Following the passage of the 2023 National Defense Authorization Act by the US House and Senate with the support of the Democratic and Republican parties, US President Joe Biden on Friday last week signed the act into law.
Among many other things, the act authorizes the provision of a US$2 billion loan to Taiwan every year for five years from next year to 2027 through the US Department of State’s Foreign Military Financing, thus implementing the resolution embodied in the Taiwan Policy Act of 2022 to defend Taiwan’s security and support its self-determination.
Some critics keen to find fault have said that the US$2 billion is being offered as a loan when it was originally going to be aid that would not need to be repaid.
However, the reality is that Taiwan’s economic strength and financial stability are such that it does not need financial aid. US$2 billion is equivalent to NT$61.5 billion, which is only 3 percent of Taiwan’s total annual budget of NT$2 trillion (US$65.1 billion), so it does not make much difference.
The US’ provision of this loan is an expression of its strong support for Taiwan and its determination to jointly resist the Chinese Communist Party (CCP).
Through the US Congress’ bicameral and bipartisan support for using the national defense budget to resist the CCP and support Taiwan, the US is also showing its Japanese, Indian and Australian allies where it stands, encouraging them to make greater efforts to contain China.
Japan has already responded by greatly increasing its national defense budget. From next year to 2027, its five-year defense budget would reach a record-high of more than ￥40 trillion (US$303 billion). Meanwhile, Australia has also announced that it would increase its defense budget.
The move is also a part of the US’ policy of strategic clarity. In the past, the US maintained a policy of strategic ambiguity with respect to the Taiwan Strait. During then-US president Donald Trump’s tenure, the US realized that strategic ambiguity gave China too much leeway, allowing it to “rise as a great power.”
The ongoing Russian invasion of Ukraine shows that an appeasement would only make war more likely, so the US’ Democratic and Republican parties have realized that to prevent war, the US must clearly and firmly warn the CCP not to overstep the line.
Specifying the US$2 billion sum is a clear statement by the US that its deterrence against the CCP is not an empty threat, but a commitment by the US to help Taiwan achieve robust military preparedness. The more Taiwan’s military preparedness is upgraded and strengthened, the lower the chance that China would resort to force. The most effective means of preventing war is always by increasing one’s military readiness.
The US’ move is also meant as a warning to CCP-friendly elements in Taiwan that the wind has changed. In the past, the US used strategic ambiguity to dupe China, so it tolerated CCP-friendly people in Taiwan flirting with China.
Former president Chen Shui-bian’s (陳水扁) pursuit of strategic clarity made him a “troublemaker” in the eyes of the US.
However, the US has shifted to a policy of strategic clarity and no longer wants anyone in Taiwan to be friendly with the CCP. Whoever fails to grasp this change in US strategy and continues to push for relations with the CCP would become a thorn in the side of the US.
In financial terms, Taiwan can afford to repay the loan.
However, Israel receives a lot of money that does not need to be repaid. The biggest difference between Taiwan and Israel lies in their real strength. Israel’s role controlling the Middle East, and its achievements in military technology are things that Taiwan cannot match, which is why it does not receive such generous treatment as Israel.
Taiwan should reflect upon this difference and draw appropriate conclusions. Israel has a population of only 9 million people and excels in software innovation, whereas Taiwan is a major manufacturing base for semiconductors and hardware. Why does Taiwan lag so far behind in terms of military might? It is only a matter of determination.
Tommy Lin is a physician and president of the Formosa Republican Association and the Taiwan United Nations Alliance.
Translated by Julian Clegg
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