Friday, August 22, 2008

President Ma Confirms Commitment to Defense of Taiwan

China Times reported today that President Ma emphasized the importance of keeping Taiwan's defense spending pegged to 3% of GDP in a meeting with a US Congressional commission. Deputy Commissioner of the US-China Economic and Security Commission Carolyn Bartholomew, Dan Blumenthal, and others are in Taipei on a fact finding mission. Ma defended his cross-Strait policies, saying that improving relations is in the interests of both Taiwan and the United States. Reference also is made to a phone call he had with 31 Congressmen during his stop over in the U.S. on the way to South America. Full article is below:




馬英九上午在總統府接見美國國會任命的「美中經濟安全檢討委員會」(USCC)副主席白嘉玲(Carolyn Bartholomew)等人。馬英九指出,台灣非常歡迎就當前形勢和美方交換意見,政府過去三個月來在兩岸關係的努力,已經使得台海地區的緊張情勢大為降低。




Taiwan Supporter, McCain Advisor Under Fire

A solid Taiwan supporter - Randy Scheunemann - took a hit in the Huffington Post today. Yes, Randy was a public relations specialist, strategic communicator, lobbyist, or whatever one likes to call the business. And his previous company, Orion Strategies, registered under the Foreign Agent Registry Act (FARA) with Taiwan as a client. Randy's been hit in the Los Angeles Times, New York Times, Rightweb, and a range of other commentaries, journals, and dailies.

As election day nears, people supporting both the McCain and Obama teams are on the look out for any perceived weakness in the opposing camp. And then take any perceived weakness, and then access the media to cast the message in manner that best suits your interests. It's politics, and it gets nasty. Fact is that attacks against Randy are less about conflict of interest than about his position on the McCain campaign team, as well as his foreign policy positions as a hawk on national defense.

Lobbying is a form of marketing, specifically geared toward Congress. Yet, it's more than that. It's shaping a message in the media, writing letters officials in the Executive Branch, and such. The business seeks to win people over to the cause of whoever the lobbyists' clients are. Most lobbyists tend to match business clients with pre-existing views, causes, and passions. Success comes easier if a lobbyist shares the same passion as his client. In fact, that's probably how he/she got the contact - the client is willing to pay because he/she knows the lobbyist cares. So a lobbyist does well by doing good, at least as defined by the lobbyist and the client.

So...Randy was passionate about Taiwan. And then Orion was able to land a one year contract in 2005 for U.S. $200,000 a year. Randy had to back out of Orion when he signed up for the McCain campaign. The Orion contract was small potatoes, although not bad for a small and until recently low key company. It's the big names that get the big contracts. Level of retainer seems to be based on how senior of an official you were. If you were a Senator, Representative, Ambassador, Cabinet Secretary, or even a deputy Cabinet official, you'll get alot. If you were a measly staffer, don't expect alot.

At the same time as it contracted with Orion in March 2005, the DPP signed up Barbour, Griffith, and Rogers (BGR) in a sweet three year deal for $1.5 million ($500,000 a year). BGR, packed with former senior Republican National Committee and Bush administration officials, such as Haley Barbour, Bob Blackwell and Steve Yates. BGR's contract was terminated early though, in the wake of the departure of Steve Yates among others. The KMT/PFP office in Washington signed up O'Neill and Associates for $12,000 a month. McGuire Woods Consulting, another major lobbying firm, was able to land a contract for $25,000 a month, or $300,000 a year. Ford Associates signed up for just over $500,000 a year. These are just a partial list of contracts triggering a FARA registration.

So Orion was one of a number of lobbying firms, modest in light of other larger firms. Question, however, is cost effectiveness for Taiwan. Most of us like and defend Taiwan because we like the place, have wives or girlfriends from Taiwan, have a strong dislike of the Gomer government in Beijing, or some other emotional attachment to Taiwan, and write, advocate, or give advice without Taiwan authorities paying for it. But it does take hiring lobbyists to market for Taiwan in Washington, and Taiwan isn't alone. China has come on strong, and has a vast lobbying campaign that is outpacing Taiwan's. Few foreign governments don't have lobbyists in Washington.

