The specific systems that have been awaiting notification to Congress since Spring 2008 include:
- Design, and possible construction, of as many as eight diesel electric submarines
- Four PATRIOT PAC-3 fire units and as many as 384 PAC-3 missiles
- Thirty (30) AH-64D APACHE attack helicopters
- Sixty (60) UH-60 BLACKHAWK utility helicopters
- Submarine-launched HARPOON anti-ship missiles
- JAVELIN anti-tank guided missiles
- E-2T HAWKEYE upgrades
- F-16 A/B MLU spare parts package
A Bush administration reversal on any single one of the seven systems could be viewed as bad policy. But a failure to forward the complete package of seven systems would be hard to fathom and would mark a major shift in U.S. policy toward Taiwan. Why would the Bush administration, which started off so committed to defending Taiwan's nascent democracy, make such a radical departure, not only from long-standing bipartisan policy but also from policy decisions made during its first term from 2001 to 2004?
The Anti-Taiwan Shift
While U.S. policy has been remarkedly consistent over the years, the Bush administration's attitude toward does appear to have shifted over the last four years. Much of this shift has been said to have been driven by the President's own dislike for President Chen Shui-bian. However, even with the change in administrations in Taiwan, there doesn't appear to have been a warming of relations. At least four explanations could be offered.
Shift in Factional Influence. The Bush administration began with a China/Taiwan strategy that had been formulated by a united coalition of Republican Party factions during the transition. One could debate the wisdom of that strategy, but there was a strategy. The strategy reflected the views of two of the three China factions within the Republican Party -- the moderates best represented by Richard Armitage, Torkel Patterson, Jim Kelly; and the hawks and so-called neoconservatives represented by Vice President Cheney, Secretary Rumsfeld, and Paul Wolfowitz (on China/Taiwan issues, Wolfowitz is perhaps best categorized as a moderate). In general, the theory was that Taiwan's democratic transition deserved to be rewarded, that China's increasingly ambitious military modernization programmed aimed against Taiwan needed to be countered decisively, that the U.S. would equip Taiwan with much needed military equipment; and that the U.S. would accelerate and strengthen its capacity to respond to contingencies and work with Taiwan as an ad hoc coalition partner.
The third faction -- the softliners represented by Condoleezza Rice and outside advisors such as Henry Kissinger, Alexander Haig, Brent Scowcroft, and Doug Paal -- held little sway in the formulation the new Bush administration's China/Taiwan strategy. As a general rule, they hold the view that China is a strategic partner that is needed to counter some of the world's most complex problems. Taiwan is an irritant and problem that needs to be managed. As the moderates left the scene between 2002 and 2004, implementation of policy became more complex with the remaining two factions -- the hawks/neoconservatives and the softliners -- battling for control over the policy agenda. Eventually, by 2005-2006, the soft liners were in control, who then began a rollback of the original strategies and policies and a containment of Taiwan.
Bureaucratic Propensity at State/NSC. A constant, enduring predisposition within the State and NSC bureaucracies is to avoid allowing Taiwan to become an irritant in U.S. relations with China. Without assertive leadership at the top, and guided by an instinctual desire to avoid pain and discomfort, State/NSC tend to be passive in dealings with Taiwan. China inflicts pain and discomfort on State and NSC, and as long as that pain level is greater than what pro-Taiwan elements can inflict, China gains the upper hand. State/NSC tends to react to initiatives and requests from DoD, Congress, or Taiwan. However, if no initiatives or pressure originates from DoD, Congress, or Taiwan, things generally don't get done.
No More Troublemakers in Taiwan. Related to bureaucratic propensities, the KMT, which has committed to not making trouble, is now in charge. As a result, there is no need to worry about Ma and his government stirring up the pro-Taiwan activists, lobbyists, and friends in Congress. In effect, it means that troublemakers stand up for their own interests and are generally listened to and respected, albeit grudingly. China certainly is a troublemaker. But the Ma administration has been weak, at best, in pressing for these notifications to go through.
