Asia Society: Publications - Growing Pains: ASEAN's Economic and Political Challenges

For the first time in Taiwan’s brief democratic history, the outcome of a national election is in doubt. Partisan control and direction of Taiwan appear to be up for grabs in Taiwan’s presidential election scheduled for March 18, 2000; as of mid-February, the three major candidates were running neck and neck. The election is important not just for the people of Taiwan but for all concerned with peace and stability in East Asia. Since one of the key issues at stake concerns the already tense cross-Strait relations with the People’s Republic of China (PRC), the identity of the winning party could have a significant impact on the stability of East Asia. The outcome of the election, hence, is of major concern to both the PRC and the United States (albeit in rather different regards).

Less dramatically perhaps, this election could prove crucial for those concerned with the fate of democracy in Asia. Its successful conduct and conclusion, especially if the nominee of the ruling Nationalist Party loses, would mark Taiwan’s democratic consolidation–which friends of democracy everywhere, especially in the US, should welcome. Conversely, if the political battles unleashed by the election should undercut Taiwan’s democracy or threaten the stability of cross-Strait relations, the image of US-style politics and development would almost certainly become even more tarnished in the less democratic nations in Asia, most particularly China.

This discussion of Taiwan’s presidential election begins with an overview of the major parties and candidates involved. It then provides a background discussion of the two major issues that have emerged during the campaign: 1) the interlinked questions concerning national identity on Taiwan and cross-Strait relations with the PRC; and 2) patronage-style politics in Taiwan with its possible linkage to corruption or what has come to be called "black-and-gold politics." The third section describes how the major candidates have treated these two issues and how this has seemingly affected their levels of support. Finally, the conclusion reviews the implications of the elections for the evolving nature of democracy in Taiwan and for relations with the PRC.

Taiwan experienced a peaceful democratic transition in the late 1980s and early 1990s from essentially one-party authoritarian rule by the Nationalist Party, or Kuomintang (KMT), which had evacuated to Taiwan in 1949 after losing the Chinese civil war to the Chinese Communist Party (CCP). Unlike most such transformations in the 1980s and 1990s, the KMT was able to retain power quite easily. This reflected its skill at managing the democratic transition, the credit that the populace gave it for Taiwan’s impressive record of economic growth (from a GNP per capita of $100 in 1950 to almost $14,000 in 2000), and the flexibility and pragmatism of the party in coopting the opposition’s stands on popular issues. Thus, the direct challenge to KMT political domination that the coming presidential election represents is a potential watershed in Taiwan’s politics and democratic evolution.

It was long expected that the 2000 presidential election might turn into a highly competitive one. Given a voting system in which only a plurality is necessary to win and the goodly probability of more than two credible candidates, the Kuomintang faced the unwelcome likelihood that any candidate other than its very popular incumbent Lee Teng-hui (who handily won the first direct presidential election in 1996 with 54 percent of the vote compared to 21 percent for the runner-up) would fall far short of having a lock on the most powerful position in Taiwan’s governmental system. This section describes the leading parties in Taiwan and the presidential candidates who ultimately emerged.

When the KMT under Chiang Kai-shek was forced to retreat to Taiwan, it ostensibly brought the democratic 1947 Constitution of the Republic of China (ROC) with it. However, authoritarian rule prevailed for most of the postwar era, for several reasons. First, in response to its rapidly deteriorating position in the civil war, the KMT declared martial law in Taiwan that continued until the late 1980s. Martial law, among other things, included sedition laws against supporters of communism or Taiwan’s independence from China, leading to very substantial political repression that is now termed the "white terror." It also prohibited the formation of new parties (though opposition figures could run as independents). Second, because of the regime’s claim to rule all of China, the vast majority of the seats in the Legislative Yuan (parliament) and National Assembly (electoral college for the president) were held by those elected from Mainland constituencies in 1947 and 1948. The regime argued that these legislators should keep their seats until elections in their original constituencies were possible. Although supplemental elections that increased Taiwan’s representation in these bodies were held starting in 1969, the huge majorities of senior legislators continued through 1990, guaranteeing KMT control whether or not the party won on election day. More informally, the Islanders, or long-time Chinese residents of Taiwan (as opposed to the 15 percent minority of Mainlanders whose families fled in the late 1940s with Chiang Kai-shek), remained distinctly underrepresented in the top ranks of government and the party through the early 1990s, suggesting a significant limit to democratization.

Authoritarian rule began to relax in the early 1970s after Chiang’s son Chiang Ching-kuo became premier, a presidential appointment to lead the executive branch of the ROC’s government. Chiang’s liberalization opened a space for political opposition and competition. The opposition became known as the tangwei (literally, "those outside the party"). They focused their policy demands on calls for democracy, which were often seen by KMT conservatives as attempts to provoke Taiwanese or Islander nationalism. Reformers within the regime were then able to use the pressures from the opposition and from society as a whole as leverage to push for a cumulatively widening set of reforms.

Taiwan’s real democratic transition commenced in 1986 when the tangwei, following stalemated negotiations with the KMT, declared the formation of the Democratic Progressive Party (DPP) on September 28 at a meeting that had been called to slate candidates. A political crisis appeared imminent as the Ministry of Justice filed charges against the DPP for violating martial law restrictions, but President Chiang defused it by announcing that martial law would be ended and that new political parties could be formed as long as they supported the Constitution and renounced both communism and Taiwan Independence. Arguably, full democracy in the sense that citizens are able to select their leaders in free and fair elections was achieved in 1991 when the senior legislators were forced to retire. Another stage was reached when the first direct elections for the powerful president were held in 1996.

