Update on Wallenberg

Scholars run down more clues to a Holocaust mystery

By ARTHUR MAX and RANDY HERSCHAFT – Apr 27, 2008

STOCKHOLM, Sweden (AP) — Budapest, November 1944: Another German train has loaded its cargo of Jews bound for Auschwitz. A young Swedish diplomat pushes past the SS guard and scrambles onto the roof of a cattle car.

Ignoring shots fired over his head, he reaches through the open door to outstretched hands, passing out dozens of bogus "passports" that extended Sweden's protection to the bearers. He orders everyone with a document off the train and into his caravan of vehicles. The guards look on, dumbfounded.

Raoul Wallenberg was a minor official of a neutral country, with an unimposing appearance and gentle manner. Recruited and financed by the U.S., he was sent into Hungary to save Jews. He bullied, bluffed and bribed powerful Nazis to prevent the deportation of 20,000 Hungarian Jews to concentration camps, and averted the massacre of 70,000 more people in Budapest's ghetto by threatening to have the Nazi commander hanged as a war criminal.

Then, on Jan. 17, 1945, days after the Soviets moved into Budapest, the 32-year-old Wallenberg and his Hungarian driver, Vilmos Langfelder, drove off under a Russian security escort, and vanished forever.

And because he was a rare flicker of humanity in the man-made hell of the Holocaust, the world has celebrated him ever since. Streets have been named after him and his face has been on postage stamps. And researchers have wrestled with two enduring mysteries: Why was Wallenberg arrested, and did he really die in Soviet custody in 1947?

Researchers have sifted through hundreds of purported sightings of Wallenberg into the 1980s, right down to plotting his movements from cell to cell while in custody. And fresh documents are to become public which might cast light on another puzzle: Whether Wallenberg was connected, directly or indirectly, to a super-secret wartime U.S. intelligence agency known as "the Pond," operating as World War II was drawing to a close and the Soviets were growing increasingly suspicious of Western intentions in eastern Europe.

Speculation that Wallenberg was engaged in espionage has been rife since the Central Intelligence Agency acknowledged in the 1990s that he had been recruited for his rescue mission by an agent of the Office of Strategic Services, the OSS, which later became the CIA.

About the Pond, little is known. But later this year the CIA is to release a stash of Pond-related papers accidentally discovered in a Virginia barn in 2001. These are the papers of John Grombach, who headed the Pond from its creation in 1942. CIA officials say they should be turned over to the National Archives in College Park, Md.

In February, the Swedish government posted an online database of 1,000 documents and testimonies related to Wallenberg's disappearance. In a few months, independent investigators plan to launch a Web site with their nearly 20-year research into Russian archives and prison records. Russia is building a Museum of Tolerance that will feature once-classified documents on Wallenberg. And the CIA last year relaxed its guidelines to reveal details of its sources and intelligence-gathering methods in the case.

Despite dozens of books and hundreds of documents on Wallenberg, much remains hidden. The Kremlin has failed to find or deliver dozens of files, Sweden has declined to open all its books, and The Associated Press has learned as many as 100,000 pages of declassified OSS documents await processing at the National Archives.

The Russians say Wallenberg died in prison in 1947, but never produced a proper death certificate or his remains.

But independent research suggests he may have lived many years — perhaps until the late 1980s. If true, he likely was held in isolation, stripped of his identity, known only by a number or a false name and moving like a phantom among Soviet prisons, labor camps and psychiatric institutions.

In 1991, the Russian government assigned Vyacheslav Nikonov, deputy head of the KGB intelligence service, to spend months searching classified archives about Wallenberg.

"I think I found all the existing documents," Nikonov e-mailed The Associated Press last month. The Soviets believed Wallenberg had been a spy, he said, but unlike many political detainees he never had a trial.

Nikonov's conclusion: "Shot in 1947."

Later in 1991, Russia and Sweden launched a joint investigation that lasted 10 years but failed to reach a joint conclusion.

The 2001 Swedish report said: "There is no fully reliable proof of what happened to Raoul Wallenberg," and listed 17 unanswered questions.

The Russian report bluntly said, "Wallenberg died, or most likely was killed, on July 17, 1947." It named Viktor Abakumov, the head of the "Smersh" counterintelligence agency, as responsible for the execution and cover-up. It said the Russians consider the Wallenberg case "resolved."

Unsatisfied, independent consultants and academics have kept digging, analyzing, reassessing old information and pressing for the Kremlin to release missing files.

