Taiwan Weighed for U.S. Jet Sale at Risk of Riling China

The Obama administration will give “serious consideration” to selling Taiwan new Lockheed Martin Corp. (LMT) F-16 fighter jets, a White House official said, creating a potential new flashpoint with China ahead of next week’s high- level meetings between U.S. and Chinese officials.

A jet sale “warrants serious consideration given the growing military threat to Taiwan,” Robert Nabors, the White House’s director of legislative affairs, said in a letter yesterday to Senator John Cornyn, a Texas Republican.

The comments risk spawning a political clash with China as Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner prepare to meet their Chinese counterparts in Beijing next week for annual talks. China, which insists that Taiwan be reunited with the mainland by force if necessary, has cut military contacts with the U.S. in the past over American arms sales to the island.

“This is going to cause huge problems for the Chinese,” Bonnie Glaser, an analyst at the Center for Strategic and International Studies in Washington, said in an interview. The tension may be compounded if a human-rights group’s speculation bears out that an activist who escaped house arrest in eastern China this week is holed up at the U.S. Embassy in Beijing, she said.

New F-16 C/D fighters would replace aging F-5 jets and supplement a refurbishment program for Taiwan’s F-16 A/Bs that President Barack Obama’s administration announced in September.

Lockheed in Texas

Lockheed has said a Taiwanese purchase of new F-16s would help keep open its production line in Fort Worth, Texas, in Cornyn’s state.

“A contract for new F-16s to Taiwan, depending on timing and quantity, could significantly extend the F-16 production line,” Laura Siebert, a spokeswoman for Bethesda, Maryland- based Lockheed, said in an e-mail yesterday.

Lockheed fell 40 cents to $91.30 at the close in New York trading yesterday and has risen 13 percent this year.

“The Chinese position of opposing U.S. arms sales to Taiwan has been consistent, clear and firm,” Geng Shuang, a spokesman for the Chinese Embassy in Washington, said in an e- mail yesterday.

Taiwan has pressed the U.S. for years to allow the purchase of new F-16s, saying it is falling dangerously behind in its ability to counter potential threats from China. The mainland has an arsenal that includes missiles stationed across the Taiwan Strait.

‘Near-Term’ Decision

The Obama administration plans to decide on a “near-term course of action on how to address Taiwan’s fighter gap, including through the sale to Taiwan of an undetermined number of new U.S.-made fighter aircraft,” Nabors wrote.

The U.S.-Taiwan Business Council, a trade-promotion group that has lobbied for the F-16 sales for years, read that as a pledge to provide the planes.

“They are committing to new aircraft as part of their strategy to assist Taiwan in maintaining a credible defense,” Rupert Hammond-Chambers, the council’s president, said in an e- mail. “We had to date not been successful in getting the administration to admit” that the difference in the number of fighter jets on each side of the Strait is significant, he said.

A spokesman for Taiwan’s representative office in Washington said he didn’t know whether his country had been notified of a potential sale.

“We always appreciate U.S. concern and appreciation of Taiwan’s defense needs,” the spokesman, Frank Wang, said in an interview.

Upgrades Instead

The U.S. parried Taiwan’s request for new fighters in September, agreeing only to a $5.3 billion package to upgrade Taiwan’s older F-16s with new radar, smart bombs and laser- guided equipment. It was the first time in several such announcements that China didn’t suspend military talks.

Chinese officials considered their response last year restrained, Glaser said.

“They believed when we made the decision on the upgrades that that was a done deal and that we were not going to consider going forward with sales of new fighters,” she said. “This will, I think, come to them as a major shock.”

Yesterday’s letter from Nabors differs from a Feb. 15 letter to Cornyn from Acting Undersecretary of Defense James Miller in response to the lawmaker’s demand that the administration acknowledge Taiwan’s defense needs, including F-16s. That came after Obama and Defense Secretary Leon Panetta presented a new defense strategy in January that shifted more attention to the Asia-Pacific region.

‘Cannot Match’

Miller cited announcements of more than $12 billion in arms sales to Taiwan in the previous two years and the conclusions of an earlier report to Congress that Taiwan “cannot match the Mainland one-for-one.”

“We believe the F-16 A/B upgrade effectively meets Taiwan’s current needs,” Miller wrote, while saying the Pentagon would “continue to consider Taiwan’s requests.”

White House spokesman Tommy Vietor said U.S. policy hasn’t changed, and he offered a more non-committal variation on Nabors’ comment about a “near-term course of action.” Vietor said the administration would work with Taiwan “on its development of a comprehensive defense strategy and a resourcing plan.”

“We take very seriously our commitment to Taiwan’s defense as outlined in the Taiwan Relations Act,” Vietor said yesterday in an e-mail. “We do not comment on future possible foreign military sales unless formal congressional notification has taken place.”

Cornyn’s Leverage

Cornyn released Nabors’ letter yesterday after lifting a hold the senator had placed on the administration’s nomination of Obama aide Mark Lippert for assistant secretary of defense for Asia, using the nomination as leverage to press for fighter jet sales to Taiwan. Nabors didn’t specify whether, when or how many fighters the administration would consider.

“We are mindful of and share your concerns about Taiwan’s growing shortfall in fighter aircraft,” Nabors wrote to Cornyn. “We recognize that China has 2,300 operational combat aircraft, while our democratic partner Taiwan has only 490.”

The Obama administration has sought to improve military relations with China while calling repeatedly for the Chinese leadership to be more open about technology it’s developing that could threaten U.S. access in the Asia-Pacific region.

China said in March that it plans to increase defense spending 11.2 percent this year. The country’s defense spending is the second highest in the world after the U.S.

To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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