Beyond the requisite for democracy of free and fair elections, probably the most important element in a party system is the number and competitive status of the political parties themselves. The beginning of the transition to democracy set off a significant change in the competitive status of Taiwan’s major parties. The data on election results in Appendix 1 demonstrate that 1986 marked the beginning of a decided decline in the Kuomintang’s domination at the polls. Up through the mid-1980s, the KMT received a dominant two-thirds or more of the vote in most elections, while the tangwei averaged significantly under a fifth, but this huge imbalance in electoral support eroded steadily and quickly thereafter. When the New Party split off from the KMT in 1993, the ruling party’s electoral power slipped further and, at times, appeared to be somewhat precarious. The Kuomintang continued to win every major national election before 1997, but its plurality/majority support slipped to the less than comfortable 47—53 percent range. The Democratic Progressive Party, in contrast, surged ahead as the major opposition party, generally garnering 30—40 percent of the vote and winning a significant number of local executive posts (e.g., the mayor of Taipei). In 1997 it actually won the elections for city mayors and county magistrates, narrowly in total number of votes but impressively in number of victories. In addition, the New Party seemed to be emerging as a significant factor in the mid-1990s when it won close to 15 percent in several national elections, but its electoral support slipped badly in the late 1990s. Moreover, as summarized in Appendix 2, the parties became increasingly competitive in that their fortunes swayed back and forth in spinmeister views of who won and lost these various elections.

The campaign started in the spring of 1999 with vigorous contests between two heavyweight political leaders in each of the major parties. The losers quickly moved to run as independents, and two minor parties nominated candidates as well, creating a six-person race by the end of the summer. Since the campaign opened, three candidates have been viewed as having the potential to win. Thus far, these expectations have been well met. Two were nominated by the contending major parties, while the third defected from the KMT when he was denied its nomination for president to run as an independent. All three leading candidates are highly educated and have had successful and distinguished careers in Taiwan’s politics and government, and none faces the George W. Bush problem of establishing his intellectual and policy-making bona fides. In addition, three other candidacies were declared (two nominations from smaller parties and one defector from the DPP). However, none of them ever rose much above 1 percent in the polls, and one was ultimately forced to withdraw when he could not gain the 225,000 endorsement signatures required of small party and independent candidates.

The outcomes of the nomination battles in both the KMT and DPP were probably preordained, but for somewhat different reasons. In the Kuomintang, Vice President Lien Chan was the designated heir of President Lee Teng-hui (whose approval rating continues to hold at 60 percent after a twelve-year tenure). Lien was challenged by James Soong, a former key Lee supporter, who had a falling out with the president, perhaps because of Soong’s ability to build an independent electoral base as provincial governor in the mid-1990s. Lee subsequently eviscerated the provincial government by abolishing the elective governor and provincial assembly and transferring many of its functions to other levels of government. Polls indicated that Soong would almost certainly be far more popular. However, when Lien and Soong found it impossible to reach a compromise over the nomination, President Lee’s domination of the Kuomintang made Lien’s nomination inevitable.

In contrast, electoral logic ruled in the DPP nomination decision between Chen Shui-bian, the former mayor of Taipei (the capital and largest city), and Hsu Hsin-liang, a two-time party chairman who had finished second in the party’s contest for presidential nominee in 1996. Hsu had a distinguished political career, but it was clear that Chen would be by far the stronger candidate. Although Hsu pointed out that Chen was technically violating party rules by running for president right after running for Taipei mayor, his challenge quickly faded.

The New Party nominated political gadfly Li Ao in a move that was widely interpreted as preserving the party’s face by having a presidential candidate, while posing the least threat to siphon votes away from James Soong. Finally, the Taiwan Independence Party (TAIP) nominated Cheng Pang-chen to round out the preliminary field of six.

Lien Chan, who comes from one of Taiwan’s richest families, has had a distinguished administrative career and close personal ties to Lee Teng-hui dating back thirty years to when they were both professors at National Taiwan University. For most of the 1990s, Lien has held one of the highest political positions in the country–premier (1993—97) and vice president (1996—2000)– marking him as a representative of the political establishment. This creates his appeal as a skilled technocrat who deserves considerable credit for Taiwan’s long-standing economic strength in general and as the well trained protégé of the very popular Lee Teng-hui, who is widely credited with bringing the polity’s democracy to fruition in particular. However, Lien has never held major elective office, and his noncharismatic style does not appear to be particularly effective in garnering electoral support. In short, he is widely viewed as suffering from an Al Gore disease, hopefully by his opponents and with some dread by KMT loyalists.

The other two candidates, as might be expected from their success despite somewhat insurgent images, are charismatic politicians with proven records on the hustings. The DPP’s Chen Shui-bian emerged on the political scene in the 1980s with something of a radical image as he first served as a lawyer for leading dissidents and was later jailed briefly for leading pro-democracy demonstrations. By the early 1990s, though, he had become much more of a reformist within the DPP, and he gave the opposition a resounding victory in 1994 when he was elected mayor of Taipei in a hotly contested three-way contest. He proved to be a very popular mayor who narrowly lost re-election in 1998 despite approval ratings in the 70—75 percent range. Yet, this loss dimmed his popularity little, if at all, and, much to the frustration of the KMT, may even have helped his presidential aspirations by freeing him from administrative responsibilities as the campaign heated up during 1999. Chen, hence, can be viewed as an insurgent who has successfully made the transition to establishment politics (unlike Newt Gingrich who flamed out soon after achieving power).

James Soong seemingly moved in the other direction from establishment to insurgency with the twist that his potential victory as president threatened to rewrite the definition of establishment within the KMT (much as President Lee’s consolidation of power had a decade earlier). Like Lien Chan, Soong was one of the young Turks in the KMT who helped propel Lee to power following the death of president and KMT chairman Chiang Ching-kuo in January 1988. Also like Lien, most of Soong’s career was spent in administrative positions until 1994, when he won an impressive victory in the race for provincial governor of Taiwan. Unlike Lien, Soong is a member of the Mainlander minority, which made his 1994 electoral success and his subsequent popularity as governor all the more remarkable. This success also exacerbated Soong’s rivalry with Lien Chan over who would succeed Lee as president. Soong cultivated his image as a populist reformer who was also a proven administrator. He appealed, thus, to those who both gave the KMT credit for Taiwan’s past successes but also blamed it for the island’s current problems (e.g., corruption, pollution, a rising crime rate, and growing tensions with China).

The three major candidates followed somewhat different approaches in their choice of vice presidential running mates. Lien seemingly sought to burnish his establishment credentials; Chen appealed to the DPP’s anti-establishment base constituency; and Soong tried to underline his nonpartisan independence from Taiwan’s politics as normal. Lien selected Premier Vincent Siew, a long-time technocrat who had also shown his potency at the polls by winning a highly competitive race for the Legislative Yuan from Chia-yi in 1995. Chen, in contrast, aimed at energizing and appealing to his party’s long-time activists by selecting Annette Lu. Chen had represented Lu as a defendant during probably the most spectacular dissident trial of the postwar era, the Formosa Incident of 1979—80, named for the opposition’s most important journal. Seven opposition leaders had been handed long jail sentences after demonstrators attacked police in Kaohsiung under circumstances that still remain somewhat cloudy. Chen announced his running mate on the twentieth anniversary of the demonstration.

