to avoid Chen's hardline rhetoric that has convinced Beijing that the president is not someone they can deal with? The party organization believes that such rhetoric is key to mobilizing the base. One focus of their efforts is a referendum on joining the U.N. under the name Taiwan. Hsieh supports joining as Taiwan, but has not yet specifically endorsed the referendum. More moderate elements believe that a coincident referendum on Nationalist Party assets will be sufficient for mobilization. As a close campaign proceeds, Hsieh will be pressured and tempted to use hardline rhetoric. Whether he does so will be another key test.

Brown discussed the "rift" between the "moderate" Hsieh and the "hardline" Chen. Brown claims that Hsieh has not specifically endorsed the referendum. Yet more than a month ago in Kaohsiung, Hsieh did just that, as I reported at Taiwan Matters!, the politics blog (Taiwan News, requires registration):

Ruling Democratic Progressive Party presidential candidate Frank Hsieh Friday threw his support behind the government effort to join the United Nations under the name of "Taiwan," saying it falls in line with his longstanding stance on the issue.

Hsieh made the remark while in Kaohsiung to cheer up the southen port city's mayor Chen Chu, whose electoral victory last December was annulled by a district court.

Though a moderate on cross-strait ties, Hsieh said he has consistently suggested the island apply for UN membership under the name of Taiwan. To that end, Hsieh said he led a delegation to the UN headquarters 15 years ago to promote the cause and engaged in a ferocious debate with opposition Kuomintang lawmaker John Chiang in the Legislature.

Kathrin Hille of the Financial Times also tried to claim that Hsieh and the DPP "hardliners" were split, and they were trying to control him.

Chen Shui-bian, Taiwan's president, has launched a fresh bid for the island to join the United Nations under its own name just as Frank Hsieh, who is campaigning to succeed him, starts a visit to the US aimed at rebuilding ties that have suffered from previous controversial moves.

Just 15 minutes after Mr Hsieh boarded a US-bound flight, Mr Chen announced that a letter in which he requested membership for the island under the name "Taiwan" had been delivered to the office of Ban Ki-moon, UN secretary-general, on July 19. Mr Chen's request for UN membership had not been expected until September.

The letter is likely to force Mr Hsieh to explain, and perhaps defend, Mr Chen's latest step in Washington at a time when he is seeking to reassure the US that he would be a reliable partner with consistent policies.

"Mutual trust [between Taiwan and the US] has been badly damaged under Chen Shui-bian," said one of Mr Hsieh's aides.

Ah, the old unnamed source! That's always reliable! Relations have soured because the State Department is slowly strangling them, as former AIT head Therese Shaheen noted last month in an essay for AEI, not just because Chen often fails to notify the US before he makes his moves.

Meanwhile Hsieh put paid to the baseless pro-KMT speculation of Hille, Brown, and others by coming out strongly in favor of the referendum. He is in fact an advocate of better communication with the US. The AP reported on his visit, naming him the frontrunner:

But Frank Hsieh said that as a member of President Chen Shui-bian's Democratic Progressive Party, he also backed Chen's controversial call for a referendum on whether the self-ruled island should join the United Nations under the name Taiwan.

The referendum idea has angered China but also drawn criticism from the United States, which is pledged to defend the island and is loath to see Taipei upset the status quo.

Hsieh, front-runner in polls for Taiwan's March 2008 presidential contest, vowed to boost understanding between Taipei and Washington. Those historic ties have come under strain during the tenure of the independence-minded Chen.

Hsieh has also adopted Chen's position that Taiwan, as the Republic of China, is already an independent state, and thus, there is no need to call for independence. In other words, by any rational definition of the word, Chen and Hsieh are both moderates. The problem is that, in the establishment academic discourse on Taiwan, the word moderate has essentially become someone who will never ever ever offend Beijing.

Hsieh is obviously a thoughtful and perspicacious observer, for he put his finger on the problem (AP, above):

"Taiwanese need to understand that the U.S. needs to engage with China to manage a wide range of issues, from trade to the environment to nuclear security in North Korea," Hsieh said in a speech at the National Press Club in Washington.

"The U.S., on the other hand, needs to understand the changing dynamics of Taiwan society," he said.

Exactly. This problem isn't going to go away. Seventy percent of the electorate support UN entry under the name Taiwan -- a large section of Blue voters are in fact supportive of independence at the national level. The mainstream voter in Taiwan is by and large pro-independence. The fundamental problem with the US position on Taiwan is that it never asked the Taiwanese what they thought about the future of their island. Instead, it disposed of them in the best realpolitik real-men-decide-the-fate-of-nations manner. The result is a foreign policy that does not, and cannot, take into account current realities. And a policy that does not take into account reality is doomed, one way or another, to failure.

