Overview
In 1945, Taiwan was restored to Chinese rule after 50 years as a Japanese colony. In 1949, Chiang Kai-Shek's Nationalist army retreated to Taiwan and the Nationalist (KMT) party ruled the island until 2000.
The defining characteristic of Taiwan's international relationships is its lack of diplomatic ties with most nations of the world. The authorities on Taiwan call their administration the "Republic of China," and for many years claimed to be the legitimate government of all China. Foreign nations wishing to establish diplomatic relations with a government of China could recognize the "Republic of China" or recognize the People's Republic of China (PRC), but not both. Most chose to recognize the PRC. The PRC was admitted to -- and Taiwan left -- the United Nations and most related organizations in the early seventies. The U.S. switched diplomatic recognition to the PRC in 1979.
The Taiwan authorities several years ago changed policies and now no longer insist that they are the sole legitimate rulers of all of China. While still admitting that Taiwan is part of China, they now seek recognition as one of two "legitimate political entities" in China, the other being the PRC. Under this policy, the Taiwan authorities are seeking to join various international organizations, including the United Nations. Taiwan has been able to join the Asia-Pacific Economic Cooperation (APEC) dialogue as an "economy" and is applying to join the World Trade Organization (WTO) as a "customs territory." Twenty eight countries currently maintain diplomatic relations with Taiwan.
Although the United States does not have diplomatic relations with Taiwan, the American Institute in Taiwan (AIT), a private, non-profit institution, was established in 1979 to maintain the unofficial relations between the peoples of the United States and Taiwan. More than thirty other countries, including most major European and Asian nations, also maintain unofficial representation
Taiwan's relationship with the Peoples Republic of China remains problematic. Despite their long-standing enmity, commercial ties between the two sides of the Taiwan straits have grown rapidly since the late 1980s. Taiwan is a major investor in China, and China recently passed the United States as Taiwan's largest export market. Taiwan enjoys a huge trade surplus with China. Its role in the China market could well continue to increase. Taiwan wants to establish itself as a regional operation center for third country businesses aiming at the greater China market. Taiwan is also an important trading and investment partner for Southeast Asian countries.
Until the mid-1980s the KMT maintained a single-party rule. Martial law, which had been in force since the 1940's, was lifted in 1987. Beginning in the mid-1980's and accelerating in the first half of the nineties, however, the political system has been transformed into a democracy. During Legislative Yuan (LY) elections in 1995, the ruling KMT emerged with only a single seat majority; and in late 1994, an opposition member was elected Mayor of Taipei, Taiwan's largest city; Taiwan's first direct presidential elections were held in March 1996. The press is free, though at times unreliable, and political debate is unconstrained and vigorous.
Taiwan is an economic powerhouse with the world's third largest foreign exchange reserves and over $235 billion in two-way trade. The economy is expanding at 6% with full employment and low inflation while other other economies in the region are shrinking. Its 21 million people enjoy a per capita Gross Domestic Product of $12,500. As Taiwan has grown richer, the formerly authoritarian system has evolved into a democracy. Opposition by the People's Republic of China (PRC) to any recognition of Taiwan as a separate political entity has limited Taiwan's official diplomatic activity for years. But Taiwan has broad-based unofficial relationships with most of the world's major economies, including the US democratic politics, a robust economy, and economic liberalization shape the Taiwan market.
Taiwan's constitutional system divides the government into five branches or Yuans. The five branches are the Executive Yuan, the Legislative Yuan, the Judicial Yuan, the Control Yuan and the Examination Yuan. At the top of this structure is the President. The President appoints the heads of the Yuans, including the head of the Executive Yuan, the Premier. The LY must confirm the President's nominees for these positions.
The Kuomintang (KMT, or Nationalist Party), which ran the previous authoritarian government on Taiwan, held most of the key political posts on the island until the March 2000 election. Despite its razor-thin majority in the LY, when push comes to shove the KMT had been able to muster the votes to achieve its most important goals.
The Democratic Progressive Party's (DPP) most salient policy difference with the KMT had been the controversial issue of Taiwan independence. As the DPP has matured and gained a significant role in the LY, it modified its demand for immediate Taiwan independence. Some members of the party now call for the people to decide Taiwan's future through a plebiscite, while others assert that Taiwan is effectively independent already so a formal declaration of independence is unnecessary. The DPP has also staked out generally populist positions of concern for the environment and for working people.