Soong employed a third strategy by nominating a political neophyte, Chang Chao-hsiung, as his running mate. Chang, an Islander, is a well-respected heart surgeon and president of Chang Gung University in Kaohsiung. Although not active in politics, Chang had an interesting set of countervailing political associations: previous affiliation with the DPP (which is generally seen as quite hostile toward China) and his university’s ties to the Formosa Plastics empire of Y.C. Wang, an outspoken advocate of expanding economic linkages with the PRC.

The results of these nominations were somewhat ironic in that what would appear to have been the safest one, Vincent Siew, drew the worst public reaction. Siew is fairly popular and might have been expected to enhance the KMT ticket. However, after his nomination, Lien’s support actually fell by five percentage points in early September due to what are called ethnic politics. The Hakka, who constitute about 15 percent of the population, were disappointed that Wu Poh-shiung, a Hakka, did not get the nomination, and Wu was soon seen as being a likely ally of James Soong. In contrast, there were no particular signs that the nominations of Chang and Lu had much effect on popular opinion. A poll in late January, though, ranked Lu the most effective and Siew the least effective of the vice presidential candidates, perhaps suggesting something of an anti-establishment tilt in public opinion.

The campaign has turned on two central issues: 1) cross-Strait relations with China, which are intimately related to Taiwan’s identity politics, or the question of whether Taiwan’s residents are Taiwanese or Chinese; and 2) corruption, or black-and-gold politics–"black" signifying gangster influence and "gold" big business influence in Taiwan’s politics. Corruption has led to ambivalent feelings about the KMT’s party machine. In addition, invoking "the dog that didn’t bark" perspective, this campaign in particular and recent Taiwan politics more generally can be considered remarkable for a seemingly central issue that is not on the agenda–social welfare policies–for a combination of reasons: rapid economic growth, the lesser significance in general of class-based politics in Asia compared to Europe, and the opposition’s emphasis on first democracy and then Taiwanese nationalism as its defining issue.

The issues of national identity on Taiwan and cross-Strait relations between China and Taiwan are closely intertwined in a manner that produces convoluted and ironic political cleavages. The controversy between China and Taiwan might seem a straightforward remnant of the cold war that pits the Chinese Communist Party, which won the civil war on the Mainland, against the anti-communist Kuomintang, which lost all of China except Taiwan and a few other small islands. Unlike the two Germanies and the two Koreas, the two regimes in divided China have never agreed on an official or explicit formula for coexisting. By the mid-1990s, though, they had worked out a tacit modus vivendi. The Kuomintang in Taiwan did not formally challenge China’s claims to sovereignty over all of China (including Taiwan). For its part the PRC, which was recognized as the government of China by most nations and international organizations, did not seek to achieve unification (i.e., its sovereignty claims) by force nor to stifle Taiwan’s unofficial links with the rest of the world. Yet, the inability of the two governments to reach an explicit agreement or even to talk to each other meant that the ghost of the past might still haunt the present–as finally occurred in 1995—96 when the PRC conducted missile tests and practiced military maneuvers near Taiwan.

To the uninitiated, this might appear to be just a hangover of the CCP-KMT rivalry, but domestic politics in Taiwan have turned the battle lines on Chinese sovereignty in a strange direction, at least in ideological terms. Following fifty years as a Japanese colony (1895—1945), Taiwan was returned to Chiang Kai-shek’s Republic of China at the end of World War II. The ensuing military rule of Taiwan in the late 1940s was quite harsh and repressive, alienating many Islanders from the Kuomintang. Furthermore, by the 1970s and 1980s, the KMT’s "one-China" policy was seen by many advocates of democratization as legitimating authoritarian rule by preventing the people of Taiwan from directly choosing their top government officials. Thus, the opposition (which was primarily led by Islander intellectuals) came to be associated with Taiwan Independence; and, indeed, support for independence was added to the DPP’s charter in 1991. The chief (and perhaps only) advocates of unification were old guard KMT leaders, who obviously did not want a direct incorporation into the PRC but hoped for reunification with a post-communist China. The PRC for its part looked across the Taiwan Strait and, by the early 1990s, turned the old adage "the enemy of my enemy is my friend" on its head. Rather the enemy (the DPP) of the CCP’s old enemy (the KMT) was so obnoxious that the anti-communist Kuomintang now appeared to be the friend in Taiwan.

Taiwan’s domestic politics helped to moderate this issue as well. At the beginning of democratization, some feared that this issue could tear the polity apart by divisiveness between Taiwanese demanding independence and Chinese demanding unification. Fortunately for Taiwan, these fears proved to be ill founded. Ethnic identity has proven to be a complex blend of both Chinese and Taiwanese components, and the satisfaction of the general population with Taiwan’s current prosperity and democracy has created strong support for the status quo of diplomatic limbo because of the incalculable consequences of pursuing either independence or unification. This consensus might be summarized by two not entirely consistent policy prescriptions: 1) maintain complete autonomy from the PRC, including upgrading Taiwan’s status in world affairs; and 2) avoid picking fights with China, including not directly challenging the PRC’s sovereignty claims over Taiwan.

Democracy has the advantage of rewarding politicians and parties who do what the public wants. Thus, during the 1990s the KMT and DPP both moved toward the center of supporting the diplomatic status quo. The Kuomintang was the first to change its stance significantly. As long as Mainlanders controlled the top levels of the party and state, the KMT unwaveringly proclaimed a commitment to one China. After Lee Teng-hui became president and party chairman, politics within the KMT shifted considerably to a struggle between Lee and his followers (who came to be called the Mainstream faction) and a group of opponents (the Anti-Mainstream faction) composed primarily of older Mainlanders in the government, party, and military. As Lee consolidated his power, he not so subtly pushed the KMT’s position on cross-Strait relations in a new direction. Lee, in fact, managed to straddle the national identity issue quite astutely, implicitly portraying himself as a moderate between the pro-independence DPP and the pro-unification Anti-Mainstream KMT, some of whose members split from the KMT in 1993 to become the New Party. While retaining a commitment to unification with China in the indefinite future, he aggressively began to pursue what he called the "pragmatic" diplomacy of trying to upgrade Taiwan’s international status. For example, in 1993 he coopted a popular issue from the DPP by launching a campaign to join the United Nations, an idea the KMT had strongly opposed up to then. For its part, the DPP began to moderate its position on Taiwan Independence in the early 1990s after its inclusion of the pro-independence plank in the party charter cost it significantly at the polls in 1991. Subsequently, the DPP downplayed Taiwan Independence without renouncing it and continued to erode the KMT majority (see Appendix 1). In short, strong association with either unification or independence was a loser at the polls because most citizens feared that either policy would threaten Taiwan’s social, economic, and political stability and achievements.

