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The relationship between Taiwan and China has been a contentious one for more than five decades. Although the two economies have become increasingly integrated, as Taiwan's companies have come to regard the mainland as the best place to manufacture their products, China continues to maintain its one country/two systems approach and the long running political disagreement between the two governments remains unsolved. Tonight's meet the programmeet the author program features Richard Bush, one of America's foremost authorities on China/Taiwan relations and author of, Untying the Knot: Making Peace in the Taiwan Strait. Dr. Bush will explore the significant differences, the similarities and the difficulties that must be resolved to calm the Taiwan Strait. Richard Bush is a senior fellow at the Brookings Institution and director for its Center for North East Asian Policy Studies. Dr. Bush came to Brookings in July 2002 after serving almost five years as the chair and managing director of the American Institute in Taiwan, the mechanism through which the United States government conducts substantive relations with Taiwan in the absence of diplomatic relations. Dr. Bush began his career in 1977 with the China Council of the Asia Society. In 1983 he became a staff consultant on the House Foreign Affairs Committee's, sub-committee on Asia and Pacific Affairs. From 1993 to 1995 he worked with the full committee of the House on Asia issues, and served as liaison with the democratic members of the house. From 1995 to 1997 he served as the national intelligence officer for East Asia, and was a member of the national intelligence council. Richard Bush received his MA and his PhD in political science at Columbia University. He is the author of a number of articles on U.S. relations with China and Taiwan, and is the author of At Cost Purposes: US relations Since 1942. So please join me in giving a warm welcome to Richard Bush. Thank you very much for that overly generous introduction. It's a great pleasure to be here. I really appreciate the World Affairs Council, the Asia Society and Stacy's Books for offering this opportunity. I am really pleased to see some old and dear friends here this evening, particularly congressman Doug Bereuter, now the president of the Asia Foundation, who was a member of the House Foreign Affairs Committee, on which I served as a staff person. California's gain is Nebraska's and Washington's loss. And also John Kamm, president of the Dui Hua Foundation, who I think has done more to advance the cause of human rights in China than any other single individual, bar none. I'm here to talk tonight about China and Taiwan, the "Taiwan Strait issue," which is a real paradox. On the one hand you have a thriving economic relations relationship. Taiwan companies have survived only because of China. They have been able to move production across to the Chinese mainland over the last almost 20 years, investing now cumulatively over a hundred billion dollars in operations in the mainland. Trade between the two sides of the strait is approaching a hundred million dollars a year. Those operations are employing several million mainland Chinese and helping preserve political stability on the mainland. In addition to that, there is a lot of social and cultural interaction occurring. Probably close to a million Taiwan people live on the mainland for the better part of the year. Taiwan museums, universities, sports organizations, philanthropic organizations, temples and many others, have interactions with counterparts on the mainland. It is very interesting that most temples in Taiwan can trace their lineage to a mother temple on the mainland of China, and since the opening of cross-strait relations they have valued the opportunity to go back their mother country and invigorate the gods that they have in their own temple. So this social, cultural and economic interaction is vibrant, ongoing and very deep. On the other hand, you have on the military and political side. It's often very hostile and sometimes very tense and quite dangerous at times. You recall in 1995 and 1996, after Taiwan's President Lee Teng-hui made a visit to the United States Is the sound okay? Someone said it'sCould be a little louder? Can, maybe I'll get a little closer to the mike. Taiwan's President Lee Teng-hui made a visit to his alma mater Cornell, China got upset at both him and the United States. It conducted another a number of aggressive exercises including the firing of missiles. I was in the intelligence community at the time. And I think that was the point that those of us in the US government who worked on Taiwan on a day to day basis realized that we could no longer take peace for granted. I think that we had kind of assumed that because of this growing economic and social interaction that this was one that would pretty much sort itself out, after that point we didn't believe that at all. And we understood that if we, the United States wanted to preserve peace we were going to have to work very hard to do it, and we've been doing that ever since. 