Problem for Taiwan is that its management of lobbyists may have problems. Little coordination, direction, and perhaps wasting money on lobbying firms that do very little for the money. Because Orion Strategies is a small firm, managed by former staffers, odds are that it has been effective where it specializes - the Hill. But effectiveness of others isn't clear.

Bottom line - Randy's been taking hits for his lobbying business. Taiwan was a client. But Taiwan needs more like Randy to maintain its relevance, especially in the face of a growing Chinese effort to win over policymakers and Congressmen. More on this later...

Friday, August 15, 2008

Taiwan Giving Up on United Nations?

The Associated Press carried an article today reflecting a shift in position regarding the pursuing membership in the United Nations. It's not clear whether or not the announcement is related to the outcome of the two referenda in March 2008 asking if Taiwan or the ROC should join the UN, or an honest effort to shift focus onto representation in UN agencies. It may be the case that if a referendum fails, either in the vote count or by failing to have enough people vote, then issue itself can't be pursued for three years. Portions of the article are below:

A senior Taiwanese diplomat says Taiwan is not bidding for United Nations membership this year for the first time since 1992, but is seeking representation in U.N. agencies instead.

The Friday statement by Deputy Foreign Minister Andrew Hsia comes as President Ma Ying-jeou pursues a less confrontational relationship with China than his predecessor.

Hsia says this year's U.N. proposal is ''milder and more feasible'' than the previous administration's efforts, and urges China to accept it.

China and Taiwan split amid civil war in 1949. Beijing continues to claim the island as part of its territory, and opposes anything that gives Taiwan the trappings of sovereignty, including membership in international organizations.

Monday, August 11, 2008

Doug Paal Returns to Taiwan

Taiwan government press entity, Central News Agency (CNA), reported on a July 27, 2008 meeting between Doug Paal and others with President Ma Ying-jeou in the Presidential Palace. Paal, a former CIA analyst and White House staffer under the George Bush administration in the early 1990s, served as AIT Director from 2002 to 2006. After he stepped down, he was quoted in one prominent U.S. journal as saying that the Pentagon had been encouraging pro-independence advocates in Taiwan.

Earlier this year, Paal joined the Carnegie Endowment for International Peace as Director of its China Program in Washington and Beijing. He recently published his outline for the next president's foreign policy. While at the NSC, he worked with International Republican Institute Director Lorne Craner. Before arriving in Taipei, he was founder and president of the Asia-Pacific Policy Center.

Other U.S. attendees included Bob Ross from Harvard, Steve Goldstein from Harvard, Bob Sutter from Georgetown, Jonathon Pollack from the Naval War College, and Michael Swaine, also from Carnegie. Attendees along with President Ma were new defacto ambassador Jason Yuan, Secretary General National Security Council Su Chi, and a Ministry of Foreign Affairs representative.

Most of the Central News Agency release was pro forma. However, what's interesting was a commentary from a Now News that analyzed why CNA posted such an unusual release:


The essence of it is that the President's office may have released the contents of the meeting, and the delegation's glowing praise for the Ma administration's cross-Strait policies, as a means to head off criticism from others in Taiwan and abroad. Conservative U.S. think tanks, arms dealers, and other nefarious characters supposedly have been expressing concern over the pace of Ma's warming to China. The CNA release shows that the Ma administration can count on at least some Americans to approve of its policies.

KMT to Send Delegations to U.S. Conventions

Taipei Times revealed today that KMT delegations will be dispatched to attend the two U.S. party conventions next month:

The Chinese Nationalist Party (KMT) will dispatch two five-member delegations to the Democratic National Convention and Republican National Convention in the US later this month and early next month respectively, a senior party official said yesterday.

In a recent meeting, the KMT decided that Deputy Legislative Speaker Tseng Yung-chuan (曾永權) will lead the delegation to the 2008 Democratic conference to be held in Denver, Colorado, between Aug. 25 and Aug. 28.Straits Exchange Foundation Chairman Chiang Pin-kung (江丙坤), a KMT vice chairman, will head the delegation to the Republican convention in Minneapolis-St Paul, Minnesota, from Sept. 1 through Sept. 4.

