FAIRBANK REPORT PREDICTS HIGH COURT NOMINEE

Shortly, President Bush will nominate a replacement for retiring Supreme Court Justice Sandra Day O'Connor. Whilst the political machinations behind the selection of a Court nominee are as Byzantine as those behind the election of a Pope, seasoned tea-leaf readers can discern certain patterns.

Chief Justice Roberts's recent nomination proffers particularly valuable insight. In Mr. Roberts, we have a man who is young, talented, expert in the law and virtually unheard of in political circles.

Mr. Bush's political nominations offer additional insight. The President made history by nominating the first African-American Secretary of State (Colin Powell) as well as the first African-American National Security Advisor and the first African-American woman Secretary of State (Condee Rice).

The FAIRBANK REPORT, therefore, projects that Mr. Bush will nominate United States Attorney Debra Yang to the High Court. Ms. Yang was Superior Court judge in Los Angeles County until 2002 when the President chose her to become U.S. Attorney for the Central District of California. Like Mr. Roberts, Ms. Yang is young, talented, expert in the law and virtually unheard of in political circles. Like the nominations of Mr. Powell and Dr. Rice, Ms. Yang's nomination would be bold and historic. She would be the first Asian-American and the first woman of color to serve on the United States Supreme Court.

In light of Justice O'Connor's recent comments about the importance of having another woman justice on the Court and in light of admonishment from Democratic senators against controversial nominees, Ms. Yang makes an excellent and compelling choice.

Leadership Matters, Part II

In an earlier piece, I talked about the leadership styles (or lack thereof) of certain officials in response to Hurricane Katrina. I now examine leadership in a more local (for me) context: the transformation of Downtown Los Angeles.

Over the last thirty years or so, Downtown Los Angeles had been just a place for office workers to come to work at eight and then rush out again at five. Once the center of civic and cultural life, Downtown LA deteriorated to the point that anyone who was still on the streets at 6 pm was either drunk, homeless or up to no good. This urban decay was not only physical but also psychological. People had given up on Downtown until a businessman-turned-politician came out from under the Valley smog in 1993 to become mayor of America's second largest city.

His name is Richard Riordan, a liberal Republican who was more interested in getting the job done than ideology. In fact, his liberalism often rubbed his more conservative state and national Party cohorts the wrong way. He was well-connected in the business community, especially among the real estate developer crowd, and he put it to good use.

Three major projects, all started under his tenure as mayor, would anchor the current revitalization of the Downtown area: The Cathedral of Our Lady of Angels, the world's newest Catholic Cathedral, the Frank Gehry-designed Walt Disney Concert Hall and the Staples Center, which is the new home of the Los Angeles Lakers and Kings. Since their opening, all three venues have attracted enormous numbers of tourists to Downtown Los Angeles.

These anchor projects have stimulated a building boom Downtown. It's hard to miss the scores of new lofts, condos and apartments aimed at the Yuppie set. And there are plans in the works to make a billion dollars' worth of improvement in the Civic Center. More significantly, the long-neglected southern portions of Downtown are major beneficiaries of much of the current regentrification efforts.

We are still in the early stages of the Downtown Renaissance. There remain significant unresolved issues to address such as affordable housing in a city that's facing a severe housing shortage, quality education and crime rates. Nevertheless, the sentinnel indications all point to a robust future. And it all started with one leader who believed that a great city deserves a great Downtown.

$3 Gas is Cheap!

Jonathan Fairbank

The price of gas is hovering near three dollars a gallon in most cities in the United States, and in some regions, it's more like $3.50 a gallon. Yet, people still drive their SUVs, bigger trucks and occasionally a few Hummers. More than that, the freeways and surface streets continue to jam. Friday nights on the eastbound I-10 in Southern California are still packed with weekend trippers. Kids are still driving their heavily altered Hondas. Yes, people complain about gas prices the way they do if it's too hot, and they go on driving.

