Friday, June 16, 2006

Intelligence Items: Iran, Taiwan, Cuba

1. IRAN. Russian opposition was the key obstacle to Iran's quest for full membership in the Shanghai Cooperation Organization (SCO), which held its fifth annual summit meeting in China's commercial capital on Thursday.

The little-known SCO is basically a tool of Chinese diplomacy, bringing Beijing and Moscow together with the four Central Asian states of Kazakhstan, Krygystan, Tjikistan, and Uzbekistan in an alliance aimed at squeezing the United States out of the strategically located, oil-rich region.

Iran attended as an observer (along with observers India, Pakistan, and Mongolia), thanks to energy-starved China, which would like to see Tehran graduate to full-member status.

China Confidential has learned that Iranian President Mahmoud Ahmadinejad, who is engaged in a standoff with the US and European Union over the country's nuclear enrichment program, pushed his pet, "powerful square" concept in sideline talks with the SCO's two giants--that Iran and India, which also seeks full membership, can join Russia and China in forming a powerful square, or energy club, in Asia to challenge US power and influence.

In contrast with China, which is a major customer of Iranian oil, Russia is reluctant to enhance Iran's legitimacy until it at least agrees to suspend most of its nuclear enrichment activities.

2. TAIWAN. China's supposedly softening position on the Taiwan Question--reported as fact by The Washington Post on Thursday--is two parts diplomacy and one part propaganda. With the 2008 Beijing Summer Olympic Games in sight and their military at least four to five years away from being in a position to conquer the self-ruled island while projecting power sufficient to block possible US intervention, China's rulers have nothing to lose and much to gain from their new statesmanlike stance toward Taipei.

Brushing off criticism of its missile buildup and recently enacted law that authorizes use of military force against Taiwan if it moves to formalize its de facto independence--or if efforts to peacefully reunite fail--Beijing will support the so-called status quo in the Taiwan Strait, in keeping with US policy, while reaching out to the island's business leaders with economic and trade incentives.

Our sources say China's embrace of the status quo concept--which it has in the past rejected as contrary to the "One China" principle--follows discussions between Chinese President Hu Jintao and former Secretary of State Henry Kissinger. The preeminent master of the art of diplomacy and architect of America's opening to China during the Cold War, Kissinger reportedly stressed the peace-preserving and public relations (in the US) benefits of avoiding seemingly provocative gestures and statements concerning Taiwan.

In trying to influence Taiwanese opinion by emphasizing economic and trade deals, including agreeing Thursday to direct flights between the mainland and Taiwan during holiday periods, China could be said to be following the advice of an ancient authority on diplomacy--as a tool of warfare. In "The Art of War," sixth century BC author Sun-tsu stressed the importance of achieving victory trough diplomatic coercion, explaining that "warfare is the way of deception" and that "subjugating the enemy's army without fighting is the true pinnacle of excellence." Said Sun-tsu: "Display profits to entice them."

3. CUBA. Bilateral trade between Beijing and Havana is booming. Officially estimated at around $750 million in 2005, the total should exceed $1 billion this year. China is also increasing direct investment, especially in natural resources. Cuba has huge nickel reserves; and China is said to be spending some $500 million to double the island's annual production. Beijing is also pumping money into oil exploration projects and increasing financial aid.

Though Communist Cuba has stuck to its economic system and resisted the capitalist reforms that have made China's economic expansion possible, the two countries have surprisingly close political ties. Chinese and Cuban officials meet often. China's president has praised Cuba's commitment to Marxist ideology in statements interpreted by some Chinese intellectuals and officials as evidence of a left-leaning stance; and Cuban leader Fidel Castro has been quoted as saying that his country can "draw on China's successful experience." Many analysts believe that Castro's brother and heir-apparent Raul is inclined to move in the Chinese direction.

Cuba has an added value to China. Without provoking Washington, Beijing's presence serves as a kind of in-your-face response to US support for Taiwan.

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