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November 30, 2000

From Our Correspondent: Hirohito and the War
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From Our Correspondent: Making Enemies
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Asiaweek Time Asia Now Asiaweek

MARCH 31, 2000 VOL. 26 NO. 12

Seismic Changes

Chen Shui-bian will try to make peace with China and maneuver through a new political landscape. Is he up to the challenges?
and ALLEN T. CHENG Taipei

David G. McIntyre -- Black Star
Chen Shui-bian and Annette Lu

What a difference two-and-a-half percentage points make. The days following Taiwan's March 18 presidential election have been a swirl of events that would have been unthinkable even weeks ago. President Lee Teng-hui, long the hero of Taiwanese aspirations, is on the way out, scorned and discredited. The soon-to-be ruling Democratic Progressive Party (DPP), long the standard bearer of Taiwan's pro-independence movement, is debating a proposal to drop the advocacy of independence from its charter. A third major political force is emerging, thanks to supporters of presidential candidate James Soong Chu-yu. And all because Chen Shui-bian edged out Soong by two-and-a-half percentage points.

Few knew what was to come when the presidential race ended that Saturday evening. The winner was announced at 7:25 p.m.: Chen of the DPP, with 39.3% of the vote. Independent Soong was just 310,000 votes behind with 36.8%. Vice President Lien Chan, candidate of the ruling Kuomintang (KMT), received 23.1%. The voter turnout was nearly 83%. At DPP headquarters, more than 100,000 jubilant supporters of "A-bian," as Chen is informally called, celebrated wildly. Some wept for joy, others danced to campaign anthems like A-bian Rap Song. Yet others hollered, "A-bian dong suan" - or "A-bian is elected," in the Taiwanese dialect.

In another part of Taipei, emotions were running equally high, but in the opposite direction. Hundreds of irate supporters of Soong - a former Nationalist stalwart who bolted from the party after Lee Teng-hui refused to nominate him as Lien's running mate - gathered outside KMT offices and protested against Lee, whom they blamed for their defeat. Calling for Lee's immediate resignation as party chairman, they hurled eggs at the building and clashed with police. The next day, they were joined by thousands of other KMT members, many of them Lien supporters. Tensions grew as the protesters, unassuaged by Lee's promise to step down after a party congress in September, attacked the cars of arriving KMT officials. The police tried to disperse the crowd with water cannons, but the demonstrators maintained their vigil. Similar protests by KMT members were held in other cities around Taiwan and abroad.


COVER: Seismic Changes
Can president-elect Chen Shui-bian meet the historic challenges posed by a changing Taiwan - and by China?
The Challenge: Now comes the hard part
Reality Check: Beijing will have to deal with the new Taiwan
Profile: Chen's split personality

Editorial: Taiwan and China have reason aplenty to make peace
Editorial: Asia needs new policies to combat prostitution

South Asia: Clinton to India and Pakistan - Start Talking
'Limited War': Don't let the term fool you
Philippines: Sister Christine vs. Estrada - yet another scandal
Extended Interview: Salamat Hashim calls for independence
Myanmar: Behind the secret "Chilston" meetings
Inside Story: Asia's "Insiders" - four people who have blown the whistle on wrongdoing
Viewpoint: A Malaysian race for Islamization?

People: Sumo's big brother calls it quits
Heritage: The struggle to save Penang's old George Town
Art: Digital works blur the line between tech and expression
Books: Why healthcare was so bad in Suharto's Indonesia
Health: Noni - The craze over a smelly green fruit
Newsmakers: Thai "List of Shame" riles the privileged

Games: Microsoft's X-factor
Computing: IBM's Deep Blue man is now into e-commerce
Cutting Edge: An e-book horror story

Bankruptcy: The court-ordered restructuring of TPI suggests Thailand is coming to grips with deadbeat borrowers
Room to Improve: Inadequate laws in Indonesia and Korea
No Hype: Can Singapore's Pacific Internet regain investor favor?
Renong: The Malaysian conglomerate sells off key assets
Business Buzz: A deal to lift Singapore's spirits

Investing: How rising U.S. interest rates will affect Asia

Noticeably quiet, though, was China. In the run-up to the election, Beijing leaders, who have long considered Taiwan an estranged province, had threatened war if the island's people chose to go the way of independence. Given China's traditional hostility toward the DPP and its pro-independence platform, their response to Chen's election victory has been curiously muted (see story page 23).