The purpose of the US party conventions is to officially nominate the party’s candidate for president and to adopt the party’s platform and rules. Since Senators Barack Obama and John McCain have already locked up their candidacies for the Democratic and Republican parties respectively, the choices of their running mates will be the focus of the conventions.

A senior Ministry of Foreign Affairs official said that traditionally, the ministry does not dispatch delegations to the US party conventions, although high-ranking officials of Taiwan’s representative office to the US usually observe them.

KMT legislators Ting Shou-chung (丁守中), Justin Chou (周守訓), John Wu (吳志揚) and Shuai Hua-min (帥化民) are members of the delegation to the Democratic convention, while Pan Wei-kang (潘維剛), Alex Tsai (蔡正元), Lai Shyh-bao (賴士葆) and Lu Hsueh-chang (呂學樟) will attend the Republican event.The Democratic Progressive Party will also send delegations to both conventions.

What the story didn't mention were the sponsors or preps that went into to arranging the delegations. In 2004, the National Democratic Institute invited a DPP delegation, led by Secretary General Liu Shi-fang and then-legislator Bih-Khim Hsiao to the Democratic National Convention in Boston. Taiwan Solidarity Union Secretary-general Lin Chih-chia (林志嘉), Chinese Nationalist Party (KMT) Legislators Yao Eng-chi (饒穎奇) and Kwan Yuk-noan (關沃暖) and representatives of the People First Party will attended the event.

Thursday, August 7, 2008

Latest on Lafayette

AFP carried an article today saying that French prosecutors will be dropping the investigation into allegations of kickbacks related to the sale of six Lafayette frigates to the Taiwan Navy:

Paris prosecutors said yesterday they have called for a seven-year probe into alleged kickbacks paid for the multi-billion-dollar sale of French warships to Taiwan in 1991 to be dismissed without trial.

The office of state prosecutor Jean-Claude Marin confirmed a report in Le Figaro newspaper saying he had requested the case, France's biggest corruption probe in 50 years, to be dismissed for lack of evidence.

French judges wrapped up a five-year investigation in 2005 into alleged kickbacks paid on the sidelines of the deal, but were repeatedly denied access by the government to top-secret defense files at the heart of the case.

The inquiry centers on accusations that a substantial chunk of the US$2.8 billion paid by Taiwan for six French-made frigates went on commissions to middlemen, politicians and military officers in Taiwan, China and France.

Taiwan's highest anti-corruption body has said as much as US$400 million might have been paid in bribes for the warships built by French defense company Thomson-CSF (now called Thales).
Allegations of backhanders emerged after the body of the officer who ran the Taiwanese navy's weapons acquisitions office was found floating in the sea off the island's east coast in 1993. Further suspicions arose when Swiss courts discovered 520 million dollars in accounts held by the businessman Andrew Wang (汪傳浦), the main suspect in the case, who was allegedly tasked with convincing Taiwan to buy the ships.

Taiwan is seeking damages of close to one billion euros from France before an international court of arbitration. It has also sought the return of the US$520 million held on Wang's Swiss accounts, but Switzerland in April rejected the request.

In Taiwan, eight people including Wang have been charged in relation to the scandal. Thirteen officers and 15 arms dealers have already been imprisoned.

The Taiwan frigates affair was also at the origin of a political dirty tricks scandal, known as the Clearstream affair, in which top figures including French President Nicolas Sarkozy - then interior minister - were wrongly accused of receiving kickbacks from the sale.

There's alot more to the story than meets the eye, and it's not clear if the whole story will ever be told. It seems hard to prove guilt with so many rice bowls that could be broken, possible links to campaign financing, and other programs that could be dragged in to the controversy. What's often forgotten is that there were at least three other European-sourced programs going on at the same time - Italian survey ships, German minesweepers, and French Mirage fighters.

