Ralph Clough: The focus of this discussion will be on the possibility of the use of force in the Taiwan Strait. The PRC has stated time and again that it reserves the right to use force in the Taiwan Strait, and indeed, in 1995 and 1996, it demonstrated that it had certain capabilities in that respect. However, there is little doubt that the PRC would prefer a peaceful resolution to the Taiwan issue.

Based on the rhetoric emanating from both Taipei and Beijing in the last 2 to 3 months, there are signs that the two sides may be moving closer to establishing a dialogue. The two sides are talking not only about the "Koo/Wang channel" (or the Strait Exchange Foundation/ Association for Relations Across the Taiwan Strait, SEF/ARATS, channel), the channel for resolving practical difficulties, but actually about some sort of political discussion.

There are four trends that bear watching:

• The progress or its lack in any negotiations

• The growing economic integration of Taiwan, Hong Kong, and Mainland China

• The zero sum game that Beijing and Taipei are playing in the international arena

• Domestic politics in Taiwan.

Beijing has issued a string of commentaries on negotiations that refer to the views expressed by Jiang Zemin in his "Eight Points." Those views were echoed at the 15^th Party Congress and urge political negotiations between the two sides. Eight principal points are noteworthy in Beijing's statements:

• Before discussions on practical problems can be resumed through the Koo/Wang channel, political negotiations between the two sides are necessary. According to Beijing, the Koo/Wang channel encountered difficulties on juridical jurisdiction between the two sides, which made further progress impossible without political talks.

• Ending the state of hostility between the two sides must be the first matter dealt with.

• The negotiators will be on equal footing, the format will not be a central government talking to a provincial government.

• The political negotiations will be based on the principle of "One China." Agreement on the definition of "One China" can, however, be deferred. This is a reversion to the position the PRC held in the 1992 Koo/Wang talks in which the two sides pledged to uphold the principle of "One China" but agreed not to define its precise meaning.

• The preliminary consultations on the name and the agenda for the talks on political negotiations can be carried out through the SEF/ARATS.

• Chinese statements recognize that negotiations will be complex and tortuous and that they will proceed step by step, with no fixed timetable for reunification.

• Any subject can be discussed in the course of the negotiations.

• No foreign meddling will be tolerated in the negotiations.

Some of Beijing's statements on the dialogue contain contradictions. Beijing has stated that the Koo/Wang talks can't be resumed until political negotiations are undertaken, but in fact, the Koo/Wang channel has been working to resolve practical issues. Communication between the offices on the opposite sides of the Strait has continued, and they have cooperated to repatriate hijackers and other criminals as well as to solve fishery disputes. A September article in an ARATS publication, "Cross-Straits Relations," urged a pragmatic approach to routine issues and avoiding sensitive political subjects. That same article went on to blame Taiwan for introducing politics into the Koo/Wang channel.

Taiwan's position on negotiations has reflected the desire to reopen the Koo/Wang talks without preconditions. Taiwan has said that it is also preparing for political talks but fears PRC insistence on the "One China" principle will force Taipei to make concessions before beginning talks.

Beijing's recent flurry of requests for negotiations is difficult to understand. It is unclear whether Beijing truly expects Taiwan to enter negotiations or if this is an elaborate propaganda campaign to make Beijing look good, to impress the United States and the people of Taiwan. Is it just an attempt to make the ROC appear unreasonable because it refuses to negotiate?

The economic integration of Taiwan, Hong Kong, and Mainland China continues. While Taiwan's investment and trade with the Mainland continued to increase during 1997, it was at a slower pace than in the past. The Taiwan Government has also taken steps to prevent what it sees as excessive economic dependence on the Mainland. It has begun to fine Taiwanese companies for failure to report investments on the Mainland, banned investment in PRC infrastructure projects such as railroads, power plants and harbors, limited the investment in any single project to $50 million U.S. dollars, has limited some imports from the Mainland to Taiwan. In general, the Republic of China (ROC) Government has been trying to exert pressure to keep Taiwan investment in the Mainland moving at a slow pace.

Conversely, the Taiwan Government has also eased some of the restrictions on trade with the Mainland. The list of permissible imports from the Mainland has been steadily expanding, and a transshipment center for Mainland goods has been opened in Kaohsiung, which is a step in the direction of direct imports across the Strait. Taiwanese businessmen are increasingly critical of the government for not permitting direct trade and travel across the Strait and for its restrictions on trade and investment in the Mainland.

Taiwan's international status is the target of the PRC's uncompromising campaign to put an end to Taiwan's diplomatic relations with other countries. Currently, Taiwan maintains relations with only 29 countries. These countries are small nations in Africa, Latin America, and the Pacific, and it is not certain that even they will maintain ties with Taiwan. The PRC has moved aggressively to supplant Taiwan's links with places like the Bahamas and St. Lucia while establishing trade offices in Panama and Haiti. China's ambassador to the United Nations makes frequent trips to countries with which Taiwan has diplomatic relations, most recently to Costa Rica and St. Kitts-Nevis. The PRC has also forced nine countries that maintain relations with the ROC to close their consulates in Hong Kong.

