DEPARTMENT OF STATE BRIEFING PAPER TOP SECRET/SENSITIVE TAIWAN 3 I. Background and Developments Since February 1973 A. Peking's campaign to woo the ROC into negotiations Shortly after your February 1973 trip to Peking, the PRC initiated a major public campaign to induce the Nationalist leadership into negotiations. On February 28, the date of a 1947 Taiwanese uprising against the Nation- alist government, two well-known PRC officials -- one a former KMT general ~- made an open appeal to “administra-~ tive and military personnel" on Taiwan to initiate secret negotiations which would reunify China. The appeal included an implicit warning about the dangers of inde- nendence for the island or of turning to the Russians for support. The "liberation" theme, previously a key clement in Peking's propaganda about the future of Taiwan, has now been played down in PRC media in favor of an ‘emphasis on national reunification. Peking has continued to actively host Overseas Chinese and Taiwanese resident in Japan and the U.S. in an effort to propagate its line that any incorporation of the island into the mainland's political structure will be a long-term process, and that efforts will be made to insure that the economic prosperity of the population on Taiwan will not be reduced as a result of reunification. (More than half of all American citizens who enter China are Chinese-Americans, with Taiwanese resident in the U.S. being another major category of visitors to the mainland.) During the summer Chairman Mao himself received two Chinese- American scientists ~- one with relatives once closely identified with the Nationalist government -- as a sign of support for the PRC's reconciliation line. And in recent weeks Peking has sought to create an air of reunification with Taiwan by giving visible press clay to ping-pong and hasketball teams composed of "compatriots from Taiwan TOP SECRET/SENSITIVE . ; = a iY ts a x TOP SECRET/SENSITIVE 2 Province resident in Japan and the U.S." The August CCP Party Congress even elected several "comrades from Taiwan Province" to the new Central Committee. In recent months PRC officials abroad have engaged in a quiet campaign to propagate the conciliatory line on reunification among Overseas Chinese in Southeast Asia, and in early October rumors spread in both Hong Kong and Peking that your forthcoming trip to China would lead to U.S.-PRC diplomatic recognition. All these developments seem to represent purposeful efforts by the PRC to in- crease the level of psychological pressure on Taipei toward negotiations and against the alternatives of in- dependence for the island or a turn toward the Soviet Union. As a counterpoint to its "soft" efforts to induce Taiwan to negotiate, however, Peking on September 24 formally demanded that the "Chiang clique" be expelled immediately from the World Bank and the IMF. While saying that China was a founding member of the two organizations, Peking did not indicate whether the PRC would actively participate after the ROC is ousted, and there is reason to doubt that the PRC would be willing to undertake the obligations of a member, particularly of the IMF. Peking's move was clearly prompted by a desire to oust the ROC from all UN-affiliated institutions in order to further isolate Taiwan diplomatically. (The ROC has asked the US to continue to support ROC member- ship until such time as the PRC indicates that it is prepared to be an active member in these organi- zations. Our position is still under review.) The Executive Directors of the International Monetary Fund (IMF) and the International Bank for Recon- struction, and Development (IBRD) met on October 29 and 30 to consider the PRC demand for ouster of ; the ROC. No decision was made but the majority in both institutions clearly favored ouster. They also supported an approach to the PRC to clarify Peking's intentions. The President of the Bank (McNamara) and Managing Director (Witteveen) of the Fund will contact the PRC in New York and report back within six weeks. We expect a decision to oust the ROC will be taken within the next few months. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 3 B. Taiwan's reaction to Peking's campaign For all these efforts, however, we have no indica- tion that Peking's propaganda campaign has had any ‘measurable impact on the population of Taiwan in the sense of developing a sentiment for reunification -- much less enticing the Nationalist leadership to establish secret contact. The majority of the Taiwanese community, in some ways more than the mainlander Chinese, have an abiding distrust of the government in Peking. For the Taiwanese, the authoritarian political system imposed on them by the Nationalist regime is at least a known quantity, and their rapidly increasing economic well-being gives them scant incentive for reunification with the mainland. The Nationalist mainlanders have now probably joined the Taiwanese in wanting to see the island's de facto separation from the mainland strengthened. They seem determined to hold on to their current relations with the U.S. and the "independence" this gives them, even as their concerns about eventual U.S. diplomatic recognition of Peking increase. At the same time, however, few on Taiwan AMMA AY BrnAlinnA +A aera atthar Far Fraemal inflanandanca Pe ft ee tee ee Ae th a ales arti he th Wee ery oe ee whe ng Oe ed ao ad ee te a an em nm me penaencs or a turn to the