The damage from the Lafayette case transcends whatever illegal activity may have taken place. The greatest tragedy was the loss of life. Beyond that, many in Taiwan's defense establishment have become risk-averse, almost to a fault.

Wednesday, August 6, 2008

The Hits Keep Coming: DPP Legislative Caucus Leader Under Investigation

Thursday's Taipei Times carried an article regarding an investigation against senior Democratic Progressive Party (DPP) legislator Ker Chien-ming (柯建銘). The immediate issue relates to a possible MJIB heads-up given to Ker, who is the DPP's legislative caucus leader, about a raid on his office. The article notes:

Officials from the special investigation panel of the Supreme Prosecutors Office probed a case in which Ker was suspected of receiving kickbacks to lobby on behalf of RSEA Engineering Corp (榮民工程公司) after a marble mine factory it operated in Hualien was accused of violating environmental regulations.

RSEA, a state-owned engineering firm under the Veteran's Affairs Commission, is one of Taiwan's most prominent construction firms. Its General Manager, Air Force LTG (ret) Lee Tien-yi (李天翼), is said to be the brother of former Minister of Defense Lee Tien-yu (see this link for some background on the relationship). Ker denies taking money from RSEA Engineering, and the MJIB refused to comment. If something comes out of the investigation, it's likely that any questionable activity occured well before Lee took over the RSEA position. RSEA has done alot of work in the Middle East, as well as sensitive military construction projects in Taiwan.

The Taiwan press had previously reported that Ker had been questioned over an alleged embezzlement case dating back to 1997 when Ker was general manager of Lungyuan International Co (隆元國際).

U.S. Congress on 50th Anniversary of Quemoy Crisis

Last month, Representative Virginia Foxx (R-NC) made an interesting speech that didn't get much press. August 23, 2008 is the 50th anniversary of the 1958 Taiwan Strait crisis:


Ms. FOXX. Madam Speaker, 50 years ago on September 11, 1958, President Dwight D. Eisenhower went before the Nation in a radio-television broadcast to speak to the matter of what we today refer to as the Second Taiwan Crisis. The Second Taiwan Crisis was when mainland China had been shelling Taiwan's Quemoy and Matsu Islands for almost 3 weeks. Records from the Republic of China report that over the course of the Second Taiwan Crisis, there were 3,000 civilian and 1,000 military casualities.

President Eisenhower explained that the United States would not waver in its commitment to assist Taiwan in its struggle to remain free of communist domination.

Taiwan, and the islands of Penghu, Quemoy and Matsu have been home of the Republic of China, ROC, ever since the Chinese nationalists, under General Chiang Kai-shek, lost their battle to secure democracy on the Chinese mainland to Mao Zedong in that Nation's civil war, which ended in 1949.

President Eisenhower strongly reaffirmed the United States support of Chiang Kai-shek and his ROC government, noting, ``Some misguided persons have said that Quemoy is nothing to become excited about,'' but pointed out their error, warning that the Red Chinese, under Mao Zedong were using the attacks on the islands to test the free world's courage in resisting aggression. President Eisenhower stated that it was the opinion of his government that the bombardment and blockade of Quemoy and Matsu were not so much a genuine attempt to conquer the Taiwanese islands, but were as part of a plan ``to liquidate all of the free world positions in the Western Pacific.''

In a firm statement of policy, President Eisenhower promised U.S. allies that there would be ``no Pacific Munich.'' Eisenhower also expressed a sincere hope for ``negotiations'' for peaceful and honorable solutions, directly or through the U.N.

Americans have not forgotten the free China on Taiwan, but need to be ``reminded'' of it. And while many today fail to grasp the difference between the ROC and the People's Republic of China they need to know that it is the difference between freedom and communism.

Today, having recently elected its third president, Taiwan is a thriving democratic republic. As citizens of United States of America, we must insure that Taiwan is assisted in its desire to remain a democratic nation. To that end, we will hold faith with the Taiwan Relations Act.
When running for the Republican nomination as President of the United States, George W. Bush was asked on national TV what he would do if push ever came to shove with mainland China on Taiwan--in other words, what would he be willing to do if the communist PRC ever threatened to take over the ROC on Taiwan. He responded in clear and concise language: ``Whatever it takes.''