A Passive DoD. DoD, and OSD in particular, appears to have become increasingly passive and distracted in minding China/Taiwan defense policy. The departure of the hawks, neocons, and experienced China/Taiwan hands over the last four years has created a vacuum in the interagency process. With no more troublemakers in Taiwan and no push from OSD, there's little if any reason for State or NSC to fear the blowback from an indefinite freeze on arms sales to Taiwan. For Congress to be effective and assertive, key staffers need to be aware that there's a problem and most input comes from Taiwan or from DoD. Initiatives associated with defense and arms sales generally come from DoD, specifically the Office of the Secretary of Defense (OSD). OSD sometimes has been characterized as the guardians and enforcers of the Taiwan Relations Act, and since the 1970s/80s, its responsibilities sometimes have lapsed.
U.S. Arms Sales to Taiwan: The Bedrock of a Unique Relationship
Because they are viewed as the symbol of America's sustained support for Taiwan in the aftermath of the switch in diplomatic relations in 1979, arms sales to Taiwan have long been controversial. After a 25-year alliance relationship and two years of negotiation, President Jimmy Carter authorized the formal derecognition of the Republic of China (ROC) and the diplomatic recognition of the People's Republic of China (PRC). The 1979 Communique was the formal policy agreement that announced the arrangement, including the abrogation of the U.S.-ROC Mutual Defense Treaty. As noted in media reports at the time, it was assumed that U.S. commitment to Taiwan's defense, including arms sales, would continue. Carter is said to have noted in his private diaries, "U.S. agreement to drop diplomatic recognition of Taiwan for China was conditional on Beijing's acceptance that the U.S. would continue to offer defense to its long-time ally in Taipei."
The framework for continuing arms sales was the Taiwan Relations Act. Under the law, the United States will "make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability."
The 1982 Communique was intended to put the U.S.-China relationship on a stable footing. The wording and interpretation was intended to balance the requirements of the Taiwan Relations Act with the need to maintain stable relations with the People's Republic of China (PRC). The key wording is:
Having in mind the foregoing statements of both sides, the United States Government states that it does not seek to carry out a long-term policy of arms sales to Taiwan, that its arms sales to Taiwan will not exceed, either in qualitative or in quantitative terms, the level of those supplied in recent years since the establishment of diplomatic relations between the United States and China, and that it intends gradually to reduce its sale of arms to Taiwan, leading, over a period of time, to a final resolution.
It's important to note that the U.S. agreement to reduce arms sales was contingent upon Beijing's commitment to a peaceful approach to resolving its differences with Taiwan. As noted in State Department testimony before the Senate Foreign Relations Committee in August 1982, the metric for a peaceful approach is the nature of China's military posture opposite Taiwan. If the military threat to Taiwan is reduced, then there would be less need for arms sales. On the other hand, should the threat increase, then the level of arms sales would go up. Because of this linkage and contrary to complaints from Beijing, there has been no "violation" of the 1982 Communique. And as long as Beijing continues to deploy increasingly sophisticated military capabilities opposite Taiwan, release of the seven systems in question would be consistent with the spirit and letter of the 1982 Communique. On the other hand, should Beijing reduce its posture opposite Taiwan in a meaningful, sustained, and certifiable manner, then there may be grounds for freezing a portion or all of the programs awaiting notification.
The Arms Sales Process
The process for arms sales can be confusing. In the aftermath of the 1982 Communique, Taiwan requested that its requests for weapon systems be given due consideration. The normal process begins with a written letter of request (LOR) for price and availability (P&A) data. Under normal circumstances, the requesting party is granted an answer within a couple of months. The release of P&A, specifically pricing data, implies a policy decision to release the system. However, in Taiwan's case, the 1982 Communique resulted in a fear that the military's requests would be ignored. Taiwan representatives pressed for a unique process in which the island's requests would be bundled and presented in person each year in meetings with U.S. policy officials. After three months, a delegation would return to receive the formal responses. However, the Bush administration, arguing that there was no longer need for this system, as evidenced by the release of the largest arms sales package in history. From that point on, Taiwan would become a normal security assistance partner and submit LORs as other defense establishments do.