At the same time, the Taiwanese effort to obtain U.N. membership has made little progress, although Taiwan does have membership in the Asian Development Bank and APEC and presumably will join the WTO. Because Taiwan has made little progress in its formal diplomatic efforts, President Lee Tenghui has initiated a campaign of "pragmatic diplomacy" in which Lee makes trips abroad. Last year he attended the world conference on the Panama Canal, which he hoped would be an occasion to meet with heads of state from around the world. As it turned out, however, only three or four heads of state participated, and they were from some of the central American countries that already maintain diplomatic ties with Taiwan. Although the trip received favorable press in Taiwan, it was not an unqualified success. More recently, Lien Chan, the Taiwanese Premier, has traveled to Iceland and Austria but was forced to cancel a trip to Spain because of PRC pressure on the Spanish Government.

Despite Lee Tenghui's impressive electoral victory in March of 1996, the KMT seems to be losing ground. It no longer holds its majority in the Legislative Yuan, and it lost badly in the local, county, and city elections at the end of November 1997. Serious questions have also been raised about the outcome of next year's Legislative Yuan elections and the year 2000 presidential elections. The popular new Mayor of Taipei, Chen Shuibian, is being touted as a likely Democratic Progressive Party (DPP) presidential candidate.

This raises the question of what effect a DPP victory would have on relations with the Mainland. The DPP leadership argues that there is no longer any need to formally declare independence because Taiwan is already an independent country. However, it also seems clear that the DPP will not subscribe to the "One China" policy on the same terms as the KMT has in the past.

In conclusion, several questions need answers: Will the trends toward peaceful co-existence and accommodation be overtaken by the tendency toward confrontation in the international arena that is being driven by domestic politics in Taiwan? What types of action by Taiwan would impel Beijing to resort again to the firing of missiles or threats of force, as was the case in 1995 and 1996? Over the longer term, which side does time favor in the Mainland/Taiwan relationship? Finally, what should the United States do, if anything, to minimize the danger of military conflict in the Taiwan Strait?

Scott Snyder: What is the likelihood of conflict in the South China Sea and when might it occur? At the core of the South China Sea issue is a series of complex of legal, technical, and geographic components critical to understanding the dispute, but the most fundamental issue, the issue on which this discussion will hinge, is the political basis of the dispute. At bottom, the South China Sea dispute is a political question, a question of how the world will deal with an emerging China. Indeed, the nations of ASEAN and others see China's behavior in the South China Sea as a litmus test for this very question.

It is important to note at the outset that there are some fundamental structural asymmetries in the perception of the South China Sea and its significance, particularly between the United States and ASEAN, vis-a-vis perceptions of China. At a meeting in Manila in October 1997, it became clear that the Southeast Asian nations view China as being militarily much stronger than does the United States. To a certain extent, many ASEAN countries have already begun to treat China with a deference that reflects this view of Chinese military power.

It is critical that the United States think very carefully about the Spratlys issue because of another aspect of Southeast Asian views that emerged at the Manila meeting: What level or type of conflict would be necessary to precipitate U.S. involvement? Is the threshold for U.S. intervention in the Spratlys the same or different from that of the ASEAN nations and how might those differences affect U.S. security posture in the broader region? The South China Sea is at the periphery of fundamental U.S. security concerns in East Asia and yet because it is the weakest point in terms of U.S. interest, the U.S. position in the region could be dramatically affected in the event of a conflict in the Spratlys. Regional perceptions of the United States could be fundamentally affected by perceptions of the U.S. response to a Spratly Islands crisis.

There are several recent indicators of the kinds of questions that might be raised about U.S. commitments to the area. During the Senkaku (or Diaoyu) Islands dispute, the State Department was very cautious in expressing its views on whether the U.S.-Japan security treaty would apply to that dispute. The cautious American response contrasted with the views of some that the treaty clearly extends to areas under Japanese administration. Similarly, the debate on the U.S.-Japan security guidelines and their application avoided discussion of geographic areas of application. It did not address whether the treaty would extend to areas outside Japan and whether Japanese involvement in those areas would be sustainable politically in Japan. This underscores some critical issues for the future of U.S.-Japan security relations as they might apply to a conflict in the Spratlys.

Lee Kwan Yew indicated a difference in Southeast Asian attitudes toward Chinese aggression in the Spratlys versus Chinese behavior in Taiwan. These views do not necessarily mesh with the U.S. hierarchy of priorities of interest.

The potential for accidental, rather than intentional, conflict is very real in the Spratlys. This might come about because of misjudgments of respective positions in the region and the race to improve respective negotiating positions among the claimants. For all the parties in the region, the costs of confrontation are higher than the benefits of cooperation. China needs to maintain good relations with ASEAN, and no party is currently capable of enforcing its claims, although by some estimates, time is on China's side. Renewed conflict may be the only stimulus that will propel the parties to the dispute to implement a conflict management regime. This should be of concern to the United States.

