Taiwan Arms Sales: A New Phase Begins

After a long delay and marking a symbolic end to six years of political wrangling, senior Bush administration officials on October 3, 2008 authorized the Defense Security Cooperation Agency (DSCA) to forward Congressional notifications on six Taiwan programs. Two other programs awaiting notification - diesel electric submarine design and UH-60 utility helicopters - were held in abeyance. The programs, with a value of up to U.S. $6.5 billion, which were notified are:

• PATRIOT PAC-3 missiles and fire units (see announcement here)
• AH-64D APACHE attack helicopters (see announcement here)
• Upgrade of E-2T Airborne Early Warning Aircraft (see announcement here)
• Submarine-Launched UGL-84L HARPOON Block 2 missiles (see announcement here)
• Spare parts for ROC Air Force aircraft (see announcement here)
• Javelin Missiles (see announcement here)

Media and Other Responses

While lauding the decision, the U.S.-Taiwan Business Council published a sharp criticism of the Bush administration's management of the Congressional notifications over the last 10 months:

The impasse over arms sales has done immeasurable damage to the U.S.-Taiwan relationship over the past several years, and these Congressional Notifications - while very late and incomplete - are an important and positive step forward in US-Taiwan relations. However, it has taken over 10 months for the notifications to accumulate - an unprecedented action irrespective of Bush Administration claims that this was part of a normal inter-agency process. There is simply no existing example of notifications being stacked in such a manner. We face a similar situation in the Bush Administration's refusal to accept an LOR for F-16s - itself unprecedented in a security relationship between the U.S. and a non-NATO ally.

Other reporting was generally positive and accurate with some exceptions. Today's Nelson Report provided a synapsis of today's decision, as well as a skewed critique of the submarine issue and some interesting remarks from Gregg Rubinstein. With regard to the submarines, Chris Nelson opines:

Left off are the conventionally powered submarines, a controversial, hugely expensive notion, one quite openly opposed right from the start, in 2001, by many in the US defense and strategic community on substantive grounds. As a friend put it today, "we don't make the damn things, so it was silly to offer them, since it would take at least a decade to get even one delivered...and that's assuming they made tactical sense, which they don't. We recognize others may disagree with the assessment, but note that even proponents agreed the cost of the submarines would likely be prohibitive, and that the money (something like half of the original package total cost) could certainly be better spent on immediately needed, and immediately deployable defensive armaments.

A detailed response can wait, but two points are important to make:

1. First, the Bush administration's decision in April 2001 marked a shift in policy regarding Taiwan's 40 year quest for a viable submarine force. Reporting has indicated that the decision was based on two military assessments, both conducted under the Clinton administration, which validated Taiwan's operational requirement for submarines as part of an integrated ASW architecture. The kind of opposition that Chris notes would have been based on reasons other than Taiwan's own self-defense needs (e.g., complicating U.S. military operations in the area or export control concerns), and not the Taiwan Relations Act. The Taiwan Relations Act is clear - decisions are to be based on military judgments of Taiwan's requirements alone. Bottom line is that Taiwan's operational requirement doesn't differ much from Singapore, Malaysia, Israel, Indonesia, Australia, Japan, South Korea, Sweden, and the dozens of other navies that own and operate diesel electric submarines.

2. Secondly, it may be an overly simplistic belief that the Bush administration "offered" submarines or agreed to "sell" submarines to Taiwan. In April 2001, the Bush administration agreed to assist Taiwan in its acquisition of diesel electric submarines. These words were nuanced but important. The U.S. left it open on how to satisfy Taiwan's requirement. Decision makers were well aware that the United States did not manufacture diesel electric submarines for use by the U.S. Navy. Observers note that the program had intended to be a cooperative defense industrial effort, and kept out of Foreign Military Sales (FMS) channels. Taiwan was to assume responsibility for acquisition and the U.S. would be in the assist mode through normal, routine review of export licenses. However, all this changed when the program, at Taiwan's request, was shifted to FMS channels and it's been a struggle ever since.

In the Nelson Report's coverage of the debate between Bill Murray and Harvey Feldman, Chris added a new, admirable perspective by Gregg Rubinstein, a former State and Defense official:

The [Murray] article has some excellent points, though some seem to use its arguments selectively to further confuse what amounts to an improvised, knee-jerk approach to Taiwan defense matters. While Murray is specific in many areas, we are still left without a clear definition of offensive weapons. Arguments on what Taiwan should have typically bog down because of this lack of consensus on what constitutes "weapons of an offensive character." For example, does this mean weapons that cannot reach China? Though simplistic, even this guideline might do if it reflected some serious thinking about Taiwan. But it doesn't.

