Taiwan Communiqué No. 101, May 2002

The National Security Bureau scandal

The Next Magazine confiscation

NSB Slush fund trophies

In mid-March 2002, two publications in Taiwan, Next Magazine and the China Times, published extensive information about two secret funds, set up in the early 1990s under former President Lee Teng-hui. One of the funds was designed to support activities to help boost Taiwan's international diplomacy, while the other one was reportedly focused on intelligence activities in China. Both were run under the National Security Bureau (NSB), in an attempt by then-President Lee to circumvent the regular diplomatic and security channels, which he didn't trust.

While in most Western democratic countries such articles would be considered part of the customary rough-and-tumble of the democratic process and freedom of the press, this particular situation warrants a different perspective, due to Taiwan's special national security situation and the China threat.

The information in the two articles is based on secret NSB documents stolen some two years ago by National Security Bureau colonel (NSB) cashier Liu Kuan-chun. At that time, Mr. Liu tried to blackmail the government by threatening to defect to China and provide Beijing with secret documents unless Taiwan gave him a pardon in an embezzlement case. He didn't get the pardon, fled Taiwan and is reportedly in China.

The documents apparently also found their way to James Soong's People's First Party (PFP), which _ instead of turning them in to the authorities _ made them available to the two publications, in an apparent attempt to embarrass former president Lee Teng-hui. Both publications are rabidly pro-China. The author of the Next article is well-known as a mouthpiece for Beijing, and is also the younger brother of the PFP's deputy propaganda chief.

The Taiwan authorities considered the leaks so serious that they obtained a search warrant and on 19 March 2002, the offices of Next Magazine were raided by police, and 160,000 copies of the magazine were confiscated. The matter led to letters of protest to President Chen Shui-bian from the New York-based Committee to Protect Journalists (CPJ), which asked the Taiwan government "…not (to) use national security concerns as a pretext to censor reporting."

Taiwan Communiqué comment: Back in the 1980s we worked long and hard to end press censorship by the Kuomintang regime in Taiwan. We appreciate the assistance the CPJ provided in those dark days, but in the present situation we respectfully disagree with the CPJ assessment of the situation.

In the present case, the raid and confiscation are regrettable, and perhaps were not necessary. However, the issue of national security is very relevant. There are apparently people — both within the NSB, in the opposition PFP and associated with Next Magazine — who have stolen documents and information related to national security issues and made them available to China.

Many people in the security services are old-style hard-liners (the same ones who were responsible for the repression and press censorship in the 1980s) whose loyalty is to unification with China. The Chen Shui-bian government has inherited this ambivalent political structure, and is trying to clean it out and open it up. It is not only hindered in making Taiwan more open and democratic by the old-style KMT and the newly-formed PFP, but the country's survival is still threatened militarily by a bullying China.

On the following pages, we present some further perspectives on this issue from the Taipei Times.

NSB furore raises loyalty question

This editorial first appeared in the Taipei Times on 24 March 2002. Reprinted with permission.

A national security adviser interviewed by this paper a couple of days ago remarked that the furor over the National Security Bureau's (NSB) secret funding is not a freedom of the press issue, nor a matter of budgetary regulation, nor even — and if there is any secondary significance it should be this — a question of Oliver North-style secret foreign policy and a lack of accountability. It is, he said, a security issue. So it is, and almost anything else is so much smoke and mirrors.

The basis of this case is that secret documents have been removed from the nation's premier intelligence organization and given to the press. Unfortunately in the criticism of the High Court Prosecutors' Office for carrying out the raid on Next magazine, and opposition attempts to embarrass President Chen Shui-bian for continuing a practice instituted by the principal opposition party when it was in power — preposterously hypocritical as such attempts seem — we are in danger of losing sight of this fact. National secrets have been stolen and given or sold — we don't know which — to the press, and probably passed on to Taiwan's enemies.

Obviously one focus of the investigation has to be on who stole the secrets. But just as importantly is the question why.

Conventional wisdom has so far ascribed the leak to Colonel Liu Kuan-chun, the missing alleged embezzler of NSB funds. That would be bad enough. After all Liu was the NSB's chief cashier and, in his knowledge of who was paid, where and for what, literally the keeper of the bureau's crown jewels. But another fear is now haunting the NSB, namely that there is an NSB leaker in place, conniving with the PFP — the role of which in disseminating their information is becoming more obvious by the day — to try to cause as much damage to the government and ex-president Lee Teng-hui as possible.

Even damage control represents a huge problem. One can assume that anything the PFP knows China also knows, since the PFP makes no secret of where its loyalties lie. So does China only know what Colonel Liu knows, which would be bad enough but at least Liu hasn't been around for the last two years, or is there a more up-to-date source, leaking current secrets to the PFP and thence to Beijing?

And this of course raises the whole question of loyalty and, incidentally, of press freedom. Taiwan is at war. People too often forget this. It is in a state of war with China. It has repeatedly sought to end this but China refuses to renounce the option of unification by force. For all the talk of Taiwan investment in China and the building of cross-strait ties, China is still belligerent toward Taiwan. It is amazing therefore that there are so many in Taiwan's intelligence and security services, its military and its government ministries, in the legislature and in the media who are sympathetic to this foreign aggressor which seeks to incorporate Taiwan unwillingly, if necessary, into its empire.