Russians. The more politically sophisticated are aware that the chances at this time of successfully establishing a separate island state in the face of Peking's opposition and lack of U.S. support are minimal, C. Reports of contacts between Peking and Taipei In the context of Peking's reunification campaign, the CIA has reported several attempted contacts between ROC and PRC officials, with Peking always in the initiating position. Several of these reports involved the GRC's new Consul General in New York, Konsin Shah -- a career diplomat personally trusted by the Gimo and Premier Chiang. According to one report, Shah said the Premier had author- ized him to enter into negotiations with PRC representa- tives in New York only if pressed by the United States. Shah was reported to have béén Instructed to outwardry appear flexible about negotiations, but to indicate in any actual contact with the PRC that reunification could come only if the PRC would meet certain impossible con- ditions, including radical reform of mainland's political system and virtual autonomy for Taiwan ("confederated" status rather than a "federation.") aah, TOP SECRET/SENSITIVE 4 Premier Chiang on several occasions since last spring has categorically denied through official channels that any contacts with PRC officials have been made. We have no information to the contrary. He has repeatedly - emphasized his intention to maintain close working rela- tions with the U.S. and gives every indication of believ- ing that Washington holds the major hope of sustaining the future security and internal autonomy of the island, if not through economic and military support, then as an honest broker in negotiations with Peking. (Premier Chiang also has denied that his government has been in contact with the Soviets.) In your August 3 conversation with Singapore Prime Minister Lee Kuan Yew, Lee denied rumors that he had served as an intermediary between Peking and Taipei. Taipei remains fearful, however, that the U.S. at some point will pressure it to undertake negotiations with Peking, or force its hand by establish- ing diplomatic relations with the PRC. D. U.S.-GRC political relations Ian relation RR Mad ent Bin BY ar hay ee ms Wa. cu ‘rhe Note thay eee New Rade tod remained on an even keel, despite Taipei's surprise ae muted sense of shock over the announcement of the estab- lishment of Liaison Offices in Peking and Washington. Taken aback by the Joint Communique issued at the conclu- sion of your visit to Peking last February, Taipei not unexpectedly declared all agreements reached between Washington and "Peiping" to be null and void, but other- wise outwardly remained remarkably calm. Privately, Taipei expressed official indignation, telling us that the agreement on Liaison Offices had "seriously harmed" ROC national interests and U.S.-ROC friendship. Another minor irritant was injected into our rela- tions in May by the apparent ineptitude of the ROC Embassy here in having some of its staff participate in a demon- stration against the new PRC Liaison Office. Deputy Secretary Rush chastised Ambassador Shen for this lapse, and asked assurances that it not be repeated. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 5 In early September, the GRC showed its pique over the withdrawal of the C-130 wing by unilaterally announc- ing the move itself. The GRC feared political embarrass- ment resulting from our redeployment of three of the four squadrons to Okinawa and the Philippines, rather than back to the States, as this would have implied elimina- tion of Taiwan from our regional defense plans. As well, Premier Chiang may have believed that a unilateral American announcement of the withdrawal would have made him look like a passive victim of secret moves on our part to fulfill the terms of the Shanghai Communique, thus undercutting his credibility and his control. Given the fundamental impact of our moves to normalize relations with the PRC on Taiwan's future, these recent frictions in our dealings with Taipei resulting from the process of normalization seem minor in comparison to the weight of the political pressures we have imposed on the Nationalists. The leadership in Taipei appears to retain a basic confidence in the worth of our defense commitment, and is holding to a realistic assessment of where its basic interests lie. Retlecting this, Premier Chiang has taken pains to tell us officially that his government values its relationship with the U.S. and intends to continue to work closely with us. On the whole, the leadership and population remain remarkably confident about the Island's future -- at least for the near term. All the same, this hopeful outlook is mixed with a growing apprehension as to just when we will switch diplomatic recognition from Taipei to Peking. There seems to be little doubt that such a development will occur at some time in the next few years, and both officials and local population interpret almost any event in Sino-American relations ~- your forthcoming trip to Peking, or the recent establishment of a U.S. Trade Center in Taipei -- as moves leading to the switch. Ambassador Shen raised this question during his last two meetings with you. On February 21 you assured him that there would be no new major developments in the normalization of U.S.