___

Wallenberg arrived in Budapest in July 1944. With the knowledge of his government, his task as first secretary to the Swedish diplomatic legation was a cover for his true mission as secret emissary of the U.S. War Refugee Board, created by President Franklin D. Roosevelt in a belated attempt to stem the annihilation of Europe's Jews.

In the previous two months, 440,000 Hungarian Jews had been shipped to Auschwitz for extermination. They were among the last of six million Jews slaughtered in the Holocaust.

Of the 230,000 who remained in the Hungarian capital in mid-1944, 100,000 survived the war.

After the Red Army arrived in January, Wallenberg went to see the Russian military commander to discuss postwar reconstruction and restitution of Jewish property. Two days later he returned under Russian escort to collect some personal effects, then was never seen in public again.

And what did his country — or his influential cousins — do about it?

Looking back a half century later, the Swedish government acknowledged that its own passive response to the detention of one of its diplomats was astounding, and that it had missed several chances to win his freedom.

"The worst mistakes were done in the first two years," said Hans Magnusson, the Swedish co-chairman of the 10-year investigation with the Russians. Sweden felt intimidated by the mighty Soviets and unwilling to challenge them, he said.

In the mid-1950s, the Swedes pursued the case more aggressively, prompting a memorandum from Soviet Foreign Minister Andrei Gromyko in 1957 that Wallenberg had died of heart failure in detention 10 years earlier — at age 34.

As more testimony came in that Wallenberg was still alive, Stockholm periodically raised the issue with Moscow — but without results, said Magnusson, interviewed in the Netherlands where he is now ambassador.

Sweden could have pushed harder, he said, "but I doubt it would have achieved more."

"It is inconceivable," says Wallenberg's half-sister, Nina Lagergren. "Here is a man sent out by the Swedish government to risk his life. He saved thousands of people — and he was left to rot."

___

Some time around 1994, Susan Mesinai, who had by then been researching the Wallenberg case for five years, visited Lucette Colvin Kelsey, Wallenberg's cousin, at her home in Connecticut. After lunch, Kelsey caught up with Mesinai as she got into the car and told her: "Raoul was working for the highest levels of government."

"So I said to her, 'How high? Do you mean the president?' And she nodded her head," Mesinai said, disclosing to AP a conversation she had kept confidential for 14 years.

Kelsey's father, Col. William Colvin, had been the U.S. military attache in the Swedish capital around the time of World War I. Wallenberg spent vacations in the 1930s with the Colvin family while he earned a degree in architecture at the University of Michigan. Kelsey, who was a year younger than her cousin, died in 1996.

Rather than clarify anything, Kelsey's cryptic remark only deepened the fog.

Wallenberg's rescue mission inevitably placed him in a vortex of intrigue and espionage involving the Hungarian resistance, the Jewish underground, communists working for the Soviets, and British, U.S. and Swedish intelligence operations. He also had regular contact with Adolf Eichmann and other Nazis running the deportation of Jews.

Whether or not he himself was passing on intelligence, Russia had plenty of reason to suspect him of spying, either for the Allies or Germany — or both.

"Wallenberg had ties to all the major actors in Hungary," says Susanne Berger, a German researcher who collaborated with the Swedish-Russian research project.

The Stockholm chief of the War Refugee Board, Iver C. Olsen, was also a key member of the 35-man OSS station in the Swedish capital, and it was he who recruited Wallenberg, who in turn kept the U.S. connection secret by sending his communications through Swedish diplomatic channels.

Olsen's OSS personnel file — unpublished until the AP viewed it at the National Archives — revealed that the American was cited for using his position at the War Refugee Board "in gathering important information for the OSS and for the State Department."

In 1955 Olsen denied to the CIA that Wallenberg ever spied for the OSS, and Mesinai and Berger offer a different likelihood: that the Swede was a source for the Pond, which was a rival to the OSS known only to Roosevelt and a few insiders in the War and State Departments.

A small clandestine intelligence-gathering operation, the Pond relied on contacts in private corporations and hand-picked embassy personnel. It worked closely with the Dutch electronics company N.V. Philips, "which had access to 'enemy' territory as well as a far-flung corporation intelligence apparatus in its own right," said former CIA analyst Mark Stout who wrote a brief unofficial history of the Pond.

So far, no evidence has emerged that Wallenberg worked for the Pond, and Stout said in an interview he had not seen Wallenberg mentioned in any papers he has reviewed.

But their circles of contacts intersected at several points, including members of the Hungarian resistance and possibly the Philips connection.