1999, President Lee Teng-hui said the cross-strait relations were a special state to state relationship. t's about seven characters in Chinese. Don't ask me to explain it because I could spend the rest of the evening explaining what it means, and why he said it and so on. But China went pretty ballistic. The United States was caught completely off guard, because we had no idea it was coming. Many of Lee Teng-hui highest officials didn't know that he was going to say it on that particular occasion, and I as sort of the most public US official concerning Taiwan based in Washington, was sent out to Taiwan to complain. About the fact that we hadn't been consulted, and complain about the tensions it was creating. And it was quite an experience, because everywhere I went the media was after me. There was at least one or two media cars with cameramen in them following, and it was the only time in my life, really where I felt like a rock star, or Princess Di. I was staying at that time with the deputy director of our office, sort of quasi embassy who had a house down at Taipei and there's a wall around his house. The first morning that I was there, we discovered that a couple of enterprising cameramen had climbed the wall of that compound, and were trying to shoot pictures into the dining room of the deputy director's house. And, you know, fortunately when we came to get breakfast, we were dressed, or completely dressed. I mean, all this would be highly amusing if it wasn't a dangerous situation because Chinese jet fighters were patrolling aggressively in the Taiwan Strait. Taiwan jet fighters were flying to meet them. And all of this was over seven characters in Chinese. Fast forward to March of 2000, the candidate of the Democratic Progressive Party, the opposition party in Taiwan which is associated with the goal of total independence of Taiwan, or the Republic of Taiwan, looks like he is going to win the Taiwan presidential election. Now, I can tell you that the United States of America, or the US government, was way ahead of everyone else in anticipating that this might happen, and we knew that because this might happen, we should get ready. And we encouraged Mr. Chen to come to the United States, a year or two years in advance. I had him to my house, for dinner. I had worked in the congress, for a member of congress who was promoting democracy in Taiwan so he and all of his colleagues were people I knew, so we were ahead of the game. We were certainly ahead of China, who sort of woke up one morning and realized that the worst was about to happen, or what they thought was the worst. We, for a while there, we were not getting much sleep. Not because we were particularly afraid of Mr. Chen winning, because we thought that we could work with him. And to shape the way that he might go. We were afraid of China's reaction, or its overreaction. We were able to keep the situation under control, but it is another example of how dangerous the situation could be. We had another episode of this in late 2003 early 2004 during the last presidential campaign. The approach that the United States has evolved to deal with this situation is something I call dual deterrence. To keep this situation from spinning out of control, Washington working hard to preserve the peace warrants China not to use force, and we warrant Taiwan not to take political initiatives that might provoke China to overreact and use force against Taiwan. We reassure China that we are not supporting full Taiwan independence. We reassure Taiwan that we are not going to sell them out. And that sort of two handed game has worked pretty well. There's a delicious irony in this I think. The Clinton administration sort of stumbled into this in the last, in the late sort of 1990's, the Bush foreign policy team as they were sort of preparing for office thought that this approach was too tough on Taiwan and too easy on China. So when they came in they took the opposite approach, they were sort of pretty tough on China and really nice to Taiwan. And what they found was that Taiwan kind of took advantage of them. And so in the end, they ended up being tougher on Taiwan than the Clinton administration had been, and basically ended up taking the same approach. And for someone who had worked first for the Clinton administration, I got a certain amount of satisfaction from that---but I don't talk about it. So this whole situation raises a very interesting question: What's going on here? What are the source of all these tensions? The answer to these questions are relevant not only to crisis prevention and crisis management, which is what the US is trying to do with dual deterrence. t is also relevant to, if you were trying to stabilize the situation to sort of stay three degrees away from having a crisis every couple of years. It's also relevant to solving the situation. If you don't know what the basic source of the problem is you are never going to able to get at the, be able to achieve any of these goals. And you may actually screw up whatever it is that you are trying to achieve. So this is the reason that I wrote Untying the Knot, it is to try and get at the root problem here. I did from the perspective of actually resolving the problem, but it's also relevant to some of these other goals, stabilization and crisis prevention. The conventional explanation of what is going on here; the one that you see in the media is that there is a fundamental clash between the intentions of the leaders of the two countries. That is China wants unification, it wants to bring Taiwan back to the embrace of the mother land---to use their words--- and do it on their terms. Taiwan on the other hand, Taiwan's leaders Lee Teng-hui and Chen Shui-bian being next, want to achieve the total legal independence of Taiwan from China. And to make matters worse, China is building up its military power much faster than Taiwan is and is creating the ability to do this by force if