It then appears that for most Americans, gas is price-inelastic--like medicine. We will pay any price to drive. Nothing beats the comfort, convenience and privacy of one's personal vehicle. Now, people will complain that there's inadequate public transportation in the country as a whole. I don't buy that. Even in car-dependent Southern California, there is an extensive network of bus and rail lines. Hence, gas price is inelastic not because there isn't a feasible alternative to the private car, but rather it is our car-obsessed culture that makes it so.

And moreover, Americans can afford to pay gas at three dollars or $3.50 a gallon. In fact, I have argued that we, as a society, can afford to pay upward of seven dollars a gallon. If we look at most European countries, gas prices have been around five or six dollars a gallon for many years. This is the direct result of high fuel taxes imposed by most European governments. The average European has less disposible income than the average American. This is the result of, again, high sales and income taxes and lower wages.

So our European allies have less disposible income and yet have been able to afford five or six dollars per gallon of gas for many years. Sure, Europe is not as rich and powerful as we are, but it is still enjoying First World status. Therefore, it follows that most Americans will be able to pay six or seven dollars a gallon of gas. We may not like it. But we sure can afford it.

So really, for too many years, Americans have been cheating the state and federal governments out of a lot of fuel taxes in light of our apparent ability to pay higher pump prices. From this perspective, three dollar gas is a bargain. Our economy can support even seven dollar gas.

Leadership Matters

Leadership matters. Leadership inspires. I am inspired and moved by Churchill's immortal "we shall fight on the beaches" speech in the Commons, Kennedy's "Ich bin ein Berliner" speech, Reagan's "Mr. Gorbachev, tear down this wall" speech and Bush's "I hear you" impromptu at Ground Zero.

I am also inspired by Rudy Giuliani's steadfastness and indefatigable resolve during the first 72 hours following the World Trade Center attacks.

Fast forward to Louisiana's leaders' responses to the aftermath of Katrina. New Orleans Mayor Ray Nagin lost his composure during the now famous radio interview. The police chief of New Orleans was literally crying and behaving erratically in front of network news cameras. Senator Mary Landrieu was threatening to punch out President Bush and of course crying on television with her now infamous sobbing line, "one little crane." And the state's other senator, David Vitter, hysterically and erroneously proclaimed that there were 10,000 dead bodies lying in the streets of New Orleans.

None of these actions inspired confidence or proffered hope. Rather, they underscored the lack of organization, coordination and leadership at the local and state levels. These well-heeled politicos manifestly demonstrated the dearth of "grace under fire." They reacted--quite dilettantishly. They never led.

The Post-Katrina Reconstruction: The Grant Administration Revisited?

In light of the enormous sum pledged by the federal government for the reconstruction of New Orleans and the Gulf Coast, it is worth cautioning the bureaucrats who will dole out this vast amount of (borrowed) cash to be alert for fraud and abuse. Chastised by the media for their lackluster post-Katrina reponses, federal officials, in their diffident state, might be tempted to eschew the usual checks and balances in the upcoming distribution of reconstruciton funds. Already, there are rumblings of fraud and abuse in the $2,000-per-family debit card scheme.

Let me urge them to examine the mismanagement and outright graft of the Grant Administration officials who oversaw Reconstruction in the aftermath of the bloody Civil War. Beware of patronage jobs and dubious projects. Insist on measurable outcome and the use of Generally Accepted Accounting Principles (GAAP). And along with the Army Corps of Engineers, send in the corps of GAO auditors for good measure.

Nevertheless, two hundred BILLION dollars (that's 200 times ten to the 9th power!) is a lot of money for any bureaucracy to effectively oversee. I urge members of the Fourth Estate to be equally vigilant and hold public officials accountable for the use of public funds.

Workplace Diversity

By Jonathan Fairbank

J Fairbank is Editor-in-Chief of the FAIRBANK REPORT.

The federal Equal Employment Opportunity Commission (EEOC) is suing a Southern California nursing home in federal court for requiring its staff to only speak English while on the job. If successful, the suit would tear the fabric that unites us as American workers and American citizens.

