The summer of 2009 was stormy for Taiwan, both literally and figuratively. While still struggling with a weak (albeit apparently stabilizing) economy, the island was hit by the most destructive typhoon in 50 years. Typhoon Morakot was a catastrophic event that also had powerful political ramifications. The political aftermath of the typhoon spilled over into the defense arena in the form of leadership changes and new mission priorities at the Ministry of National Defense (MND). In the meantime, the effects of Taiwan’s fiscal realities are beginning to show, with a significant tightening of defense spending in the FY2010 government budget.
This quarterly report will review the major political events that transpired during the third quarter of 2009, along with the significant defense and national security developments over this period. The report will also cover defense spending and budgetary issues, along with the normal look at the status of select programs.
The US–Taiwan Defense Industry Conference 2009 was held September 27-29, 2009 in Charlottesville, Virginia. This was the eight annual event in a series of ongoing conferences addressing the future of U.S. defense cooperation with Taiwan, the defense procurement process, and Taiwan’s defense and national security needs.
The first conference in this series was the St. Petersburg, Florida event where former Minister of National Defense Tang Yiau-ming gave the keynote address in March of 2002. The second conference in the series was held in February 2003 in San Antonio, Texas, the third in October 2004 in Phoenix, Arizona, the fourth in September 2005 in San Diego, California, the fifth in September 2006 in Denver, Colorado, and the sixth in September 2007 in Annapolis, Maryland. Taiwan’’s former Minister of National Defense Chen Chao-min gave the keynote address at the seventh conference in the series, held in September 2008 on Amelia Island, Florida.
Keynote Addresses
Keynote speakers at the 2009 conference included General Chaou Shih-chang, Deputy Minister (Armaments) at Taiwan’s Ministry of National Defense, Wallace “Chip” Gregson, Assistant Secretary for Asian & Pacific Security Affairs at the U.S. Department of Defense, and David Shear, Deputy Assistant Secretary for China, Hong Kong, Taiwan & Mongolia at the U.S. Department of Defense. Council Chairman Dr. Paul Wolfowitz was the conference host.
Conference Program
Sessions at the US-Taiwan Defense Industry Conference featured a moderator and several speakers on a panel, and some sessions included additional commentators. Each speaker gave a short presentation on the session topic from his or her own viewpoint and expertise, those presentations were then followed by a moderator-led discussion among the panelists, as well as a moderator-driven question and answer period with the attendees. This format offers the maximum amount of time for exchanges among the panelists, as well as between the panel and the audience, allowing the sessions to become a forum for substantial and valuable interaction and discussion.
Breakout Sessions
There were three sub-sessions within Session IV. These sub-sessions conducted discussions focusing on current Taiwan procurement and modernization issues from the perspective of each individual branch: Army, Navy, and Air Force.
The US-Taiwan Business Council today announced that it will host the 8th annual US-Taiwan Defense Industry Conference from September 27-29, 2009 in Charlottesville, Virginia.
Keynote speakers at the conference will include Wallace “Chip” Gregson, Assistant Secretary of Defense for Asian & Pacific Security Affairs; David Shear, Deputy Assistant Secretary of State for China, Hong Kong, Taiwan & Mongolia; and a senior representative from Taiwan’s Ministry of National Defense. Council Chairman Dr. Paul Wolfowitz will be the conference host.
This annual conference focuses on US-Taiwan defense and military cooperation and Taiwan’s future defense and national security needs. This year, conference sessions will examine Taiwan’s military transition and transformation strategy, force modernization and integration, and defense innovation. Special breakout sessions will cover each of the services: Army, Navy, and the Air Force.
Rupert Hammond-Chambers, President of the Council, said “We are honored to have General Gregson and Mr. Shear as keynote speakers. Their views and insights on the U.S.-Taiwan defense and security relationship, and on current and future challenges for Taiwan, will be both valuable and timely.”
Early last month, several of Taiwan’s Ministry of National Defense officials met with the Legislative Yuan’s Foreign and National Defense Committee. During his testimony, Chang Liang-jen, vice minister of national defense, noted that Taiwan’s defense procurement budget will be reduced as a result of the planned move to an all-volunteer force. He did not state whether that reduction is simply through the transition period or a long-term adjustment.