"The Pond was centered around President Roosevelt's office and rumors of a special mission, intelligence or otherwise, for Raoul Wallenberg have persisted through the years," said Berger, who suspects the Soviets knew about the agency.

It may have been just one more reason for Stalin to order his arrest, she said. Regardless of whether Wallenberg was involved, "the Pond's activities clearly would have served to enhance Soviet paranoia about Allied activities and aims in Hungary."

Hungarian historian Laszlo Ritter, of the Institute of History of the Hungarian Academy of Sciences, said the Philips company also was providing cover for Britain's MI6 intelligence service. One of its crucial agents in the Balkans was Lolle Smit, who was knighted after the war by both Britain and his native Holland.

One month before Wallenberg arrived, Smit fled Budapest for Romania, from where he continued to control his network, Ritter said, but he left his family behind.

Smit's daughter, Berber Smit, worked with Wallenberg in his rescue efforts — and "had a romance with him," according to her son, Alan Hogg.

Ritter said Hungarian war files show no direct tie between Wallenberg and Smit, or between the diplomat and British intelligence. At the same time, MI6 used the Swedish legation at least twice to smuggle out information, and helped give false papers to Jews and the anti-fascist resistance, he said.

When the OSS wanted to dispatch a radio to the Hungarian underground leader Geza Soos, it sent the transmitter with a Swedish intelligence officer and told him Wallenberg would know how to contact Soos.

Wallenberg's very name may have been enough to arouse Russian distrust. Throughout the war, his cousins Marcus and Jacob Wallenberg, the czars of a banking and industrial empire, had done business in Germany, producing the ball bearings that kept its army on the move.

The Wallenbergs also were involved in discreet, unsuccessful peace efforts between the Allies and Germany, which Stalin feared would leave him excluded — a foretaste of global realignment that would lead to the Cold War.

___

In December 1993, investigator Marvin Makinen of the University of Chicago interviewed Varvara Larina, a retired orderly at Moscow's Vladimir Prison since 1946. She remembered a foreigner who was kept in solitary confinement on the third floor of Korpus 2, a building used both as a hospital and isolation ward.

Though it was decades earlier, the prisoner stood out in Larina's memory. He spoke Russian with an accent and "complained about everything," she said. He repeatedly griped that the soup was cold by the time Larina delivered it. Prison authorities ordered her to serve him first.

"This is very unusual," Makinen said in an interview. Normally, such complaints would condemn an inmate to a punishment cell. "The fact that he wasn't means he was a very special prisoner."

When shown a gallery of photographs, Larina immediately picked out Wallenberg's — one never published before, Makinen said.

She recalled he was in the opposite cell when another prisoner, Kirill Osmak, died in May 1960.

That was enough for Makinen and Chicago colleague Ari Kaplan to roughly pinpoint the cell of Larina's foreigner. Creating a database of cell occupancy from the prison's registration cards, they found two units opposite Osmak's that were reported empty for 243 and 717 days respectively.

Normally, cells were left vacant for a week at most, Makinen said. The researchers concluded that those two cells likely held special prisoners, namelessly concealed in the gulag.

Mesinai and others reviewed hundreds of accounts over the decades of people who claimed to have seen or heard of someone who could have been Wallenberg. They established a pattern of sightings, even though many individual reports were considered unreliable, uncorroborated, deliberate hoaxes or cases of mistaken identity with other Swedish prisoners.

Some stories, like Larina's, ring particularly true.

One compelling account came in 1961. Swedish physician Nanna Svartz asked an eminent Russian scientist about Wallenberg during a medical congress in Moscow. Lowering his voice, the Russian told her that Wallenberg was at a psychiatric hospital and "not in very good shape."

The Russian, Alexandr Myasnikov, later claimed he had been misunderstood, but Svartz stood firm. His remark, she later reported, "came spontaneously. He went pale as soon as he said it, and appeared to understand that he had said too much."

A few years later the Soviets sent out feelers for a possible spy swap. Envoys indicated Moscow was ready to "compensate" Sweden if it freed Stig Wennerstromm, a Swedish air force officer who had spied for the Kremlin for 15 years.

Though Wallenberg's name was never mentioned, he was considered the only prize worth exchanging for such a high-value spy. The intermediary was Wolfgang Vogel, an East German lawyer who engineered many Cold War prisoner exchanges. But years of halfhearted negotiation ended in no deal.

___

Nina Lagergren keeps a small wooden box in the cellar of her comfortable Stockholm home. The Russians gave it to her in 1989 when she visited Moscow. It contains her half-brother's diplomatic passport, a stack of currency, a Swedish license for the pistol he bought but never used, and two telephone diaries. Among the entries are Eichmann and Berber Smit, the daughter of the Dutch spy.