With P&A data in hand and confident of U.S. willingness to release the system, Taiwan's defense establishment can proceed with its planning, programming, and budgeting process and seek legislative authorization of funding. Once that legislative approval is granted, Taiwan's defense establishment can proceed with an LOR for a letter of offer and acceptance (LOA), in effect a government-to-government contract for buying a weapon system. Before signing the LOA, however, DoD, through the State Department, must first send a formal notification to Congress in accordance with Section 36(b) of the Arms Export Control Act (AECA). Although there are other procedures, the most important requirement is to submit the notification while Congress is in session and wait 30 days to give Congress time to raise objections. If no objections, the LOA can be signed and the program started.
Several of these notifications that have been held up, such as JAVELINs, HARPOONs, F-16 spare parts, and E-2T, represent follow-on procurements or upgraded capabilities to what Taiwan currently has in its inventory. The KMT under President Lee Teng-hui generated initial requests for submarines and PAC-3 in the 1990s, specifically 1994 for submarines and 1998 for PAC-3. Following detailed military assessments of Taiwan's requirements, the Bush administration announced the release of these systems in April 2001. The Bush administration deferred a request for APACHE attack helicopters in 2001, but approved release in 2002. Taiwan has had a civilian variant of the UH-60 utility helicopter -- the S-70C -- since the 1980s. Submarine and PAC-3 procurement was bogged down in Taiwan domestic political wrangling, and finally resolved in 2007. Frustrated over a perceived lack of commitment on Taiwan's part, Bush administration officials repeatedly criticized Taiwan for not following through on procuring the systems approved in 2001.
So when Taiwan's domestic polity reached a consensus to move forward, the Legislative Yuan appropriated funding for procurement of these seven items in Fall 2007. With funding approved, Taiwan's Ministry of National Defense submitted its LORs for LOAs for the seven systems in early 2008. In accordance with regulations and legal procedures outlined in the Arms Export Control Act, DoD Army, Navy, and Air Force program managers sent draft notifications to the State Department to forward to Congress.
However, the routine bureaucratic process hit a snag in Spring 2008. As the notifications piled up, the bundled package likely was brought to the attention of the seniormost levels of the State Department. In turn, the package likely was taken to President Bush for a decision. He reportedly said no. While it's uncertain, possible reasons could have included a desire to give the new KMT administration time to review the proposed procurements, a desire to contribute to a conducive atmosphere that could lead to a breakthrough in cross-Strait relations, and perhaps to not spoil the atmosphere leading up the the Beijing Olympic games.
U.S.-Taiwan Business Council's Rupert Hammond Chambers first highlighted the problem in an editorial in the Congressional newspaper The Hill on June 5, 2008. Defense News Asia Bureau Chief Wendell Minnick broke the freeze story to a wider audience on June 9, 2008. Glenn Kessler from the Washington Post followed up with added assertions that Secretary of State Condoleezza Rice and Deputy Secretary John Negroponte had recommended to President Bush to hold the notifications. There also were reports that President Ma Ying-jeou's KMT administration had requested that the notifications be delayed until sensitive cross-Strait negotiations related to direct flights and tourism wrapped up on July 4th. On June 25, responding to inquiries stemming from the media reports, Assistant Secretary of Defense James Shinn told a congressional hearing that the Taiwan arms freeze “was driven, as far as I understand, by Taiwanese domestic politics.” Commander, U.S. Pacific Command Admiral Timothy Keating, presumably speaking on the fly during a Heritage Foundation event, confirmed the freeze, saying that "there is no pressing and compelling need for at this moment arms sales to Taiwan.”
Yet, State Department and National Security Council representatives have been vociferous in their denials. They have to deny the freeze, of course. Failure to provide Taiwan with necessary defense articles and services would counter U.S. legal statutes under the Taiwan Relations Act. For example, a State Department spokesman said "there is no change in U.S. government policy" and that "the administration faithfully implement the Taiwan Relations Act." During a July 28 press conference, NSC's Dennis Wilder said:
"There is no change in American policy toward Taiwan, toward arms sales to Taiwan. This term 'freeze,' I'm not sure where it came from, but it is not a term we have ever used in the administration. We have a commitment under the Taiwan Relations Act to help Taiwan with its own defense. We continue to live up to that commitment. There are many engagements between the United States military and Taiwan military. Those are ongoing. Nothing has been frozen in this relationship."