necessary. Some add onto to this that China is authoritarian and Taiwan is democratic, so there is a level of values to this as well. Now its true that China does want unification on its terms and its approach is the approach that it used toward Hong Kong, something called one country/two systems, something which you may be familiar with, and it's also true that some people on Taiwan do want to permanently separate he island from the state called China and create a republic of Taiwan. And the DPP has had that goal in their party charter. I on the other hand believe the situation is more complicated than that, I couldn't have written over a 400 page book on it if it were that simple, and I actually believe that China's leaders misunderstand what Taiwan, Taiwan has been asking for, or that they are sort of misdirecting all of us. Now let me explain the title. I was visiting my mother not to long ago, and a friend of hers, who is a family law, who has a family law practice was, happened to be there and he saw the book on the coffee table. And you he said, "Is this book about divorce?" Because you know tying the knot getting married, untying the knot getting a divorce, makes sense. I said no, no, no. It comes from a Chinese expression: the person who tied the knot, who created the problem should untie the knot. And so it's, let's figure out the source of the problem if we want to solve the problem. And I have a knot. For those of you who can see it, it's a two-stranded knot, and it's tied together, I guess it's a square knot or something. The two strands represent what I call the substantive issues of the Taiwan Strait issue, which I believe encall sovereignty and security. I also believe that there are several aggravating issues or issues that make this harder to solve, and that to use, to extend the metaphor, they tighten the knot. And so to best understand this you to look both at the substantive issues and the aggravating issues. And to tighten the knot you have to address both the sort of nature of the knot itself and also the way the knot is tightened. Now let's, with your indulgence let me talk about the substantive issues a little bit. Sovereignty, I said that China's approach to Hong Kong is one country/two systems. And the basics of that approach are that the one that Hong Kong has, and under that approach China remains the exclusive sovereign and Hong Kong has home rule. It reserves certain fundamental powers, all fundamental powers and Hong Kong has to defer to the sovereign on all of those issues. On everything else, Hong Kong has autonomy. Hong Kong has certain freedoms still, but it's very interesting that in terms of who rules Hong Kong China has been able to gear the system in such a way that certain outcomes are impossible. The opposition in Hong Kong, the Democratic Party cannot practically win power in the legislature. The leader of the Democratic Party practically cannot become chief executive. What does sovereignty mean in a theoretical or abstract sense? It means the absolute right to rule within ones jurisdiction. It means the ability to participate in the international system. Now there is a broad consensus on Taiwan that their. Taiwan, what they call the Republic of China---is a sovereign entity, is a state. And it has been for a long time by virtue of history, by virtue that they are a democratic system, and that if there is to be unification, it has to be on the basis of that fact. If one goes back into American history at the time of our revolution, one can find a similar debate. That basically Britain wanted to just have a home rule situation in the colonies, and the colonies wanted to be sovereign entities. The question in terms of resolving this substantive issue, in terms of untying the knot is: Can you have a political union? Can you have unification when this union made is made up of sovereign entities, or is home rule the best that Taiwan can do? So that's the sovereignty issue. Security issue: we have a situation where China is building up its military power; Taiwan has been building up its military power, as well, although there have been some difficulties in that regard in last few years. Each worries about what the other is doing in that regard. Although China is more worried about what Taiwan is doing politically rather than what it is doing militarily. Now this, this arms race has two implications in terms of resolving this dispute. One is in the future. One is in the present. For the future, looking at it from Taiwan's point of view, they know that China is going to continue building up its military power. So if they come to an agreement with China, they are going to be a little afraid that this, if there is, if the dispute erupts again in some way, will the military power be used against them? And particularly because China is probably going to demand that Taiwan give up its only real protection, which is its defense relation with the United States. The prothe, the problem now is that this, the mutual suspicion that exists, makes it very hard to compromise. Each side mistrusts each other. Each is afraid to make a concession because fears that the other side is going to pocket the concession and ask for more. And so it becomes very difficult to even start a bargaining process, a process of compromise. So those are the substantive issues, sovereignty and security. Let me talk a little about the aggravating issues. One is politics. One is what I call the leverage game. Politics exists in both Taiwan and China. It is significant in both places. It's