It's divisive enough to have certain naturally occuring cliques and alliances in the workplace. It would be devastating, in terms of team cohesion and morale, if language- and ethnic-based cliques and alliances were to be officially sanctioned as a matter of law. I don't care if an employer allows use of a foreign language in the workplace among his staff; however, he should not be compelled by the government to permit such practice, especially if the practice hurts teamwork and therefore business output.

Moreover, mandating multi-lingualism in the workplace undermines the country's efforts since the Brown decision in 1954 to desegregate and to become more inclusive.

One last point. We here in Southern California already live in de facto segregation: Asians tend to live in the San Gabriel Valley of Los Angeles County, African-Americans in South Los Angeles, whites in South Orange County and the Westside of Los Angeles and Hispanics in East Los Angeles and San Bernardino County. The workplace is one of a few places left where different ethnic and cultural groups actually come together. Let's celebrate this diversity by breaking down old barriers instead of erecting new ones.

Mark Cooper-Basset on Mexican Independence Celebrations

About the Author:
Mark Cooper-Basset is a freelance writer based in Orange County, CA.

As I struggled with heavier than normal traffic into Downtown Los Angeles over the last three days, I soon realized that the cause for the gridlock was the closure of several major arteries into the civic center for the Mexican Independence Day celebrations. While it is problematic enough to observe a foreign POLITICAL holiday on American soil, it is doubly injurious to discover that major streets were to be closed for three days in order to put on celebratory festivities. I realize that the new mayor, Tony Villa (aka "Antonio Villaraigosa"), is an avowed reconquistador, but this apostasy of American sovereignty, however symbolic, is "over the top."

But let me not digress any further and go to my thesis. What is there to celebrate and to show for in the 195 years since Mexico separated from Spain? Very little. The overwhelming majority of Mexico's hard-working people remains poor while a small cadre of predominantly white elites enjoys enviable wealth and high-living. Over the last few decades, Mexico has successfully pursued an unwritten (and shameful) policy of social dumping against the United States, to the point of exporting 25 million of its poorest, 20 million of whom are in the United States illegally. Much of the country's wealth, particularly from petroleum and agriculture, has been siphoned off to secret overseas bank accounts.

Contrast Mexico's 195 years of independence to that of the United States. When the United States celebrated its 195th year of independence from Great Britain in 1971, it had become a global economic, military and technological superpower.

Contrast Mexico with the "Asian Tiger" countries, which had only begun to industrialize after World War II. And the contrasts are revealing. Malaysia, Singapore, Taiwan, South Korea, and now China and India have all come from lower socio-economic baselines than the Mexican Republic, and in mere decades, each of the above-mentioned country has surpassed Mexico in almost all major economic and social indicators.

For a country endowed with so much natural resources and sources of wealth, Mexico should rank as one of the top economies of the world. Yet, it languishes in Third World status and will continue so for many years to come.

And yet, this is the country that Mayor Villa of Los Angeles and his band of reconquistadores want to emulate. Go figure!

On China-Taiwan Relations

Beyond "One Country, Two Systems": An Alternative Paradigm for
China-Taiwan Integration



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Beyond "One Country, Two Systems": An Alternative Paradigm for
China-Taiwan Integration


In 1982, the National People's Congress of the People's Republic of China adopted a new constitution for the country. Among many changes was the inclusion of Article 31, which authorized the establishment of Special Administrative Regions (SAR).[1] Two years later, Chinese leader Deng Xiaoping and British Prime Minister Margaret Thatcher signed the Joint Sino-British Declaration[2], which set in motion the mechanisms for restoring Chinese sovereignty over Hong Kong in 1997 after almost 160 years of British colonial rule. Under the joint communiqué, Hong Kong would become a SAR (per Article 31) exercising local autonomy and self-rule (gangren zhigang). The Hong Kong SAR and later the Macao SAR (1999) are showcases of Deng's "one country, two systems" (yiguo liangzhi) formula, which was meant to woo Taiwan back into the Chinese motherland. This formula remains the official Chinese policy for cross-strait reunification, and Prime Minister Wen Jiabao reiterated this position during his December 2003 visit to the White House.

