Sunday, October 02, 2011

When Does the U.S. Lease on Taiwan End?

With the recent news that the U.S. has decided not to sell Taiwan new F-16 fighter jets and instead upgrade their existing fleet of older F-16s, a shift in U.S. policy may be occurring. While the Obama Administration has claimed that its decision was based on the balancing of Taiwan’s needs and U.S.-China relations, it may be that the U.S. is slowly backing away from and shunning Taiwan as the need for the U.S. to keep on China’s good side grows.

Is this so bad? Not necessarily. Economically, U.S.-Taiwan trade in 2010 only accounted for around $60 billion, (U.S.-China trade was well over $450 billion) and while Taiwan may be a solid trading partner, in terms of trade importance it pales in comparison to China. The potential weakening of future trade with Taiwan would not represent a death blow to global U.S. trade.

The U.S. has become much more heavily dependent on China for trade, the purchasing of U.S. debt, and joint diplomatic efforts, among a host of other things. The world has changed dramatically since 1949 when China and Taiwan split and Taiwan first began turning to the U.S. for protection and support. Since then the U.S. has been “leasing” its protection to Taiwan. However, Taiwan quite frankly is now just not as important as China is to the U.S. in 2011. As Owens wrote in last week’s reading, “When strategy makers…do not adapt to changing conditions, serious problems can result.” The U.S. needs to re-evaluate its relationship with Taiwan in light of its current dependence on China and China’s past history with Taiwan. China sees Taiwan as part of its country (which Taiwan was before the Chinese Civil War) and U.S. interference in what they see as an internal issue has been a source of strife and potential trouble in U.S.-Chinese relations.

While Taiwan has been a longtime U.S. ally, their importance politically and economically does not equate to the potential risks that the U.S. is taking by maintaining its policy of support. If potentially the U.S. were to back off of their policy and allow Taiwan to again become an official part of China (relations between the two have been improving recently) the U.S. would have just given China something that it desperately wants and would eliminate a potential flash point between the U.S. and a country that it relies on very heavily for its economic well-being.

There is an opportunity therefore for the U.S. to use Taiwan as a bargaining chip. The U.S. could quietly back away from its support of Taiwan in exchange for something that it wants and that the Chinese control completely- their currency value. The supposed undervaluing of the yuan by China is a hot-button political issue in the U.S. and it is often blamed by U.S. politicians as the reason for the U.S.-Chinese trade imbalance and the dismal state of the economy. A trade could potentially be reached as both sides have something of value that the other desires. If the U.S. were to limit their support of Taiwan and allow it to fall into the Chinese sphere, Beijing would be able to claim a major political victory and sell it to their people as a reunification of China. If China were to allow the yuan to float, even to a small degree, U.S. politicians could claim a major victory in time to sell it to their constituents as the 2012 elections approach.

The U.S. could use Taiwan as a way of placating the Chinese and as a political and economic victory. It would be a sizable achievement to both sides and a point of conciliation that could ease tensions in the region. So when does the U.S. lease on Taiwan end?

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