Equipment is not the real issue here; it is lack of strategic policy. Good policy backed with a proper mix of defense planning and relevant transfers would enable Taiwan to dissuade China, something surely in US interest. The problem is that the US has not made a real effort to build up both a strategic dialogue and a capabilities assessment that evaluates needs in terms of perceived threat. The mechanisms to do so exist, but are useless without guidance from empowered decision makers. The substantive competence and morale courage to act within the legal framework of US- Taiwan relations has been lost in the fog of our preoccupation with China -- while China continues to build up its military leverage against Taiwan.

Gregg's got it right on a number of accounts, especially his point about what seems to be the lack of a strategic perspective regarding Taiwan. Decisions seem to reflect a tactical expediency. In addition to the Nelson Report, the Associated Press, CNN, Financial Times, BBC, AFP, and Washington Post all covered the release.

China's Possible Responses

How or if the PRC would respond to the announcements remain uncertain. It may only be coincidental that Chris Hill, as reported in the New York Times, just wrapped up three days of inconclusive talks in Pyongyong in a "last ditch effort" to head off North Korean action to restart its nuclear weapons program. Beyond this, John Pomfret of the Washington Post provided some interesting insights today in his blog, Pomfret's China. He highlights the signaling that may be going on, sending a message to China that the continued expansion of China's military capabilities arrayed against Taiwan carries a cost. He also notes that China may be less offended by the omission of the UH-60s and submarines in the series of notifications (the additional fire units were indeed covered in the DSCA announcement). If this indeed is one line of thinking within the administration, it may be faulty. Beijing strongly opposes any arms sales to Taiwan, and the larger and more public a particular package is, the stronger the potential response. The difference between a $6 billion package and an $11 billion may be significant in real terms, but it likely wouldn't make much of a difference to Beijing.

Beijing's track record in responding to major arms sales decisions is difficult to assess. However, responses in the past appear to have included negative proliferation behavior, withdrawal of support for issues that the U.S. has deemed important, as well as imposing penalties on U.S. commercial interests.

Boeing As a Target?

It's fairly well known that U.S. defense companies, such as Lockheed, Raytheon, and Northrop Grumman have been blacklisted, or at least punished, for supporting the U.S. government in providing defense articles and services (see reporting by Wendell Minnick in Defense News from May 2008 on this issue). Much of the lost business has been in the air traffic control arena, which is a relatively minor part of these companies' overall business. However, for Boeing, it's different because its business line is more evenly divided between commercial and defense, and it's a safe bet that Beijing has been putting the squeeze on the Chicago-based company. The PRC has been known to shift business back and forth between France's Airbus and one of America's largest exporters, Boeing, depending on the political winds.

Media reporting indicates that Boeing signed a $6 billion plus agreement in July 2008 for the possible sale of 45 Boeing 777 and 737 aircraft to Air China, the PRC's flagship airline. The deal, with a potential price tag of up to $6.3 billion and one of the largest deals to date that would expand Air China's fleet by 45%, was sealed after the visit of Boeing CEO Jim McNerney (and Yale colleague of President Bush) to Beijing in June. Given the company's labor problems and falling stock value, and penchant for playing hardball with U.S. companies that should be immune from politics, it wouldn't be uncharacteristic of China to take its anger out on Boeing. Just something to watch....

The Road Ahead

With the deck cleared on the Bush administration's April 2001 package (with the exception of subs), the next administration start with a clean slate. A Taipei Times editorial today offered a useful perspective:

The importance of the effort to unfreeze the arms deal cannot be understated as far as US foreign policy is concerned. As a number of analysts have suggested, leaving the problem to next year would have left both a Republican and Democratic president with an unnecessary burden. Starting a term as US president by releasing arms to Taiwan would be far more damaging to US-China ties than releasing them in the dying days of the current presidential term. The release of arms also lets the next president craft a China policy relatively unsullied by the ham-fisted behavior of everyone involved in recent years.

That said, what to do with the remaining two programs -- submarine design and the UH-60 Blackhawks -- on the table? Taiwan is faced with a few options, the first being to wait and see if a second set of notifications could be forthcoming in December or before the end of the Bush administration. Another option could be to initiate planning for the acquisition of these two systems through direct commercial sales channels or industrial cooperation.

Another option, specifically with regards to the submarines, could be to give up. Given the severity of the ROC Navy's Lafayette Syndrome and general distaste for relying on domestic industry, the Navy may indeed forego its 40 year quest for a full 10-12 boat diesel electric submarine fleet if given a choice between a domestic program or no submarines at all.

Regardless, for the programs that have finally been notified, the ROC Ministry of National Defense now will be in a race with the clock to review draft DoD letters of offer and acceptance (LOAs), get them signed, and then allocate funding before the end of the year. However, draft LOAs will have to wait until 30 days pass with no Congressional comment on the notifications.