1. www.brookings.edu Untying the Knot Richard C. Bush Brookings Institution Center for Northeast Asian Policy Studies

2. www.brookings.edu The Taiwan Strait Paradox Shared Economic Interests Extensive Private Interchange Common Ethnic and Cultural Heritage BUT Political Hostility Military Build-up

3. www.brookings.edu The PRC Hypothesis It’s Lee and Chen, stupid! BUT In office, Lee and Chen have been careful not to rule out unification totally. They certainly opposed one country, two systems (1C2S). They insisted that the ROC or Taiwan was an independent sovereign state.

4. www.brookings.edu The PRC Hypothesis Both have insisted Beijing should acknowledge that Taipei is essentially equivalent, that Taiwan have an international role, and that the PRC renounce the use of force. In addition, both have been frustrated that Beijing has rejected Taipei’s views outright and ignored its moderation.

5. www.brookings.edu The PRC Hypothesis To be sure, Lee and Chen did act provocatively at times. They also took initiatives that were motivated by domestic politics. Yet Beijing incorrectly read their opposition to 1C2S as a rejection of unification. For Lee and Chen, however, how Taiwan might be a part of China has governed whether it should be a part of China.

6. www.brookings.edu The Taiwan Strait Knot (TSK) The TSK is a knot formed by two twisted strands of rope. Each strand represents a core substantive issue: –The first issue is sovereignty –The second is security The strands are twisted because they are interrelated.

7. www.brookings.edu TSK: Sovereignty Stephen Krasner tells us that sovereignty can take four forms: –Domestic sovereignty; –Westphalian sovereignty; –International legal sovereignty; and –Interdependence sovereignty. The first three, particularly Westphalian sovereignty, are analytically important.

8. www.brookings.edu TSK: Sovereignty Many observers focus only on international sovereignty, on whether the ROC is a full member of the international community. But when it comes to sovereignty, for cross-Strait relations, it’s Westphalian sovereignty that matters more.

9. www.brookings.edu TSK: Sovereignty Westphalian Sovereignty: –A government’s absolute right to rule within the territory under its jurisdiction unless it chooses to vest a higher authority with its powers. –The key is non-subordination. –This is the concept that underlies the stance that the ROC is an independent, sovereign state.

10. www.brookings.edu TSK: Sovereignty This claim is fundamentally antithetical to the 1C2S approach. Under 1C2S: –Central government is the exclusive sovereign; –The Special Administrative Region (SAR) is subordinate to central government and acts internationally only at its discretion; and –The SAR has autonomy and nothing more. In practice, Beijing’s system for Hong Kong limits political outcomes to what it can tolerate.

11. www.brookings.edu TSK: Security Taiwan and the PRC are locked in a security dilemma. –Each fears the intentions of the other. –Each builds up its capabilities to hedge against pre-emption. –Each reads the other’s hedging as hostile. –Mistrusting the other and fearing exploitation, each is afraid to make a concession.

12. www.brookings.edu TSK: Security Yet the cross-Strait security dilemma is special. –What China fears is not military action by Taiwan but a political initiative that will irreversibly change the status quo and close the door on unification. –In addition, Taiwan must live with the fear of abandonment by its de facto ally, the United States.

13. www.brookings.edu TSK: Security The essence of the security dilemma is that each side understands the value of peace but mistrusts the other too much to pay the price to gain it. –Each worries that if it makes a concession, the other side will exploit its good will. –Beijing’s demand that Chen Shui-bian accept the 1-China principle is an example.

14. www.brookings.edu Tightening the Knot Several factors in the dispute –Domestic politics: In Taiwan: –Identity and the fear of outsiders –The DPP’s history as opposition party –Taiwan’s unconsolidated democracy In China: –Leadership politics –Nationalism

15. www.brookings.edu Tightening the Knot Decision-making systems: –Misperception –Miscalculation The Leverage Game: –The International System –The United Front The U.S. Factor –Dual Influence and Dual Deterrence

16. www.brookings.edu Untying the Knot If the knot is to by untied, three things are required: –Ways to reconcile substantive differences over sovereignty and security, which are linked. –Ways to mute the effect of the aggravating factors. –A skillful integration of substance and process.

17. www.brookings.edu Untying the Knot: Substance Concerning the sovereignty issue, is there a way for Beijing to get what it wants (unification) and for Taipei to get what it wants to preserve (sovereignty)? There are models of political union that are composed of sovereign entities: confederation, federation, etc.

18. www.brookings.edu Untying the Knot: Substance Such unions are difficult to construct and hard to preserve, but sharing sovereignty is possible. Both the KMT and President Chen have expressed a positive attitude towards such unions. It is the PRC that is opposed, for some important reasons.

19. www.brookings.edu Untying the Knot: Substance There have been some ideas on the security side: –Agreement to end the state of hostilities –Allowing Taiwan to keep its armed forces –Jiang Zemin’s missile-withdrawal idea –The interim-agreement proposal –CBMs Yet all of these founder because of mutual mistrust.

20. www.brookings.edu Untying the Knot: Process Even if theoretically there is common ground, mistrust makes it difficult for the two sides to move there. Perhaps it is necessary to use process to drive substance, instead of using substantive concessions to begin process.

21. www.brookings.edu Untying the Knot: Process Setting preconditions for dialogue, while understandable, only compounds mistrust: –One China Principle –1992 consensus Recall that Beijing set a precondition after Lee Teng-hui’s U.S. trip but then ignored it for Koo Chen-fu’s 1998 visit.

22. www.brookings.edu Untying the Knot: Process Instead, the two sides should establish a private, authoritative channel to: –Reduce mistrust; –Build mutual understanding and assurance; and –Explore methods of starting public dialogue. This sort of channel existed before.

23. www.brookings.edu Untying the Knot: Process As trust is built and as dialogue resumes, a mutually agreed set of principles could create a framework for discussions. This would: –Set limits; –Define areas of fundamental consensus; and –Establish an agenda for future action. In process terms, this approach is different than an interim agreement.

24. www.brookings.edu Untying the Knot: Process How to deal with the aggravating factors? –For the leverage game: diplomatic truce and an end to PRC intervention in Taiwan politics. –To manage the Taiwan politics of cross- Strait relations, there needs to be a mechanism of transparency and consensus building.

25. www.brookings.edu Untying the Knot: Process What role for the United States? Different forms of “intermediation”: –Messenger –Intellectual facilitator –Process facilitation –Mediation –Serving as a guarantor

26. www.brookings.edu Untying the Knot: Process I believe that the lower end of this scale is more appropriate. On mediation, –Do both sides trust Washington? –Would both sides trust the U.S. throughout? –Would the Congress support the Executive Branch? –How to deal with the fact that the United States is a party to the dispute?

27. www.brookings.edu The Near Term If solving the dispute is not possible, stabilization is the next best thing. A window of opportunity has opened. Beijing need not fear constitutional change in Taiwan. Communication and trust-building is as important for stabilization as it is for solution.

28. www.brookings.edu The Near Term Preconditions are an obstacle to communication and trust-building. The U.S. approach of dual deterrence also contributes to stabilization.

29. www.brookings.edu A Final Word The group that has the most to lose from mismanagement of the Taiwan issue is the people of the island. They have finally gained the power to make choices about their future. The U.S. will play a role, but it is the people of Taiwan who will have to choose. To make good choices, Taiwan must strengthen itself.