The Cable

White House set to announce Taiwan arms deal

Three weeks after the president's visit to China, the Obama administration is getting ready to announce a package of arms sales to Taiwan that could complicate delicate relations between Washington and Beijing.

According to Taiwanese government sources, the package includes most of the items the United States and Taiwan agreed upon previously, but not F-16s or submarines. The sale could result in a stalling of the recently renewed military-to-military ties between the U.S. and China, which were restarted with fanfare this summer.

"There will be an arms package [sent from the White House to Congress for approval] but they never told us exactly what the items will be," said one Taiwanese government source, who added, "From other information that we gathered it seems to us the F-16 will not be in this decision or anytime soon."

Taiwan's deputy national security advisor, Ho Szu-yin, is in Washington this week and is said to be talking with the administration about the issue.

The Obama White House has been extremely cagey about whether the Taiwan arms sales would continue, in what form, and when. Eager to set U.S.-China relations on the right foot, U.S. officials have kept Taiwan's diplomats at arm's length, according to Taiwanese sources, giving them little information on the arms-sales package.

White House officials did tell the Taiwanese not to submit a request letter for the F-16s (so they wouldn't have to reject it), the sources said. That's the same as what happened under the last administration when, on three occasions, the Taiwanese tried to submit a letter of request for F-16s to Bush. Back then, a Taiwanese government source explained, the Bush White House said, "[D]on't do it right now, it's not good timing. You will get an answer you don't want to hear."

The Obama administration also told the Taiwanese that the arms-sales announcement would come only after the president's trip to Beijing and indicated the announcement would come before his trip to Copenhagen, which is currently slated for Dec. 18. Taiwanese sources now say they expect the decision shortly after Obama returns from the climate-change conference.

Although largely silent in the public arena, administration officials have indicated that the sales are moving forward.

"I can assure you this administration will not waiver in its commitment to provide those defense articles and services necessary for Taiwan's defense," Assistant Secretary of Defense Chip Gregson told the U.S.-Taiwan Business Council in September.

China has made clear its opposition to any new U.S. arms sales to Taiwan, telling Secretary of State Hillary Clinton as much directly during the U.S.-China Strategic and Economic Dialogue in Washington in July.

The People's Republic of China also lobbied the U.S. to scrap the planned arms sale to Taiwan during a June visit to Beijing by Michèle Flournoy, the under secretary of defense for policy. Flournoy's visit was also when the Chinese agreed to resume the mil-to-mil discussions.

Now there is a concern that China will halt that cooperation, for at least a time, and take other punitive measures to protest the impending Taiwan arms deal. The PRC cut off military-to-military relations with the United States following the 2008 sale of arms to Taiwan by the Bush administration.

Some experts say it's not a huge issue.

"Given the broad agenda that Presidents Obama and Hu [Jintao] laid out in Beijing last month, I expect China to register their complaints, register their disapproval, and then move on," said Abe Denmark, Asia expert at the Center for a New American Security.

The Taiwanese government has already budgeted around $4 billion to purchase 66 F-16s, but Taiwanese officials do not expect a deal to happen. The initial agreement also raised the possibility of Taiwan purchasing diesel submarines, but that is also seen as very unlikely.

F-16 sales are also an issue for members of the U.S. Congress, who are concerned that the production line for the planes might shut down if foreign sales trail off. But when the White House sends whatever arms deal it decides on to Congress, only the Senate Foreign Relations Chairman John Kerry, D-MA, and House Speaker Nancy Pelosi, D-CA, have the right to object and neither is likely to do so.

A host of items remain left over from the arms-sales agreement made between the Taiwanese government and the Bush administration, including Black Hawk helicopters and Patriot missile batteries, both of which are expected to be in the package. The Bush team put through some arms sales to Taiwan just before leaving office, including Apache helicopters and destroyers.

The Obama administration is clear on its support for standing policies regarding Taiwan, including adhering to the Taiwan Relations Act, which pledges that America will help Taiwan maintain its defense capabilities. But over the years, U.S. arms sales to Taiwan have become a political football, more symbolic than strategic considering the towering and growing imbalance of power across the Taiwan Strait. China continues to build up its missile inventory opposite Taiwan, which is now estimated to top 1,300 missiles capable of hitting Taiwan.

"These arms sales are at least partially a response to China's military buildup opposite Taiwan," said one Asia hand. "The rapprochement across the strait simply hasn't been reflected in China's military deployment."