Semantic debates over the definition of a "freeze" aside, observers expected the notifications to go forward after the Olympics and after Congress came back in session after Labor Day. Former Deputy Secretary of Defense Paul Wolfowitz, presumably armed with reassurances from senior Bush administration officials that the package would go forward, went on record in a media event to say that "President Bush treats commitments as commitments," and that the notifications would go forward. If true that he had been assured by a senior Bush administration official before making those public remarks, it most likely wasn't the President himself.
But Wolfowitz wouldn't be the only one with egg on his face if President Bush doesn't live up to his commitments. Jason Yuan, Taiwan's new defacto ambassador to the United States, ridiculed the notion of an arms freeze, thereby ingratiated himself to senior Bush administration officials. Furthermore, and as his first order of business, he publicly expressed confidence that he'll deliver the goodies shortly after he assumes the post on August 4. So far, Jason hasn't delivered, although the Washington Times reported on Thursday that he's still optimistic.
The new Ma administration appears to have mixed feelings about the issue. Initial indications were that there had been a request to hold the notifications, at least until after July 4th. Since then, there has been little indication that the Ma administration has been pushing hard for the notifications to go forward. The beltway rumor mill indicates that President Ma gave a letter to NSC Secretary General Su Chi to deliver to President Bush on the arms sale issue, perhaps to outline their priorities if the President would be unable to forward all the notifications at once. A senior U.S. NSC official was rumored to have traveled to Taipei to follow up the arm sales and other issues last week.
Taiwan's United Daily News reported today that scholars from Columbia University and other institutions have been advocating abandoning arms sales and a backing away from legal requirements to maintain the capacity to intervene on Taiwan's behalf in a conflict in order enhance relations with China.
Implications of a Permafreeze on Major Arms Sales
A permanent freeze on major foreign military sales to Taiwan could have a number of consequences. These include: 1) further weaken Taiwan's ability to defend itself thus increasing the risk to the United States; 2) raise questions about U.S. credibility; 3) weaken the KMT's negotiation position in dealings with China and embarrass it at home; 4) create incentives to strengthen Taiwan's domestic defense industry; 5) lost jobs and income in the United States; and 6) embolden the PRC in its dealings with Taiwan and the United States.
A Weakened Taiwan Military. The most obvious consequence could be a further deterioration of Taiwan's self defense capabilities. This, of course, assumes that the notifications are forwarded next year after the new U.S. administration is in place. Putting submarines to the side, average time between LOA signing and delivery is at least three years, depending on U.S. industrial production schedules. So APACHEs, PAC-3, and the munitions would be kicked down the road for a year. The submarine notification is said to only be for Phase 1 of the program -- only up to conceptual design, which is expected to take about three years. The funds that the LY appropriated this year for the systems presumably would be returned to the treasury.
Beyond this, what effect would foregoing these systems have on Taiwan's defense? Most critical are the F-16 spare parts, with a rumored value of between $200-500 million. The planes can't fly long without them. However, the U.S. Air Force came up with a clever solution to this impasse by offering an alternative package valued at less than U.S. $50 million, thus falling below the notification threshold. The HARPOON sale would provide Taiwan's existing submarines with the ability to target surface ships at longer ranges than offered with conventional torpedoes. The JAVELIN would augment the Taiwan Army's current inventory of TOW missiles, both of which are needed to kill landing ships approaching Taiwan's beaches. The E-2T upgrade is associated with the aircraft's command and control function. But the software also could serve as the basis for modernizing Taiwan's aging strategic level command and control system that is centered deep inside Hengshan Operations Center.
The four new PATRIOT fire units and more than 350 PAC-3 missiles would undercut the coercive utility of the PLA's growing ballistic missile arsenal deployed opposite Taiwan. Taiwan currently has three PATRIOT fire units, and Guidance Enhanced Missiles that were designed to counter aircraft. Last year, an LOA was signed to upgrade the radar and other ground systems of Taiwan's existing three PATRIOT units around Taipei. The additional four units presumably would be deployed in the Taichung and Kaoshiung areas. With the missiles by themselves costing around $1.5-2 million each, the total program is likely at least $1 billion.