The move to an all-volunteer force is not the only pressure on Taiwan’s defense budget. Taiwan’s economy is expected to contract by 6 percent to 7 percent in 2009, and it is likely that defense spending will come under extensive budgetary pressures as the government of President Ma Ying-jeou seeks to allocate greater resources to social welfare and industrial development.
The contraction will allow Ma to claim that he is maintaining his commitment to spending 3 percent of GDP on defense. But as a practical matter, we would likely see a significant and real drop in defense spending.
Such a reduction in resources, and the slowing in Taiwan force modernization that comes with it, could seriously jeopardize the ability of the Ma government to place Taiwan’s relations with China on firm and sustainable footing.
Ma enjoys high support for his country’s policies toward China not as a goal unto itself, but as part of a broader strategy to improve Taiwan’s international profile and operating space.
Yet China continues to hedge on its Taiwan policy. China is continuing its force modernization efforts, and the People’s Liberation Army remains focused on ensuring its ability to coerce Taiwan while deterring U.S. intervention. The Chinese feel a need for options, including military ones.
Ma is therefore wholly beholden to the willingness of the Chinese to continue to provide Taiwan with greater international breathing room. If the Chinese balk or fail to make material concessions, domestic support for Ma’s policies will erode. The prospect of a chastened Ma government and a China frustrated over another failed strategy is deeply troubling. This is a contingency that should not be overlooked.
Conversely, Taiwan’s negotiating position is strengthened immeasurably by a robust U.S. security commitment; it underpins Ma’s outreach and ensures a degree of Chinese respect for Taiwan’s options. This is an essential component if Taiwan-China detente is to have legs and if Ma is to build enough momentum to ride out the rougher patches that are sure to come.
Taiwan continues to experience economic distress and ongoing internal political woes. In contrast, Taiwan’s relationship with China continues to show steady improvement, and the long-term prospects seem positive. Against this backdrop, President Ma Ying-jeou has decided to consolidate his influence over the ruling Kuomintang (KMT) party. It is a first step towards addressing the major economic and political challenges facing the island, as well as a means to help realize the promises of improved cross-Strait relations.
The outlook for Taiwan’s fiscal performance for the year remains bleak, which could have profound implications for the FY2010 government budget and spell serious trouble for defense spending. Meanwhile, Taiwan’s military begins a process of painful soul-searching, in a campaign to root out corruption.
This report will highlight the significant political and economic developments in Taiwan during the second quarter of 2009. It will also examine the notable defense and national security issues during the past three months, and offer updates on select weapons procurement programs.
The economy and cross-Strait ties continued to take center stage in Taiwan during the first three months of 2009. However, as Taipei moves beyond the rapid progress and relatively easy deliverables of its initial dealings with Beijing, there are signs that President Ma Ying-jeou’s government may have also begun to give greater consideration to defense and other national security agenda items. With the new U.S. Administration of President Barack Obama now in office, this could set the stage for a process to refine and possibly re-define U.S.-Taiwan relations in the months and years to come.
This report will offer a brief survey of the major political events of the past three months, together with an overview of the significant defense and national security developments during this period. The report will also provide an update on Taiwan’s defense budget, as well as an update on the procurement progress for select weapons systems.
At the beginning of 2008, many held hopes for an eventual peaceful resolution of the Taiwan “problem”, and the year even delivered on some of its early promises to lower tensions in the Taiwan Strait.
The first part of the year saw the election of President Ma Ying-jeou and the start of a new Legislative Yuan (LY) session controlled by Mr. Ma’s Kuomintang (KMT) party. This KMT majority within both the executive and the legislative branches helped pave the way not only towards ending the longstanding and frustrating deadlock in the LY, but it also served to effectively and actively thaw relations with Beijing.
Challenges remain, however, even as Taipei tries to rebuild trust with its major ally the U.S. – also undergoing a change in government – while at the same time working to improve ties with its principal and often elusive adversary, China. National security is increasingly being viewed in the context not just of traditional military balance, but also as a part of a highly complex network of competitive economic integration between China and Taiwan. This complex relationship poses new problems for Taipei in terms of defense and national security strategy, the long-term implications of which are still far from clear.