moreit is very interesting in Taiwan. Most interesting element is the existence of Taiwan identity. The sense that people in Taiwan are a separate people, separate from Chinese, or along with Chinese. Now how did this come about? You probably know the history, that in the 17th, 18th, and 19th centuries Chinese ethnic Chinese people from the mainland of china, particularly from the south east moved to Taiwan to settle. Japan had took Taiwan as a colony in 1895, ruled it for 50 years, Taiwan was given back to the China of Chiang Kai-shek and the Nationalist Party in 1945, the Nationalist Army took it over in 1945. At that point the Chiang Kai-shek government, the Nationalist Government or the Kuomintang Government, decided that the Taiwanese hadwere not really very good Chinese anymore. That they had had there Chineseness leached out of them because of Japanese colonialism, and so it was necessary to re-instill Chineseness into them. And so there was a kind of indoctrinization campaign. And one of the ways that this was manifest was in language. That Mandarin Chinese became the language of instruction in schools, and Mandarin Chinese is pretty mutually unintelligible from the Taiwanese dialect. But if you were a sort of native Taiwanese and you were caught speaking your mother tongue in school, you were punished. Now this is true even though, Chiang Kai-shek and Ma Ying-Jiu spoke a dialect of Chinese was not really close to Mandarin Chinese either, but let's leave that aside. Along with this sort of cultural indoctrinization, went a political repression, for a lot of reasons. And the result was really the opposite of what was intended. Because there developed more and more a feeling that among a significant segment of the Taiwan population that, if this is what it means to be Chinese, then we can't be Chinese. We've got to be something else, because the treatment we are getting by the people who say they are Chinese is so inhumane, that we've got to be something else, we must be Taiwanese, we're a different people. And so you have the beginning of a Taiwan identity. And it kind of stays underground. It exists overseas, among exiles. It stays underground until democracy is allowed in the late 1980's early 1990's, and then it flowers forth. And it takes a, it comes forth in a variety of degrees, for some people it's very, very strong and they feel they're Taiwanese only. And they want a republic of Taiwan. For other people, they are willing to say, that I am both Chinese and Taiwanese at the same time. And maybe I am culturally Chinese but politically Taiwanese. Or maybe I am Taiwanese today and Chinese tomorrow and it just depends on the circumstances. For other people they say I'm really Chinese, all the time. Actually, people have been feeling more Taiwanese as time goes on. Another, a couple of other interesting elements about itthisthis, sort of evolution of identity is really subject to outside influences. What China does has a lot to do with it, and as Chinaif China is becoming sort of aggressive towards Taiwan in a variety of different ways it increases the Taiwaneseness. If China acts in a more kind way towards Taiwan, it increases the sense of Chineseness. Finally, one other element of is that itthisa side affect of this sense of identity is a fear of outsiders. And early on the outsiders that are feared were the outsiders who came from the mainland in the 1940's. Now the outsiders that are feared are Chinese Communists. This has become a very important force in Taiwan politics today. A couple of other aspects of politics, let me just mention them briefly. First of all, I mentioned the Democratic Progressive Party that has held the presidency since 2000. This party never held power at the central level before. It never had the experience. It's made a lot of mistakes, simply because it hasn't held power before. It's made mistakes for other reasons, but itthis is something that is very common for opposition parties which have come to power in the past. Second, Taiwan is a new democracy, and it has not consolidated that system, the way our system has consolidated over 2000 years. In many ways it's rather dysfunctional. Politics in China: it's not a democracy, but it does have public opinion, in some ways it is quite populist. Its nationalism is quite strong, and one of the areas in which nationalism and populism is allowed to hold forth is on Taiwan, on the issue of Taiwan. Japan is the other one. And so leaders feel constrained by this public opinion. Leaders are sometimes criticized by the masses who say that they are too soft of Taiwan. Now how, how does politics therefore aggravate the dealinghow the Taiwan Strait issues is dealt with? There's pressure on Taiwan, there is pressure for Taiwan independence. On Taiwan it creates the fear of China and mistrust accommodations policies. The Democratic Progressive Party lacks management ability, and on China there is also the fear of populist opinion. The leverage game, each side is contending for diplomatic partners. Taiwan wants to get into international organizations. China wants to keep it out. Each side wants the favor of the United States. How does this aggravate the question of the knot? This competition can aggravate any efforts of conciliation, because if one side sort of steals away a diplomatic partner of the other it messes up any cooperation or progress that has been made in negotiations. Okay. We've defined at least as far as I think, what the nature of the dispute is and some factors that make it harder. If