The US needs to re-establish the position it has always held: that the status of Taiwan is undecided. To move the Taiwan Desk out from under the China Desk at the State Department. To permit contacts at the highest level. To sell Taiwan the fighter aircraft and other weapons it needs, and to vigorously support Taiwan's entry into the WHO and other bodies where non-state entities can join. To stop transferring the costs of enforcing the status quo to the US-Taiwan relationship.

And pain beyond irony: while the US keeps Taiwan in its ambiguous non-state existence, at the same time it is committed to full support of independence for Kosovo come November, despite Russian anger. And those of you who imagine that Taiwan's independence must be a bloodbath, take heart from the story of Estonia, in which many of the same themes and tactics appear.

There is a path for Taiwan too, if only we can find it.

[Taiwan] [US] [China] [2008 Presidential Election] [Frank Hsieh] [Ma Ying-jeou] [KMT] [DPP]

Daily Links, July 26th, 2007

There we were, sitting at home watching a movie, when a snake slipped under the main door, slithered along the living room wall, and then slipped out the screen door on the side. Naturally, my Olympus, whose warm up times and shutter lags are glacial, was only able to get this shot as it slipped out the screen door, to the untrammeled delight of the dogs, one of whom awaits it with great interest.

What's creeping across the blogs today?

mediadiary reviews Morning in Taipei.

A-gu notes that Chen and Hsieh have the same views on Taiwan's independence. He also discusses a China Times article which claims that if the UN referendum passes here, China says it will use military force.

CFI, as always, has some great pics.

Wild at Heart blogs on birds caught in farmer's nets and their sad, slow deaths.

The Foreigner discusses citizen journalism in Taiwan.

Memoirs on a rainy day, which has some nice pics, also makes Thai green curry.

bent has a great post on economics, democracy, Taiwan....lots of good stuff coming out of bent lately.

"Chen's" amnesty bill under attack by the people who voted for it? A-gu has a laugh.

Want a yoga mat? Formosa Neijia discusses your every mat need.

Chewin' on the Chung dissects the crime statistics of our fair city.

Todd attempts panoramas. Looks great, man!.

Prince Roy reviews our jaunt to Jolly's in Taipei. Watch out for that 7.2% pale ale.

Thoth blogs on health care in Canada and Taiwan.

Mark blogs on his first investment in a Taiwan firm.

THINGS TO DO: Formoz music festival. Conference on transitional justice in Taipei on Saturday.

MEDIA: I'll be commenting on the coverage of Hsieh's trip to the USA later this week. For now, see how breathless KMT fan Kathrin Hille over at the Financial Times says Hsieh is Chen's rival whom the DPP has hung out to dry. China says Chen is a schemer. Because everyone knows that Hu is not a schemer -- he got his position by free and fair elections and wise offerings of public policy. Export orders here continue to rise. The UN rejects Taiwan's bid to enter under "Taiwan." No, really? Xinhua praises the UN. The Reuters news article on Hsieh's trip, which originally described Hsieh as the frontrunner, now has Hsieh merely as a contender ("Hey! I couldda been a frontrunnah!").

[Taiwan]

Taiwan TV flap in Singapore

Making the rounds in Singapore is this snippet from a local talk show that discusses Singapore, in the context of Ma Ying-jeou's praises of the city-state's government as efficient. This blog gives a synopsis.

Rough Synopsis:

1. Ma Ying Jiu made a comment comparing Singapore to Taiwan. His opinion that Singapore was more efficient, un-corrupt and economically stronger than Taiwan. The speakers here are rebutting his comment.

2. Panel brought up arguments (like Lucky Tan said), already brought up in The Straits Times a long long time ago. That the PM was also Finiance minister, that his brother Yang was on the board of Singtel and some bank, that his wife heads Temasek holdings. Thus questioning the point on corruption.

3. Brought up also on how media is state-owned. It's officially not.

4. Also questioned the nature of Singapore's democracy. That we are overly dependent on the Lees' for our nation's future (not true. Goh was PM for some time). That our efficiency was because of our single-party government.

Generally arguments that most people are familar with but not bringing it up coz its not time for our elections.

