By Harvey Sicherman

On July 9, 1999, ROC President Lee Teng-hui was asked by a Deutsche Welle interviewer to comment on cross-Strait relations. He rejected the PRC's description of Taiwan as a "renegade province." "Taiwan has an elected, democratic government," he said and, citing its 1991 constitution, defined cross-Strait relations as "country-to-country, at least a special relationship between nation-to-nation, not as a legitimate government or a local government in a One- China theory.... Since ROC is a sovereign country and under special nation-to-nation relations, there is no longer any need to declare Taiwanese independence." (Translation from original Chinese text.)

With this statement, Lee apparently abandoned the carefully ambiguous One-China theology that had long allowed both sides -- and the U.S. -- to avoid the perils of either a declaration of Taiwanese independence (a casus belli in Beijing) or an attack by the PRC (a casus belli in Washington). But did he, really?

Lee's intent, apparently, was to explain that the cross-Strait situation resembled Cold War Germany. One nation, Germany was divided into two sovereign states, the Federal Republic to the west and the German Democratic Republic to the east. Thus, in Lee's view, there is one Chinese people under two governments, the PRC (mainland) and the ROC (Taiwan). But Chinese terminology does not allow for such a distinction: the character used to express nation or country is guojia. China is a guojia; so is America or India or Japan. Because there is no other way to express the idea of a sovereign country in Chinese, Lee used guojia. But to have two guojia in One-China does not work. Hence, Lee's declaring Taiwan a guojia appeared to mean that Taiwan was no longer part of China.

This declaration has bred considerable confusion and anger. If Taiwan is a country separate from China, then why would it be called the Republic of China? And how did this affect cross-Strait relationships? The ROC's Mainland Affairs Council therefore hastened to clarify that what Lee meant was a "special state-to-state relationship." In other words, one nation -- the Chinese guojia -- divided into two states. Was this an important change from Taipei's 1991 formula of "two equal political entities?" Lee, in his own inaugural address in 1996, said, "The ROC has always been a sovereign state.... For over 40 years, the two sides of the Strait have been two separate jurisdictions due to various historical factors, but it is also true that both sides pursue eventual national unification." The Council argued that the One-China mantra had allowed the PRC undue verbal advantage, as in Beijing's favorite formula of "one country, two systems" (applied already to Hong Kong), which subordinates the ROC to provincial status. Henceforth Taipei would argue that its future is not a matter of "one country, two systems" (the PRC formula) or "one country, two entities" (the old ROC formula), but rather "one country, two states" until that blessed moment when a fully democratic, prosperous China justifies a change. Dr. Su Chi, Chairman of the Mainland Affairs Council, summed it up in English on July 12: "two states in one nation." A day later his deputy, Lin Chung-pin, amplified, "The goal of eventual reunification remains intact." Finally, on July 20, President Lee himself declared, "We are not seeking independence."

Why did Lee tamper with the One-China ambiguity now? And where does this change leave Beijing and Washington?

Speculation about Lee Teng-hui's intentions has become a major industry among Taiwan watchers, and this linguistic disturbance has set in motion one more round of suspicions that what Lee really wants is a Taiwan guojia, or perhaps a Chinese guojia with more than one sovereign state -- a federal system. These are words and concepts that fit well with Lee's view of Taiwan as the vanguard of a New China, free and prosperous, that breaks the old mold of Chinese politics and society, whether imperial, communist, or "market-Leninist." And it exhibits his deft ability to inspire the local audience. In Taiwan, once the message was understood, it was regarded as a bold assertion of the island's pride in its achievements, one that tweaked Beijing but did not cross the "red line" of a declaration of independence.

With only eight months left in his term, Lee, reviled by Beijing since the 1995 U.S. visa incident, will obviously not be the man to bring fresh warmth to relations with the PRC. But he has set a new benchmark for his successor, to judge by the broad political acclaim for his new formula. One of Lee's targets, experts on Taiwanese politics point out, is his adversary, former Taiwan governor James Soong, a presidential candidate advocating smoother dealings with Beijing.

Thus far, Lee's pronouncements have inspired angry warnings and denunciations in Beijing, a perplexed but urgent insistence by Washington that he repeat the verities of the old formula, and a precipitous drop in various stock markets: Taipei, Shanghai, and PRC company shares listed in Hong Kong. Initially, at least, Lee's sally has put Taiwan at odds with both the PRC and the U.S., countries which find themselves in sudden agreement on the merits of "One China." Neither the U.S. nor the PRC wants a new bruise in a season already full of bruisings over spies, damaged embassies, and the World Trade Organization (WTO) negotiations. But the real question is whether the myths shielded by the old theology can still work. The most useful of these was the fiction that both sides wanted unification when such a process meant political gratification and new assets for Beijing but political extinction for Taipei. In fact, there is little reason for the island to seek political reunification unless (1) this is needed to deter a war, which is why the mainland, quite realistically, will not give up the military option as the ultimate prod to negotiations; or (2) the mainland becomes democratic, in which case the island's political fears would be relieved.