The PRC, as might be expected, did not view favorably the changing nature of the Kuomintang and Taiwan’s policy toward one China. In fact, by the mid-1990s Beijing was beginning to complain about what it called Taipei’s "creeping officiality." China was partly (if not fully) mollified, though, by the tremendous increase in economic and social contacts across the Taiwan Strait that commenced in 1987, after Taipei loosened prohibition on contacts between its citizens and the PRC by allowing visits, trade, and investments as long as they were conducted via third points, such as Hong Kong. Subsequently, a tremendous growth in trade and investment across the Taiwan Strait occurred from the late 1980s through the mid-1990s. Taiwan businesses are now estimated to have invested $30—$40 billion dollars on the Chinese mainland, primarily in low-end manufacturing that is being priced out of Taiwan, and the indirect trade to China accounts for nearly a fifth of Taiwan’s exports. In fact, by the early 1990s, there even appeared to be something of a movement toward economic integration between Taiwan and southern coastal China, especially Fujian Province. Beijing could see this as a move toward eventual reunification.

Unfortunately, domestic politics on both sides of the strait then produced foreign policy shifts that turned détente into confrontation. In Taiwan, the general population became increasingly restive over their lack of diplomatic status, or face, and President Lee became frustrated when his initiative to gain some type of association with the United Nations went nowhere in the mid-1990s because of Beijing’s strident opposition. The central objective of Taiwan’s pragmatic diplomacy then turned to arranging an unofficial visit for Lee to the United States. Domestic factors in the PRC were making Beijing less flexible and less willing to compromise as well. There was a growing new nationalism among the public, who increasingly saw Taiwan as representing the last major symbol of national humiliation from nineteenth-century western and Japanese imperialism and whose possession was essential for China’s face. At the same time, the military was increasingly critical of President Jiang Zemin for his soft policy toward Taiwan. The PRC strongly objected to any Lee visit to the United States, and the Clinton administration assured Beijing that Lee would not be granted a visa. However, after Congress passed a nearly unanimous resolution supporting a Lee visit, Clinton changed his mind and granted permission for Lee to attend a reunion at Cornell University, his alma mater, in June 1995.

China reacted extremely strongly to Lee’s visit. The PRC argued that this represented a major change in the US policy that prohibited visits to the United States by ROC officials. Such a change, Beijing claimed, supported Lee’s concerted effort to turn "creeping officiality" into "Taiwan Independence." China went ballistic (almost literally) with a series of war games and missile tests in the Taiwan Strait area that were aimed at intimidating the ROC and voters in the December legislative and March presidential elections. The efficacy of this intimidation was somewhat questionable, however. First, the election returns themselves probably gave the PRC some pause, since Lee won an impressive victory for president with 54 percent of the vote with a pro-independence DPP candidate finishing a very distant second with 21 percent. Second, the threat to Taiwan drew a strong reaction from the United States, which deployed two aircraft-carrier battle groups near Taiwan.

However, the Chinese show of force appeared much more effective in inhibiting calls for independence in Taiwan. In fact, the combination of Chinese intimidation and electoral defeat seemingly convinced the DPP that Taiwan Independence was an unrealistic goal. Indeed, after the DPP presidential candidates’ poor showing and the evident desire of most DPP politicians to move toward a more centrist view on national identity, several leaders and groups left the DPP to form the Taiwan Independence Party in 1996, claiming that the DPP had forsaken its major issue. This loss has not seemed to have hurt the DPP at the polls, though, since the TAIP gets only about 1—2 percent of the vote, and its defection helped to moderate the image of the DPP.

The extremes of unification and independence are now only unambiguously represented by two minor parties: the New Party and the Taiwan Independence Party. The PRC, however, does not agree with this interpretation of growing moderation on the national identity/cross-Strait relations issue. Rather, it sees the DPP as irreconcilably hostile to China and fears that Islander Lee Teng-hui is committed to promoting Taiwan Independence, although the Chinese leadership evidently views other KMT leaders, including Lien Chan, as more reasonable and acceptable. Since Chinese denunciations and threats are deeply resented in Taiwan, though, they create a potentially volatile issue in themselves.

Before the 1996 election, there were some fears that both Lee Teng-hui and Jiang Zemin had committed so much face to their dispute that they could not back down. Yet, both sides sounded quite conciliatory after the election, and the crisis quickly de-escalated. For example, a meeting between the leaders of the two unofficial organizations that Beijing and Taipei have created to deal with each other was held in Shanghai in October 1998, and the Taiwan delegation then traveled to Beijing to meet President Jiang. Although neither side displayed any willingness to compromise its position on the central sovereignty issue, the discussions seemed fairly amiable and were generally taken as a sign that cross-Strait relations had reached a stable equilibrium. However, the détente of the early 1990s never returned, and tensions remained significant. In fact, by the late 1990s, the situation seemed to be slipping toward instability, because each side evidently felt that time was working against it–Beijing saw Taiwan moving toward independence, whereas Taipei felt that the PRC was increasingly isolating it from normal international affairs. Each also claimed that US policy was tilting against it.