we're going to go about solving the dispute, how would we going to go about doing so? If you are a---you know---academic doing it maybe you would just look at the sovereignty and security problems and think up a creative solution and turn off your lights and go home. If you're a policy maker, you have to address not only the sovereignty issues, but you also have to look at the whole package and how you mitigate the impact of the aggravating factors. Because it's quite possible that if you don't deal with the aggravating factors, even the most brilliant substantive solution would never get off the ground. And I think that particularly important here is the mistrust issue that I mentioned before. The mistrust between the two sides is so deep that unless that is dealt with, unless there is some way to address that, then you can't---I don't think---the two sides can't get to the substantive solution. I actually think there probably is theoretically a way of addressing the sovereignty solution, because there are political unions that are made up of sovereign entities. The United States started as a confederation. The European Union is a confederation. These are very difficult to construct, I grant you. They are very hard to maintain. I would argue though, that one of these days China, that is the Communist Party, is going to have to address the issue of sovereignty at sub-central levels. It's too big a system to maintain sovereignty at the central level. And it will have to at some point devolve sovereignty to lower levels. Why not start with Taiwan, which is sort of relatively easy? Maybe then move to more Hong Kong, Macau, Shanghai---the more developed parts of the system. Those in a way are safe, and then do it at other parts of the system. I'm not sure that the communist party would ever be willing to do it, but thisif, when they are ready, or if they are ever ready this is the way to it. But unless you deal with the mistrust problem, you can't do it. I talked about the competition internationally, and the mistrust that that creates. Well, maybe the way to do that is just to call a diplomatic truce, for both sides to say okay, we won't compete. We'll just stop competing, and let's address what is really important. Now you may ask, what's the role for the United States here? I think the role is actually very limited. It's very interesting that we have gotten involved in all kinds of international disputes, Northern Ireland, Bosnia, the Middle East, Cyprus. This is one we haven't touched. We've prevented disaster, but we've never tried to solve this one. And I think that is for a couple of reasons. Number one, neither side really trusts us to get involved. Taiwan has a lot of influence in our political system, and that makes our policy makers very nervous. I think that we could play a role in reducing the mistrust at the beginning, to sort of catalyze a communications process. To start at least a private dialogue, which is where I think the trust building has to start, and then get out. And then let the two sides work it out, but they're the ones that are going to have to do it, so enough about Untying the Knot. Let me talk; let me give a short prognosis about where I think things are going in the next couple of years. I actually think after the tension that we've had for the last ten years, the next few years are going to be fairly stable. I think the forces on Taiwan, the political forces on Taiwan, who want accommodation with China or relative accommodation---the so called Pan-Blue forces--- they have the political initiative and they have the necessary power. It appears that China is confidant that time is on its side. And as long as they're confidant, that helps. Taiwan is going to have a presidential election in 2008. It's a long time away. It's hard to make predictions, but the chairman of Kuomintang, Mr. Ma Ying-jeou, is the likely Pan-Blue candidate, and he seems to have the advantage so far. If he were elected the situation would be more stable. It would be more predictable. I don't think that there would be a political breakthrough if he won, because the sovereignty issue is likely to persist. There is a broad consensus in Taiwan on that. So if China wants progress in that area, it's going to have to be creative there, in part because the Taiwan identity and the fear of outsiders is going to continue. Moreover I would say that in spite of the economic and human convergence there remains some danger that conflict might occur through accident and miscalculation. Those things have happened in the past, they could happen in the future, so dual deterrence is going to have to continue. Finally whoever wins the next elections in Taiwan, I think that country needs, has some work to do. It needs to strengthen itself economically, militarily, diplomatically ---in terms of its legal identity but especially politically. It faces, the country faces some major choices, the political system that doesn't work very well. You have 23 million people who for much of the history have been in a situation where other people have made choices for them. They finally got in a political system, they finally were allowed with democratization, 15 years ago to be to make choices for themselves, but unfortunately the political system has gotten kind of dysfunctional, so one can hope that through some kind of reform process that they will get the kind of political system they deserve to meet the serious challenges that face them over the horizon. Thank you very much I look forward to your questions. Q & A