Whether the Hong Kong and Macao SAR's are enjoying genuine autonomy and home rule is subject to some debate. A quick scan of the literature seems to point both ways. What is indisputable, however, is that the "one country, two systems" (OCTS) approach cannot form the basis on which China and Taiwan peacefully reunify -- at least not at the present or near future. Even the anti-independence mayor of Taipei Ma Yin-jeou said as much.[3] An alternative paradigm is needed. In this paper, I table a model for cross-strait integration that takes the next logical step beyond the "one country, two systems" formula. I propose the creation of a commonwealth entity and identify various mechanisms for its implementation.

The Problems with OCTS vis-a-vis Taiwan

Unlike the territories of Hong Kong and Macao, Taiwan is not geographically attached to Mainland China. Separated from the Mainland by 100 miles of sea, the island has its own fresh water sources, agricultural base and power supply -- in other words, all the basic essentials to run a disparate state. Had Hong Kong or Macao opposed reunification with China, then all that the Mainland authorities had to do was to shut off the water valve or power grid. (We are assuming here that food could be flown or shipped in from elsewhere, no doubt at a great cost.) The two regions would collapse soon enough. Therefore, Hong Kong and Macao would have had no option but to accept reunification on any condition. The same cannot be said for Taiwan.

Again, unlike Hong Kong and Macao before the handover, Taiwan is a democracy -- and a new one at that. After the authoritarian rule of Generalissimo Chiang Kai-shek and his son Chiang Ching-kuo, Taiwan embraced democratic change in the late 1980’s culminating in the first popularly elected presidency in 1996. Hence, we cannot fault the Taiwanese for wanting to safeguard their new democracy against potential encroachment by Beijing. Why should they go for a promise of limited autonomy and self-rule when they already have it all?

Even without democratization and the subsequent rise of the independence movement, it is difficult to discern how entrenched mandarins and politicians in Taipei would willingly surrender their positions and power. This is especially true in the executive yuan, which would have the most to lose under OCTS. For example, there would not be any need for the ministries of foreign affairs and defense.

Another reason why OCTS will not work for Taiwan is the divisive issue of Taiwanese identity. Are Taiwanese Chinese? Indeed, this is the crucial question in the current China-Taiwan debate. According to Beijing and the opposition Kuomintang (KMT) Party of Taiwan, the vast majority of Taiwanese are culturally and ethnically Han Chinese. Therefore, Taiwanese are a part of the Chinese nation (tongbao), and Taiwan is an integral part of China (lingtu).

Taiwan's ruling Democratic Progressive Party (DPP) seems to think otherwise. Many leaders and members of the DPP (including President Chen Shui-bian and particularly the outspoken Vice-President Annette Lu) advocate a distinct Taiwanese identity. They no longer see themselves as Chinese and thus not culturally tied to the Mainland. In recent years, many Taiwanese -- particularly those in the popular media -- have foregone speaking Mandarin, which has been the official dialect of the Chinese state since imperial times, and have begun speaking "Taiwanese." Ironically, the latter dialect is not indigenous to the island of Taiwan. It is actually the dialect common to China's Fujian province across the Strait.

Regardless of the idiosyncrasy of the latest linguistic fad, it is clear that the process of "de-Sinofication" is under way in Taiwanese society. Many young people have not had direct, first-hand connection with Mainland China. In fact, Taiwanese youths today are more likely to be influenced by American culture and mores than by Chinese customs. Given the many large (and successful) Taiwanese communities throughout the United States and the frequent travel between them and Taiwan, it is not altogether surprising (albeit somewhat disturbing) that there are even fringe elements in Taiwan advocating American sovereignty over the island.