Dating back to the early 1950s, the Kuomintang strategy for ruling Taiwan included not just authoritarian controls, but also the creative application of patronage politics to incorporate the existing political factions and leaders of Islanders into the party. The central leadership’s strategy was to divide and rule by playing competing local factions off against each other in an attempt to ensure that each side won enough local elections to gain significant patronage resources, while none became so dominant that it would feel independent of the central party leadership. This long-term strategy had several important (and, from the standpoint of the central leadership, contradictory) consequences. First, the KMT, even when dominated by a Mainlander leadership, built an awesome machine that could deliver the vote on election day, although its potency was stronger in rural than urban areas and in local than higher-level elections. Second, many local political leaders became independent entrepreneurs beyond the direct control of the central party leadership. Several times during the 1980s and 1990s, the central party leadership under both Chiang Ching-kuo and Lee Teng-hui sought to crack down on local factions but failed due to the KMT’s reliance on the votes that they controlled. Third, as Taiwan became more urbanized and middle class, the reputation of these party machines became increasingly less than savory. Yet, concerns over patronage politics per se generally remained in the background of political discourse, and by the 1990s concern had shifted to much more blatantly illegal types of political activities than, for example, using vote-buying to get out the vote.

Under the KMT authoritarian regime, corruption remained fairly limited at what might be termed "first world" rather than "third world" levels. Democratization unfortunately unleashed burgeoning corruption. The declining powers of the police state made illegal activities, including political corruption, much safer. The key stimulus, though, came from several unfortunate side effects that democratization itself had on political processes. First, politics and campaigning became extremely expensive, forcing politicians to become dependent upon contributions from well heeled business people. Second, the growing power of legislatures gave small groups of politicians the power to bestow favors, such as government contracts. Third, Taiwan began a huge program of infrastructure expansion in the early 1990s which created lucrative opportunities for those with political connections. Fourth, when Lee Teng-hui and his young Turks challenged the KMT old guard, they turned to the support of rich businesspeople and local patronage-oriented political factions as a counterweight to the bureaucratic power wielded by their conservative rivals in the party and the government. Finally, Taiwan’s dynamic economy produced substantial resources to grease the wheels of political corruption in general. More specifically related to the political sphere, the Kuomintang ran a wide variety of businesses, and many of them shared in the bonanza of rapid economic development, giving the party large amounts of Taiwan’s version of political soft money.

The burgeoning political corruption offended general public sensibilities in three major areas. First, many contracts for public projects became highly politicized. Corrupt legislators would form their own companies to bid on contracts and, in many instances, would form ties to organized crime who, in turn, would deter bids by legitimate businesses. Needless to say, quality suffered greatly, and public cynicism about government projects rose. Second, several prominent business leaders and conglomerates blatantly used political connections and legislative positions to help their corporations and influence the stock market, leading to a seemingly endless series of major scandals in the early and mid-1990s. Finally, local political factions, which had always been patronage-oriented, became increasingly blatant and tied to organized crime. For example, during one crackdown in the mid-1990s, it was estimated that almost a third of those recently elected to local government councils had mafia connections.

Throughout the 1990s, black-and-gold politics did not gain much salience in partisan clashes. The KMT was widely blamed for being the largest practitioner of the corrupt arts. Over time, though, the other parties became tainted as well, and in the mid-1990s President Lee and the central KMT organization launched a credible anti-corruption drive. Political corruption and black-and-gold politics, however, continued to boil beneath the surface of Taiwan’s politics for the last decade. With popular resentment strong, they seemed to constitute an important issue just waiting for the right fissure in order to erupt on the scene.

As the campaign commenced, the three major candidates made distinct impressions, if not explicitly stated positions, on the national identity/cross-Strait relations issue. Soong was seen as the most accommodating toward China; Chen the most supportive of Taiwan Independence; and Lien the most tied to the status quo and Lee Teng-hui’s policies. In contrast, the major candidates were not greatly distinguished on black-and-gold politics, as all three had clean images. Lien’s career had been an administrative one, whereas the worst corruption was tied to legislative politics, and Chen and Soong pointed with pride to scandal-free terms in major elected posts. During the summer and autumn of 1999, the candidates’ positions on cross-Strait relations converged, creating an almost issueless campaign. The campaign entered a new and much more hostile phase in November and early December, though, in which the two major issues sketched above emerged as major cleavage lines in the battle for voter support.

Cross-Strait relations had erupted as a major concern, both for the campaign in Taiwan and for the larger international community, in early July when Lee Teng-hui upset their seeming equilibrium. In an interview with a German newsman, Lee argued that Taipei and Beijing were connected by "special state-to-state relations." Although Lee soon took pains to deny that he was asserting Taiwan Independence or that this formulation implied any change from the status quo in cross-Strait relations, the PRC reacted very strongly to what it claimed to be Taiwan’s first direct and explicit challenge to the sovereignty of one China. The United States reacted with considerable alarm. Initially, US efforts (and ire) were directed toward Taiwan, which was seen as potentially challenging China without giving America any forewarning. When China began to make implicit threats about minor military retaliation (e.g., invading small islands controlled by Taiwan), US efforts at deterrence turned toward Beijing. By September, the immediate crisis appeared to be contained but not resolved. The PRC proclaimed its refusal to accept Lee’s theory with exclamation points, while Taiwan’s president refused to back down, although he did reiterate that special state-to-state relations were not a declaration of Taiwan Independence.

This impasse tossed a potential hot potato into the middle of the presidential campaign; no candidate wanted to touch the issue. Ironically, though, the way in which Lee presented the matter made it hard, if not impossible, for it to have much play in domestic politics. Whereas external observers, especially the PRC and many in the US, felt that Lee’s principle of special state-to-state relations violated the second half of the dictum "preserve Taiwan’s autonomy but don’t needlessly challenge or antagonize China," Lee’s pronouncement proved to be extremely popular with the Taiwan public. Rather than seeing Lee’s statement as a provocative challenge to one-China sovereignty, Taiwan’s citizenry believed that this theory simply described the reality of a divided China. They may also have felt that Taiwan needed to respond in kind to an aggressive Chinese push to obliterate the ROC in the wake of President Clinton’s acquiescence to the PRC in Shanghai in June 1998 with his "Three No’s" pledge: that the United States would not support 1) Taiwan Independence; 2) two Chinas, or one China—one Taiwan; or 3) Taiwan’s admission to any international organization requiring statehood for membership.

