In this week's featured commentary, SIIA Chairman Simon Tay looks at the recent arms deal between the United States and Taiwan, and how this might affect ties with China and next year's presidential elections in Taiwan.
This story was featured in the TODAY (Singapore) newspaper on 6 Oct 2011. It was also published in the South China Morning Post (Hong Kong) on 7 Oct 2011 under the title "Weighing the Realities".
Controversy surrounds the near-US$6-billion (S$7.85 billion) deal signed recently for the United States to help Taiwan upgrade its air force.
Beijing has protested strongly and reportedly asked Washington to reconsider or else it will downgrade military ties. American arms sales to Taiwan have always been more than a commercial decision. But the current situation may signal more.
Amid talk about American decline, there are signs of Chinese assertion. The dynamics around the Taiwan arms deal may have implications for others in Asia.
Many economies hub around China for growth, and yet wonder whether having closer ties with Beijing helps or hurts. Under current President Ma Ying-jeou, Taiwan has courted better cross-strait relations and entered into an Economic Cooperation Framework Agreement (ECFA). This caps the long-standing reality that so many Taiwanese companies do business in China. Mr Ma's cross-straits stance contrasts to the preceding Chen Shui-bian administration, which the mainland accused of seeking independence.
If leaders in Beijing seriously extend themselves to stop the sale or step back from the ECFA, observers would take the lesson that there is little gain from being cooperative. In Taiwan, Mr Ma's standing could be adversely affected. More assertive voices might gain ground in the run up to presidential election, due next year.
Mr Ma's chief opponent, the Democratic Progressive Party's Ms Tsai Ing-wen, has shown moderation and is gaining ground. But the mainland still regards her with some suspicion and seems to favour Mr Ma.
Beijing has sent increasingly explicit signals that if the next President in Taipei that does not embrace the 1992 Consensus to affirm "one China", business ties will suffer.
They should calibrate protests on the arms sales and contain strident nationalists. Otherwise, they risk a replay of 1996, when they lobbed missiles across the straits just before the island's presidential election. This signalled Beijing's position against incumbent Lee Teng-hui but that message backfired, so Mr Lee won the election with a higher vote than previously.
In that same crisis, the Americans were roused to send naval ships into the Taiwan Straits to signal their strength and commitment. This is another issue to look for amidst this arms controversy: To see the balance between Beijing and Washington.
In this past year, many in the region have strengthened security ties with the United States; not only long-standing allies like Japan, South Korea and the Philippines, but also newer friends like India and Vietnam. This is fed by controversies about Chinese assertiveness over islets in the South China Sea and the Diaoyu islands (Senkakus to the Japanese), and Beijing's support for a provocative North Korea.
Yet even as Asians have turned to the US for strategic assurance, there have been concerns about American capacity and will to remain in the region. The Obama administration has made the right moves. But the continuing economic weakness and huge public debt cause concern. To some Americans, their military presence in Asia will seem like an expensive luxury that should be cut back. As America enters its presidential election cycle, some may wonder why and how long more their country should expend money to be so strongly present in Asia, while others spoil for a fight with China.
It is, therefore, not just the Taiwanese who should watch how Washington responds. Other friends across Asia will take lessons about the value and dependability of ties with the US in dealing with China.
Notably, the current deal is already watered down, agreeing only to refurbish Taiwan's existing F-16s, rather than allowing them to buy new planes. Moreover, even after the refurbishment, most analysts agree the mainland will retain the clear military advantage. Having made such compromises, the Obama administration cannot afford to blink on this, without eroding credibility.
On their side, Beijing should circumscribe their responses within diplomatic norms, rather than getting too shrill or worse, ushering in retaliatory actions. Beijing should be confident enough and also consider not if they like the deal, but whether they can live with it.
Looking to America for strategic assurance while deepening economic engagements with China is a stance that has inherent tensions and contradictions. Yet that is the current reality, not only for Taiwan but for just about all in the region. Few Asians, if any, are ready for this to change abruptly.