When Taiwanese President Lee Teng-hui told a German interviewer this month that relations between the Republic of China on Taiwan and the People’s Republic of China were a form of state-to-state relations, a diplomatic firestorm predictably erupted over his apparent embrace of a “two China” or a “one China, one Taiwan” policy. Beijing let rain the colorful denunciations that have become its trademark, branding Lee a sinner condemned by history whose criminal acts would stink for a thousand years. Great powers and small states scrambled to reaffirm their “one China” policies. Clinton telephoned Jiang Zemin to assure Beijing that the U.S. did not support any move by Lee to change the status quo. The world worried about a replay of the military tensions in the Taiwan Strait that attended the PRC’s reaction to what it saw as Lee’s head-of-state-like visit to the U.S. for a Cornell reunion in 1995 and Taiwanese voters’ possible affinity for pro-independence platforms in the then-upcoming 1996 elections. Some observers warned — although not terribly plausibly— that Beijing would feel compelled to attack the renegade province. Taipei’s stock market dropped.

The words that precipitated all of this were less than revolutionary. To the untutored ear, there was little difference between the new (and fairly opaque) terminology of a special type of state-to-state relations within a Chinese nation and the former (and quite convoluted) official formulation of intra-Chinese relations between two equal political entities, each exercising sovereignty over a part of China. Lee’s comments and subsequent official statements stressed that the ROC had not abandoned unification as an ultimate goal, albeit one to be achieved— as the 1991 National Unification Guidelines had made clear— in the very long term and after the mainland achieved democracy. Lee cast his claim that there was no need to declare independence not as a formal assertion of a new stance but, rather, as an implication of the familiar claim that the ROC has been a sovereign independent state since 1912. The controversial state-to-state language was explained, plausibly but somewhat disingenuously, as merely descriptive of the state of affairs that had existed at least since 1991, when the ROC government formally dropped its claim to be the wielder of legitimate sovereign authority over all of China.

True, Taiwan’s Mainland Affairs Council confirmed that the government was dropping a “one China” policy, at least with respect to the connotations of Taiwan-PRC inequality and subordinate-superior relations that Beijing had managed to attach to the phrase. The heavily couched and caveat-laden statements from Lee and his minions represented only one step in a decade-long march away from the logically consistent but politically bizarre framework in which everyone agreed that there was one China with one legitimate government, but disagreed about whether that government was the one in Beijing or the one, temporarily, in Taipei. For any realistic observer, of course, Lee and other ROC officials uttered an obvious, if politically touchy, truth: The PRC and Taiwan are, in practice, two separate countries.

In cross-strait relations, of course, the absence of radical policy change or the congruence between description and reality does not render new terms innocuous. As Lee and his government knew, subtle changes of language — especially anything touching Beijing’s hot-button issue of sovereignty— are seen as communicative and provocative acts, likely to produce the reaction that occurred. Why, then, did Lee do it? Speculation has ranged from the banal (an uncalculated utterance by an incautious president with pro-independence sentiments) to the conspiratorial (a plot to trigger confrontation with the PRC that would justify Lee’s remaining in power beyond his term). While we do not know what the actual motives were, the plausible candidates are aspects of the same broader explanation: The ROC government has been caught in a tightening political vise abroad and at home, and had a likely-fleeting chance to push back.

Externally, the PRC has increased the pressure on Taiwan to move toward reintegration under some version of its “one country, two systems” formula. Able to point to Hong Kong’s relatively untraumatic reversion, offering to let Taiwan keep more of the trappings of a separate political existence, and voicing complaints about the desultory pace and insubstantial content of cross-strait negotiations, the PRC has enjoyed growing success in portraying itself to the world as a reasonable (and, by some lights, the more reasonable) party. The scheduled October visit to Taipei by the mainland’s chief Taiwan negotiator, Wang Daohan, promised an occasion to tighten the screws.

Such developments, coupled with Beijing’s relentless campaign to deny Taiwan membership in intergovernmental organizations and recognition from other states, threatened Taiwan’s tenuous international status. Especially ominous for Taipei was the U.S. shift from formal agnosticism (acknowledgment that Chinese on both sides of the strait believed that there was one China) to stated opposition to an independent Taiwan (one of the “three no’s” Clinton articulated in 1998). The PRC’s steady rise as a great power and the U.S. business lobby’s pressure for good U.S.-China relations suggested little hope for reversing the trend. Beijing’s military modernization program, along with Taiwan’s uncertain access to U.S. protection, arms and weapons technology, augured further shifts of the strategic balance against Taiwan. Taiwan’s burgeoning investment and trade relations with the mainland were giving Beijing a promising economic lever against Taipei. Within the PRC, the decay of communist ideology, the prospect of bumps on the once-smooth road of rapid economic growth, and the persistence of military and conservative elements among a generally pro-reform leadership have produced a durable embrace of nationalism— an influence that favors a hard line on Taiwan issues, and one that spiked in the aftermath of the bombing of Beijing’s embassy in Yugoslavia.