They also gave the family a copy of Wallenberg's "death certificate," handwritten and unstamped.

"They anticipated that I would get very moved and understand there was no more hope," Lagergren said.

Instead it reinforced her belief that Wallenberg had lived beyond 1947 and perhaps was even then alive. "This proved we could go on," she said. Today he would be 95, and she concedes he must be dead.

If indeed Wallenberg's death in 1947 was a lie, the question remains: Why was he never freed?

The 2001 Swedish report speculated that the longer he was held, the harder it was for the Soviets to release him. Still, "it would have been exceptional to order the execution of a diplomat from a neutral country. It might have appeared simpler to keep him in isolation," the report said.

The search continues.

Berger, the independent researcher, has submitted a new, detailed request to Moscow to release files on prisoners who shared cells with the missing diplomat and on other foreigners in the gulag; Mesinai hopes to study psychiatric facilities where Wallenberg may have been confined; Ritter, the Hungarian researcher, is tracing the British spy network of Lolle Smit; and historians are awaiting the release of the Pond papers.

Whatever any of this reveals, a 1979 State Department memo puts these questions into perspective: "Whether or not Wallenberg was involved in espionage during World War II is a moot point at this stage in history. His obvious humanitarian acts certainly outweigh any conceivable 'spy' mission he may have been on."

Associated Press investigative researcher Randy Herschaft reported from Washington, D.C.

On the Net:

• Wallenberg Association: http://tinyurl.com/55p7y5
• Swedish goverPublish Postnment Web site: http://www.sweden.gov.se/content/1/c6/04/11/37/37b7322e.pdf
• International Wallenberg Foundation: http://www.raoulwallenberg.net/?en/wallenberg/
• U.S. Holocaust Memorial Museum: http://www.ushmm.org/wlc/article.php?langen&ModuleId10005211
• CIA "Pond" article: http://tinyurl.com/3ar3rx

GOP makes TOTAL TOTAL asses of themselves today

The Florida Democratic Party has released a statement:

"Everyone from the Israeli Foreign Minister to Condoleezza Rice to Bono took time out to mourn the loss of this respected Holocaust survivor and Congressman, but apparently, even a memorial service can't stop Lincoln Diaz-Balart from playing politics," Florida Democratic Party spokesman Alejandro Miyar said.

"This is simply shameful."

"The disrespect that has been shown by a Republican member of Congress in calling a political procedural motion during the memorial service for the late Chairman Tom Lantos is incomprehensible," Stacey Bernards, a spokeswoman for House Majority Leader Steny H. Hoyer, told Politico. "It is unjustifiable, and Republican leaders should restrict their members from further such action."

Lantos, the only Holocaust survivor to ever serve in the U.S. Congress, represented California's 12th District for almost 28 years. He died of esophageal cancer Monday at the age of 80.

"The disrespect that has been shown by a Republican member of Congress in calling a political procedural motion during the memorial service for the late Chairman Tom Lantos is incomprehensible,"

said Stacey Bernards, a spokeswoman for House Majority Leader Steny Hoyer (D-Md.).

"It is unjustifiable, and Republican leaders should restrict their members from further such action."

Amen to that! And it would be wise to consider Lantos legacy today of ALL days. I join the shame brigade, obviously. What a completely disingenous TACTIC. (i hate TACTICS.)

R.I.P Tom Lantos

Congress lost someone with a vastly experienced perspective on human rights to esophageal cancer.

Lantos, who referred to himself as "an American by choice," was born to Jewish parents in Budapest, Hungary, and was 16 when Adolf Hitler occupied Hungary in 1944. He survived by escaping twice from a forced labor camp and coming under the protection of Raoul Wallenberg, the Swedish diplomat who used his official status and visa-issuing powers to save thousands of Hungarian Jews.

Lantos' mother and much of his family perished in the Holocaust.

That background gave Lantos a moral authority unique in Congress and he used it repeatedly to speak out on foreign policy issues, sometimes courting controversy. He was a strong supporter of Israel and a lead advocate for the 2002 congressional resolution authorizing the Iraq war, though he would come to be a strong critic of the Bush administration's strategy there. In 2006 Lantos was one of five members of Congress arrested in a protest outside the Sudanese Embassy over the genocide in Darfur.

His scorecard from Wikipedia speaks volumes - especially that number from the FRC.

