The navy is exploring an underwater acoustic monitoring system in the Taiwan Strait as part of an early-warning system against submarines from China.
The project, to be jointly operated by Taiwan and the US, carries an estimated cost of NT$300 billion, a military leader has divulged.
The military leader, a high-ranking naval official, made the remarks at a recent address to the media.
The US is to share with Taiwan the development costs of the project, which would serve the interests of both countries.
The underwater acoustic-monitoring system will link up with two similar systems that the US operates in waters north and south of Taiwan and that are within the territorial waters of Japan and the Philippines.
It is expected to form a seamless early-warning mechanism capable of monitoring the entire Chinese coastline.
The navy has yet to decide whether to embark on the project due to the extremely high cost, the military leader said.
One other consideration is whether the navy wants to share all information it gathers from the system with the US.
"It is like making all our national secrets accessible to the US. It will not be a problem as long as we are still friends. Who knows what will happen in the future?" the military leader said.
Another naval official, who spoke on the same occasion, said the project has been in the planning stages for several years and that specialists with the Kaohsiung-based National Sun Yat-sen University have conducted research into the project's feasibility.
Experts speculate that the navy confirmed the existence of the highly-sensitive project because there is some concern that warmer relations between the US and China threaten the initiative.
An army official, also speaking on condition of anonymity, cast further doubt on the project.
"The underwater acoustic-monitoring system that the navy plans to build is basically a Cold War relic. It is a primitive anti-submarine early-warning system. It is comprised mainly of cables," the official said.
"By current standards, this kind of system is outdated. It is hard to imagine that the navy is trying to introduce it," the official said.
"If the navy really wants to build a system of this kind, it has to have its own plans for the deployment of the system, rather than following advice from the US. What Taiwan needs is an underwater acoustic-monitoring system that can cover the entire coast, not just the western coastline," he said.
"An around-the-island system can warn against submarines not only from China but also from other countries. The navy certainly has to re-think its plans for the deployment of this system."
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