Another is here -- shut up Taiwan, you're not a country. And this guy says with a heart of parody:

Now if you ask any Taiwanese which party willl win their next elections, they will say they don't know. Every weekend they have protests for/against reunification with China, nobody seems to be able to decide on this issue and no body seems to be afraid of the authorities. There 15 newspapers and 7 24-hr news stations in Taiwan each expressing a different viewpoint causing much confusion among the Taiwanese. It is clear that Singapore has a system that is far more advanced than the Taiwanese and they do well if they listen to the KMT's presidential candidate Ma Ying-jeou plan to emulate Singapore - they should consolidate their newspapers and TV stations, have more predictable elections that is won by the KMT and focus on economic growth. I'm sure the Taiwanese will be happier people if they have a more advanced system of govt in place like Singapore. They wouldn't be wasting their time protesting on the streets and will have more time at the shopping mall. A media that provides high quality filtered and harmonised information will help them to relieve of the burden of pondering over issues. It will take them 40 years to get to where Singapore is today and they better start soon or we will move even further ahead of them.

Popular Singapore blogger Mr. Brown also linked to it, but with few comments.

[Taiwan] [Singapore] [democracy]

US angered over referendum

Bonnie Glaser, a US Taiwan/China expert, had this to say in the CSIS. The article gives a good idea of how American establishment academics are looking at the UN referendum.

++++++++++++++++

UN Referendum Brings U.S.-Taiwan Relations to a New Low

Bonnie S. Glaser (Senior Associate, Pacific Forum CSIS)

Taiwan President Chen Shui-bian is backing a plan to hold a referendum on the island's UN membership under the name "Taiwan" to be held in tandem with the March presidential election. Although the referendum will have no practical impact on Taiwan's status, the United States has made clear that it opposes the initiative because it "appears designed to change Taiwan's status quo unilaterally" and could undermine peace and stability in the Taiwan Strait.

From the U.S. perspective, Chen's initiative violates the spirit if not the letter of his "four no's" pledge, enunciated in 2000 when Chen was inaugurated as Taiwan's first DPP president. He said that he would not declare independence, change the national title, incorporate the concept of state-to-state relations between the island and the mainland in the Constitution of the Republic of China, or promote any referendum on independence or reunification. President Bush sees the "four-no's" as a commitment not just to the Taiwan people, but also to the international community and to himself.

[MT: Typical. Glaser does not acknowledge that Chen's promises were conditional on China's good behavior. More importantly, nowhere does Glaser acknowledge China's constant attacks on the status quo, or the military threat from China as a violation of the status quo. As always, the status quo is violated only by Taiwan, never by China.]

The decision by the Bush administration to publicly condemn Taiwan for planning to conduct a referendum to demonstrate the will of the Taiwan people could not have been an easy one. Despite almost constant friction in U.S.-Taiwan relations in the past five years, President Bush continues to view Taiwan's democracy as a beacon for China. He values the friendship between the American and Taiwanese people and takes seriously U.S. obligations to Taiwan under the Taiwan Relations Act. Many Bush administration officials view China's intensifying efforts to squeeze Taiwan's international space as petty and unbefitting a major international player.

To what extent is U.S. opposition due to pressure from Beijing, which is putting increasing pressure on Washington to do whatever its takes to stop Taipei from proceeding with the referendum? First, it should be clear that the U.S. has often reiterated that it has a "one China" policy and, consistent with that policy, it does not support Taiwan's membership in international organizations that require statehood. For this reason, the U.S. would not cast a vote in favor of Taiwan joining the UN under any name.

Second, since the majority of countries will not back Taiwan's bid, and, more importantly, China's veto is certain, the U.S. cannot help but ask why Taipei is resolved to hold a referendum on this issue. The answer, of course, is that President Chen hopes to strengthen "Taiwanese identity" and thus rally voters to support another DPP presidency. Polls in Taiwan show that more 70 percent of the population favors joining the UN, so this is an issue that can be used to garner votes.

[MT: Bingo. Since China can veto it, it will have no effect at all. Once again, the pattern holds. The US is getting angered over an event that will have no effect, while ignoring what China does. Dr. Glaser misses the key point that if pro-Taiwan moves gain votes, then we are not looking at an isolated incident from the hand of the dastardly Chen, but something that we will see more and more in the future. As A-gu noted the other day, even Ma Ying-jeou said that entry into the UN under the name Taiwan was legit.]

