Foreign Policy Research Institute A Nation Must Think Before it Acts Beyond COVID-19, Part 12: Taiwan’s International Stock Rises as Turkey’s Falls
Beyond COVID-19, Part 12: Taiwan’s International Stock Rises as Turkey’s Falls

Beyond COVID-19, Part 12: Taiwan’s International Stock Rises as Turkey’s Falls

Mid-May is upon us. I would like to thank our readers who have loyally read our weekly discussions throughout the pandemic. I hope you all are healthy and safe, and continue to stay the course in staying at home. This week, Aaron joins me for a riveting discussion on important developments related to China, Taiwan, Turkey, the F-35 jet program, and the ongoing Marine reforms—Maia is off this week sunbathing in Tahiti.

General reminder to our readers to keep up to date with guidelines coming from the U.S. Centers for Disease Control and Prevention; continue to stay home as much as possible; and when you must leave your home and engage with people, be mindful of social distancing practices; and wash your hands frequently with soap for at least 20 seconds.

Thomas Shattuck: The two programs you direct, National Security and the Middle East, intersected this week in a Government Accountability Office (GAO) report about the F-35 fighter jet program. What is the latest on Turkey and the F-35?

Aaron Stein: Thanks, Tom. For those that don’t know, Turkey was a member of the F-35 consortium, the multi-national group of countries that financed the development of the aircraft and, in certain instances, had a say over its design. Turkey was removed from the consortium in July 2019, after months of negotiations to try to end the Russian-Turkish agreement on the purchase of the S-400 missile system. The S-400 is a Russian-made weapon that, if operating close to a F-35, could collect valuable intelligence about the jet. The concern was that Russia would gain access to data about Turkish-operated F-35s, and use that data to better track and kill a jet that the United States and its allies have designed to be hard to track and kill. Turkish aerospace firms were sub-contractors on the program, and produced over 1,000 parts for the jet. To date, the F-35 program office has found U.S. suppliers to replace 1,005 components that had been made in Turkey, but it will take time for these suppliers to ramp up production and to get the required quality control certifications. Thus, for the current block of F-35 production, the program will accept some single-sourced parts made in Turkey, as the alternative suppliers come online and ramp up production for the next big buy of fighters. This should not distract, I would argue, from the main point: The United States has, since 2018, worked to “unwind” Turkey from the F-35 supply chain and, for all intents and purposes, this process has been achieved. The wind-down will, of course, take a bit more time, but we find ourselves in this place where F-35s produced for Turkey remain in the United States, with funding allocated to store them and to integrate them into the United States Air Force, and a decision to absorb the cost of reconfiguring the supply chain (despite knowing that it would cost ~$500 million or so) to protect the jet’s design from a Russian missile system Ankara chose to buy.

Tom, the World Health Organization (WHO) is set to meet early next week, and one topic that has received a lot of attention is Taiwan’s participation. What can you tell us about Taiwan and its role in the WHO?

Shattuck: Apologies that my answer will have to delve into some COVID-19 information (a generally forbidden topic in these discussions). Due to Taiwan’s ambiguous international status and the fact that it’s not a member of the United Nations, it isn’t allowed to attend, or become a member of, certain meetings hosted by international organizations (and some international organizations writ large) that require “statehood” for attendance/membership. The World Health Organization (WHO) and its annual session, called the World Health Assembly (WHA), fall into organizations/meetings that have require statehood to be a member because they are UN-affiliated. During the tenure of former President Ma Ying-jeou, who left office in 2016, Taiwan was invited by the Director General of the WHO to attend the WHA as an observer. That invitation stopped after Tsai Ing-wen was elected president—as a punishment for her election, and especially for her refusal to accept the so-called “1992 Consensus.” So, Taiwan under Tsai has been boxed out of the important global health organization and most of its technical meetings for four years.

