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Generational Dynamics Web Log for 26-May-2016
26-May-16 World View -- China demands new Taiwan leader explicitly affirm that Taiwan is part of China

Web Log - May, 2016

26-May-16 World View -- China demands new Taiwan leader explicitly affirm that Taiwan is part of China

IMF balks at new European bailout plan for Greece

This morning's key headlines from GenerationalDynamics.com

China demands new Taiwan leader explicitly affirm that Taiwan is part of China
IMF balks at new European bailout plan for Greece

China demands new Taiwan leader explicitly affirm that Taiwan is part of China

Tsai Ing-wen, Taiwan's new president (Reuters)

Tsai Ing-wen, Taiwan's new president (Reuters)

Just four days after Taiwan's new president Tsai Ing-wen took office, she is already facing a major political crisis with China, after a major election victory in January. ( "17-Jan-16 World View -- Taiwan's pro-independence party wins historic presidential election")

As I wrote in my January article, Taiwan-China relations are sure to be tumultuous as soon as Tsai takes office, and that is happening very quickly.

Since 2008, Taiwan has been governed by the pro-China Kuomintang (KMT) party, which favors the "one China" principle and unification with mainland China, and which has fully supported all of China's claims in the South China Sea.

Tsai is the leader of Taiwan's Democratic Progressive Party (DPP), which in the past has favored Taiwan independence from China. When the DPP was in power prior to 2008, relations between China and Taiwan so bad that in 2005 Beijing passed an "anti-secession law" saying that China would take military action against Taiwan if there were any moves or speeches in the direction of Taiwan independence from China.

So in Tsai's inauguration speech five days ago, Tsai said that she "respected" the "common understanding" between Taiwan and China, but did not say what the common understanding was.

According to Beijing state media, Tsai made "a painful effort not to answer one important question..., whether or not to acknowledge the 1992 Consensus embodying the one China principle."

According to Beijing:

"The current developments across the Taiwan Straits are becoming complex and grave. ...
Since 2008, the two sides of the Straits, acting on the common political foundation of adhering to the 1992 Consensus and opposing "Taiwan independence", have embarked on the path of peaceful growth of cross-Straits relations. ...
The key to ensuring peaceful growth of cross-Straits relations lies in adhering to the 1992 Consensus, which constitutes the political basis of cross-Straits relations. The 1992 Consensus explicitly sets out the fundamental nature of relations across the Taiwan Straits. It states that both the Mainland and Taiwan belong to one and the same China and that cross-Straits relations are not state-to-state relations. The 1992 Consensus was reached with explicit authorization of the two sides and has been affirmed by leaders of both sides. It thus constitutes the cornerstone of peaceful growth of cross-Straits relations.
We have noted that in her address today, the new leader of the Taiwan authorities stated that the 1992 talks ... reached some common understanding, and that she will handle affairs of cross-Straits relations in keeping with the existing defining document and related regulations and continue to advance the peaceful and stable growth of cross-Straits relations on the basis of the established political foundation.
However, she was ambiguous about the fundamental issue, the nature of cross-Straits relations, an issue that is of utmost concern to people on both sides of the Taiwan Straits. She did not explicitly recognize the 1992 Consensus and its core implications, and made no concrete proposal for ensuring the peaceful and stable growth of cross-Straits relations. Hence, this is an incomplete test answer.
A choice of different path leads to different future. This is a choice between upholding the common political foundation that embodies the one China principle and pursuing separatist propositions of "Taiwan independence" such as "two Chinas" or "one country on each side". This is a choice between staying on the path of peaceful growth of cross-Straits relations and repeating the past practice of provoking cross-Straits tension and instability. And this is a choice between enhancing the affinity and well-being of people on both sides and severing their blood ties and undermining their fundamental interests. The Taiwan authorities must give explicit answer with concrete actions to all these major questions and face the test of history and the people. ...
"Taiwan independence" remains the biggest menace to peace across the Taiwan Straits and the peaceful growth of cross-Straits relations. Pursuing "Taiwan independence" can in no way bring peace and stability across the Taiwan Straits. The common will of people on both sides of the Straits are not to be defied. Today, we remain as determined as ever to uphold national sovereignty and territorial integrity and have ever stronger ability to do so. We will resolutely forestall any separatist moves and plots to pursue "Taiwan independence" in any form."

Beijing is demanding that "Taiwan must clarify this issue with practical action and allow the examination of the people and history."

Tsai won the January election overwhelmingly because the people of Taiwan, especially the younger generations, increasingly identify as "Taiwanese" rather than "Chinese." The KMT is a party of older generations.

If Tsai complied with China's demands and unambiguously recognized the 1992 Consensus, there would probably be anti-Chinese "Sunflower movement" riots in the streets, as there were frequently the last time the DPP was in power, and those riots will probably overflow into Hong Kong, where there could be a renewal of anti-Chinese "Umbrella movement" riots.

So China's demands of Tsai are quite ominous, and the political situation will be extremely volatile no matter what Tsai decides to do. China Radio International's English Service and Xinhua

IMF balks at new European bailout plan for Greece

The eurozone finance ministers, meeting in Brussels, announced on Wednesday morning that they had reached deal to provide a new bailout to Greece, and also announced that the deal complies with the demands by the International Monetary Fund (IMF) for "debt relief" for Greece, and that debt relief will be provided by 2018. The new 10.3 billion euro bailout loan to Greece would allow Greece to make a July 1 debt repayment and avoid bankruptcy. It's expected that, as in the past, about one-third of the bailout loan would come from the IMF, which is funded by the United States and other countries, and two-thirds would come from eurozone institutions.

The IMF demand for "debt relief" alludes to the fact that Greece can never pay off its debt. Readers who have been following this issue for years and years can well remember crisis after crisis, with a decision each time to "kick the can down the road" by granting Greece a new bailout loan so that they could use it to avoid immediate bankruptcy. (This technique is sometimes called "Using your Visa credit card to pay your Master Card bill.")

However, the IMF announced that for this, the first 2016 crisis, they would not simply kick the can down the road, but would demand debt relief. Since most of Greece's 300 billion euro debt is owed to European Union (eurozone) institutions, the eurozone has it within its power to reduce Greece's debt so that Greece could one day be debt-free.

The main opponent of debt relief has always been the Germans, especially Germany's cranky finance minister Wolfgang Schäuble. So the finance ministers reached a compromise on the debt relief issue, "extending the repayment period and capping interest rates."

What does that mean? Details were not provided, but speculation was that interest rates would be close to zero until 2050, and Greece would not have to repay the debt in full until 2100. By that time Wolfgang Schäuble would be dead, and indeed so would all the other finance ministers.

So the finance ministers announced that they'd agreed on debt relief, and had met the IMF's demands.

However, an IMF official disagreed, saying:

"Greece is in a situation where it needs a disbursement, and so we were certainly willing to concede on some points. But we have not conceded on the point that we need adequate assurances regarding debt relief before we go to our board... I am hopeful we will get there. ...
We are not in the situation where the IMF can say that we're ready to move ahead. But... given what we have got from the Europeans, given what they committed to, I'm hopeful that we can get to that point by the end of the year."

By the end of the year? It looks like another crisis in the making. Kathimerini and BBC and AFP

(Comments: For reader comments, questions and discussion, see the 26-May-16 World View -- China demands new Taiwan leader explicitly affirm that Taiwan is part of China thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-May-2016) Permanent Link
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