Also, the ROC government had largely exhausted the gains available under the existing rules of the game. Taipei’s dollar diplomacy had won most of the recognitions that it could expect to obtain from small and financially strapped countries. The aggressive pursuit of membership in international organizations and international agreements had mostly played out. Of the two big prizes, WTO accession had become inextricably bundled with the PRC’s still-stalled entry, and UN membership was beyond reach, given Beijing’s intractable opposition and another of Washington’s “three no’s” (no support for Taiwan’s participation in states-only bodies).

At home, the vise has been tightening all around. The ruling Kuomintang’s Taiwanization (exemplified by Lee’s status as the ROC’s first non-mainlander president), the popular appeal of principles of democratic self-determination, and the popular distaste for mainland life that many Taiwanese have now seen first-hand have generated growing demands for stronger assertions of Taiwan’s separate status. Possible limits to hypocrisy, even in politics, have made the old “one China” formulation increasingly untenable in light of Taiwan’s political life as an entity obviously distinct and profoundly different from the mainland. Taiwan’s democratization has subjected the KMT to electoral pressures— from the Democratic Progressive Party, whose electoral success has driven the KMT to try to coopt the DPP’s relatively pro-independence agenda, and from the New Party, whose small constituency of old-style reunificationists sometimes has threatened KMT candidates’ electoral base. Taiwanese business interests’ huge stakes in the PRC have made them a potent force against policies that could anger Beijing.

The approach of the 2000 presidential election has increased the pressure on Lee and his KMT government. The party’s candidate and Lee’s chosen successor, vice president and former premier Lien Chan, has lagged in a race with rivals who stood to either side of the government’s former position on cross-strait issues— DPP standard-bearer and former Taipei mayor Chen Shui-bian, and then-expected and now-declared independent candidate James Soong, a mainlander and former provincial governor who had been part of the KMT leadership. In this troubling setting, President Lee approached his final chance to define his legacy in the crucial area of Taiwan’s status.

In giving Lee reasons to act now, these threats coincided with a moment of opportunity. The likelihood of serious retaliation from the PRC was relatively low. Beijing has been reminded of its military weaknesses by the latest display of U.S. weaponry in Yugoslavia. It has been on the defensive diplomatically after overplaying its hand in the Balkan crisis and the last Taiwan crisis. It has been seeking a favorable foreign relations environment for its WTO bid, and has been preoccupied with difficult domestic issues. U.S.-PRC relations have been in such a bad state that Washington likely would feel disinclined or unable to side with Beijing. Amid the controversies over the embassy bombing, the failed WTO deal, the Cox Report’s allegations of Chinese nuclear espionage, and Chinese-sourced campaign contributions, Taipei at least could count on its friends in Congress to make it difficult for the administration to lean heavily on the ROC government, especially if Beijing made the expected threats to use force. Taiwan might even improve its chances of getting the coveted Theater Missile Defense.

Lee took advantage of a chance to seize the initiative in demanding preconditions of equality for the scheduled October cross-strait talks, although at considerable risk of scuttling the talks. At home, announcing the new position also might influence Taiwan’s presidential contest, most obviously by partly capturing a key DPP issue. A PRC response that triggered anger and fear toward the mainland could be expected to drive voters away from Soong, the candidate most acceptable to Beijing, from Chen, the candidate most likely to provoke Beijing, and toward Lien, the candidate of continuity and stability. Even if unable to affect the election’s outcome (or, worse yet for Lee, causing worried citizens to back Soong as the proponent of moderation), Lee’s declarations— made with his unique authority as the ROC’s soon-to-retire, first democratically elected and first Taiwanese president— might constrain a not-wholly-sympathetic next president or give cover to a more like-minded successor.

For the U.S., there is much irony in all this. Lee has created vexing diplomatic problems for Washington. His pronouncement, along with the reactions to it, have added new stresses to a troubled U.S.-PRC relationship. It may force new and difficult choices about where and under what conditions the U.S. will use military force in East Asia. It has put the Clinton administration in the awkward position of scolding the leader of a thriving market-democracy, with inevitable overtones of kowtowing to an authoritarian regime with a poor human rights record and a badly battered public image. Yet, most of the factors that likely produced this mess reflect developments that the U.S. has championed: democratization and political freedom on Taiwan, greater engagement in the international order, greater economic openness and economic reform and development, and a more pluralistic policy process in the PRC. The task ahead for political leaders in Washington, Beijing, and Taipei is to manage the vices that the tightening vise has produced. To do that, they will need to see the virtues of virtu, in particular looking to long-term national interests and resisting the temptation— much in evidence on all sides in the current troubles — to pursue short-term domestic political gains when handling what surely will be an on-going series of crises over Taiwan.