It also provides a means to put KMT presidential candidate Ma Ying-jeou on the defensive. Since the majority of Taiwanese support joining the UN, Ma cannot urge voters to boycott the referendum as KMT candidate Lien Chan did in 2004 when the DPP included a referendum on the ballot on the procurement of missile defense systems. This time, Ma is countering by endorsing a referendum to join the UN "under a practical name and flexible strategy" that would increase Taiwan's chances of being accepted in more international organizations. So, to many Americans, it seems that presidential politics is the driver and the impact on cross-Strait security is given little, if any, consideration.

[MT: Dr. Glaser has apparently forgotten what she wrote in the previous paragraph: China can veto this. It can't succeed. So the only way that it can affect cross-strait relations is if China chooses to "be provoked." The reason cross-strait security issues aren't a driver here is because nobody expects anything to happen, just as nothing has happened for the last seven years whenever Chen has done something positive for Taiwan's identity. One reason China is making all the noise is because it wants to help out the KMT.]

Third, while it is true that Washington is cooperating ever more closely with Beijing on certain regional security issues – most notably the denuclearization of North Korea –there is no evidence that China has demanded a quid pro quo for its cooperation. The Chinese are involved in the Six-Party Talks because they fear the consequences of instability along their border and see an opportunity to facilitate a transition to a more stable peace in Northeast Asia. Of course they hope that the U.S. will reconsider its policies toward Taiwan in light of the value that it attaches to China's cooperation. But if changes in U.S. policies are not forthcoming, Beijing is not likely to alter its policies on other issues that serve Chinese interests.

It is true that China is alarmed about the referendum and other steps that Chen might take in his final months in office that could challenge China's claim to sovereignty over Taiwan and compel a decision to use force against the island under Article 8 of the Anti Secession Law. The Chinese leadership is preparing for the 17th Party Congress this fall at which major personnel decisions will be made. If Hu Jintao is seen as being soft on Taiwan, he will be vulnerable on other issues. The Chinese have always drawn a close connection between leadership legitimacy and Taiwan. Foreigners have long been told that no leader in Beijing could remain in power if he allows Taiwan to secede. Whether this is true isn't relevant. Perception matters. If the Chinese view this referendum as crossing a red line and decide to respond militarily, the consequences would be disastrous. The preservation of peace and stability in the Taiwan Strait is vital for both Taiwan and for U.S. interests. So Washington has to take China's concerns seriously, even if it doesn't agree with them.

[MT: A-gu at That's Impossible! loaded up an article from the China Times which said that China was so concerned it was going to attack. No kidding -- Dr. Glaser writes that China would be "compelled" under the anti-succession law to attack Taiwan -- just as they are "compelled" under the national security laws to execute dissidents, I suppose. China will attack when it wants to for reasons of its own.]

What is likely to happen next? The U.S. will seek to accurately gauge China's position and the danger of miscalculation on this issue. Efforts will certainly be made to persuade Beijing that using military force in response to a referendum that will have no policy impact whatsoever but will unquestionably result in a major deterioration in both cross-Strait relations and U.S.-China relations makes no sense and isn't worth it. At the same time, the U.S. will take steps to criticize and even punish Chen for his antics. The purpose will be two fold: 1) to inform the Taiwan people that Chen's actions are putting U.S.-Taiwan relations at risk so that they will oppose them; and 2) to satisfy Beijing that U.S. policy against Taiwan independence is firm and enable China to justify a more modest response should the referendum be held.

[MT: Yes, you know those dumb Taiwan people. They need the US to tell them when Chen is putting the island at risk. They can't decide that for themselves. I wonder why the US doesn't tell them about the Chinese military buildup as well. And observe how Ms. Glaser characterizes US policy as being "against Taiwan independence." ]

An obvious opportunity to publicly signal Taiwan of U.S. displeasure will be President Chen's transit through the U.S. on his way to Central America next month. When he last transited, the U.S. allowed Chen to spend the night on the west coast en route to Nicaragua. That decision was made only after intense debate in the U.S. government. It is unlikely that individuals who opposed restricting Chen to a transit in Hawaii or Alaska will stick their necks out this time. Look for approval of the offer of a short stay in the 49th or 50th state for the sake of the visitor's "safety, comfort and convenience."

The U.S. may also express its opposition to the referendum at a higher level. No one has forgotten President Bush's rebuke of President Chen in December 2003 alongside Chinese Premier Wen Jiabao for "the comments and actions made by the leader of Taiwan [that] indicate that he may be willing to make decisions unilaterally to change the status quo – which we oppose." Subsequently, in October 2004, then Secretary of State Colin Powell stated plainly that "Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy." Similar statements could be made again, albeit reluctantly, because U.S. officials are loathe to take steps that are harmful to U.S.-Taiwan relations and because they highlight destabilizing political moves taken by Taiwan over the even more dangerous military buildup that Beijing is undertaking.