What is to be done about such people? Taiwan is perhaps unique in history in having an administrative and cultural elite that actually seeks to undermine its sovereignty and hand it over to an enemy power. So far the DPP government has shied away from the question of who can be trusted, falling for the reunificationist trick whereby any questions about loyalty are called anti-democratic or provocative of ethnic division. But it's the pro-China lobby that provokes ethnic division if only by trying constantly to damage Taiwan's domestic and international interests. The NSB furor is an example of this in action. Let us hope that it focuses the mind of the government on the loyalty question at last.

The eight-inch wafer debate

Wafer spinache
"Popeye" Taiwan trying to fight off China, strengthened by its own "wafer spinache."

On 29 March 2002, the Taiwan government announced a controversial decision to allow Taiwan's chip-makers to set up eight-inch wafer production plants in China. The chipmakers had pushed for such measures in order to lower their production costs in the face of increasing international competition, and at the same time to get a head start in the Chinese market. However, others had counseled against such a decision, since it would undermine Taiwan's international position.

The eligibility for applying to set up eight-inch wafer foundries in China will be contingent on their investment in Taiwan. In addition, they will not be eligible for application until their 12-inch wafer fabrication plants have ramped up mass production. Mr. Yu defined "mass production" as the plant's "normal output of ordered wafers for at least six months."

The total number of eight-inch wafer foundries set up in China, however, cannot exceed three before 2005. A cross-ministry task force will also be established to review the qualifications of the applicants and oversee the operation of such facilities in China.

Prime Minister Yu said that he is confident that Taiwan has the capability to become the global manufacturing center for 12-inch wafers in the near future. "It's estimated that in 2005 Taiwan will have a more mature manufacturing technology for 0.13 micron process level and that Taiwan will have eight 12-inch wafer manufacturing plants set up by that time," he said.

The following is an OpEd article on the issue by Professor Chen Wen-yen, former president of the Formosan Association for Public Affairs (FAPA) in Washington.

Will Taiwan be derailed by China investment?

By Professor Chen Wen-yen, former President of the Formosan Association for Public Affairs. This article first appeared in the Taipei Times on 21 March 2002. Reprinted with permission.

It's all very well discussing the controversial decision to allow eight-inch wafer manufacturers to migrate to China in terms of its industrial, economic and security implications. But we must also consider the effects that such a technology transfer may have on Taiwan's international and diplomatic standing. Above all, we need to consider the possible negative impact it may have on the US government and the US public, and how it may affect their support for Taiwan.

The bottom line in US policy on Taiwan is clear. The US will absolutely not accept a non-peaceful solution to the "Taiwan issue." Further, since Taiwan is a mature democracy, any solution must be agreed on by the people of Taiwan. The US does not have a fixed opinion on whether the solution should be unification, independence or "one country, two systems," but it does hold that the solution must be peaceful and must have the consent of the people.

US President George W. Bush has robustly and unequivocally insisted on a peaceful solution. With peace thus established as the basic premise, public opinion in Taiwan has a crucial influence on US policy. Bush has repeatedly stated his support for the American values of democracy and liberty, and if the people of Taiwan continue to support democracy and liberty and reject China's authoritarian government and its "one country, two systems," the US will be duty-bound to support Taiwan.

If, however, Taiwan blindly invests on a large scale in China and people move there in large numbers, enhancing Chinese power, and if Taiwan prepares to transfer technology, a signal will be sent to the US government and its people that Taiwan is slowly moving from economic to political integration with China, a signal that maybe one day, Taiwan really will become a part of China.

Such considerations may cause the US to modify its support for Taiwan. In fact, some of the more conservative of US think tanks and senators are quietly beginning to show concern over Taiwan's future, and coming round to the view that, in its own national interest, the US should review its Taiwan policy.

Indeed, some analysts believe that one of the reasons the US declined to include AEGIS-equipped destroyers in last year's arms sale was that the ships would fall into Beijing's hands if Taiwan and China unified.

If Taiwan continues to allow large-scale investment in China and the transfer of its leading industries, it will become very difficult to persuade US public opinion of the need to assist in the protection of Taiwan in the event of war in the Taiwan Strait. It would be unreasonable to ask the US to sacrifice its soldiers when Taiwan's only concern is economic gain.

I once asked a US senator to support the Taiwan Security Enhancement Act (TSEA). I talked to the senator's assistant, and he told me that Taiwan's blind push for economic investment in China was the reason for the senator's refusal to support the TSEA.

The gods help those who help themselves. The people of Taiwan preoccupy themselves with profit to the point of neglecting their own future, failing to take the kind of assertive action that would show the world that they have a burning desire to protect democracy, liberty and independence.

Such behavior may have a negative impact on the willingness of the world, and the US in particular, to support Taiwan. In the debate over investment in China, Taiwan's government must exercise the utmost care in striking a judicious balance between national security and survival on the one hand — and economic development on the other. The challenge will be a true test of its political wisdom.

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