One reason may be that Chen, a lawyer and former Taipei mayor who has been with the DPP since its founding in 1986, has remade himself as a pragmatist willing to deal with China. During the campaign, he toned down his pro-independence rhetoric; he said he would not declare Taiwan independent and promised to pursue talks with the mainland. In his acceptance speech, he used the term "Republic of China," rather than the "Republic of Taiwan" found in the DPP charter, and described his election as a victory for huaren, or Chinese people. Given Chen's conciliatory approach, Beijing appears to have adopted a "wait-and-see" policy.

But for most Taiwan people, China's low-key response took a back seat to the momentousness of the occasion. Chen's win in Taiwan's second direct presidential poll marks the first time an opposition party has peacefully taken power in Chinese history. The Nationalists have ruled Taiwan since 1949, when they were driven out of the mainland by the Communists. Chen's inauguration on May 20 will formally end 51 years of KMT domination.

The event is more than a simple transfer of power to the opposition. It also represents a milestone victory of "native Taiwanese" over "mainlanders." The former - whose ancestors migrated from China centuries ago - make up 73% of Taiwan's population. Yet the island has largely been controlled by the latter -who came to Taiwan with the KMT in 1949 - even though they represent just 13% of the populace.

For four decades, Taiwanese rights and interests were subjugated to those of the new arrivals, many of whom harbored the hope of reuniting with China. The DPP was formed to fight for the Taiwanese, who were less attached to the notion of reunification. Things began to improve in 1987 with the lifting of martial law (imposed in 1949). The next year, Lee Teng-hui became the island's first Taiwanese leader. Now Chen's victory marks a clean break with the mainlander-KMT past.

His election not only vindicated democracy in Taiwan, it also embodied the desire of many Taiwanese to seek control of their own destiny, free of historical baggage from the KMT-Communist conflict. "Taiwan may finally begin to divorce itself from the Nationalist-dominated chapter in history and assert itself with a new identity," says Sarasin Viraphol, a Thai academic and Asia specialist.

Ironically, China may have been a catalyst. While Beijing's tough talk probably scared some voters away from Chen, it may have prompted more of them to support him in defiance. At the same time, Chen shed - or at least hid - his pro-independence leanings and presented a more moderate image, making himself acceptable to a larger spectrum of voters. Opinion polls have long indicated that most Taiwan people are leery of the hardline pro-independence stance the DPP is traditionally known for.

Another factor behind Chen's victory was the issue of reform. The KMT has been soiled by its association with hei-chin ("black gold") - a term evoking the seamy world of money politics and triad gangsters. More than three-quarters of the voters opted for the candidates perceived as reformists, Chen and Soong. Both ran on promises to clean up the corrupt system. "The election turned on the issue of corruption and reform," says Shelley Rigger, a Taiwan expert at Davidson College in North Carolina. "And apparently Chen had a little more credibility as a reformer than Soong."

But perhaps the most significant factor was the split in the KMT. Lien and Soong together accounted for 60% of the vote. Had they joined forces, the KMT would undoubtedly have won - a fact that clearly rankled the protesters outside the KMT headquarters. But President Lee froze Soong out - because, say party insiders, he did not want the possibility of Taiwan someday being led by another "mainlander" (Soong was born in China's Hunan province). The KMT actually began fragmenting in the late 1980s when Lee, upon taking control of the party, proceeded to systematically purge mainlanders from the senior ranks.