Much of Taiwan’s citizenry perceived President Lee as representing the center on the national identity issue in the late 1990s. In the 1998 campaign, for example, Lee introduced the concept of "new Taiwanese" as a national identity that Mainlanders, as well as Islanders, could claim, in the hope of boosting Mainlander Ma Ying-jeou’s campaign for Taipei mayor. This idea seemed quite attractive. In fact, DPP candidate Chen Shui-bian (who is generally seen as a Taiwanese nationalist) complimented Lee indirectly by imitation, with his statement that Taiwan’s residents were "peanuts," which easily root in Taiwan, rather than "yams" (Islanders) or "taros" (Mainlanders). China welcomed Chen’s defeat at the time. The idea of a common, new Taiwanese citizenry is not one that boosts Beijing’s "one country, two systems" formulation (though the two are not necessarily incompatible).

The widespread popularity of Lee’s position, in essence, removed the topic of cross-Strait relations from campaign debate.

The unpopularity of James Soong’s accommodating approach toward China deterred him from criticizing Lee or even bringing up cross-Strait relations. Chen Shui-bian and the DPP had been moving over the previous year or so to downplay their image as pro—Taiwan Independence (e.g., by explicitly accepting "Republic of China" as Taiwan’s official name, which the DPP had never previously acknowledged). Lee’s special state-to-state relations theory, if anything, went beyond the DPP’s position and made it difficult (if not impossible) for them to advocate a more hard line position. For example, in October Chen proposed that Taiwan accept the PRC’s proposal to allow direct linkages (e.g., transportation, trade, and social communications) between Taiwan and the PRC–the most accommodating explicit campaign position toward China at that time. A similar action in the US would be for George W. Bush to advocate increased taxes.

The attempt of Chen and the DPP to overcome their lingering radical image on national identity and cross-Strait relations during the early part of the campaign was presumably a means to increase his appeal to Taiwan’s generally conservative middle class. Chen shifted strategy in November, however, in a move that probably reflected several motivations. First, he could hope to motivate and activate his base constituency in general and, in particular, lessen the strength of support for the candidate of the Taiwan Independence Party who was, in fact, forced to drop out of the race in early January. Second, the PRC took little, if any, note of the DPP’s move away from calling for Taiwan Independence. In fact, Beijing’s ambassador to the United States was quoted as saying that China could accept any candidate except the one who stood for independence–which was interpreted as expressing the PRC’s disapproval of Chen (the statement was later denied). Finally, since James Soong was ahead in the polls at the time, an attempt to draw invidious attention to his Mainlander origins made electoral sense.

The DPP’s initial foray into the national identity arena came when it began attacking Soong for his actions during the authoritarian era when Islander dissidents were harassed, in particular during the Formosa Incident. Soong was director-general of the Government Information Office (i.e., the government’s press secretary) at that time. Thus, the DPP tried to paint him as at least partially culpable for the repression and also charged him with using his office to impede the use of the Taiwanese dialect (Mandarin, the dialect from northern China, was the official language, which was resented by many Islanders). The DPP’s tack was somewhat ironic because only a few weeks earlier Soong had claimed that he was being wiretapped and explicitly linked it to past KMT repression. Soong’s response to the DPP accusations was to deny personal responsibility for government repression and illegal acts.

By calling attention to Soong’s Mainlander origins, the DPP presumably was trying to suggest that he could not be trusted to stand firm against China in protecting Taiwan’s interests. If anything, the Kuomintang was even more strident in denouncing Soong in these terms. Soong and six of his followers were expelled from the KMT in mid-November, and another 21 were expelled in early December for supporting Soong’s candidacy. Soong’s expulsion was inevitable, but the harshness of the KMT chastisement exceeded expectations. For example, Soong was called a "betrayer of Taiwan" and was charged by premier and KMT vice presidential candidate Vincent Siew with receiving campaign money from the PRC. Soong responded by pointing out that President Lee had once planned to appoint him to lead the Strait Exchange Foundation (i.e., to be chief negotiator with the PRC), which did not suggest that his loyalty to the ROC was in question, and by challenging Siew to provide proof for his charge (which was not forthcoming).

The DPP’s changed policy went far beyond trying to embarrass Soong, though. A switch toward the party’s traditional views on cross-Strait relations accompanied the renewed DPP emphasis on national identity. While Chen continued to make it clear that he had no intention to proclaim Taiwan Independence in the form of an Independent Republic of Taiwan, he began asserting Taiwan’s sovereignty and independence of the PRC. For example, he told Richard Bush, chairman of the American Institute in Taiwan (the unofficial organization in charge of America’s relations with Taiwan) that "Taiwan is an independent country is not only a fact but also a shared wish and desire of more than 90 percent of Taiwan’s people." In a white paper on constitutional change, he argued, "[t]he Constitution does not quite do the job of spelling out Taiwan as an independent state." He argued for redefining in the Constitution the territory of the ROC to what it now controls and for mandating a popular referendum on any change in Taiwan’s status. Both these proposals were once part of the DPP’s pro-independence platform, and they are still strongly opposed by the KMT.

Yet, in reality, Chen’s statements that Taiwan is independent and sovereign seem to differ little from what President Lee means by saying that a special state-to-state relationship exists between Taipei and Beijing. In fact, by mid-January Chen moved back to the middle of the policy spectrum, both to appeal to the broad electorate in Taiwan and to calm fears in Beijing and Washington that his victory would constitute a revolution. For example, in a CNN interview with the three major candidates on their views toward China and in a later personal interview with major Japanese media, Chen explicitly stated that he would not declare Taiwan Independence, change the name of the Republic of China, attempt to change the international status quo, or include special state-to-state relations in the Constitution.

At the other end of the spectrum on cross-Strait relations, Soong tried to position himself as the least likely candidate to stir up confrontation with the PRC, while maintaining that he would protect Taiwan from Chinese aggression. For example, he offered to conclude a nonaggression pact with the PRC and contributed to the attempt to conceptualize cross-Strait relations in early January by saying that they were not "domestic" (as the PRC claims) but also not "100 percent state-to-state" (which was a slight slap at President Lee’s concept). In contrast, Soong came up with the phrase "quasi-international" to describe relations between Taipei and Beijing. The meaning of this new formulation was a little ambiguous. His proposal received contradictory criticisms for "denigrating" Taiwan by ascribing it a second-class international status and for lacking distinction from the policy stances of Soong’s rivals. Overall, he proposed to promote increased ties with the PRC over a fifty-year period on the model of the evolving European Union, but he also made clear his conviction that the people of Taiwan had a fundamental right to approve or disapprove any change in the island’s status.