That was before COVID-19 began to wreak havoc and devastation around the globe. Unlike the Trump administration, Tsai’s government has responded to the pandemic effectively. The government in Taiwan has led the charge from the beginning, and hasn’t gaslighted and misled the public over the facts. Instead of having their leader tell people to inject bleach or light into their bodies, Taiwanese people have looked to Chen Chien-jen, an epidemiologist who currently serves as Vice President but his term is set to end next week. Taiwan was one of the first countries hit by COVID-19, yet has fewer than 500 cases, with fewer than ten deaths. It also has not reported a locally transmitted case of the virus for one month. Taiwan’s exemplary response to COVID-19 has now become an international showdown between the United States and a coalition of other democracies such as Japan, Australia, and European nations that are pushing for Taiwan’s inclusion at the WHA meeting next week and China, which seeks to continue to block Taiwan’s inclusion, and countries that do not desire to get on the PRC’s bad side. Our Asia Program Director, Jacques deLisle, delves more deeply into these issues (here).

The WHO could face a crisis of legitimacy if Taiwan is excluded from this year’s WHA meeting due to the country’s stellar response: why exclude a country that has responded so well to something that not even the United States could handle? For me, that’s the most important question for consideration, but Beijing’s grasp on these international organizations and member-countries makes Taiwan’s fight for inclusion an uphill battle. We’ll see what happens next week.

The F-35 part of the issue is just one component of the broader story here, right? You have written in this series about Turkish economic concerns amidst the COVID-19 pandemic. Does this have a bearing on the current S-400 brouhaha?

Stein: I think it does. Congress, in July 2016, passed legislation dubbed the Countering America’s Adversaries through Sanctions Act (CAATSA), a piece of legislation that mandates sanctions for a “significant transaction” a foreign country engages with entities linked to the Russian Ministry of Defense and Intelligence. The legislation was not aimed at Turkey, but was instead a congressional flex to ensure that Donald Trump did not unilaterally lift sanctions imposed on Russia for its interference in the 2016 election. Turkey, by this point, was engaged in talks with Russia for the S-400 and finalized the agreement in December. Despite Ankara having engaged in a “significant transaction” with Russia, Trump has resisted the sanctions option. Most people attribute this to his odd relationship with Turkish President Recep Tayyip Erdogan, who appears to know how to manipulate Trump, but also who has irked him to the point where Trump has repeatedly—and on Twitter, no less—to “destroy or devastate” the Turkish economy for mis-steps in Syria or during an entirely different saga over the imprisonment of an American pastor.

I think Trump doesn’t want to use the sanctions card because his staff has told him that CAATSA is unconstitutional because the sanctions mandated in the legislation do not have a presidential waiver. In the absence of this waiver, and amidst talks with Erdogan, Trump has floated this idea via Senator Lindsey Graham that Turkey can avoid sanctions if it “keeps the S-400 boxed,” meaning that the system Turkey has imported is never used and kept in storage. Ankara had balked at this, but the self-declared “unbox date” has passed without Turkey “turning on” the radar and using the system. Why? Officially, Ankara says it is taking things slow because of the COVID-19 pandemic.

I think Turkey is unofficially abiding by the Graham compromise to avoid sanctions and, importantly, as Erdogan appeals to Trump directly for a Federal Reserve swap line to ease its foreign currency reserve crisis. Turkey can always “unbox” on demand. It has all of the S-400 components stored at Murted Air Force Base, and crews have all finished training in Russia. This is, of course, totally separate from the F-35 issue, which Ankara will still have to grapple with, and different from the revenue Turkish firms have lost after being removed from the F-35 supply chain.

China and Australia have gotten into a bit of a tiff recently, which has culminated in some Chinese import ban on Australian meat. What’s going on between these two countries?