For two decades but especially since the early 1990s when the ROC abandoned its claim to rule all of China, the theology of One China allowed both sides to find a way to live decently with each other while plotting the day of change. Taipei hoped that communism would wither away; Beijing hoped that cross-Strait trade and international pressure would produce a variation of the Hong Kong model. The virtue of the theology was precisely that it allowed both sides to pursue a very realistic set of pragmatic relationships while piously invoking unification as a distant objective.

More recently, the theology had become increasingly difficult to sustain in both Beijing and Taipei because the "pragmatics" were taking it in unexpected directions. In Beijing, communism is withering away, but into an authoritarian nationalism which celebrated the return of Hong Kong as a model precursor for Taiwan. Meanwhile in Taipei, a democratic but distinctly island-based nationalism has replaced the KMT's authoritarianism, even as economic relations with the mainland blossomed. In short, while the parties have grown closer at the pragmatic level, their political evolutions have aggravated the gap between them. Progress toward unification has become a fresh litmus test for the new nationalism in Beijing. For Taipei, this pressure threatens to compress the time schedule. So while the island government prefers to discuss unification the way philosophers discuss metaphysics, the "practical philosophers" in Beijing are looking for proof of intent through action.

Lee Teng-hui has now bolstered the case for metaphysics. By making this a state-to-state issue, he duplicates the German (or Korean) model. In the German case, mutual recognition and international confirmation of both FRG and GDR sovereignty rendered discussions of political unification moot until 1989-90, when one side -- the communist side -- collapsed and disappeared. This corresponds very well to Taipei's thesis that democracy in Beijing is the necessary precondition for unification.

Lee's "state-to-state" declaration is based upon the incontestable reality that the ROC possesses all the usual indices of statehood. Moreover, it is a successful, prosperous place that has become democratic without violence. But there is another reality, too. The major international powers do not recognize it, and so long as the PRC wants unification, they will not recognize it. Nor can Beijing lightly suffer this challenge to its nationalist credentials. Lee's reality will therefore be pressured anew by Beijing not only through military threats but also in the one place where the One-China theology was most convenient, namely Washington D.C.. The Clinton Administration's own tampering with the myth, converting it during the President's visit to the PRC in 1998 from a "made in China" device to a point of PRC-U.S. agreement, has not helped.

The consequences flowing from Lee's comments can be understood as a series of questions. Will the "state-to-state" formula improve the ROC's chances of gaining international recognition? Not likely, unless the PRC takes actions so threatening to international peace that recognizing Taiwan becomes a vehicle of retaliation. Will the PRC attack Taiwan? If the politicians are still in charge, also not likely. Beijing's current priorities are to bolster the basis of U.S.-PRC ties -- the economic dimension -- through entry into the WTO, while carefully surmounting a series of political minefields such as spy scandals and Kosovo (U.S. military intervention into the domestic affairs of a state). That does not rule out the rhetorical threats that can do real harm to Taiwan's economy, although this will also harm the mainland. Will the PRC try to extract from the U.S. some sort of compensation that would affect the arms supply to Taiwan? Yes, in all likelihood, it will -- and this will pit the President against the Congress in a way that may shred the Administration's ability to do anything coherent. Will the ROC retreat from its new formula? Chen Chien-jen, the ROC Cabinet spokesman, announced on July 22 that the national unification guidelines remained unchanged and that the phrase "one nation, two states" would not be used: "We decided not to use that phrase because we want to avoid any misunderstanding." Instead, there would be "special state-to-state relations." As for the "One China" phrase, Su Chi explained that this was something for the future: "As a concept, it's all right. Our problem is that there is no 'One-China' right now. There's a divided China" (New York Times, July 23, 1999). The more intriguing part of the episode -- Taipei's offer of a "serious discussion" of unification issues if Beijing continues the cross-Strait dialogue on the basis of equality -- remains to be tested.

The only sensible thing for Washington to do under the circumstances is to cling to a policy of "two noes and a yes": no to Beijing on the use of force; no to Taipei on the declaration of independence; yes to both on the importance of cross-Strait talks. This is one linguistic disturbance that defies even the legendary obfuscators in Foggy Bottom.

Harvey Sicherman, Ph.D., is President of the Foreign Policy Research Institute and a former aide to three U.S. secretaries of state. He is editor, with Murray Weidenbaum, of The Chinese Economy: A New Scenario (FPRI Report, May 1999), and author, with Alexander M. Haig, Jr., of New Directions in U.S.-China Relations (FPRI Report, March 1997).