Lien Chan, of course, remained in the middle, but the distinctiveness of his position became increasingly muddy. For example, he said that Taiwan would not seek independence "but will never accept Beijing’s description of Taipei as a local government of mainland China." Lien also tried to add complexity to his own image. On the one hand, he sounded fairly conciliatory toward Beijing–for example, not discussing special state-to-state relations, in contrast to President Lee and his own running mate Vincent Siew. On the other hand, he also tried to look tough in defending Taiwan by advocating the development of long-range missiles as a deterrent against Chinese aggression, following reports of Chinese deployment of missiles against Taiwan.

At first, the blurring distinctions among the candidates on cross-Strait relations probably worked in favor of the Kuomintang ticket of Lien Chan and Vincent Siew. Lien almost certainly benefits from a popular image that the KMT has managed the dangerous and troublesome relationship with the PRC fairly well. Furthermore, his experience of working closely with President Lee suggests that he would be the most able to preserve stability in the Taiwan Strait area. However, in late January, perceptions that Lien was softening Lee Teng-hui’s position toward China began to lead to embarrassing questions that made Lien look indecisive.

As the campaign heated up, the three candidates had sought to use differing perspectives on cross-Strait relations to attract different voters, yet by January the distinctions among their positions were less clear. All opposed a declaration of Taiwan Independence from China but stated that at present Taiwan is sovereign and independent of the PRC and that the PRC’s "one country, two systems" plan for reunification is completely unacceptable. In addition to stating their willingness to stand up for Taiwan, all three also made conciliatory appeals toward China as well, presumably to reassure both Beijing and their constituents that they would not be unduly confrontational. All supported liberalizing and expanding direct contacts between Taiwan and China and offered to visit the PRC, if elected, in order to tone down hostilities.

The Kuomintang’s political machine had the potential to become a double-edged sword. It should have automatically conferred upon the KMT a significant advantage in getting out the vote. Yet it also created two potential perils. First, especially given the links between local factions and organized crime, it could turn into an instrument of the party’s own destruction. Second, the independence of the factions from central party controls meant that a significant number could defect, thereby turning an electoral advantage into a disadvantage. In particular, James Soong had been a very aggressive as provincial governor in meeting and cultivating contacts with local leaders, so that the chance for substantial KMT defections to Soong looked fairly good. These two problems might interact perversely for the KMT–a significant number of middle class citizens could vote against the KMT on clean-government grounds, and a substantial number of machine votes could flow to Soong or even Chen based on the personal deals and loyalties of factional leaders.

In early December the Nationalist Party unleashed a major offensive in what seemed the unlikely area of corruption. A KMT legislator charged that an account in the name of James Soong’s son at the Chung Hsing Bills Finance Corporation had received a mysterious deposit of over 100 million NT dollars in the early 1990s (slightly over $4 million) and had subsequently been managed by Soong’s sister-in-law. At first this seemed to be a personal scandal based on illicitly acquired funds, and Soong’s initial explanation that the sum came from an elderly gentleman concerned with his son’s welfare fueled such speculation. The Defense Ministry, for example, denied that the money came from a kickback for Soong’s role in getting George Bush to sell F-16s to Taiwan in 1992. Two things about the deposits had become clear by mid-December, however. First, the accounts at Chung Hsing Bills represented the tip of an iceberg of funds that Soong had managed which soon appeared to be in the range of one billion NT dollars and growing. Second, the money came from huge Kuomintang slush funds that Soong had controlled as the party’s secretary-general and candidate for provincial governor.

This changed the ensuing rounds of charges and countercharges but did not make Soong look much better. He argued that the initially discovered accounts had been established on the order of Lee Teng-hui to help take care of the family of the late President Chiang Ching-kuo and to help the campaign activities of a variety of KMT and even DPP candidates. He produced a witness who said that on at least one occasion a suitcase full of 1,000 NT notes had been given to Chiang’s widow and that a substantial campaign contribution had been made to John Chang, secretary-general of the Office of the President and widely recognized illegitimate son of Chiang Ching-kuo. Soong also indicated that his records would show that all the funds were accounted for by such party tasks and, by not very subtle intimation, that many high-ranking KMT officials (to be named later) had benefited from them.

Presumably not coincidentally, charges against leading KMT officials of various unethical behaviors suddenly erupted as well. The legislator who originally leveled the charges against Soong was denounced for receiving a huge overpayment when a harbor expansion in the early 1990s destroyed his business. Charges also circulated that John Chang was engaged in a long-term extramarital affair (the woman rumored to be his paramour denied it), but Chang quickly resigned as secretary-general of the Office of the President (although he was almost just as quickly appointed senior advisor to the president) and appeared at a Clinton-style press conference with his wife.

Soong’s responses did nothing to deter a crescendo of Kuomintang denouncements. The party and President Lee strongly contended that Soong had manipulated these funds on his own, in effect stealing money from the KMT. Several official investigations were opened, and Soong replied by having a former judge and New Party legislator with a reputation for honesty and outspokenness audit his financial records. The Ministry of Finance refused access to its records. By early January, both the auditor and the Taipei District Prosecutor’s Office issued preliminary reports saying that they had found no illegal activities on the part of Soong and his relatives. Still, other investigations continued as the government and KMT proved unrelenting in their efforts to ruin Soong’s reputation, and new charges periodically emerged. In one exchange in January, the KMT accused Soong of having bought a house in Hawaii with party money. Soong denied the allegation and offered to withdraw from the race if anyone could prove it, as well as daring Lien to withdraw if such proof failed to materialize. Soong forces also demanded that several leading figures in Lien’s campaign explain their foreign properties.

The KMT attacks on Soong were not without risk. As noted above, mud and stronger substances could come flying back. Furthermore, the KMT accused Soong of misusing huge party funds that in themselves were likely to raise the ire of the public. After all, the current leaders may well have been using the huge slush funds in the same manner. By raising the scandal to discredit Soong, the Lien campaign reminded people of the many less than savory aspects of the KMT itself and of the large amounts of soft money that the party has had at its disposal. The public seemed disgusted with both Soong and the KMT. On the one hand, polls indicated that only about a fifth of the people believed that Soong had told the whole truth. On the other, less than a fifth (17 percent) agreed with President Lee’s characterization of Soong as a "shameless liar and thief" (51 percent disagreed).