[MT: Finally, Glaser acknowledges that Beijing's military buildup is a problem.]

Steps could also be taken to postpone notifications to Congress of approved military sales to Taiwan or delay planned exchanges between the U.S. and Taiwan militaries. Such decisions might be unwise, however, as they would run counter to U.S. interests in aiding Taiwan to bolster its capacity to defend itself and would undermine U.S. efforts to persuade Taiwan to halt the development of its Hsiung Feng 2E land-attack cruise missiles.

[MT: I am glad she recommends against punishments on defense issues.]

Another possible action to penalize Taipei would be a U.S. decision to lobby countries to vote against Taiwan in the UN. While the bid would be fated to fail in any case for reasons noted above, a proactive approach by Washington to deny Taiwan support, even from its diplomatic allies, would send an unambiguous message that the U.S. is determined to oppose efforts to change the status quo.

The referendum will be high on Washington's agenda this week when DPP presidential candidate Frank Hsieh meets with U.S. officials. Hsieh has indicated a desire to improve relations with the U.S., which he terms Taiwan's "strategic partner." Candid talks are sorely needed. Taiwan's security interests are not served by promoting domestic political stunts that alienate the U.S.

+++++++++++++++++

The article is a neat illustration of the looming problem in US-China-Taiwan relations -- that any move by Taiwan is a violation of the status quo, but moves by China are not.

[Taiwan] [US] [China]

Why Hsieh Will Win

There's a widespread perception that Ma Ying-jeou is the frontrunner in the 2008 Presidential race. This is fed by the constant flow of polls that appear in the pro-Blue media that have Ma ahead of Hsieh by light-years. Such polls exist to shape discourse, not to provide information for it.

So let's take a moment, dust off our thinking caps, and imagine why Frank Hsieh will defeat Ma Ying-jeou in the 2008 Presidential election on the Beautiful Isle.

Experience -- Ma has never run in a contested election against a competent opponent who had a chance to beat him. His only "election" victories came in Taipei, where a Blue wig on a stick is certain to win, and the landslide election to KMT chairman. He was appointed head of the RDEC, and appointed Minister of Justice. Hsieh, by contrast, was elected legislator and Taipei city councillor. He won a tough race in Kaohsiung. More importantly, Hsieh has lost two elections, the 1996 Presidential election, where he was the Veep candidate, and the 2006 Taipei mayoral election. The experience of loss is as important as victory in teaching candidates what it takes to win. And Hsieh has already competed at this level. Moreover, Hsieh has contested elections in both the north and the south. Ma has never been elected outside Taipei. Take a look at their respective backgrounds:

Ma: failed the bar
Hsieh: human rights lawyer

Ma: Minster of Justice
Hsieh: Premier

Ma: no deliberative background
Hsieh: Taipei City Councilor

Ma: no deliberative background
Hsieh: Legislator

Ma: Mayor of Taipei
Hsieh: Mayor of Kaohsiung

Ma: Chairman, KMT
Hsieh: Chairman, DPP

Ma: head, RDEC
Hsieh: no similar experience

Ma: no prior national election experience
Hsieh: Veep candidate, 1996

Ma: no media experience
Hsieh:Talk show host, TVBS

Ma: servant of authoritarian regime
Hsieh: opponent of authoritarian regime

The result? Hsieh has that fire in the belly. Ma....has nice hair.

Economy -- Oh yeah. It's rolling right now. Stock market at 7 year highs. Unemployment falling gently over the long term. Exports at record levels and likely to continue as the China market continues to boom. The income equality issue isn't going to be solved any time soon, but if unemployment trends continue, Ma is facing a serious problem running on the economy. Ma's pick of Siew as Vice President was a tactical error -- it essentially locks him into running on the economy (Siew is a technocrat with broad respect but no broad appeal). Ma should have announced he would make Siew his econ czar if elected, and then picked someone young and interesting to be his Veep.

As the advocate of complete opening to China, Ma's policy runs into one of the underlying pillars of support for the DPP's cautious China policy. Chen Shui-bian, speaking on the issue of admitting Chinese students here, observed:

"Don't be naive and think that it is simply a cross-strait educational exchange. Once you allow a small crack in the system, a giant gash will soon follow. Opening Taiwan to Chinese students and professors will only have an adverse effect on job opportunities for local citizens," the president stressed.

