September 16, 2002 | Commentary on Asia
United Front on Taiwan: Concerted Western Action Could Supply Subs
Because Taiwan is a democracy, one might think that democratic
Europeans would share Washington's determination to deter Beijing
from inflicting its will on Taiwan by force. Instead, Sinophobia
continues to handicap the sale of advanced submarines to
Europe is China's second largest export market (the United States
is first), and China now is a member of the World Trade
Organization (WTO), so the trade leverage is not necessarily in
Beijing's hands. But by ruling themselves out of Taiwan's
multibillion-dollar arms market, European politicians stunt their
With the collapse of German engineering giant Babcock Borsig and
another 700 shipyard workers out of jobs, Chancellor Gerhard
Schröder might rethink Germany's ban on exporting self-defense
items to Taiwan before the Sept. 22 elections, though no one would
bet any money on it.
For the past 20 years, Taiwan has been in the market for a dozen
advanced submarines to defend itself against the ever-modernizing
Chinese submarine fleet. The Dutch submarine yard RDM sold two subs
to Taiwan in 1980, and for that $1.1 billion sale, the Dutch
government paid a modest price; the Chinese forced the Dutch
Embassy to go four years without an ambassador.
Last year, President George W. Bush committed the United States to
providing Taiwan with these submarines - even though the United
States makes no non-nuclear subs. The Bush administration therefore
must get Taiwan's subs from Europe, but such a deal will be
shrouded in complex business mergers.
The resulting submarine project could include a hull from the
Netherlands, a power plant from Germany, U.S. electronics, and
assembly by European engineers in American shipyards.
European shipyards, defense firms and their workers would benefit
vastly more by simply selling the subs directly to Taiwan, but
because the Americans are the only ones willing to ignore Chinese
threats, the Americans will get at least half of the deal.
Washington ignores China's threats because the United States has an
annual trade deficit with China of $98 billion to $100 billion, and
America (next to Taiwan) is China's biggest source of direct
Europe, ironically, enjoys much the same immunity, if only it
would use it. While China imports $23 billion to $29 billion worth
of European goods a year, Taiwan imports about $15 billion to $16
billion. Europe clearly has more trade leverage against
What's more, the European Union imported $66 billion from China in
2000 and $74 billion in 2001. A final comfort to Europe is that
China, now in the WTO, has less standing to make trade-related
threats. So, where's Beijing's trade leverage against the European
Union? There is none.
For at least five years, the Pentagon has been fretting about the
growing Chinese submarine threat to Taiwan and to Western Pacific
sea lanes in general. The appearance in the Chinese fleet of
super-quiet Russian-built Kilo 636 subs compounds the issue.
Providing Taiwan with advanced subs is the ideal strategic
If German Dolphin subs are sold to Taiwan, Israel also has an
opportunity to benefit. Israel likely would piggyback onto the deal
and purchase three vessels, doubling its submarine fleet.
These subs would be built by the German shipyard HDW (the world's
biggest non-nuclear shipyard, 75 percent of which was purchased
last year by American investors) and considered among the most
advanced in the world.
However, there are impediments. First, Israel will have to turn
its German blueprints over to the United States and remove itself
from direct involvement in the Taiwan transaction. The Germans, it
seems, have signed over all intellectual property related to the
Israel. The German Dolphin design also directly competes with a
Dutch Moray design. Since the Dutch government claims no legal
authority over RDM's 1980 sale of two submarines to Taiwan, it has
deniability. If Taiwan used the RDM design, RDM engineers and
craftsmen would stand to profit.
But RDM's prospects are dimming. Northrop Grumman, powered by the
Israeli factor, has reportedly signed a deal with HDW to build and
market the world's most advanced non-nuclear subs.
The Germans have kept their promise and never sold arms to Taiwan,
but the Dutch, French and U.S. governments have. China cannot
punish everyone for arms sales to Taiwan.
China's dilemma was highlighted by the 1992 fighter jet sales to
Taiwan by both France and the United States. In several big-ticket
purchases, France and the United States were competitors; to
sanction one meant China had to buy from the other. With this in
mind, European bureaucrats have concluded they can still win part
of the Taiwan submarine contract without antagonizing the Chinese,
provided it is laundered through the Americans.
Although the German government still professes to oppose the sale
of submarines to Taiwan, a Taiwan newspaper, Liberty Times, quoted
an HDW spokesman June 6 as saying, "propulsion plants [needed to
build the 'no noise, no exhaust' German motors] aren't covered in
the German arms export laws," and expressed "unusual optimism"
about the Taiwan deal.
It appears that Berlin now hopes to cushion the blow to Beijing by
telling the Chinese that sub sales are inevitable.
Europe is starting to see that a U.S.-European Union united front
on arms sales to Taiwan may be the best guarantee of stability in
the Taiwan Strait. China is in no position to punish the entire
world for accepting Taiwan's right to exist, and cannot sanction
its biggest trading partners.
If convinced the international community will oppose a military
option, Beijing will be obliged to abandon threats of force against
the island, and instead offer significant economic, and political,
incentives to join "one China."
This, not an arms embargo against Taiwan, will enhance peace in the
region. And thus, European defense firms can join their American
colleagues in doing well by doing good.
Originally appeared in Defense News Weekly