Given Lee's role in wrecking the KMT's chances, there has been much speculation that he did it deliberately. Why would he do that? Because, say his critics, he was a closet supporter of both Taiwan independence and Chen's bid for the presidency. Rumors even circulated that Lee's people used "black gold" to support Chen's campaign. The outgoing president has denied backing Chen, but his detractors noted that, when campaigning for Lien, Lee concentrated his attacks on Soong rather than Chen.

Fueling the rumors has been the backing Chen received from those close to the president. Notable among them is Academia Sinica head Lee Yuan-tseh, a Nobel Prize-winning chemist, who openly endorsed Chen's candidacy. (Chen has since asked the scholar to be his premier.) Hsiao Bi-khim, the DPP's director of international affairs, denies that Chen got any help from Lee Teng-hui, though she admits that both see eye-to-eye on placing "Taiwan first" and building long-term "self-rule." She insists: "[Lee] supports these notions but doesn't support the DPP."

Chen now has his work cut out for him. He lacks a clear mandate, having won the election with less than 40% of the vote. And the KMT still dominates the Legislative Yuan, controlling 117 seats out of 224 (although the number is expected to shrink as some KMT lawmakers defect to Soong's camp). The DPP has only 71 seats. So Chen needs to work effectively with other parties to get anything done.

Chen will also have to find consensus within his own party. DPP member Chen Chao-nan has submitted a proposal to modify or get rid of its pro-independence position. (The move may have also been given some impetus by a statement by the Taiwan armed forces that they opposed independence, since their duty was to safeguard the nation's territorial integrity and prevent its break-up.) The bid to change the party's charter, however, could upset pro-independence diehards and precipitate a split between the DPP's hardline faction and its more pragmatic (but far larger) wing that is willing to go along with Chen's moderate stance.

Then there is the question of experience. Only 14 years old, the DPP is not fully ready for prime time, although Rigger notes that "Chen is probably as ready as anybody's going to be who hasn't come up through the KMT system." Unlike Lien and Soong, who in their KMT careers were given a string of key administrative jobs to groom them for higher office, DPP stalwarts have had few such opportunities. DPP candidates have won city and county executive positions, but the party has no experience at the central level. Indeed, besides Chen, the DPP has few members with Taiwan-wide reputations. Most who have achieved prominence are aging veterans, among them Chen's running mate Annette Lu, who will soon become Taiwan's first female vice president. She had spent more than five years in jail during the martial-law years.

For his part, Chen proved himself an able administrator during his four-year term as Taipei mayor (1994-98). The stint earned him kudos for making the city's government more efficient and responsive. But running Taipei is one thing, running all Taiwan, especially at this highly sensitive time, is quite another. Compounding his difficulties in assembling a capable team will be DPP members eager to pick up the spoils of their long-sought victory. Some have waited two decades for the opportunity and will be upset if Chen is too restrained in offering patronage.

Yet Chen may be prepared to rise above party politics and govern for a wider constituency. One of the first things the DPP announced after the election was that it would cooperate with other parties. "Chen is not the president of the DPP, he's the president of all of Taiwan," says DPP chairman Lin Yee-hsiung. Chen has said he would step down from the DPP hierarchy after his inauguration. And he has pledged to refrain from shaking up sensitive portfolios like defense, foreign affairs and mainland affairs, so that policy remains consistent.

Other matters on Chen's plate include wooing the business community and reforming the political system. For the former, Chen will have to overcome the DPP's anti-business image and its inexperience in making economic policy. "The party's financial expertise isn't good enough," admits Chen's campaign manager Chiou I-jen. But Chen does have some key business allies, notably shipping tycoon Chang Yung-fa, president of the Evergreen group. On March 20, the first trading day after the election, the stock-market index plunged 2.6%, but it recovered the following day, soaring 5.5%, the fifth-biggest gain in a single day.

Reforming Taiwan's "black-gold" culture will be harder. Campaign spending limits are routinely flouted; public, private and party funds are not separated or properly accounted for. Party-asset laws need to be introduced in order to apply greater disclosure and transparency. Previous efforts by DPP lawmakers to tackle money politics have largely failed. They have sometimes been met with intimidation, even physical attacks.