The APACHEs, equipped with the Longbow radar, would augment and eventually replace Taiwan's aging AH-1W attack helicopters and would enable the Army to operate over the Taiwan Strait and to the northwest of the island to destroy landing craft and ships further away from Taiwan proper. The APACHEs would be accompanied by a range of munitions, including HELLFIRE air-to-surface missiles and probably air-launched STINGER missiles to defend against PLA air threats.
The submarine design would be the first phase of a longer program that would introduce advanced underwater vehicle that would be largely immune to a disarming PLA first strike, able to destroy PLA surface vessels approaching or operating in Taiwan coastal waters to the northwest, southwest, and east of the island. The design phase is said to be $360 million. Should Taiwan opt for Phase 2 -- construction -- cost estimates range from $8 to 10 billion. However, Phase 2 may require a second Congressional notification. If employed as part of an integrated anti-submarine warfare (ASW) architecture, including an undersea surveillance system, P-3Cs, heliborne ASW assets, and an ASW operations center, submarines would offer a lethal counter to the PLA's increasingly sophisticated offensive submarine force.
Harm U.S. Credibility. An indefinite deferral of Congressional notifications could damage America's credibility as a trusted partner, friend, and guarantor of Taiwan's security. The previous release of price and availability (P&A) data for the systems on the table carried with it an implied commitment to release the systems. A reversal, particularly without a major reduction in the PRC military threat to Taiwan, would reduce U.S. credibility, particularly within Taiwan's defense establishment.
Views on U.S. arms sales to Taiwan are sometimes contradictory. On the one hand, critics railed against U.S. pressure to invest greater resources into defense modernization resentment among a large segment of Taiwan toward the United States already exists. Yet the same critics may view a decision to forego arms sales in an equally negative light. Latent anti-American sentiment sometimes simmers beneath the surface in Taiwan, and both heavy-handed pressure or neglect or abandonment can often alienate the general public. As one taxi driver remarked, after being asked his views of the firmness of the American commitment to Taiwan, that "America has sold us out three times already -- 1972, 1979, and 1982. Why should we trust America now?" Some could argue that a hold on notifications could increase pro-China sentiment. However, it may be equally true that the appearance of diminished U.S. support could galvanize pro-independence sentiment on the island. Regardless, an announcement of an indefinite freeze would prompt an emotional reaction and the effects could be unpredictable.
Weaken the KMT Administration. Arms sales have traditionally been viewed as a metric of U.S. commitment to Taiwan's security. A permanent freeze could be viewed domestically as a failure of the new Ma Ying-jeou administration to effectively manage relations with the United States. Further diminishment of public confidence in the KMT could widen divisions with the domestic polity, complicate the ability of the Ma Ying-jeou administration to govern effectively, and could serve as a rallying point for a DPP that has been reeling from the losses in the legislative and presidential elections.
Strengthen Prospects for Unification on Terms Favorable to Beijing. Domestically, a permafreeze likely would weaken the KMT administration. However, a freeze may help the KMT achieve a breakthrough in cross-Strait relations. In the spirit of Kissingerian realism that many in the predominantly softline Bush administration believe in, a decision to halt arms sales could be driven by a a belief that a freeze would faciliate a political accomodation between China and Taiwan. In order to put U.S.-China relations on firm ground, resolution of differences between China and Taiwan is critical, even on terms that Beijing proposes. The indefinite cessation of arms sales may send a clear signal that the United States believes that the autonomy or de facto independence of Taiwan has come to an end.
Encourage Domestic Defense Industry. Diminished confidence in the United States' willingness to offer defense articles could strengthen commitment to shoring up Taiwan's domestic defense industry. Taiwan had prioritized domestic programs in the aftermath of the 1982 Communique, which resulted in the development of a number of systems, including the Tien-kung surface-to-air missile system, Hsiungfeng anti-ship missiles, and the Indigenous Defense Fighter (IDF), just to name a few. Since 1992, however, Taiwan's procurement policy shifted toward the acquisition of systems through Foreign Military Sales channels.