Heretofore, I have pointed out some reasons why OCTS will not work for Taiwan. Does this mean that inevitably Taiwan will drift toward de jure independence? Not necessarily. The present status quo has kept the peace for over fifty years. However, there are forces at play which may not permit the status quo to continue for long. Having regained Hong Kong and Macao, Beijing is keen to reunify with what it sees as its last major outpost and end a troublesome chapter in modern Chinese history. On the other hand, political, societal and cultural changes in Taiwan have made the push for full independence from China more likely than before. The fear is that these two opposing trajectories will result in war. I am convinced that there will be war -- and it will be a ruinous and bloody one -- should Taiwan completely sever itself from China. It is with an eye toward preventing war and promoting regional stability that I propose an alternative paradigm to OCTS.

Going Beyond "One Country, Two Systems"

I propose the creation of a new entity called the Greater China Commonwealth (GCC) consisting of Mainland China, Hong Kong SAR, Macao SAR and Taiwan. The general concept of a pan-Chinese commonwealth is not new. A few years ago, Ralph Cossa of the Center for Strategic and International Studies had floated the idea in a press interview.[4] The value of this article, I hope, lies in the analysis presented below of how such a commonwealth would take hold.

The Greater China Commonwealth would be a single, confederative, quasi-state entity governed on the principle of consensus. It would emphasize, in the first instance, integration rather than reunification. Integration denotes coming together for a common purpose without the loss of sovereignty whereas reunification implies the transfer of state sovereignty (such as in the cases of Hong Kong and Macao). Decisions should be taken by means of group consensus. Hence, areas most likely to achieve group agreement will primarily center on economic, technocratic and technological projects.

The GCC model is a multi-step and multi-year process. The idea is for the various Commonwealth members, in particular China and Taiwan, to first collaborate on small, non-political and mutually beneficial projects in order to build confidence and trust. In this connection, I envision greater economic and technological cooperation. Indeed, since the reform era launched by Deng Xiaoping in 1979, we have already seen tremendous growth in economic activities between China and Taiwan. According to the Center for Strategic and International Studies, China-Taiwan trades amounted to almost $50 billion in 2003 and are set to surpass this statistic in 2004.[5] In 2002, China surpassed the United States as the single largest consumer of Taiwanese goods, which accounted for nearly 24% of all Taiwanese exports.[6]

The objective, then, is to formalize these complex trade relationships within the GCC framework, which would eventually culminate in the creation of a free trade area among Commonwealth members. Goods, services, capital and perhaps specialized labor would freely circulate among GCC members without the hindrance of borders and tariffs. A free trade zone would remove one significant impediment in the economic and social integration of China and Taiwan.

The next step would entail the establishment of a customs union among the four GCC members. A customs union would require all GCC members to have a common tariff schedule vis-a-vis the rest of the world. Thus, an American or European company would face the same duty structure in Taiwan as it would in China, Hong Kong and Macao. A free trade accord and customs union are important in that they would require "state" actors (i.e., Taiwanese and Chinese government officials) to meet and confer with one another. This type of dialogue and consultation is rare across the Strait, especially under the current climate of high tension and distrust.

Moreover, a free trade zone and a customs union would also enhance the economic competitiveness of the GCC. Both policies would make it more attractive for foreign as well as Commonwealth firms to establish their operations and invest in the GCC region.

Another confidence-building measure that Commonwealth members would take under this model is collaboration on technical matters. If there was any doubt in the minds of Taipei or Beijing policymakers on the need to collaborate on technical issues, the SARS crisis of 2003 should have cleared up any misgivings. Hong Kong, Taiwan and China were the most acutely affected areas during the epidemic. Had there been a multi-jurisdictional body managing the crisis, the severity and geographical spread of SARS might not have been so devastating.

Ironically enough, the SARS epidemic underscores the extent of integration that has already taken place by non-state actors in Hong Kong, Taiwan and China. Indeed, it was business travelers and tourists hopping from one part of Greater China to another, which helped to spread the virus. As usual, the state sector is falling behind the curve. Other candidate areas for technical collaboration include communications infrastructure, manufacturing standards as well as sporting and athletic endeavors. On the latter note, it would be a tremendous symbolic move and an immense jumpstart for the Commonwealth concept if teams representing Macao, Hong Kong, Taiwan and China would march together under one banner at the 2008 Olympic Games in Beijing.