Every Taiwanese knows that across the Strait are hordes of unemployed Chinese who have no families here and can work for half of what a Taiwanese can. The working class already sees its wages falling in real terms, and knows that foreign labor is here to keep their own wages down. When people feel threatened economically, they tend to vote nationalistically. And voting "nationalist" in Taiwan means casting a pro-Taiwan vote.

Electioneering -- The DPP knows how to run and win elections. They got Chen Shui-bian to victory in 2000 and 2004, when everyone said it was impossible to do so. Feiren pointed out to me the other day that Hsieh has a cadre of volunteers who were out electioneering on the last night before the Taipei mayoral election, even though he had no chance of winning. Ma has nothing like that. It is true that the DPP's local level networks are not as extensive as those of the KMT, but the KMT also does not appear to know how to translate its presence at the local level into victory at the national level.

Enmity -- Ma is disliked by the KMT Party Machine politicians like Speaker of the Legislature Wang Jyn-ping and Chairman for Life Lien Chan. In the chairmanship election two years ago none of the party elites supported Ma. He is also disliked by the Taiwanese legislators in the KMT, the so-called "southern legislators," who are grumbling that he is displacing them in party power circles and in the legislature. Many of those legislators have farm and irrigation association backgrounds, others in shady local industries and clan and patronage networks. This was the crowd that Ma attacked when he was justice minister. They might support him, for he has shown little inclination in recent years to take on the Party Machine. But then again, they might fear he will turn on them once in office.

Earnings -- KMT is much wealthier than the DPP, no question. But the DPP has apparently been raking it in recently:

The Chinese Nationalist Party (KMT) is nearly 80 times richer -- in total asset terms -- than the Democratic Progressive Party (DPP), figures from the Ministry of the Interior show.

The KMT has assets worth more than NT$27 billion (US$821 million), while the DPP's assets amount to nearly NT$339 million.

In a rare peek at hard numbers from political parties' financial statements, some surprising information about the top parties appeared on the ministry's Web site yesterday (www.moi.gov.tw/home/home.asp).

Although it is no secret that the KMT possesses copious assets -- much of which its critics allege it plundered after Taiwan ceased to be a Japanese colony -- it might surprise some to know that the DPP's income for last year was more than double that of the KMT.

The DPP earned NT$661 million while the KMT pulled in a little more than NT$301 million.

In terms of net assets, the KMT boasts 100 times more asset value, or roughly NT$25.5 billion, to the DPP's nearly NT$253 million, the records show.

But the KMT is also saddled with more debt, nearly NT$1.6 billion as of last year, compared with the DPP's nearly NT$86 million.

Is the smart money betting on the DPP? Hard to say, but I'm inclined to think so.

Ethnicity -- In the western press it is conventionally claimed that Ma and Hsieh are both moderates who can appeal to centrist voters. The western moderate voter here is a myth -- the center in Taiwan is composed of two types of voters: apathetic Greens who don't turn out if not thrilled by the candidate, and voters who have given up on politics and do not vote. In other word, the centrist voters are pro-independence. Western observers are often puzzled as to why political leaders in Taiwan do not move toward the middle when they make political moves. This is because, by default, the DPP is already at the middle -- the centrist voter is Green, and because the middle -- that's the place between Blue and Green! -- consists of people who don't vote (so why move toward them?). This is why Ma, when trying to move toward the center and pick up some of those Light Green votes, has made feeble gestures, killed by the KMT core, to include independence as an option for the KMT. In other words, Ma is constrained by his political values from appealing to the "center" since, as polls show, the Taiwan identity is growing here. The most Ma can do is get absolutely everyone Blue out to vote. In a nation where voters tend to vote their political identities, this is a disadvantage.

The election will of course be tight, but all in all, I think Hsieh has an excellent change to win.

That could change, of course. The indictments against both are wild cards, though it unthinkable that the largely pro-Blue prosecutorial and judicial system will actually convict Ma. Ma's indictment will be thrown out, I suspect. Another huge intangible is Chinese money, which I fear will be entering Taiwan in large amounts for this election. But still, if both sides give it their best shot, I look forward to watching President Hsieh sworn in 2008.

UPDATE: I wrote this before Chen Shui-bian became Chairman of the DPP. Heh.

[Taiwan] [2008 Presidential Election] [China] [Frank Hsieh] [Ma Ying-jeou] [KMT] [DPP]