More recently, Article 22 of Taiwan's National Defense Law, enacted in 2003, called for greater domestic content in the development and production of weapon systems. While implementation of this section of the law has been weak, diminished confidence in the U.S. commitment to sell arms could shore up the position of those advocating a stronger defense industry.
The submarines present perhaps the best example. There has long been a faction that has advocated an indigenous submarine program. As options for managing a submarine program were contemplated, the original US Navy position in late 2000/early 2001 was that a program be carried out through direct commercial sales channels. In other words, U.S. Navy had no objection to assisting Taiwan in its acquisition of diesel electric submarines, but advocated doing it at an arms length. The goal seemed to be to keep final assembly out of US shipyards.
However, the Taiwan Navy and the Chen Shui-bian administration insisted that the program be managed through FMS channels. In response, the US Navy has been cool to the idea, highballed price and timeline estimates, yet has still supported the program. In the meantime, a faction within Taiwan has pressed for an indigenous submarine program. Debates over whether to pursue the program via FMS vs indigenous channels have taken place as recently as August 2008.
Opportunity Costs for US Industry. The shelving of these programs likely would have an effect on portions of the US defense industry and, by extension, could have some influence over undecided voters in the November election. DoD contracts for the manufacturing of the seven systems affects workers in a wide swath of the United States.
The total value of the seven programs is estimated to be around U.S. $5 billion. If one includes F-16s, the estimate runs as high as $11 billion. If one includes the manufacturing of submarines, the estimate could run as high as $20 billion spread over a 10 year period. Many states would be affected. For example, the PAC-3 system sale is said to include up to 356 missiles, with a unit cost of between U.S. $1.5-2.0 million per missile (total $534-712 million). Lockheed Martin Missiles and Fire Control, headquartered in Dallas, Texas, is the prime contractor for the missile. Its Camden, Arkansas manufacturing facility, employing over 450 people, is responsible for missile integration and assembly.
Boeing’s Air & Missile Defense Systems in Huntsville Alabama, supported by its Anaheim, CA facility for program management and design support and its El Paso facility for circuit cards, is responsible for the missile seekers. Aerojet, headquartered in California and with facilities in Virginia and Arkansas, produces both the solid rocket motor for the missile boost and the individual attitude control motors for homing guidance maneuvers during flight. Most of the ground systems would be manufactured in Raytheon plants in Massachussetts, with a range of component suppliers scattered through the rest of the United States.
For Apaches, Boeing Defense in Arizona would serve as the leading systems integrator. Other players would be Lockheed Martin, along with Northrop Grummon, for the radar sub-system and General Electric for engines bring business to Florida, California, Maryland, and Ohio. The list could go on, but suffice it to say that U.S. companies, which would reflect anticipated revenues in projected quarterly earnings estimates, could take hits in their stock value if they fall short of projected earnings.
Stock prices and unfullfilled business expectations, by themselves, aren't major issues. However, with elections coming up in November, the loss of projected work in a number of states could blow back on President Bush's fellow Republican and Presidential candidate, John McCain. This could be politically magnified given the economic problems the United States is currently facing.
An Emboldened China. Finally, failure to notify Congress could embolden leaders in Beijing who would be increasingly confident in their ability to coerce, deter, and influence the United States. They also may be less willing to compromise on other issues involving Taiwan or other issues in which the United States has interests. At a time when Beijing has been gradually softening its position on cross-Strait issues, the PRC could feel sufficiently confident that it could successfully entrap or coerce Taiwan into accomodations it normally may have made. Arguably, Beijing's softer approach, increasingly noted since the ascendency of Hu Jintao in 2005, arguably could have been influenced by past strong US support of Taiwan.
In sum, while unclear at the current time, a decision to impose an indefinite freeze would be a sharp divergence from long standing U.S. policy. It likely would draw sharp criticism from Congressional representatives who would argue such a freeze constitutes a violation of the Taiwan Relations Act. It would diminish Taiwan's self defense capability, affect U.S. jobs through a wide swath of America, further alienate the general populace on Taiwan, and perhaps trigger the final collapse of Taiwan's will to resist PRC coercion. striking a blow to supporters of democracy around the world.