But perhaps Chen's greatest challenge will be relations with Beijing. He has gone out his way to offer an olive branch, even inviting the mainland's chief cross-strait negotiator Wang Daohan to his inauguration. Yet doubts remain about how effective he will be. "I don't think that Chen has offered anything substantive enough for China to consider," says Andrew Nathan, a sinologist at Columbia University who was invited to Taiwan to observe the election.

Indeed. Despite Chen's seeming eagerness to go to Beijing for negotiations, despite China's willingness to treat Taiwan as an equal (as indicated by its recent White Paper on Taiwan policy), there remains a gap between the two sides' positions. Beijing insists that the principle of "one China" be accepted by both parties before any talks. Chen, however, says he is willing to make "one China" a topic of discussion, but not a precondition for talks.

So the possibility of war, however remote, remains. Most foreign observers discount the Chinese military's ability to mount a full-fledged attack on Taiwan. "I expect there is quite precise planning on a variety of military options, including a full-scale invasion," says Robert Karniol, Asia-Pacific editor of Jane's Defense Weekly. "But successful implementation is unlikely at this stage." Winston Lord, former U.S. ambassador to China, is more dismissive of the mainland's capabilities: "It would be a million-man swim."

Still, Beijing's desire for reunification cannot be underestimated. "China is resolved to make whatever effort necessary to make Taiwan a part of the People's Republic," says Gao Heng, a Taiwan specialist at the Chinese Academy of Social Sciences in Beijing. And that, he adds, includes war - even if the U.S. and Japan should intervene. What could complicate matters is inflammatory moves by outsiders. "We should be cautiously watching if anti-China hardliners in the U.S. Congress create unnecessary conflict in China-Taiwan relations," says Kobayashi Yotaro, who heads the Japan Association of Corporate Executives. Japan, too, could add to the tensions. Conservative pro-Taiwan politicians, including Tokyo governor Ishihara Shintaro, are trying to invite Lee Teng-hui for a visit after his term ends.

The best hope may be for China and Taiwan to return to a 1993 accord, under which they held talks under the "one-China" principle, with each side having its own interpretation of the term. Gerrit Gong, a Washington-based Asia specialist, agrees that this is the best way forward: "What's practical is for Washington to say that we support 'one China,' but both sides have to figure out what that means."

In the meantime, what lies ahead for the KMT? If it is to revive, reform is essential. Wei Wou, head of the party's anti-Lee faction, blames the president for "black-gold" politics and infiltration by gangsters. "All the good guys he kicked out of the KMT and only the bad guys are left," he claims. Faction sources allege that Lee and his allies have begun to move assets into offshore accounts or sell them at big discounts to friends. Li Ao, a minor presidential candidate, even claimed to have unearthed Lee's Swiss bank account number.

Whatever the veracity of the charges, such practices would become a thing of the past if Lien has his way. After his defeat, the vice president called for immediate party reforms to get rid of criminal elements. Among the first to be caught up in the house-cleaning: Lee himself. Lee's reluctance to step down before September seems to be motivated by worries that it would leave the door open for Soong to return and take over. But with the continuing clamor for his ouster, Lee's position became increasingly untenable. On March 22, Taiwan media reported that Lee would stand down as KMT leader two days later, with Lien replacing him as acting chairman. The same day, Soong's supporters announced the formation of their political group, the New Taiwan People's Party.

If and when the KMT makes a comeback, the party is more than likely to find itself playing in a new ballgame. For better or for worse, Chen's victory has shifted the dynamics of Taiwan's domestic politics, as well as those of cross-strait relations. The island will never be the same again. And everyone - the KMT, China, the international community - better start getting used to it.

With additional reporting by Paul Mooney/Beijing, Samuel Gilston/Washington, Julian Gearing/Bangkok and Murakami Mutsuko/Tokyo

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