When the sale is announced, pundits on both sides of the Pacific will be sure to praise or decry the move as Obama either bravely standing by Taiwan or dangerously thumbing his nose at the Chinese. But following the harsh criticism of his trip to Beijing, criticism that the White House feels was unfair and unsupported, the White House is looking for a new story line.

One Asia hand said that the White House might see the arms-sales announcement as "a repudiation of the critics of the president's trip to Beijing," because it combats the perception that Obama is kowtowing to the Chinese.

"This shows that China policy occurs in more than one-week increments; you can't judge the success or failure from one trip," the expert said.


The Cable

Congress prepares to pass new measure hitting Iran's oil industry

As the clock winds down on President Obama's year-end deadline for Iran to respond to his efforts at engagement, Congress is preparing to pass language restricting U.S. loans that aid the Islamic Republic's oil industry.

The policy language is part of the fiscal 2010 state and foreign operations appropriations bill, which is moving on the Hill as part of a mammoth catch-all spending bill that's expected to move through both chambers this month. The bill would prevent the Export-Import Bank of the United States "from providing credit, insurance, or guarantees to any project controlled by any energy producers or refiners that contribute significantly to Iran's refined petroleum resources," according to a summary document.

It's been more than a month since the new fiscal year started and several federal agencies are operating under a stop-gap funding measure called a "continuing resolution" that keeps the government humming but doesn't allow for new funding initiatives to begin. That expires on Dec. 18, giving a semi-firm deadline for Congress to pass the real funding bills.

Democrats had promised not to resort to using such sloppy means of doling out appropriations, as was the usual practice in the Bush administration. But they got hampered by other priorities and the GOP stalled the process further by making issues out of things like funding for prisoners being transferred from Guantánamo Bay, Cuba.

Overall, the state and foreign ops funding would be $48.8 billion of discretionary budget authority for fiscal year 2010, $3.3 billion below the president's request. That's also about $1.2 billion less than what was given in fiscal 2009 including supplemental bills. A fiscal 2010 supplemental is widely expected.

Sources tell The Cable that for fiscal 2011 the administration request will be about 11 percent above that level, or at least that's the number decided on by the White House Office of Management and Budget, subject to further ongoing negotiations. OMB declined to comment.

Here are some of the other highlights in the bill:

  • Diplomatic and Consular Programs: $8.227 billion, $1.164 billion above 2009 and $733 million below the request, for diplomatic operations and to hire more than 700 new Foreign Service personnel
  • Operating Expenses for USAID: $1.39 billion, $330 million above 2009 and $50 million below the request, to allow USAID to hire 300 additional Foreign Service Officers as part of the Development Leadership Initiative (DLI)
  • Assistance for Afghanistan: $2.611 billion, $4 million below the 2009 enacted level including supplemental appropriations and $151 million below the request;
  • Assistance for Pakistan: $1.459 billion, $17.5 million above the 2009 enacted level including supplemental appropriations and $123.5 million below the request; and
  • Assistance for Iraq: $467 million, $142 million below the request
  • Assistance for Israel: $2.220 billion, which combined with the $555 million of forward funding in the 2009 supplemental is the same as the $2.775 billion in the request
  • Assistance for Egypt: $1.295 billion in economic and security assistance, which when combined with the $260 million in forward funding in the 2009 supplemental is the same as the request
  • Assistance for Jordan: $543 million in economic and security assistance, which when combined with the $150 million in forward funding in the 2009 supplemental is the same as the request
  • Assistance for Mexico: $231.6 million, which when combined with $254 million in forward funding for Mexico in the 2009 supplemental, results in a total of $485.6 million for bilateral programs for counternarcotics, law enforcement, and development assistance programs
  • Assistance for Central America: $83 million for regional security and law enforcement programs with the countries of Central America
  • Assistance for the Caribbean: $37 million for a new Caribbean Basin Security Initiative, which seeks to achieve security and prosperity in the region
  • Assistance for Colombia: $522 million
  • HIV/AIDS: $5.709 billion (including $350 million for AUSAID HIV/AIDS programs), $200 million above 2009 and $100 million above the request, for international HIV/AIDS prevention, treatment and care programs including $750 million for multilateral programs through the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria
  • USAID Global Health and Child Survival Programs: $2.42 billion to USAID, including for HIV/AIDS, which when combined with $50 million for global pandemic programs in the FY 2009 supplemental is $134 million above the request and $440 million above 2009, for other global health programs