Chen Shui-bian for his part lost little time in burnishing his image for honesty and in trying to tar both Lien and Soong with charges of KMT corruption. Chen’s efforts seemed to be bearing some fruit. Polls in mid- and late December suggested that black-and-gold politics had emerged as the public’s top concern, to the DPP’s benefit. A poll at the end of December, for example, found Chen to have a significant lead in terms of which candidate was perceived to have the greatest integrity: 26 percent versus 16 percent for Soong and 11 percent for Lien. The very low figure for Lien, incidentally, suggests that the KMT attacks on Soong may have been counterproductive. In response to the public’s growing disgust with the scandal, Lien Chan promised to put the Kuomintang’s massive assets into trust and to pass a law prohibiting political parties’ involvement in businesses.

The standing of the candidates remained stable from midsummer through the end of November. James Soong held a clear lead, generally with 30—35 percent of the vote, although his level of support seemed to be declining slightly in November. Chen Shui-bian held second place with 20—30 percent of the vote with perhaps a slight increase as the campaign progressed. Somewhat surprisingly perhaps, the KMT’s standard bearer Lien Chan trailed the other two. He began with approximately 20 percent support but saw this drop to slightly over 10 percent by early September. Lien’s leadership of Taiwan’s earthquake recovery efforts after the disaster in September boosted his standing in some polls, but by mid-November his support was below 15 percent again. Despite Lien’s trailing position in the polls, though, he was seen as the candidate most likely to win in March for most of this period, reflecting the respect for the KMT as the party with by far the most powerful political machine on the island. Not surprisingly, the December scandal cost Soong considerable public esteem. He quickly lost about a third of his support in the polls, falling from 30 percent to 20 percent of the likely vote, whereas Lien benefited with his support levels rising appreciably. By early February, most polls showed the candidates closely bunched in the 20—25 percent range. The three candidates have generally remained at those levels since then, although Lien showed some signs of slippage in both late December and late January.

The race is now extremely close, and it would be rash indeed to even speculate about which of the three contenders has an advantage. This should make for an exciting election, especially given the large stakes involved. These large stakes, though, may create a couple of dangers. First, the extreme competition and contentiousness could set off events challenging or undermining Taiwan’s democracy. Second, the campaign and its outcome could exacerbate tensions with the PRC, thereby triggering another crisis in the Taiwan Strait.

From a political standpoint, the dramatic reforms of the late 1980s and early 1990s that transferred Taiwan from an authoritarian one-party state to a democratic polity almost certainly form the most important event in the island’s postwar history. Across the political spectrum, leaders and citizens appear proud of Taiwan’s becoming the first democracy in 5,000 years of Chinese society and display little sympathy for Lee Kuan Yew’s or Jiang Zemin’s championing of so-called Asian values that restrict western-proclaimed political rights as incompatible with indigenous Asian cultures.

The potential challenges to Taiwan’s nascent democracy are of two kinds. Neither, though, appears to be overly serious. First, some might worry that the Kuomintang or the military might not accept a loss and stage a coup. At the beginning of the 1990s many, especially in the opposition camp, saw such a danger. Now, in contrast, such fears seem to have dissipated, and almost everyone assumes that the election’s the thing. Second, with little to distinguish the candidates on substantive issues, the nasty negative campaigning that results may be harmful. For example, nearly half the population believes that the KMT-Soong mutual charges of corrupt behavior will hurt Taiwan’s democratic development. Yet, as Lien’s commitment to reform the KMT suggests, the cure for problems of democracy may be more democracy, in the sense that popular disapproval may push the politicians to clean up their act. While it may be too early to be all that optimistic, there seems to be little reason to expect that Taiwan’s election will not go smoothly.

The impact of the elections on cross-Strait relations is harder if not impossible to judge, because it depends on Beijing’s reaction to events in Taiwan. President Lee’s special state-to-state relations theory was taken as a direct challenge by both the leaders and citizens of the PRC, and acrimonious debate ensued between different groups of Chinese in the United States. Many expect China to do something aggressive before the election is over, and it is easy to find a series of Chinese threats. Yet, just as Taiwan’s politicians sound both aggressive and conciliatory, sometimes in the same speech, China has also made more positive statements. For example, it proposed de-escalating the bidding wars with Taiwan over buying diplomatic recognition from countries. China has indicated a desire to improve relations with the United States and Japan, presumably for the economic advantages. It is here, in fact, that President Lee’s bombshell may have had an ironic side effect, by getting the US and PRC to talk to each other at time of hostility over the American bombing of China’s embassy in Belgrade. Without this opportunity, the deal between China and the United States over the PRC’s entrance to the World Trade Organization might well have not been possible. In short, China has contradictory incentives for responding to Taiwan’s campaign and election, and it is hard for an outsider to predict whether a combative or conciliatory scenario is in the offing.

Tangwei

	KMT	DPP	New Party
1980 Legislative Yuan	72	13	--
1980 National Assembly	66	--	--
1983 Legislative Yuan	69	19	--
1986 Legislative Yuan	67	25	--
1986 National Assembly	64	24	--
1989 Legislative Yuan	59	29	--
1991 National Assembly	71	24	--
1992 Legislative Yuan	53	31	--
1995 Legislative Yuan	46	33	13
1996 National Assembly	50	30	14
1998 Legislative Yuan	46	30	7

Cal Clark is an Alumni Professor of Political Science at Auburn University. His research and teaching specialty is East Asian political economy, and he has previously taught at New Mexico State University, University of Wyoming, and Chung Yuan Christian University in Taiwan. Clark is the author or co-author of several books and articles, including Flexibility, Foresight, and Fortuna in Taiwan’s Development, Women in Taiwan Politics, and "Taiwan in the 1990s" in China Briefing: The Contradictions of Change. He has also edited several volumes, including THE ROC on the Threshold of the 21st Century. He has been the special editor or co-editor of issues of American Asian Review, Business & the Contemporary World, Governance, and Policy Studies Review.

The Asia Society is prepared to assist journalists by providing briefings by telephone and in person, additional background materials, and help in identifying specialists on Asia for consultation or broadcast appearances.

The opinions expressed in this publication are the author's and do not necessarily represent the views of the Asia Society.