Complementing China's missile deployments and its limited air and
naval capabilities is the credibility of its threats. Taiwan's
leadership knows that China's failure to respond to a declaration of
independence would challenge its international reputation, affecting
border security and independence movements around its periphery. In
March 1996, despite the risk of U.S. intervention, the PLA launched
M-9 missiles into coastal waters within the vicinity of Kaohsiung,
Taiwan's major port city, to underscore its will to oppose moves
toward independence. These actions were very risky, but they enhanced
China's credibility in using force to oppose Taiwan's independence.

Taiwan's interest in preserving the political status quo reflects
more than PRC military deterrence. Taiwan's economic prosperity
depends increasingly on cross-strait stability. As China's economy
has continued to grow and Taiwan's labor costs have increased,
Taiwan's economy has become more integrated into the Chinese economy.
Its high-technology industries have begun to move offshore to China,
so that its export-led economy and future economic growth are
increasingly dependent on a stable political relationship with the
mainland. Moreover, since late 2000 Taiwan has experienced a
significant economic downturn. Unemployment is higher than ever
before, the stock market has lost nearly 50 percent of its value, and
the New Taiwan dollar reached a 32-month low in early June. The
result of Chinese growth and Taiwan's relative decline is that
business confidence on Taiwan has reached a five-year low and
business elites increasingly recognize China as their long-term hope
for continued profits. Consequently, Taiwan's business elite
pressures political leaders to keep relations with China becalmed. As
these trends continue, especially after Taiwan and China enter the
World Trade Organization, Taiwan's ongoing incorporation into the
mainland economy and its economic dependence on it will discourage
provocations from Taipei.

Taiwan also has critical political stakes in cross-strait stability.
Its democracy is young and fragile and has yet to develop a tradition
of cooperation across party lines. Its society continues to suffer
from a deep fissure reflecting conflict between those born on the
mainland and arrived after 1945 and those born in Taiwan. This
fissure has contributed to intense partisan politics which, in turn,
have undermined Chen Shui-bian's ability to develop a coherent
economic recovery policy. They have also undermined voter confidence
in Taiwan's ability to contend with mainland pressure. It is far from
clear, therefore, that Taiwan's democracy could long survive
intensified mainland-Taiwan conflict.

Taiwan clearly retains an ambition for sovereignty and the associated
membership in the United Nations and other international
organizations. But, similar to Beijing's demand for unification, this
is a demand for face, not a vital interest. U.S. intervention could
defeat a Chinese offensive, but Taiwan would nonetheless lose all
that is worth defending--its very impressive strategic, economic and
political successes. Taiwan's satisfaction with a very favorable
status quo and the great risk in challenging Chinese interests
combine virtually to guarantee that there will be no declaration of
independence--and this is not to speak of U.S. opposition to such an
initiative. This reality is reflected in both Taiwan's public opinion
polls and in the outcome of the 2000 presidential campaign. Since
1997, support for independence has never exceeded ten percent in
government-sponsored opinion polls; the norm is less than six
percent. Thus, pro-independence candidates risk appearing reckless
should they call for a declaration of independence. Although Chen
Shui-bian won the 2000 presidential campaign, he was the beneficiary
of a three-way race in which the candidates opposed to independence
divided the anti-Chen vote. That he polled less than 40 percent of
the vote reflected in part voter apprehension over his prior support
for independence.

Beijing's interest in Taiwan's continued formal acceptance that it is
part of China is therefore not as much at risk today as seemed to be
the case two or three years ago. For the first time in many years, it
is confident that "time is on China's side." This is reflected in
reduced expectations that China will have to go to war to arrest a
trend toward Taiwan independence. Indeed, China has retreated from
the February 2000 Taiwan White Paper threat to use force if Taiwan
resists unification negotiations "indefinitely." Foreign ministry
officials no longer raise this condition; when pressed, they respond
that "indefinitely" is a "long time." Thus, while China is deterred
from initiating a major war, Taiwan is deterred from doing that which
would elicit China's use of force in the first place.

The U.S. Stake

The U.S. aim in cross-strait relations ought to be to re-inforce
these offsetting strictures and to make sure that its well-intended
efforts to prepare for war do not destabilize a constructive status
quo and unnecessarily set back U.S.-China relations. This should not
be too difficult.

