Taiwan Deferring US Weapons Payments?

President Ma Ying-jeou's administration intends to defer payment for a massive US shipment of military hardware according to contested Taiwanese media reports and a website affiliated with the Taiwanese military.

The reports have been denied loudly by the Ministry of National Defense and the American Institute in Taiwan, the de facto US embassy. Taiwan's Deputy Minister of National Defense Andrew Yang said that Taiwan in more than 30 years had never delayed payments for US arms sales and it doesn't intend to now.

Observers nonetheless believe there is a grain of truth in the story, and that Ma would like to use the deferred funds to move Taiwan's armed forces to an all-volunteer force, partly to fulfill a campaign promise and partly to remove the burden on young, well-educated Taiwanese college professionals to serve in the military.

If the story is true, the Obama administration in Washington, DC, would almost certainly breathe a sigh of relief. That is because if Taipei delays payment, the US government gains an easy out in a tough situation. The US administration, strapped by the war in Afghanistan, facing vast budget deficits and a faltering economy as well as trouble across the Islamic world, is displaying an increasing reluctance to deliver the weapons out of a desire to maintain stable relations with Beijing.

Indeed, Chen Bingde, the chief of the general staff of the People's Liberation Army, is expected to tell his US counterparts this week to stop selling weapons to Taiwan and end surveillance activities off China's coast, according to a report in the South China Morning Post in Hong Kong.

The weapons in question include 60 UH-60 Black Hawk utility helicopters, 31AH-64D Apache Longbow attack helicopters and six PAC-III missile defense batteries. The reports further claimed that procurements requests for F-16C/D aircraft and diesel submarines would also be delayed, as well as the domestic development of a high-tech missile corvette. The first batch of AH-64Ds was expected to be delivered in the first quarter of 2014. The Black Hawks were to begin delivery in 2016, the PAC-3s shortly after that. The reports say that delivery of UH-60 Black Hawk utility helicopters, AH-64D Apache Longbow attack helicopters and PAC-III missile defense batteries would be delayed if the ministry decided to delay payment for those platforms.

Few countries have to lobby as hard to get their hands on US-made weaponry as Taiwan. Although Washington is bound by law to provide the self-governed island with defensive arms, US administrations have been finding compliance difficult as Beijing's reactions to US-Taiwan arms deals have become more ferocious.

US arms sales to Taiwan are currently assessed as the principal irritant in the Sino-US relationship.

After the most recent package was announced by the Obama administration in January 2010 -- mainly covering the very items the Ma administration now allegedly wants to delay -- the Chinese not only suspended military exchanges and security talks but also threatened the US with economic sanctions.

In order to avoid a repeat of Beijing's strong reaction, the Obama administration has so far refrained from providing Taiwan with the new F-16C/Ds that President Ma on numerous occasions has asked for and apparently has back-pedaled on a promise to deliver a crucial mid-life upgrade for Taiwan's existing fleet of F-16A/Bs.

In a corresponding development, a number of influential think tanks and former high-ranking US officials have in recent weeks called on Washington to rethink what they say is an outdated commitment to Taiwan's security to get into better terms with Beijing.

Retired US State Department official Charles W. Freeman, the main interpreter for Richard Nixon in his 1972 visit to China, warned in a May 10 address to the China Maritime Studies Institute in Newport, Rhode Island, that the Chinese government is poised to launch a new policy review of its relations with the United States and "Americans cannot safely assume that China's recent objections to US arms sales to Taiwan or other military actions on our part are pro forma or 'just more of the same.' It's at least as likely that we will soon once again confront the necessity to choose between the self-imposed shackles of longstanding policy and the imperatives of our long-term strategic interests."

On the other hand, however, Washington remains under significant pressure to continue offering arms to Taiwan to assure its allies that the US will continue being engaged in Asia Pacific and also in order to counter political flak at home from Republicans.

