By Greg May

In his inaugural speech Saturday, Taiwan's new president, Chen Shui-bian, showed that there is a limit to how far he will go to placate Beijing. For all his pragmatism, President Chen is still a bona fide Taiwanese nationalist. In subtle and not-so-subtle ways, he clearly established the fact that Taiwan is an independent, sovereign country and that Beijing's idea of "one China" is a non-starter for his government.

Chen's statement that "Taiwan stands up" is the most significant. (This passage is highlighted in red on the Office of the President web site to emphasize its importance.) This is a clear reference to Mao Zedong's October 1, 1949 speech announcing the founding of the People's Republic of China, during which Mao said the Chinese people had "stood up." Chen's message was clear: Taiwan is now its own nation.

Former President Lee Teng-hui, though universally suspected of favoring independence, never fully discarded the fig-leaf that Taiwan is a part of China (just not part of the People's Republic of China). Judging by the inaugural speech, the days of such lip service are over. Chen repeatedly used the politically-loaded word "compatriot" in reference to Taiwan's 23 million people only, not to all Chinese as has traditionally been the case.

This is not to say Chen pushed too far. He promised to abide by the "five nos" no formal declaration of independence; no changing of Taiwan's official name, the "Republic of China"; no revision of the constitution to establish a "state-to-state" relationship across the Strait; no referendum on Taiwan's independence; and no abolition of the National Reunification Council. Chen acknowledged that Taiwan and China share the same "ancestral, cultural, and historical background" and said the two sides could discuss a future one China. This fell way short of China's demands that Taiwan return to the idea of an existing one China.

Squaring Chen's vision of an ethnic/cultural one China with the PRC's demands for a political one China is probably too difficult even for the most skilled semantic gymnast. The PRC may eventually accept a commonwealth model--in which Taiwan would acknowledge China's sovereignty in the same way Australia keeps Queen Elizabeth as the head of state--but this is unlikely so long as nationalism, rather than the ballot box, is a central pillar of the Communist Party's legitimacy.

All of this means the Taiwan Strait will remain a very tense region and there will continue to be a real possibility that the U.S. will be drawn into a conflict. Baring any surprise breakthroughs in cross-Strait relations, U.S. policy should focus on three things: demilitarization, political neutrality, and liberalization in China.

First, arming Taiwan to the teeth as though conflict were inevitable is ill advised and risks encouraging a "now-or-never" mentality in Beijing. The U.S. goal should be to preserve the military balance and Washington should make it clear that China must halt its buildup of conventional forces and ballistic missiles along the Strait if the U.S. is to reduce arms flows to Taipei.

Second, the U.S. needs to stay out of the Taipei-Beijing political dispute. Washington should not oppose Taiwan independence, reunification, or anything in between provided the two sides reach a solution peacefully. While American opposition to the use of force weakens Beijing's hand, Washington's one China policy also limits Taiwan's option to unilaterally pursue independence. To the extent the U.S. intervenes at all it should be to deter the use of force, not to bring Chen Shui-bian and Jiang Zemin to Camp David.

Finally, encouraging liberalization in the PRC should be recognized as an important component of the United States' Taiwan policy. The only way out of this mess is for China to follow Taiwan down the path of prosperity and democracy. This is one reason why Taiwan supports China's entry into the World Trade Organization and has asked the U.S. to grant permanent normal trading status to the PRC. If given a say, China's citizens would be reluctant to sacrifice their new-found wealth in a costly war with Taiwan. For Taiwanese, full reunification would only be possible once China sheds the kind of one-party rule that they, by electing Chen Shui-bian, have ended on their side of the Strait.

Greg May is Assistant Director of The Nixon Center. His e-mail address is gmay@nixoncenter.org.