An integral component of the program outlined above is the step-by-step approach taken over a period of time. Small, technical successes should be lauded as they help to build confidence, good faith and momentum on both sides of the Strait in furtherance of bigger agreements. This is the X-factor in any negotiated outcome -- be it management-labor bargaining or state-to-state negotiations.


Selling the Plan

Clearly, the program proposed above will not be easy to implement, especially under present circumstances. As Taiwan prepares for a hotly contested presidential election in March 2004, inflammatory rhetoric -- such as President Chen's push for the referendum legislation -- will be abundant in the heat of the campaign. And Beijing may overreact to this rhetoric as it had in the past. So any talk of cooperation will have to wait until after March 2004.

Just like the "roadmap to peace" in the Middle East, the proposed plan requires the two sides to "buy" into it. Perhaps unlike the Middle East, circumstances across the Taiwan Strait may force the two parties to be more receptive and accommodating.

The GCC from Beijing's Perspective

From Beijing's perspective, the GCC model at least gives some semblance of territorial integrity. It can certainly be argued that the raison d' etre of the early Chinese Communist Party was to save the country (jiuguo) from foreign occupation and dismemberment.[7] The GCC would help the Communist Party realize its mission of jiuguo and finally close a woeful chapter in the nation's history. Over the years, the Mainland party-state has made special arrangements for ethnic minorities (xiaoshu minzu) in the form of National Autonomous Areas.[8] It has encouraged local entrepreneurship in the Special Economic Zones and Open Coastal Cities. And finally, it has provisioned local autonomy and self-rule in the Hong Kong and Macao Special Administrative Regions. The creation of a commonwealth partnership with Taiwan for the sake of national unity is not an unreasonable next step in this continuum.

In addition to jiuguo, the GCC would also help the Chinese Communist Party in its quest for self-preservation. Since the Party has apostatized most of its core values in the pursuit of economic progress, nationalism remains the only linchpin that binds the party-state with Chinese society at large. The recent Shenzhou launch into outer space was as much about nationalism as it was about scientific research. Should Mainland China "lose" Taiwan, the regime in Beijing would probably implode from intra-Party in-fighting and social discontent from a highly nationalistic populace.

If not the GCC model -- or something akin to it -- what then are the options for China? The status quo has bought China time in its attempt to deal with the Taiwan question. But fifty-four years on, the problem remains unresolved. I don't believe Mainland authorities have another fifty-four years to effect a solution. Many in Taiwan are restive for statehood and may just obtain it given recent development. Chinese officials should note that it is not entirely coincidental that Taiwan's only two popularly elected presidents (Lee Tung-hui and Chen Shui-bian) are both pro-independent.

The other option is war. This will cost Beijing dearly both in terms of lives and resources lost as well as economic growth, which is something that the Chinese leadership has focused on since the reforms of 1979. Taiwan has a formidable air force with many of the latest fighter jets bought directly from the United States (F-16) and France (Mirage 2000).[9] An August 26, 2002 report in Jane's Defence noted that Taiwan is even developing stealth technology for its fighter jets.[10] In addition to a robust air force, Taiwan has other significant military assets including a large number of battle tanks, towed artillery, battle ships and a total active duty armed force of 376,000.[11] According to David Shambaugh, an expert on the Chinese military, "Taiwan's conventional defenses at present appear qualitatively superior and adequate to repel an invasion."[12] And there is always the possibility of a grossly inadequate Chinese navy facing the United States Seventh Fleet, which was last dispatched to the Taiwan Strait in 1996 amidst heightened tensions between China and Taiwan.

In the event of war, the economic and diplomatic fallout would be just as consequential as the military operations. War in the Strait would drive capital and investments out of the country. Moreover, the United States and the European Union -- two of the Mainland's largest trading partners -- would likely impose significant economic and diplomatic sanctions against China.