The KMT was historically associated on Taiwan with ethnic Mainlanders (i.e., people who fled to Taiwan with the KMT in 1949 and the descendants of those people). The DPP has sought to identify itself with the ethnic Taiwanese (Chinese who immigrated to Taiwan during the past 300 years, mostly from Fujian Province). As the democratization process proceeded, the ethnic Taiwanese role expanded.
In the December 2004 LY election, the Pan-Blue coalition won a slender majority of 114 of the 225 seats compared to the Pan-Green coalition's 101. The LY was halved in size from 225 to 113 seats by constitutional amendments in 2005. In the January 2008 LY election, the first to be held under this new structure, the KMT won an absolute majority of 81 seats to the DPP's 27 seats, with the remaining five seats going to independent and small party candidates.
The March 2004 election also included two "defensive referenda." Historically, referenda have been closely tied to the question of Taiwan independence, and thus a highly sensitive issue in cross-Strait relations. Both referenda in 2004 failed to meet the required participation threshold of 50% of eligible voters, as did four more referenda held in conjunction with the 2008 legislative and presidential elections. The 2008 DPP referendum on joining the UN under the name Taiwan was especially controversial.
President Chen was re-elected by 50.1% of the popular vote to a second term in a very tight contest on March 20, 2004. The election was marred by a shooting incident the day before the election during which President Chen and his running mate Vice President Annette Lu were slightly wounded. While the opposition contested the results, it was the first time that the DPP had won an outright majority in an island-wide election. Taiwan's second democratic transition of ruling party followed the March 22, 2008, presidential election, which went decisively (58%) to KMT candidate Ma Ying-jeou. Together with the KMT legislative victory two months earlier, Taiwan now had a unified government under KMT control.
Since his May 20, 2000 inauguration, President Chen called for resuming the cross-Strait dialogue without any preconditions, but the P.R.C. insisted President Chen must first acknowledge what it claimed was the "1992 consensus" on one China reached by the two sides. The cross-Strait dialogue remained suspended for the entire eight years of President Chen's two terms. Nonetheless, economic and social ties continued to develop rapidly despite the "one China" obstacle and Taiwan's resentment over the P.R.C.'s March 2005 "Anti-Secession Law," and the two sides were able through intermediary organizations to reach agreements on holiday cross-Strait charter flights.
The KMT began its own dialogue with Beijing in 2005. President Ma has moved quickly to resume the cross-Strait dialogue, expand charter flights, and take other steps to enhance cross-Strait relations. The United States has welcomed and encouraged the cross-Strait dialogue as a process which contributes to a reduction of tension and to an environment conducive to the eventual peaceful resolution of the outstanding differences between the two sides. The United States believes that differences between Taipei and Beijing should be resolved peacefully in a manner acceptable to people on both sides of the Taiwan Strait.
Following mainland Chinese overtures on holding political and military talks with a view to ending cross-strait hostilities, Taiwan’s Presidential Office stressed the island would continue to promote relations between both sides based on the “1992 Consensus.” Presidential Office spokesman Wang Yu-chi said 05 March 2009 that the Ma Ying-jeou administration will maintain the status quo by adhering to its policy of “no unification, no independence and no use of force,” implemented after it took office May 20, 2008. “There is little likelihood in the government changing its stance on this policy as it reflects mainstream public opinion in Taiwan,” he added. During an 05 March 2009 address by Wen Jiabao, the Chinese Communist Party’s second-highest ranking leader, Wen hailed the significant improvement in ties and a major reduction in tensions between both sides of the strait. “We are ready to hold talks on cross-strait political and military issues and create conditions for ending the state of hostilities and concluding a peace agreement,” he said.
Corruption has been reported as most pervasive in the area of government procurement, particularly in public-sector construction projects. Local-level construction tenders seem to have the highest level of corruption. Some prosecutors estimate that payments to organized crime syndicates amount to 8 to 15 percent of the cost of all public engineering projects. The authorities have been investigating alleged corrupt procurement practices at both the provincial and central level. These investigations have resulted in a few convictions.
The primary objective of the ROC's defense policy is to defend Taiwan, the Pescadores, Kinmen, and Matsu. This entails establishing a fighting force of sufficient readiness to guard the nation and protect its people. The direct and most serious threat to the ROC's national security remains the unwillingness of Peking to renounce the use of military force against Taiwan. Thus, while ROC national defense strategy calls for balanced development of the three Armed Forces, naval and air supremacy receive first priority. In addition to current defensive preparations, a long-term policy of developing an elite fighting force and self-sufficiency in defense technology is also being strictly followed. This calls for restructuring the Armed Forces, streamlining command levels, renovating logistical systems, merging or reassigning military schools and upper-ranking staff units, as well as reducing the total number of men in uniform.
