Written by Laurence Brahm - Published by South China Morning Post on 12/14/2004

Following the surprise result in Taiwan’s legislative election, will President Chen Shui-bian show his cards as an independence ideologue or a political pragmatist? History will remember him based on what he achieves in the nest three years. This is tricky for Mr Chen, who achieved power largely by antagonizing Beijing. But pushing independence is not practical. A war across the Taiwan Strait would destroy all economic and social achievements by both sides, and consign Mr Chen to the dustbin of history.

So, if he wishes to be remembered positively, Mr Chen has only one road to take. But can he close the gaps in cross-strait relations? His hands are partially tied because he was elected on controversial ticket, preventing him moving too radically or too fast. How things develop will largely be determined by the political mood in Taiwan.

Beijing has a direct effect on this mood, and can influence it for better or worse. Every time the State Council’s Taiwan Affairs Office hits out Mr Chen, it merely fans independence sentiments. Sometimes it is better to say nothing.

But if Taiwan Affairs Office were to talk of promoting peace and economic development, rather than just directing broadsides at Mr Chen, it would demonstrate a more sensible way of handling the domestic realities. The current approach is outdated, and not in keeping with the skilful style that new leadership had demonstrated in latin America and Europe over recent weeks.

Moreover, both sides have failed to play the key card; cross-strait economics. Economic integration is inevitable, and obvious to anybody visiting both sides. Beijing and Taipei need to recognize the urgency of economic integration, and neither should underestimate the unpredictability of US policy, especially with Condoleezza Rice in a position of great power. Her frame of reference in understanding China is the former Soviet Union. The greatest fear on both sides of the strait is that Taiwan will become a battleground for a fundamentalist US administration “containing” a China, which they cannot understand.

Economics is where dialogue should start. While Taipei’s policy is to promote diversification of investment and trade away from the mainland, this makes little sense.

During the 1980s, Taiwan was one of the Asian dragons, its economic boom leaving the rest of China lagging behind. Today, this situation has reserved; Taipei’s infrastructure is in a 1980s time warp.

The best thing Mr Chen could do to be remembered by the Taiwanese people is reactive the economy. That will only come through economic integration with the mainland, and cross-strait reciprocal investment and trade references. It would not be too far-fetched to suggest special investment privileges for Taiwanese companies in certain mainland cities in exchange for exchange mainland companies listing on the Taipei stock exchange. It will be more than a decade before Beijing gets its capital markets in order. If a breakthrough could occur, the value to both sides in inbound institutional investment could be unprecedented. Such capital remains skittish when the volume of the rhetoric rises.

The problem is that Beijing distrusts Mr Chen, who has changed course so many times that he has even irritated sympathizers in Washington. So, dialogue cannot move forward until Beijing is assured that Mr Chen openly recognizes “one China”. This puts him in a political predicament, as local sentiment and political factions are pulling in different directions. It appears that he would like to say he does recognize “one China”, without actually saying so directly, but this does not appear acceptable in Beijing.

For a breakthrough, Mr Chen needs the right expression. Perhaps he should look the language in the 1972 Shanghai Communiqué between China and the US. If he finds the wording, perhaps both sides might finally be able to move ahead.

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