Shattuck: Well, it looks like China is ready to start a trade war with Australia over the latter’s support for an investigation into the COVID-19 outbreak. Beijing has banned four Australian beef exporters for violating custom standards and may impose a 80% tariff on barley. Chinese Foreign Ministry spokesman Zhao Lijian said that the ban has absolutely nothing to do with the Australian call for an inquiry. The timing of the Chinese ban is just a coincidence, and us outsiders should not question anything. These two measures could do significant harm to Australian producers. Australian National Farmers’ Federation President Fiona Simson said to the Guardian, “Two-thirds of Australia’s farm production is exported. Almost one-third of this, 28%, is exported to China, including 18% of our total beef production and 49% of our barley.” China is Australia’s top importer of its beef by volume ($800 million annually), so if Beijing further increases its restrictions, it could have a lasting impact on the Australian beef industry.

China’s actions will further damage its international reputation. If Beijing doesn’t blink at punishing Australia for speaking out against China’s handling of COVID-19, then what will it do to smaller, less powerful countries? (This threat connects to the Taiwan WHO dilemma mentioned above: China has shown it will retaliate over just about anything these days.) These moves by China continue to show the importance of economic diversification away from the Mainland because any statement, tweet, or action by a government official has the potential blow up into a trade war or denial of market access. It happened to the National Basketball Association over one tweet. And Beijing is still reeling over that issue (which happened in October). It is happening to Australia. Who’s next?

Can we revisit another topic we’ve covered? Frank Hoffman wrote a report about the Marine Corps, and there has been some news about money budgeted for the purchase of cruise missiles.

Stein: In early May, Retuers reported, “The Pentagon intends to arm its Marines with versions of the Tomahawk cruise missile now carried on U.S. warships, according to the White House budget requests for 2021 and Congressional testimony in March of senior U.S. military commanders.” This isn’t surprising, but it is another step towards the movement of the Marines Corp to working with the Navy to attack Chinese ships using an anti-ship version of the Tomahawk to target ships from islands where small numbers of Marines are deployed. Policy is dedicated by the federal budget, we are often told. And now we are seeing things show up in the budget, so times they are a changin’.

Tom, one more for you: some interesting public opinion polls have been released in Taiwan. What do they mean for outsiders?

Shattuck: The Pew Research Center just published a public opinion poll conducted in Taiwan in late 2019. This is the first polling done by Pew in Taiwan. The results are nothing surprising, but its release comes at an important time for Taiwan due to the amount of international press and attention it is getting. A significant percentage of Taiwanese prefer to keep on the country’s current trajectory: 68% have a favorable view of the U.S. (compared to 35% for China); 85% support closer economic ties with the U.S. (52% for China); and 79% support closer political ties with the U.S. (36% for China). It also confirms the growing trend of people in Taiwan identifying as “Taiwanese” over “Chinese” or “Taiwanese and Chinese,” something that the Election Study Center at National Chengchi University (my alma mater) has been documenting since 1992. Almost all of the trends noted in the report point to good news for the ruling DPP, which will control the executive and legislative branches for the next four years and which has sought to diversify Taiwan’s economy away from the Mainland.

The report should be heeded by the opposition Kuomintang, which lost the presidential and legislative elections in January (after this polling was conducted). One of the key factors in the KMT’s defeat was/is its traditional policy of advocating for closer relations with China, with elements of the party still continuing to push for (re)unification with the Mainland. As these polls show, this policy is not in line with most of the Taiwanese electorate. KMT officials have even criticized the Tsai Ing-wen administration for getting too close to the United States at expense of relations with China. Again, this poll shows that the people disagree with that line of thinking. The KMT’s new chair, Johnny Chiang, has a chance to reform the party. After the electoral losses in January, there were calls for great change in the party structure and how it perceives China (I wrote about it here). Data continue to show that the KMT’s China policies are not as popular as the DPP’s. With former presidential candidate and Kaohsiung Mayor Han Kuo-yu facing a recall vote next month, it is time for the KMT to seriously reconsider some of its long-held views and policies, or it could risk losing a generation of voters to the DPP as China continues to bully Taiwan over its political choices. The people of Taiwan have spoken at all kinds of polls (sorry, for the bad pun); it’s time for the KMT to listen.

Aaron, thanks for yet another great discussion!

The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.