Seven Years on Good Behavior

 by John Tkacik, Jr.

There was a collective sigh of relief in Taipei on the evening of Friday, July 13, as CNN correspondents and half a dozen Taiwan TV journalists in Moscow reported that the International Olympic Committee had indeed awarded the 2008 Games to Beijing.

One shudders to imagine the sour mood Beijing would have been in if their meticulous machinations for the games had gone awry once again. Taiwan's peppery Vice President Annette Hsiu-lien Lu, who has absolutely no sympathy for her "distant relations" in China, was magnanimous before the selection in saying she wished Beijing success because then China would be on good behavior for the next seven years.

After the news, though, she cautioned, "There are plenty of examples of Olympic hosts starting wars."

Taiwan's mainlander politicians looked on the brighter side. Beijing had told the IOC that the Olympic Torch Route would go through Hong Kong and Taiwan, news that was welcomed by Taipei's popular mayor Ma Ying-jeou. On reflection, however, several observers noted that the gesture would imply that Taiwan belonged to the People's Republic of China (PRC) and argued strenuously against it.

Other suggestions that Taipei "co-host" some of the events are foreclosed by Olympic rules that restrict the events to cities close by the host city. In the end, the 2008 Beijing Games will have minimal, if any, impact on cross-Strait relations.

Pesky neighbors

That much was evident on Tuesday, July 10, when Beijing iterated and reiterated its rejection of Kuomintang (KMT) party Chairman Lien Chan's "confederation" proposal. Chinese Vice Premier Qian Qichen even saw fit to respond with his own "seven conditions," a rehash of late Marshal Ye Jianying's "Message to Taiwan compatriots" issued on New Year's 1979.

Still, that didn't stop Vice Premier Qian from pointing to the "conditions" as proof that "one country, two systems" didn't mean exactly the same thing for Taiwan as it did for Hong Kong….

To which Taiwan President Chen Shui-bian responded pithily. "One day, your neighbor comes to your house saying rudely, 'I want to own your house, but I allow you to continue living here and continue using part of the furniture.'"

Chen continued, "I would say that the house belongs to us, not the neighbor and this has been the case from the beginning. The neighbor makes no contributions to the house…but he claims that he wants to own it, and he must permit whatever we want to do. Such a theory is unacceptable to anyone."

Household finances

But despite the international attention that the Olympic news got last week, it was unable to eclipse the increasingly grim state of Taiwan's stock market, which sank to its lowest level in seven years, below even the dark days of the March 1996 Chinese missile threats.

Paradoxically, foreign investors are delighted. Qualified foreign institutional investors (QFII) poured another US$800 million into Taiwan's equity markets in June. They, if no one else, seem to feel bottom and are still bargain-hunting to a fare-thee-well.

Meanwhile, Taiwan's economic planners and econometricians have once again revised Taiwan's growth forecasts. Saying growth is down 2.32 percent for the year seems about right, if one factors in slow growth in the United States and Europe.

Taiwan's currency has also taken a nosedive to a 33-month low of 35.05 new Taiwan dollars (NTD) to the U.S. dollar.

Security system

Taiwan's defense budgetmeisters are beginning to feel the drop in the NTD with particular acuity. After oiling their abaci and sharpening their pencils, they are beginning to wonder whether they can afford the new (well, fairly new) Kidd Class destroyers for the Taiwan navy, according to the China Times on Sunday, July 15.

On the other side of the Strait, by the way, China is making preparations to buy its third Soviet-era aircraft carrier. The "Varyag" will join the carrier fleet which now includes that "Kiev" (about to become a tourist attraction near Tianjin) and the "Minsk" (already a tourist trap in Zhuhai-Shenzhen).

These ships were originally bought for scrap. Does anyone but me think it's odd that they haven't been scrapped yet?

Also on Sunday, Los Angeles Times correspondent Jim Mann called into question Washington's seriousness about providing submarines to Taiwan. Mann said the United States offered the subs, but there's a catch: the United States doesn't build them and we can't find a foreign country willing to sell them.

"We didn't intend for this to be a cosmic joke," one State Department official told Mann, apparently in all seriousness. "We intend for this to happen -- but how, that hasn't been decided yet."

Well, let's hope that Taiwan doesn't need them at least until after the 2008 Olympics.

John Tkacik is a research fellow in China policy at the Heritage Foundation's Asian Studies Center.
Reprinted with permission of China Online