The thinking behind changes to the ROC's Armed Forces over the past few years reflects a shift from equal stress on offense and defense to assuring defense. This strategic principle, as implemented under the Ten-Year Troop Reduction Plan, has led to a targeted force of less than 400,000 troops by the year 2003 and an increase in the ratio of combat troops to overall military manpower.
The allocation of resources among the three services will give priority to air superiority and control of the seas in defensive operations, as well as to coastal defense. Accordingly, a ten-year program is to be implemented in three phases, including the development of a practicable table of organization for the three services to facilitate training and carry out peacetime missions, elimination of overlapping staff units in the three major services, and consolidation of the General Staff Headquarters of the Ministry of National Defense (MND) and the general headquarters of the three services, transferring non-military tasks to organizations outside the MND.
Second-generation weapon systems used by the three armed services are also being actively updated. These include the inception of four E-2T air defense warning systems, the formation of the first Ching-kuo indigenous defense fighter (IDF) squadron, the commissioning of the Cheng-kung and Knox-class missile frigates, and taking delivery of a second batch of AH-1W attack helicopters and OH-58D reconnaissance helicopters.
In terms of arms sales, Section 3 of the Taiwan Relations Act clearly states that it is U.S. policy to provide Taiwan with such weapons as may be necessary for its security and an adequate defensive capability and that the quality and quantity of these weapons will be determined by the president and the Congress after consultation with U.S. military authorities. U.S. Secretary of State Hillary Rodham Clinton affirmed 16 February 2009 that U.S. policy on arms sales to Taiwan under the new administration of President Barack Obama “remains as it has been.”
In 2005 the MND concluded that the currently proposed arms package was inadequate to comprehensively safeguard the country. The MND found that the military needed nine Patriot PAC-III anti-missile batteries, 12 anti-submarine surveillance aircraft and 10 diesel submarines, while the proposed package calls for six PAC-III batteries, 12 anti-submarine aircraft and eight diesel submarines. With the opposition-controlled Legislature objecting to the package's original NT$610.8 billion price tag, the military has pared the estimated total cost down to approximately NT$480 billion. Nearly NT$300 million would be financed by a special budget, while the rest would come from the Defense Ministry's annual budget.
In October 2008, President Bush notified Congress for the sale of PAC-3 systems, Apache helicopters, Harpoon missiles, and Javelin missiles, along with the upgrade of the E-2T aircraft. The procurement of these systems is ongoing.
As of late 2008, according to the MND's latest arms procurement plan, F-16C/D fighter jets were to be part of the "seven plus one" arms deal. The other items on the shopping list include anti-tank missiles, Apache helicopters, Patriot PAC-3 missile batteries, diesel-powered submarines, P3C anti-submarine aircraft, sea-launched Harpoon missiles, and Black Hawk helicopters. Taiwan is seeking to buy 12 P3-C anti-submarine aircraft, 8 conventional submarines, 6 PAC-III anti-missile batteries and 60-66 F-16 C/D jets from the U.S.
On 03 October 2008 the US Defense Department notified Congress that it had approved the sale of a US$6.46 billion package of weapons to Taiwan. The sales would cover some of the $12-billion package approved by President George W. Bush in 2001. That package was held up by debate in Taiwan's legislature. The Bush Administration approved the sale of a package of weapons to Taiwan that included 330 advanced capability Patriot (PAC-3) missiles worth up to $3.1 billion, and 30 Apache attack helicopters valued at $2.5 billion, along with 32 Harpoon sub-launched missiles, 182 Javelin guided missiles, and four E-2T system upgrades. The US did not, however, approve diesel-electric submarines and Black Hawk helicopters that Taiwan had sought.
Ma's administration was still seeking UH-60 Black Hawk utility helicopters built by United Technologies Corp's Sikorsky unit and design work on modern diesel-electric submarines. These two items were cleared for release to Taiwan by Bush as part of a landmark arms offer in April 2001, but left out of the October 2008 notification to Congress. The deals were held up for years, largely by partisan hurdles to funding in Taiwan. The Bush administration had told Taiwan that it was not denying it any of the weapons approved in 2001, but would leave the decision to Obama.
On 09 March 2009, Taiwan’s Ministry of National Defense announced an allocation of US$230 million to buy 60 UH-60 Black Hawk utility helicopters, following indication the US Congress would approve the deal in September or October 2009. Originally part of a US$11-billion weapons package requested by Taipei last year, the helicopters were not included in the eventual US$6.43-billion deal approved by Washington on 10 October 2008.