Thus, as Taiwan celebrates the 50th anniversary of the August 23, 1958, Bombardment War, we join with Taiwan's President Ma, in his August 23, 2008, visit to Quemoy, where he will personally salute his nation's military, all the citizens of Taiwan and their United States military allies, in their ongoing struggle for self-determination.

Henceforth, let the word go forth that at one time there were people willing to sacrifice, even to death, to protect what they considered payment towards a future of freedom, one not dictated by any outside ``detractor,'' but by those of a citizenry choosing their destiny. Nor should the world forget that today, because of their sacrifice, Taiwan is a free democratic republic.
God has blessed the world with a free, vibrant and productive society in the democratic people on all the islands of Taiwan. May the citizens of Taiwan live long in freedom.


Taiwan Inflation Hits New High

The Directorate General of Budget, Accounting and Statistics (DGBAS) released economic performance data yesterday, reporting that Taiwan's inflation rate for July is the highest in more than a decade. The consumer price index (CPI) went up almost 6% in July, and was accompanied by a marked rise in certain categories of the wholesale price index (WPI).

Compared with other economies, it's not too bad and perhaps to be expected with the rise in oil prices and the KMT's policies of lifting the cap, albeit limited, on gas and electricity prices.

Regardless, the KMT went to great lengths to criticize the DPP for the island's economic performance starting back in 2001 - the first year Taiwan experienced a negative GDP growth in history. And as should be expected, what comes around goes around. But what's missed is that Taiwan, highly dependent on export for sustained economic growth, is highly responsive to economic fluctuations elsewhere in the world, especially the U.S. and increasingly China. Regardless, here's the whole DGBAS article:

Led by a 13.61 percent hike in food prices, Taiwan's consumer price index (CPI) rose 5.92 percent year-on-year in July to 106.88, the highest since October 1994, the Directorate General of Budget, Accounting and Statistics (DGBAS) said Tuesday.

In its monthly CPI report, the DGBAS indicated that the country's inflation rate, core CPI, and wholesale price index (WPI) had all hit the highest levels in recent years, mainly due to two storms and rising domestic fuel and electricity prices.

"The CPI increase in July was the highest since October 1994," said Chao-Ming Wu, a DGBAS section chief, at a news conference Tuesday. He noted that the inflation rate in September 1994 was 6.69 percent.

Wu said the 13.61 percent hike in food prices represented the largest rise of any category in the index's basket of goods, as the prices of cooking oil, fruits, and meats rose by 42.02 percent, 25.52 percent and 24.76 percent year-on-year, respectively.

"Food prices in July were responsible, for the most part, for the inflation, and represented 3.48 percent of the overall index," he said.

Wu hinted at the possibility that food prices might fall in the coming months, as international grain prices have dropped by nearly 40 percent in the last half year.

Domestic transportation costs also increased considerably, with the transportation index rising 6.80 percent year-on-year, representing 0.97 percent of the overall CPI growth rate, according to the report.

"This increase has to do with gasoline prices, which were hiked by 1.5 percent in the beginning of July," Wu said, adding that generally fuel prices rose by 23.26 percent, the biggest jump in the transportation category.

The core CPI, which excludes the prices of energy, fresh vegetables, fruit, and seafood, also rose by 4.06 percent year-on-year, the highest since March 1996.

When asked if the annual inflation rate is likely to increase, Wu declined to speculate on the possibility, saying the bureau will need to further evaluate the situation before adjusting its forecast of 3.29 percent made in May.

The growth rate of consumer prices was 4.18 percent for the period January to July this year, leaving a slim possibility for the annual index to drop to the level of the DGBAS May forecast.
Wu said that because of the two typhoons that caused severe damage to the island's agriculture sector in July, the CPI had peaked in summer. He said that the growth rate could decline in September and October.

Inflationary pressure could be seen in the WPI for imported commodities, which rose by 11.49 percent year-on-year, he said.