-PRC relations for at least the remainder of 1973. You repeated this on August 6, when you told him that we did not plan any major initiatives on this question in the "near future." TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 6 E. U.S. Military Presence on Taiwan 1. Current U.S. force levels. As of August 31, our force level on Taiwan was 8,400 men. This compared . with 9,700 last December 31, and 8,600 on December 31, 1971. , The decrease is to be accounted for largely by the withdrawal late last year of 22-24 KC-135's (which had been shifted to Taiwan from Clark Field due to floods the previous summer), and to the redeployment in August of the first of the four C-130 squadrons. The remaining three squadrons are scheduled to come out by early December. This will drop our force level to about 6,000 by the end of 1973.* 2. Forces left after C~130 withdrawal. The 6,000 men who will remain on the island after the with- drawal of the C-130's include 1,400 USAF support personnel and the F-4 squadrons (which include about 800 men**) stationed at CCK Air Base. The remainder of this 6,000 man level hreaks down as follows: Taiwan defense related | 1,600 Regionally related 2,200 The regionally related forces, it should be noted, consist of two communications units and the communications intel-~ ligence unit -- all three of which are also directly related to our defense of Taiwan -- plus a USAF support unit at Tainan Air Base which services several regionally related activities. *The 1,400 USAF support personnel which have been servicing the C-130 wing also service the two F-4 squadrons on the island, and thus will stay on until the F-4's are withdrawn. The Department of Defense contends that as an operational matter the same size support unit is required to take care of the F-4 squad- rons as was needed to service the C-130 wing as well. **The F-4 squadrons were deployed to Taiwan late last year to compensate for the 48 F-5A's which the ROC agreed to transfer to Viet-Nam under ENHANCE PLUS. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 7 Also included in our remaining military presence are the tactical nuclear bombs. The two to four F-4 aircraft which constitute the delivery capability for the bombs have not, by Presidential directive, been reintroduced on Taiwan since they were withdrawn in February 1972.* Last January we agreed with the ROC to an F-5E ' co-production program on Taiwan under which they will produce 100 of these aircraft, interceptors of a rela- tively short combat radius which will replace older aircraft in the ROC Air Force. (There will be no increase in the total number of Taiwan's combat aircraft.) Although we had earlier agreed to transfer F-5E aircraft to Taiwan as part of its modernization program, we went along with the ROC's request to co-produce a part of these F-5Es as a quid pro quo for the ROC's cooperation in turning over F-5As Tate Tast year for use in Viet- Nam. Implementation of the co-production program is now well underway. We also intend ts broach with the ROC soiiettine after your PRC visit our intention to terminate the U-2 program on Taiwan. We plan to withdraw the two U-2 air- craft by the end of next March. To satisfy defensive ROC intelligence needs, we would substitute the results of satellite photography for that now supplied from the U-2 program. U.S. military equipment assistance to Taiwan has changed significantly in character this year. There *A State-Defense memorandum taking up the question of removing the tactical nuclear bombs is now being processed by the NSC Staff, and will be combined with a study Defense has now almost completed on the phase- down of our conventional military presence on Taiwan-- both to be sent forward for the President's decision. These studies will probably suggest the feasibility of removing the nuclear weapons and the two F-4 squadrons within the next 10-20 months. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 8 will be no grant material assistance provided after the fiscal year which ended June , . A sma gran amount of less than $6 million will be provided in each of the next two years, but this will cover only the cost of training in the United States for a few military personnel from Taiwan and the shipping costs for the small amount of equipment authorized in earlier years but not yet delivered. The United States plans in the future to-sell to Taiwan, either on a cash or credit basis, some defensive equipment and replacements and repair parts for equipment which was provided earlier. These sales will include equipment, materials and major assemblies which will permit the final assembly in Taiwan of the 100 F-5 air- craft over the four year period from June 30, 1973 to June 30, 1977, and of a planned 300 helicopters over the five-year period from June 30, 1973 to June 30, 1978. It is expected that these sales will also include replace- ment trucks, small tactical radios and engineer equip- ment for construction and road maintenance, about 13 small coastal patrol boats. and two battalions of HAWK air defense weapons. In addition, DOD recently transferred to the ROC the second of the two submarines sold to them by an agreement reached in the fall of 1971. The total value of these sales programs, including the aircraft, is expected to be about $150 million per year, beginning July 1, 1973 and running through mid~-1978. To summarize these military developments and prospects: -~ By the end of 1973 we will have drawn down our military personnel on Taiwan by 30+% in the year (related to the