One advantage in achieving this aim is the fact that the United
States does not possess inherently vital security or political
interests in Taiwan's strategic role in international politics. U.S.
security would not be affected by either China's unification or
Taiwan's independence. Thus, every U.S. administration since that of
Richard Nixon has declared that the United States does not favor any
particular outcome of the mainland-Taiwan conflict, only that it be
resolved peacefully. This interest enables the United States to be
content with a situation in which neither Taiwan nor China is fully
satisfied with the status quo but both prefer peace to war.

What, then, should the United States do, and what should it avoid
doing? First, the United States must continue its effort to maintain
the capability and the credibility to deter Chinese use of force
against Taiwan. In other words, the United States must hold up its
end of the triangle of deterrence and dissuasion. Useful in this
regard would be U.S. research and acquisitions strategies that
maintain Chinese doubts that asymmetric strategies are enough to
deter U.S. intervention. Such efforts should seek to protect the U.S.
regional presence through the enhancement of C4I capabilities. U.S.
defense planners should also consider how forward deployed arsenal
ships can complement the role of aircraft carriers in deterrence,
insofar as greater reliance on precision munitions and reduced
exposure of U.S. soldiers to attack will enhance the credibility of
the U.S. threat to intervene.

But the United States should not abandon its policy of ambiguity
regarding intervention in a mainland-Taiwan conflict. Abandoning the
present ambiguity would not enhance deterrence or stability, but it
would impose a cost on the United States. President Bush got it right
on April 25 when he said that Washington would do what it takes to
help Taiwan defend itself, but also that the United States opposes a
declaration of independence.

Ending ambiguity by clearly stating that the United States would not
defend Taiwan in the event of a declaration of independence may
clarify the U.S. posture, but it would not make deterrence of such a
declaration any more effective. Taiwan is deterred by the credibility
of PRC retaliatory threats, regardless of U.S. policy, because the
United States cannot defend Taiwan against Chinese missiles or from
the economic and political costs of even a limited war. Moreover,
clear opposition to Taiwan's independence would be politically
controversial in the United States, undermining the fragile domestic
consensus on Taiwan policy and making it even more difficult for the
White House to cooperate with China.

But neither should Washington abandon ambiguity by threatening
intervention against the mainland's use of force under all
circumstances. China cannot be deterred in the unlikely event of a
Taiwan declaration of independence and it is already deterred from
challenging the status quo by U.S. capabilities and commitments.
Additional clarity would not enhance deterrence or cross-strait
stability. But an unconditional U.S. commitment to defend Taiwan
would undermine the U.S. ability to cooperate with China. It would
affect mainland assessment of U.S. intentions, creating greater
suspicion of the United States and reduced interest in cooperation.

Above all, the United States should not exaggerate the fragility of
the cross-strait political or military balance. Stable deterrence
across the Taiwan strait means that Washington can refrain from
destabilizing initiatives intended to prepare for war and enhance
Taiwan's security. The U.S.-mainland balance enables the United
States to limit arms sales to Taiwan without undermining Taiwan's
security. U.S. arms sales to Taiwan contribute only marginally to
deterrence or to Taiwan's security. What really deters the mainland
is not Taiwan's military but the U.S. military. Thus, with the
important exception of ensuring Taiwan's air superiority, U.S. arms
sales to Taiwan are not a major factor in the security equation. This
is especially the case concerning the transfer of theater missile
defense technologies to Taiwan. Rather than seek a panacea in an
uncertain technology, the United States should have confidence in the
strength of its overall deterrent capability and, thus, avoid
unnecessary, provocative and destabilizing arms and technology
transfers.

Similarly, enhanced U.S.-Taiwan defense planning and coordination will neither aid deterrence nor affect the outcome of a war. Overwhelming U.S. superiority deters unprovoked Chinese use of force. It also enables the United States to incur minimal casualties, so that the Pentagon would prefer to fight a war over Taiwan alone. Washington would demand that Taiwan's forces stand down, sparing the United States the need to manage the complexity of cooperating with Taiwan's relatively ineffective military and risking casualties from friendly fire in a very tight theater. On the other hand, determined U.S.-Taiwan military cooperation will eventually elicit costly mainland opposition. Despite recent U.S. efforts to alleviate the stress in U.S.-China relations and China's evident interest in minimizing U.S.-China tensions, Chinese civilian and military leaders appear to be increasingly concerned over the direction U.S.-Taiwan defense ties.