This annual report provides a brief overview of significant developments in 2008, as well as some of the more systemic factors that influenced the course of events during the past year. We will also examine the 2009 defense budget and provide an update on select systems.
When the U.S. State Department notified Congress Oct. 3 of a proposed $6.4 billion arms package offering a range of defensive weaponry to Taiwan, the sheer scope and cost of the package caught everyone’s attention.
Yet the package has a history dating back to 2001, and these notifications were both incomplete and well past due. The U.S. administration has drifted away from long-established policy in dealing with Taiwan during this time, and it only undercuts American interests in Asia.
U.S. President George W. Bush released a number of items for sale to Taiwan in April 2001 that were seen as crucial to Taiwan’s military modernization, thus fulfilling an important role in U.S. obligations to provide for Taiwan’s self-defense under the Taiwan Relations Act (TRA). That decision was based on counsel from all parties in the U.S. interagency process, as well as on Taiwan’s own assessment of its defense needs.
Taiwan bears equal responsibility for the seven-year impasse over arms sales, given its domestic political wrangling over the arms budget. Nevertheless, the budgets for these systems were passed in Taiwan in 2007, with eight pending congressional notifications starting to roll into the State Department from the Defense Department in early 2008.
While the notification package sent to Capitol Hill was welcome as a positive step in an otherwise troubled relationship, it omitted Black Hawk utility helicopters for logistics and humanitarian support, well as some of the requested Patriot anti-missile systems and a submarine design program.
It also took more than seven months for the notifications to accumulate – an unprecedented action irrespective of Bush administration claims that this was part of “a normal interagency process.” There is simply no existing example of notifications being stacked at the State Department in such a manner.
The US-Taiwan Business Council comments on Congressional Notifications for Taiwan Arms Sales
While there has been a delay of over 7 months for 8 separate Congressional Notifications (CNs) for arms sales to Taiwan, on October 3 the U.S. Department of State released six items for notification: Javelin, Harpoon, spare aircraft parts, PAC-III, E-2T retrofit, and Apache. The total DSCA estimated cost is US$6.463 billion.
Two of the programs in the original request were omitted – the submarine Phase I design program and the Black Hawk program – while the PAC-III program was reduced. [The original request included the Harpoon anti-ship missiles; Apache helicopters (x30 units); PAC-III (x7 units, 6 operational batteries + 1 training battery); diesel-electric submarine design – Phase I; airplane spare parts (mostly for fighters); E-2T retrofit; UH-60 Black Hawk utility helicopters (x60 units); and Javelin anti-vehicle missiles.]
It seems as if the Bush Administration’s intention today was to create an overall package based on a dollar figure. They viewed the Black Hawks as a large but not controversial program, and therefore it was one they could punt into 2009 with a degree of confidence that the incoming U.S. administration would not view it as controversial and would likely send it to the Hill. Omitting the submarines was not controversial within decision-making circles, and in the case of PAC-III it pared back the buy to reduce its overall cost.
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.
The past three months saw a continued souring of public opinion and the end of the honeymoon period for President Ma Ying-jeou’s government, and the continued delay of Congressional notifications for U.S. arms sales added further strain to an already difficult period. Challenges extant both in the economic sphere and with domestic administration may have significant implications for cross-Strait affairs, as well as for Taiwan’s national security policy.
While Taipei was bolstered by its diplomatic victory when the Bush administration finally submitted the notifications to Congress for a scaled-back arms package in early October, much uncertainty remains regarding the best way forward for Taiwan’s national defense establishment. Debates on defense and national security issues are expected to rage in the coming months as the Ma administration transforms its strategic vision into policy.
This quarterly report will provide an overview of the major political events in Taiwan during the third quarter of 2008, together with an appraisal of the developments and trends that are likely to influence defense and national security issues on the island, a status update on US-Taiwan defense relations, and an update on the progress of current Taiwan procurement programs.