"It looks as though the Taiwanese government is signaling to a number of audiences – domestic ahead of 2012 elections; China on improved ties; US on money, or perhaps an easing in the relationship or compliance to wider US policy interests," a Hong Kong-based security consultant told Asia Sentinel, pointing out that Washington wouldn't be overly concerned with a payment delay anyway because arms sales to Taiwan are covered by government guarantees to the weapon manufacturers.

"Deferring payments is therefore not the problem; it would be in purely commercial transaction – and may even be welcomed if the deferment suits wider US foreign policy objectives, as it may well do in this case", he said.

The all-volunteer military program the Ma administration reputedly needs the money for has been a hot topic ever since the KMT's Lien Chan made it part of his campaign platform when running against then-president Chen Shui-bian of the Democratic Progressive Party (DPP) in 2004.

Lien lost the race, but the genie was out of the bottle. A professional force would relieve Taiwanese youth from the burden of universal service and allow highly educated university graduates to enter the job market earlier.

During his presidential election campaign in 2008, Ma pledged that Taiwan would complete the implementation of an all-volunteer military within four to six years. In late March, his government identified 2015 as the goal despite financial difficulties. Back then, officials talked about the ample idle plots of land, buildings and camps the military owns that could be sold to meet the objective.

"The implementation of a military made up of volunteers is the major aspect of the Ma administration's defense policy," Wang Jyh-Perng, a reserve captain of the Taiwan Navy and associate research fellow at the Association for Managing Defense and Strategies, said in an interview.

"Based on political considerations reflecting public opinion, it would almost be impossible for any political party to support maintaining the current system."

But, Wang said, turning a conscript military of conscripts into a professional one won't come cheap.

"It's estimated that for every 10,000 volunteers, personnel costs will increase by about US$210 million." Taiwan maintains a level of 275,000 troops, but a five-year plan aims at trimming the size of the island's armed forces by 60,000.

Since the current conscription system with its service period of less than one year means servicemen leave the military right after getting familiar with processes and their weaponry, an all-volunteer force is perceived as significantly more punchy. While the Ma administration is pushing for its implementation, it is thus seen as bolstering national defense. Therefore, Ma, who has widely been criticized for letting the military wither, finds a way to get re-elected in 2012 by getting rid with a military made up of conscripts as an alternative to presenting his constituency a mediagenic last-minute US approval of annual arm sales to Taiwan.

Rupert Hammond-Chambers, president of the US-Taiwan Business Council, echoed Deputy Minister of National Defense Yang dismissed the delay allegations as humbug.

"The main thrust of this story is wrong. There have been no adjustments to the Letters of Acquisition (LOA) for Apache and Black Hawk nor PAC-III", Hammond-Chambers said in an interview.

The head of the US-Taiwan Business Council, which among other things also functions as a conduit between Taiwan and the US defense industry, added that changing payment schedules or terms and conditions of signed LOAs is not in the cards.

"It hasn't happened nor do US companies expect it to happen", so Hammond-Chambers, nonetheless warning that the payment delay story itself would be damaging if the Ma government does not continue to push back.

"Andrew Yang gave a good start, but they need to keep at it. Misperceptions in DC will be used by those who reflexively oppose arms sales to Taiwan to undermine the process."

Wendell Minnick, a senior observer on Taiwan military affairs and Asia Bureau Chief for the authoritative Defense News, asked about the unnamed Hong Kong-based security consultant's statement, that the Obama administration would welcome a delay, replied that "This is correct, and agreed that "in this kind of atmosphere" Taiwan would have a tough time pushing for the release of F-16C/Ds and even for upgrades to the older F-16A/Bs.

"It doesn't help them when they plead for new toys then say they can't pay for last year's Christmas gifts. Kind of reminds me of US debt to China", Minnick joked.

He also pointed out that despite Deputy Minister of National Defense Yang's statement that his country within the last 30 years had never delayed payments for US arms sales, "They've been late on payments on different programs before due to budgeting issues, but eventually they [the US ]got their money.