The GCC from Taipei's Perspective

From Taipei's perspective, the advantage of the GCC proposal is first and foremost the prevention of war. Since war in the Strait will primarily be fought on Taiwanese soil, much of the misery, devastation and destruction will be borne by the people in Taiwan. Even if China were to launch a limited assault, the psychological damage could be long lasting. If the missile tests of 1996 and military exercises of 2000 rattled nerves and spooked the Taiwanese stock market, an actual outbreak of conflict -- even a limited one -- will surely invite economic and political instability for some time to come.

Notwithstanding Taiwan's air superiority and modern weaponry, China has a missile advantage over the island. There are at least 500 ballistic missiles, which are stationed along China's southeastern provinces, pointing at Taiwan.[13] Although Taiwanese military leaders have talked about theater missile defense (TMD) as a counter-measure to the missile gap, the technology behind TMD is rudimentary and unproven. Then there is the matter of China's two and a half million armed personnel.[14] Even in the high-tech realm of modern warfare, foot soldiers are still the pivotal factor in winning wars. In both the 1991 and 2003 Persian Gulf wars, the United States and its allies could not have won without adequate ground troops. In this connection, not only does China have a quantitative edge but also an advantage over Taiwanese forces in terms of combat experience. Very few, if any, of Taiwan's active military personnel have direct combat experience. The last time Chiang Kai-shek's army fought a war was against the People's Liberation Army (PLA) in 1949, and it was badly routed by the PLA. The PLA's last major war was against Vietnam from 1978-79.

Even if Taiwan were able to repel a Chinese invasion, the cost of mounting a vigilant defense could be crippling. Taiwan would have to spend more and more of its national wealth on weapons procurement. The current military expenditure level at about three percent of gross domestic product (GDP) will have to rise significantly in a post-attack scenario.[15]

So if war is not a desirable option for Taiwan, why not stay the current course? As I have pointed out above, Taiwanese society is undergoing an identity transition. As the older generations pass on, their descendents born and bred in Taiwan do not feel "Chinese." They want -- and are expressing -- a Taiwanese identity, which is distinct from the one on the Mainland. For many years, Chiang Kai-shek and his son, Chiang Ching-kuo, were able to suppress any expression of Taiwanese identity. However, since the democratic movement of the late 1980's, the question of Taiwanese identity has resurfaced with a vengeance. It is unlikely that any democratically elected government henceforth -- be it Kuomintang or DPP -- will be able to resist popular demand to demonstrate some degree of "Taiwaneseness."

More imminent, though, is China's direct pressure on Taiwan. Chinese authorities have identified several triggers for going to war, one of which is the refusal to reunify with the Mainland in an orderly and timely manner. At least in theory, Taiwan cannot play the status quo strategy indefinitely. Thus, the Greater China Commonwealth paradigm proffers Taiwanese leaders an honorable “third way” out of the perennial stalemate and deserves serious consideration from Taipei officials.

Another advantage of the GCC paradigm for Taiwan is stability. Present relations across the Strait can be characterized as constant bickering punctuated by threats of war every time there is a parliamentary or presidential election in Taiwan. According to the slippery slope theory, shouting matches might lead to bullet matches. The current scenario cannot be conducive to long-term economic development in Taiwan or regional peace. The GCC would, at minimum, reduce the acerbic rhetoric thrown at each other from across the Taiwan Strait and provide a forum for the two parties to constructively engage one another.

The GCC from Washington’s Perspective

So far, our analysis has mainly concentrated on the two protagonists in the cross-strait dispute. But there is another significant player whose support is crucial to the success of the GCC proposal and overall regional stability. The United States is essentially the guarantor of Taiwanese security under the Taiwan Relations Act of 1979.[16] The United States is China's most important and lucrative market, importing everything from chopsticks to electronics. And the United States Navy is the mightiest in the Pacific.

