To the Brink and Back

The

rain was heavy, and there wasn't much cover. But despite the gloomy weather, Douglas Paal, head of the American Institute in Taiwan (AIT), the U.S.'s de facto embassy on the island, was in a bright mood. For nearly an hour, Paal had sat and listened to Taiwan's President Chen Shui-bian deliver his inauguration address to scores of foreign dignitaries and tens of thousands of his supporters in the square in front of the presidential office in Taipei. During his re-election campaign, Chen had repeatedly stressed Taiwan's separateness from China. While that stance helped him win votes among many people in Taiwan who increasingly see their island as a sovereign entity, it infuriated Beijing, which regards Taiwan as a renegade province that must be returned to the motherland, even by force, and vexed the U.S., which is trying to keep the peace between the two. Now, however, Chen was dispensing with the provocation and adopting a conciliatory tone. Though he still emphasized Taiwan's "national identity" in his speech, he dropped a controversial plan to write a new constitution that was to be endorsed by a referendum—a step Washington feared could be perceived by Beijing as tantamount to a declaration of independence, and which could push the two sides of the Taiwan Strait to the brink of war. Asked by a TIME reporter what he thought of Chen's address, Paal smiled and said: "I am happy with what I heard today."

Happy—and relieved. For the first time in a long time, Chen had toed the line from Washington, heeding its warnings that if he did not back away from his campaign positions, he might be leading Taiwan to disaster. First elected in 2000 on a platform of self-determination for Taiwan, the 53-year-old Chen is a pugnacious former lawyer who doesn't hesitate to play the independence card to boost his political career. But as he stepped up to the podium last Thursday, say U.S. officials, the message from Beijing was that Chen was dangerously close to the red line. That he did not cross it, and indeed vowed not to change the status quo, was a victory for diplomacy and pragmatism—and the climax to weeks of frenzied lobbying and pressure by the U.S. "I don't think anybody [in Washington] considers [Chen] reckless," says James Lilley, a former U.S. ambassador to China. "He's a very calculating lawyer who's got an agenda and who tests the waters."

The geopolitics of the Taiwan Strait is a delicate balancing act between Taiwan, China and the U.S. What's said and unsaid can either generate harmony (or at least a temporary truce in the continual war of words between Taipei and Beijing), or friction, or at worst outright conflict. In this complex triangular relationship, Washington is in the most awkward position. It has a "one China" policy but is obligated by its Taiwan Relations Act to come to the island's defense if Taiwan is attacked by the Chinese military. Indeed, in 1996, Washington dispatched two aircraft carriers to the waters off Taiwan after Beijing fired unarmed missiles at the island. In recent years, however, the U.S. and China have grown closer: the two countries have forged strong economic ties, and Beijing has supported Washington's war on terror and its efforts to contain North Korea. The U.S.'s deep involvement in Iraq and Afghanistan also means it is unwilling—and perhaps unable—to deal with any additional trouble over Taiwan. Hence, what Washington wants is for Chen to not rile China. "It is in nobody's interest to force the [Taiwan] question," says a U.S. source. "Taiwan has considerable pride [in its democracy], but they need to be aware that what they say and do has consequences for their security, and for ours." With Chen throttling back during his inauguration last week, the U.S. is off the hook—for now. "We appreciate his pledge [not to change the status quo]," said U.S. State Department spokesman Richard Boucher.

In fact, Washington knew it was coming. Chen's aides say the text of his address had been given to members of the Bush Administration days earlier. Most of the major points in the speech—no unilateral action to change the status quo with China; a clarification that any changes to the current constitution would not touch on sensitive areas such as the definition of national territory; and the notable omission of his often repeated phrase, condemned by Beijing, of "one country on either side of the Taiwan Strait"—were the result of intense negotiations between Washington and Taipei after Chen won Taiwan's bitterly contested presidential polls by a razor-thin majority in March. "We spent a great deal of time with the Taiwanese, talking about what we thought was constructive," says a senior U.S. State Department official.

Still, because of his brinkmanship, Chen has had a strained relationship with Washington. Bilateral ties hit a low last year, when Chen stunned the White House by declaring at a presidential campaign rally in Taiwan that he intended to use powers afforded him under a new referendum law to hold a popular vote to "protect our country's sovereignty." Many interpreted that to mean Chen was flirting with the idea of a referendum on independence—an action that China has consistently warned will lead to war. The next day, according to one U.S. source, a furious Colin Powell, U.S. Secretary of State, rang the AIT office in Taipei and demanded to know what was going on and why the U.S. had not been forewarned. "[Powell] was not a happy camper," says the source.

Neither was George W. Bush. In a move that shook the island, Bush, during Chinese Premier Wen Jiabao's first-ever visit to the White House in December, appeared to side with Beijing by publicly dressing down Chen, signaling that Taiwan's President should not move ahead with the referendum. "The comments and actions made by the leader of Taiwan indicate that he may be willing to make decisions unilaterally to change the status quo," said Bush—a position, he added, the U.S. "opposes." Then last month, the Bush Administration dropped the Washington-based chairwoman of the AIT, Therese Shaheen, who was openly pro-Chen; U.S. officials admit that Beijing lobbied intensively to have her removed from the post.

Yet even China seems to be acknowledging that it has to start to deal with Chen, whose new term of office lasts until 2008. The Chinese Foreign Ministry described his speech as "a sham," and in a statement released by the mainland's Taiwan Affairs Office earlier in the week, Beijing warned that if Taiwan's leaders took any steps toward independence, it would "crush their schemes firmly and thoroughly at any cost." But although it made them contingent on Chen's accepting Beijing's "one China" policy, the same statement also put forward seven points seemingly designed to put cross-strait ties on a more stable footing. They ranged from confidence-building measures, such as proposals for increased visitor exchanges, to suggestions of closer economic cooperation. Beijing even seemed to address Taiwan's deepest concerns—military security and the island's place on the world stage—by calling for the establishment of "a mechanism of mutual trust in the military field" and the granting of more "international living space" to Taiwan. "In its own way, China is trying to deliver a constructive message," says the senior U.S. State Department official, "though you have to make it through the anti-Chen rhetoric to find it." A senior member of Chen's administration claims: "[Beijing's] statement is a sea change in China's thinking."

Nonetheless, the growing sense of a Taiwan identity on the island makes reunification less and less likely, and almost ensures that Taipei will run into more trouble not just with Beijing but Washington as well. "Right now, China's relationship with the U.S. is the best it's ever been," says the Chen official. "And it comes at a very unfortunate time for us because our democracy, and the people's aspirations, are rising." It's a situation, he adds, which has "everyone afraid we are on a collision course." For now, however, that collision has been averted.