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arms
budget on June 29, 2004 No
US pressure on arms budget: Chen STRATEGY:
The president said the special budget was the result of a long-term evaluation
to reflect the nation's need to deter the threat of invasion by China President Chen Shui-bian
yesterday denied that the government's proposed arms procurement deal had
anything to do with pressure from the US government. He said the special arms budget pragmatically reflects the nation's need to
deter the threat of invasion by China, although the Legislative Yuan has
insisted that the price tag should be cut significantly. Chen made the remarks at a reception at the Presidential Office to welcome
US Representative Scott McInnis to Taiwan yesterday. "The arms procurement budget, which includes the submarines, is part
of a plan resulting from a long-term, cautious evaluation process by the
Ministry of National Defense and other government depart-ments," Chen said.
"We made the request and we appreciate that it received the approval
of US President George W. Bush. The US reacted to a request from our government.
The deal is not the result of pressure from the US government," he said. He said that the Ministry of National Defense had proposed a priority list
for weapons procurement in response to a request from the Bush administration in
April 2001. The list clearly indicated that the purchase of diesel-powered submarines,
PAC-III Patriot anti-missile batteries and P-3C maritime patrol aircraft was to
meet the military's "anti-missile, anti-submarine" stra-tegy, Chen
said. "To enhance our self-defense capability, which is our realistic need,
as well as to seek permanent peace in the Taiwan Strait, to avoid a military
imbalance on either side, to secure the hard-won fruits of Taiwan's democracy
and to show goodwill toward the resumption of cross-strait dialogue, I must
state seriously here that it [the arms purchase] was absolutely not an outcome
stressed by the US government," he said. Chen said that his promise of constitutional re-engineering had not been a
result of US pressure either.
He ended his speech by saying that the arms-procurement plan was aimed at
effectively preventing an invasion by China, while Taiwan would by no means
provoke the Beijing administration. "We will not bring Taiwan into the arena of war, despite the
belligerence of the Chinese Communists, who still refuse to renounce their use
of force against Taiwan. Although we have no intention of provoking China, we
have to be cautiously alert, because China's irrational nature might ultimately
lead to a crisis in the Taiwan Strait and threaten the stability and security of
the Asia-Pacific region," Chen said. The Cabinet's approval on June 2 of the special budget of NT$610.8 billion
(US$18.1 billion) to purchase advanced weaponry caused controversy almost
immediately. The opposition alliance and some social groups said the country could not
afford spending that much on weapons systems, arguing that the arms deals might
be no more than an exchange between the Chen and Bush administrations based on
private interests. Meanwhile, Legislative Speaker Wang Jin-pyng , who led a legislative
delegation to visit the US to gain a better understanding of the arms deal, said
on his return yesterday morning that the main achievement of the trip had been
to "launch a new phase of negotiations about cutting the price of the arms
purchase." "Based on consensus that the submarines are too expensive, the
delegation reached two resolu-tions," Wang said at a press conference
yesterday morning. "The first is that we suggest that the US government should move
forward the dates for construction and delivery of the submarines to Taiwan; the
second is that the defense ministry should ask the US government to quote new
prices," he said. Wang said that he had no idea whether the new quote would be a lower price
between NT$200 billion and NT$330 billion. "We have reopened the door for the two countries' governments to
renegotiate the price, and now we have to await the results. The US government's
new quote will be the crucial element determining whether the Legislative Yuan
will pass the Executive Yuan's budget before November," he said. A
no-haste policy has ensured our well-being By
Huang Tien-lin Formosa Plastics chief
Wang Yung-ching returned from a trip to China on June 5. It seems that, in
addition to going back to his old stomping grounds in Quanzhou, he took time to
visit a power station in Zhangzhou. This was not the first trip that Wang has
made there, and it must have caused a few pangs of regret. Nine years ago, Wang saw considerable potential in the electric power
industry in China, and signed an agreement with Chinese officials in an
investment worth US$3 billion in the Houshi Thermal Power Station in Zhangzhou.
Not long after, the Uni-President group announced plans to plow money into the
Wuhan Hydroelectric Power Station. Taiwanese businesses jumped on the bandwagon,
getting involved in steel plants and other construction projects. In reaction to this, in August 1995, then president Lee Teng-hui came up
with his "no haste, be patient" policy to restrict investment. Plans
for building large power stations and steel plants were put on the back burner,
and investment in the Zhangzhou power station was reduced considerably, with
only part of the plan implemented. Now, nine years later, China is plagued with problems surrounding the
output and cost of electricity and high-grade steel. This has in turn required
Chinese Premier Wen Jiabao to announce a slow-down of the economic growth rate,
a serious blow to the Asian economy and the stock market. China's shortage of
electric power is predicted to continue until at least 2006, and this will
undoubtedly retard the flow of Taiwanese and other foreign investment into the
country, restricting the strength of China's economic growth. We have to admire Wang's perspicacity. Nine years ago, he was able to
predict the energy requirements demanded by China's economic growth, and follow
his convictions by putting up US$3 billion in investment money. The "no
haste, be patient" drive thwarted this particular business opportunity
(although there are business opportunities everywhere, and Formosa Plastics was
sure to have used the money to good effect elsewhere). Despite the fact that
Wang hit the nail on the head with this one, the profits involved would have
been reduced by other Taiwanese investors constructing power stations and
exceeding the demand for electricity. If it had not been for Lee's no-haste policy, by 2000 China would have
already had several power stations and steel plants, built with Taiwanese money,
up and running. With these, China would have had sufficient supplies of cheap
electric power to spur economic growth, and would have had no problem
maintaining the required growth rate of 7 or 8 percent. If this had been the
case, China would be enjoying a double-digit growth rate, without power woes and
steel shortages. Wen would also have been able to avoid implementing his macro-economic
control policy. China's GDP for last year would certainly have exceeded US$1.4
trillion, giving Beijing the opportunity to behave even more outrageously toward
Taiwan. It would also have given China more leverage with Japan and the US. This
would have put Taiwan in a worse position than it is today. Lee's no-haste
policy was thus not only correct, it was necessary. Lee may well have trod on the toes of Wang and other Taiwanese businessmen
straining to get into China, but he was able to ensure the nation's security.
Nine years on, the events surrounding the Zhangzhou plant have driven home the
point that the interests of, and decisions made by, individual enterprises are
not necessarily beneficial to the nation, and may even be damaging to them in
many instances. If this is the case for power plants, then surely it also applies to direct
links. Huang
Tien-lin is a national policy advisor.
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