removal of the KC-135s and C-130s). -~ We will terminate the U-2 program in the first quarter of 1974. -~ We are studying possible plans for the removal of the F-4 squadrons. It may be possible to withdraw TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 9 the first squadron by late spring 1974, and the second squadron by the end of 1974. (Since the aircraft to replace the F-4's will initially be drawn from South Viet-Nam, the exact timing will depend upon the possi- bility of an offensive by Hanoi next spring, as well as the production of F-5E's in the US.) Withdrawal of the two squadrons would reduce US military personnel by 2200, to 3800. -- We are currently studying approaches to the removal of the nuclear weapons on the island. (NSC's preliminary position is that these weapons should be withdrawn at the time that the F-4s are removed, thus conceivably making it possible to initiate action as early as the end of 1974.) -- The remaining 3,800 men are associated with communications and communications intelligence (1,600 men), and air support unit (650 men) of both a regional and Taiwan-defense related character, and assorted units related to planning, coordination, and military assistance. . (There are no planning efforts presently underway related to the removal ot these-torces trom the island.) he We are engaged in the following co-production ae sekemes with the ROC:/--vH-1H helicopters and T-53 engines (50 have been produced out of 300 planned; we wae com- ~~ Po - Fesohy, mitted to FMS funding through the end of FY 74)s01/4 ton-——~ (jeep) and 2-1/2 ton (FMS funding ends but could be renewed at end FY 74)#¢I00 F-5E aircraft in FY 73-78 (we have contractual arrangement to support the project with a total of $225.3 million in FMS and grant funds). '~-- ~The ROC also produces small arms, ammunition, patrol gun- boats and landing craft, but no US funds are involved in these projects. ~~ Grant material assistance to the ROC military ended in June 1973. Military sales, in part related to the co-production arrangements, are expected to continue at about the level of $150 million per year _ through mid-1978, TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 10 Ir. Current Issues Relating to Taiwan A. The PRC Position The Chinese will obviously be very interested to hear anything you may have to say about the future of our relations with Taiwan -- most immediately the prospects for reduction of the American military presence on the island. At the same time, it is interesting to note that PRC diplomats have low-keyed this issue with us since the President's trip, preferring to act as if the Taiwan question has basically been solved as a ‘problem area between us. During your October dinner for Ch'iao Kuan-hua, the Vice Foreign Minister responded in an aloof manner to your allusion about "future de~ cisions we may have to make" with the comment, "On the Taiwan question I understood what you said." During your October 11 lunch for staff of the PRC Liaison Office, Ambassador Huang Chen responded to a discussion of the way in which the Taiwan section of the Shanghai Communique had been. negotiated with the observation, "You had to have a solution to the Taiwan question in the Communique" -- implying that there is now a firm solution. We have received a number SRF reports, particularly in the months just after the President's trip, indicating that Chinese ambassadors in various countries were similarly treating the Taiwan question as a closed issue in U.S.-PRC relations. We have no indication of private dissatisfaction within the PRC leadership over the pace of movement on the Taiwan question, although this is oneissue on which Premier Chou might be vulnerable. The signs of political pressure on him in the context of the recent Party Congress were by all evidence related to domestic issues. We did, however, receive one report that Tung Pi-wu, acting State President, told trusted “old friend" Chester Ronning -- a former Canadian diplomat, and father- in-law of New York Times editor Seymour Topping -- that while the Chinese are pleased with the words surrounding their new relationship with the U.S., they are not so Satisfied with the degree of actual progress. Ronning thought that Tung was alluding to the Taiwan situation. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 11 In the last month, as well, high level PRC leaders have publicly suggested that there can be no normalization of US-PRC relations until Washington severs diplomatic ties with Taipei and recognizes Peking as the sole legal government of China. This view was publicized by Cy Sulzberger of the Times after an interview with Premier Chou on October 26. Sulzberger's notes on this interview (attached), which. gives a fuller account than the story he filed, has Chou responding to Sulzberger's query about diplomatic relations as follows: "That depends on the U.S. side as well as the Chinese side. On the U.S. side, you should sever diplomatic relations with Taiwan and recognize the People's Republic as the sole legal government of China, just as Japan did. And the U.S. is clearly prepared to do so, as can be seen from the Shanghai Communique following President Nixon's visit to us last year. From the Chinese side, we must unify our country by liberating Taiwan, as can also be seen from reading the Shanghai Communique. The question that remains is one of timing." (We do not think that Chon. meant