"Excluding the impact of the Taiwan dollar's appreciation, the WPI for imported commodities, valued in U.S. dollars, soared by 26.50 percent in June, the highest since March 1980," Wu said. The the index rose 26.90 percent in February 1980 because of the second oil crisis, he added.

Tuesday, August 5, 2008

A New Taiwan Representative Arrives in Washington

The Ma administration has cleared the necessary hurdles to get its new defacto ambassador in place in Washington DC. Yesterday's Taipei Times covered the arrival of Jason Yuan, who had served as the KMT/PFP representative to the U.S. since at least 2004. Most of the article covers the delay in Congressional notification of the intended sale of eight defense systems:

Taiwan’s new representative to the US, Jason Yuan (袁健生), said upon arriving in Washington on Monday that he expected the US government would eventually approve pending sales of defensive weapons to Taiwan and that he would restore mutual trust between the two sides.

Yuan received a warm welcome from 100 Taiwanese officials and expatriates upon his arrival at the airport on Monday.Barbara Schrage, managing director of the American Institute in Taiwan, was also present to welcome Yuan.Schrage said at the airport that the US and Taiwan had long had a solid relationship and that she hoped bilateral relations would become even more robust.

At the airport, Yuan said he would use his sincerity to rebuild mutual trust. As bilateral relations are solid, he said rebuilding trust should not be too difficult, but that it would take time. Questioned about Washington’s reported “freeze” on the sales of weapons to Taiwan, Yuan told reporters that US government agencies — including the Department of State, the Department of Defense and the National Security Council — had never used the term “freeze.”

Yuan said the US is a country that follows the law and that the Taiwan Relations Act is “a US law.”As a result, he said he did not believe that any US government official would violate the act and freeze arms deals with Taiwan.Yuan said he believed that after the US Congress reconvenes, the US government would notify it of its approval of the long-delayed arms package sale to Taiwan.

He said he believed Congress would not block the approval. Congress will adjourn on Sept. 26, meaning the notification — which Congress has 30 days to respond to — would have to be submitted later this month if the arms deal were to be finalized this year.

Jason, you're a good guy. But face the truth. President Bush and the State Department's hold on sending over the Congressional notifications is a freeze. A freeze is a conscious decision, made at a very senior level sometime in late Spring 2008, to halt the necessary steps for the sale of defensive articles and services to take place. The freeze could be lifted next month or it may not. Maybe a few of the eight notifications may make it through.

My advice on talking points - stick with "we expect the United States will live up its own legal obligations under the Taiwan Relations Act." If the Bush administration decides to forego the notifications even after Congress comes back into session next month, it could prove to be a bit embarassing.

And, furthermore, will U.S.-Taiwan relations improve now that the KMT is back after eight years in disloyal opposition? The arms sales freeze, and refusal to accept the letter of request for 66 F-16 C/D fighters, seems to be a good sign of what to expect. For the late Bush administration, Taiwan is Taiwan. It doesn't matter who's in charge in Taipei - one shouldn't be holding his/her breath for any breakthroughs. Things can only get better in January 2008.

Why Blog on Taiwan?

There's no place like Taiwan. To quote the esteemed Winston Churchill, it's "a riddle, wrapped in a mystery, inside an enigma." Perhaps there is a key, but it could take a lifetime to find it. The quest to unravel the mysteries and beauty of Taiwan is an worthwhile end in itself. Taiwan is a land of contradictions and a global anomaly that is blessed with an abundance of energy and beauty.

The purpose of The Taiwan Link is raise the visibility of Taiwan in the Washington DC area and augment the variety of useful blogs that already exist.  The Taiwan Link intends to offer independent perspectives on Taiwan, U.S.-Taiwan relations, cross-Strait trends, and other areas of interest. The intrinsic value that Taiwan and its people brings to the international community deserves greater attention, and this blog intends to make a contribution, however small. The intent is to cut across a wide cross-section of issues, including political, defense and security, socio-economic, technological, environmental, and social concerns.

As a newcomer to blogging, it may take awhile to master the art. But that's part of the experience! Thank you and let's see how it goes...