Resource exploration has driven tensions in the region and has made the region more important strategically. Chinese sovereignty claims have thus far outweighed energy needs as a primary issue in their own calculations. However, energy may provide yet another reason for China to resist compromise on the Spratlys.

In 1990, Indonesia established a series of Track II discussion workshops that have been useful in confidence-building purposes. Those discussions yielded ASEAN support for a declaration in 1992 on the nonuse of force in the region; China opted not to sign. The same year the Chinese National People's Congress passed a resolution declaring Chinese sovereignty over the rocks and the seas in the region.

1995 was also a critical year, with the Mischief Reef incident and Vietnam's accession to ASEAN. Vietnam's accession to ASEAN has had an effect on the shape of the dispute, making it into a two-sided conflict between the PRC and ASEAN. This has shifted the dynamic of how a conflict management regime might be established.

The Mischief Reef incident also demonstrated the importance of ASEAN solidarity in managing the issue. At a March 1995 meeting, immediately following the incident, China showed a more conciliatory position than had previously been the case. Subsequently, China allowed the South China Sea to be discussed at ASEAN-China meetings and at the ASEAN Regional Forum (ARF). The United States also issued a four-point statement following the incident stating U.S. interest in peace and stability in the region; the importance of the freedom of navigation in the region; that the United States took no position on the merits of the claims; and that a solution to the situation should be consistent with maritime laws, including the U.N. Convention on the Law of the Sea (UNCLOS).

Since 1995, the PRC has responded in a number of interesting but ambiguous ways. Firstly, there was Qian Qichen's statement at the ARF that China would seek a solution consistent with the Law of the Sea. However, the 1992 NPC law remained on the books. China subsequently decided to ratify the UNCLOS, but at the same time it declared base lines inconsistent with conventional interpretations of the UNCLOS. China has pursued a bilateral code of conduct with the Philippines but has also undertaken activities that appear to violate the spirit of that agreement. The South China Sea continues to be discussed in Track I meetings, but there has been no progress and China has effectively cut Taiwan out of those discussions.

A few factors are key to the management of the South China Sea dispute or shape the environment in which a conflict management regime might be established:

• The tenor of U.S.-PRC relations has a broad impact on the possibilities for regional cooperation. While good relations might ease ASEAN-PRC interactions, a counter-argument holds that hostile U.S.-PRC relations might actually facilitate ASEAN-PRC cooperation on this issue.

• ASEAN-PRC relations are a priority for China, but it is noteworthy that China has tried to approach the South China Sea issue primarily in the context of bilateral discussions and not multilaterally. That it continues to do so was clear in Li Peng's August 1997 proposal in Malaysia to pursue a bilateral development joint development regime in the South China Sea.

• Perhaps most important is ASEAN's apparent disunity on the South China Sea. Nonclaimants are ambivalent about the issue and thus are easy targets for PRC diplomatic efforts to prevent the emergence of an ASEAN united front. There is a clear differentiation and priority hierarchy of national versus regional interest within ASEAN. ASEAN expansion also diminishes ASEAN solidarity, and member countries hold clear and differing views on how to manage China.

• Domestic political and bureaucratic relations within the PRC are factors in the dispute as well. This is particularly the case because the Chinese leadership has not been forced to confront or present a consistent and unambiguous policy on the South China Sea. While the PLA-Navy places emphasis on the Spratlys as a potential resource base, the Ministry of Foreign Affairs plays up the importance of ratification of and accession to the UNCLOS and PRC/ASEAN relations. The Chinese National Offshore Oil Company has become another source of the "hard-line" pressure on Beijing not to relinquish a potential developing market.

Can the Chinese State Council or Jiang Zemin be forced to take up the issue? Unless they are externally prompted, the Chinese will retain an ambiguous policy.

The Indonesian workshops that are a part of a norm-building, confidence-building process should be taken into account as part of the attempt to manage conflict in the South China Sea. This is especially the case as pertains to Indonesian efforts to develop a regional code of conduct. Of course, it is unclear whether the PRC would honor such efforts. The UNCLOS as a norm to be applied to this dispute could be used as a basis for settling the definition of disputed areas. However, the UNCLOS cannot address the issue of Chinese historical claims as historical claims are out of its purview.

The May 10, 1995, U.S. statement lays out the public foundations of U.S. policy, but it should be backed up by a visible force presence-actively exercising the right of freedom of navigation, what Joseph Nye called "active neutrality." In addition, because of the importance of preventing conflict and the need for some kind of conflict avoidance mechanism, the United States should quietly promote the conditions for the creation of such a mechanism within ASEAN. The United States should stress to ASEAN the importance of maintaining a unified position and engaging the PRC in an effective dialogue to prevent conflict. The United States should also raise the issue at the highest levels in the PRC, not as part of the formal U.S.-PRC agenda but on the side. The United States needs to make clear the costs to China of continued tension and conflict in the South China Sea.

In the long term, the United States should support a CFE-type agreement to regulate the size and nature of troop deployments in the South China Sea area. The United States should also support the regionalization of "incidents at sea" and other maritime measures being discussed in the context of CSCAP that could help minimize the possibility of conflict in the South China Sea.