that "liberating Taiwan" is a precondition for diplomatic relations with the U.S. Instead, he seemed to be making again the distinction the PRC has long made between the "international" and "domestic" aspects of the Taiwan problem.) It may be that the leadership in Peking is becoming restless about what they see as a desultory pace to our military redeployment from the island, and con- cerned about their inability to date to engage the Nationalists in direct.talks that might lead to defini- tion of the future of the island. B. The U. S. Position We have to perform something of a balancing act on the Taiwan question. On the one hand, the way in which we .follow through on the Shanghai Communique commitment to withdraw our military presence from Taiwan is no doubt a touchstone of our credibility with Chinese leaders. Failure to move relatively expeditiously could very well subject Premier Chou to criticism. On the other hand, if we move very rapidly, it could eliminate a major incentive for PRC cooperation on our TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 12 efforts to stabilize developments in Indochina and Korea. As well, the manner in which we transform our military, political, and economic relations with the ROC will have a significant impact on other Asian countries where .we seek to maintain stability and confidence in American support. , Within the confines of these conflicting demands, you will want to indicate to PRC leaders our intention to move ahead with further U.S. military reductions from Taiwan -- perhaps cautioning that a renewed flare-up of military action in Viet-Nam will compromise our ability to sustain the withdrawal, and make more difficult a future fundamental change in our relationship. (You will also want to relate your comments on Taiwan to any plans you may have regarding moves toward diplomatic recognition of Peking.) III. Talking Points ~- I want to review what we have done regarding our military presence on Taiwan over the past year, and our future plans. » By the end of 1973 we will have drawn down our military manpower on the island by 30+% This has been related to the redeployment of air units related to the Indochina situation. - We plan to terminate a U-2 program (that has flown offshore, outside PRC waters) which was run by the Nationalists by with- drawing our aircraft in the first part of 1974. » We are currently drawing up plans to begin the removal of F-4 aircraft from the island. We will probably be able to initiate the withdrawal of these units in 1974. Once these redeployments are completed, we will have reduced our manpower by more than half the current level to about 3,800 men. TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 13 - We will continue to review the status of the remaining units on the island in the context of the overall security situation in the region. - We terminated,our grant military assistance program of material aid to the island at the end of June this summer. We will continue a small program of military sales for a few more years, but this relates only to equip- ment that is clearly defensive in character (F-5 parts, coastal patrol craft, air defense equipment), or engineering equipment (trucks, road building machinery). -- I must emphasize that our ability to sustain our military withdrawals will be related to further progress in consolidating the Paris Agreement on Indochina. If there is a major expansion of military activity in Viet- Nam in early 1974 -- and we have strong indications that Hanoi is preparing itself for such action -- we will be constrained in our ability to follow through on the redeployments I have just mentioned. -- (If they raise the question of our co-production plans with the GRC:) These programs aré Clearly de- fensive in character. The military items produced could not be used to attack you. If we did not maintain a minimal program of this sort to give concrete evidence of our defense commitment to Taiwan, the Nationalists would probably begin looking elsewhere to satisfy their security. needs. This would not be in either of our interests. be ~~ I noted that shortly after my return from Peking in February, two of your officials made a direct public appeal to the Taiwan leadership to initiate secret talks regarding reunification. I wonder if you received any reply from them? TOP SECRET/SENSITIVE TOP SECRET/SENSITIVE 14 -~- (If they ask if the Nationalists have approached the USG regarding reunification talks:) No. They have asked us what your intentions are. I told their Ambas- sador simply that you wanted to negotiate. They have . hot asked us to intermediate; and according to the terms of the Shanghai Communique we could not play a direct role in any such negotiations. -- (Tf they ask about the US position on their demand that thé ROC be oustéd from the worid Bank and IMF) We are studying the matter. We are aware of the political considerations underlying your demand, but beyond that, we would be interested in knowing whether the PRC plans to participate as an active member in the two institutions. -- As I am sure you will understand, we will have to satisfy Taipei that we have done what we could to protect their interests in the International Financial Institutions. ~- However, I can assure you that whatever position we adopt will be consistent with our Shanghai Communique position on Taiwan. Attachment: Paris 28222, 10/31/71 TOP SECRET/SENSITIVE