How then should Washington react to the creation of the Greater China Commonwealth? There are some in the United States Congress and Pentagon who see China as an emerging threat, if not competitor. They see the creation of a Greater China as a strategic threat to American interests. This viewpoint is misleading and unnecessarily alarmist. In terms of economics, Greater China poses significantly less of a challenge to the United States than Japan and the European Union. The combined gross domestic product (GDP) of China and Taiwan equals about $1.5 trillion, or about 15% of the entire American economy.[17] Japan's GDP is about $4.3 trillion, or about 40% of the United States economy, and the European Union's total GDP of $10.4 trillion is about that of the United States economy.[18] Indeed, Lester Thurow has persuasively argued that an integrated European Union would be the primary challenger to American economic dominance in the 21st century.[19] From the military angle, the combined Chinese-Taiwanese military assets would amount to a small fraction of total American military power. Besides, the GCC model does not anticipate Taiwan handing its military assets over to Beijing. This would be a deal killer.

On the contrary, if the GCC paradigm is successful, one more conflict would be removed from the list of global hot spots. This would be welcome news for the world’s superpower, which is and will be busy leading the international effort against terrorism.

Moreover, war between China and Taiwan would not only harm the two parties involved but would also destabilize much of the Pacific Rim and beyond, which would undoubtedly ripple to American shores. Will North Korea take advantage of the regional instability and invade South Korea? If so, the United States ipso facto will be fighting another war on the Korean Peninsula. Will the Turkic population in China's Xinjiang province join their brethren in the Central Asian republics to fight for a separate homeland? If so, Russia would probably intervene to protect its interests in the steppes of Central Asia. Russian intervention, in turn, might trigger United States involvement. And in the post-September 11 context, there are significant geo-political ramifications of a pan-Islamic region stretching from the old Silk Road to the Persian Gulf.

On the other hand, a China contented with its arrangements on the Taiwan question would prove most useful in dealing with the North Korean nuclear proliferation issue. And a China grateful to the United States for supporting its historic mission to reunify the motherland would prove equally useful in the fight against global terrorism.

Concluding Remarks

Deng Xiaoping's OCTS formula was an innovative yet stillborn idea to address the Taiwan issue. Let's consider some stipulated facts. (1) Taiwan rejects reunification based on the OCTS formula. In fact, there is a sizeable segment in Taiwanese society that wants complete severance from the Mainland. (2) China will not brook an independent Taiwan and will probably resort to war in order to thwart the creation of the Republic of Taiwan. (3) China will not negotiate with Taiwan unless the latter accepts the "One China" principle; the current Taiwanese government balks at this pre-condition and has in past years proposed negotiations with the Mainland on a state-to-state basis. (4) Because of the various reasons discussed in the paper, neither party across the Strait can nor will accept the present status quo for long.

Given the gulf described above, there are only two solutions left in the China-Taiwan conundrum. The first is war. If we accept Clausewitz's dictum that war is an extension of politics, then war between the two armies would provide a very clear-cut outcome. If Taiwan is defeated, then it will be reunified with China on the conditions set by Beijing. If China is defeated, then Taiwan will become an independent nation-state, and the regime in Beijing will probably collapse from internal pressures.

The other solution is some sort of confederation or commonwealth such as our proposed Greater China Commonwealth. The GCC upholds the Mainland's paramount "One China" principle. At the same time, the model protects Taiwan's de facto independence and enjoins the two cross-strait rivals to cooperate on mutually beneficial projects, which hopefully will lead to greater trust and cooperation on bigger issues. Cynically speaking, if the GCC plan fails, then China and Taiwan can always resort to war to settle their differences once and for all. However, to borrow a slogan from the 1960's, it is time to give peace a chance.

The Maiden Issue of the Fairbank Report

We are pleased to introduce to the English-reading world THE FAIRBANK REPORT. Our goal is to provide incisive, analytical, clear-thinking and, at times, humorous critique in the areas of current events, public policy and politics, philosophy, popular culture, the media and business economics.

We hope you will enjoy and support the FAIRBANK REPORT.

Respectfully yours,

Jonathan Fairbank
CEO, the Fairbank Group
Editor-in-Chief, the FAIRBANK REPORT