• American Civil Liberties Union – 91% for 2005–2006
• Americans for Democratic Action – 100% for 2006
• American Land Rights Association – 9% for 2006
• Americans for Tax Reform – 0% for 2006
• AFL-CIO – 100% in 2006
• Campaign for America's Future – 100% for 2005-2006
• Conservative Index-John Birch Society – 11% for Fall 2004
• Children's Defense Fund – 100% for 2006
• Drug Policy Alliance – 83% for 2006
• Drum Major Institute – 100% for 2005
• Family Research Council – 0% for 2006
• FreedomWorks – 0% for 2006
• Gun Owners of America – 0% for 2006
• Humane Society of the United States – 100% for 2005-2006
• League of Conservation Voters – 92% for 2006
• NARAL Pro-Choice America – 100% for 2006
• National Association of Wheat Growers – 37% for 2005
• National Education Association – 100% for 2005-2006
• National Federation of Independent Business – 14% for 2005-2006
• National Journal – Composite liberal score of 86.2% for 2006
• National Organization for the Reform of Marijuana Laws – 20 for 2006
• National Organization for Women – 95% for 2005-2006
• National Rifle Association – F for 2006
• National Right to Life Committee – 0% for 2005-2006
• National Taxpayers Union – 10% for 2006
• Population Connection – 100% for 2006
• Republican Liberty Caucus – 16% for 2005
• Secular Coalition for America – 70% on 2006 scorecards
• United States Chamber of Commerce – 33% for 2006

Looking at Taiwan

Background Note: Taiwan

Women perform a traditional dance during a festival in Taipei, Taiwan, October 22, 2006. [© AP Images]

PROFILE

NAME: Taiwan

Geography
Area: 35,967 sq. km. (13,887 sq. mi.).
Cities (2006): Capital--Taipei (pop. 2.6 million). Other cities--(Kaohsiung 1.5 million), Taichung (1.0 million).
Terrain: Two thirds of the island is largely mountainous with 100 peaks over 3,000 meters (9,843 ft.).
Climate: Maritime subtropical.

People
Population (July 2007): 22.9 million.
Annual growth rate (2006): 0.47%.
Languages: Mandarin Chinese (official), Taiwanese, Hakka.
Education: Years compulsory--9. Attendance (2006)--99.0%. Literacy (2006)--97.5%.
Health: Infant mortality rate (2006)--0.46%. Life expectancy (2006)--77.46 yrs; male 74.57 yrs.; female 80.81 yrs.
Work force (2006):10.6 million.

Political Establishment
Type: Multi-party democracy. There are four major parties forming two alliances known as Pan-Blue and Pan-Green. The Pan-Blue includes the Kuomintang (KMT) and the People First Party (PFP). The Pan-Green includes the Democratic Progressive Party (DPP) and the Taiwan Solidarity Union (TSU). The Pan-Blue coalition holds a slight majority of seats in the Legislative Yuan (LY).
Constitution: December 25, 1946; last amended 2005.
Branches (Yuan): Executive, Legislative, Judicial, Control, Examination.
Major political parties: Democratic Progressive Party (DPP); Kuomintang (KMT or Nationalist Party); People First Party (PFP); Taiwan Solidarity Union (TSU).
Suffrage: Universal over 20 years of age.
Central budget proposed (FY 2008): $51.5 billion.
Defense proposed (2008): 20.1% of entire budget.

Economy
GDP (2007): $379 billion.
Real annual growth rate (2007 estimated): 4.6%.
Per capita GDP (2007 estimated): $16,596.
Unemployment (2006) 3.9%.
Natural resources: Small deposits of coal, natural gas, limestone, marble, and asbestos.
Agriculture (1.5% of GDP): Major products--pork, rice, fruit and vegetables, sugarcane, poultry, shrimp, eel.
Services: (71.7% of GDP).
Industry (26.8% of GDP): Types--electronics and computer products, chemicals and petrochemicals, basic metals, machinery, textiles, transport equipment, plastics, machinery.
Trade (2006): Exports--$224 billion: electronics, optical and precision instruments, information and communications products, textile products, basic metals, plastic and rubber products. Major markets--U.S. $32 billion, P.R.C. and Hong Kong $89 billion, Japan $16 billion. Imports--$203 billion: electronics, optical and precision instruments, information and communications products, machinery and electrical products, chemicals, basic metals, transport equipment, crude oil. Major suppliers--Japan $46 billion, P.R.C. $27 billion, U.S. $23 billion.

PEOPLE
Taiwan has a population of 22.9 million. More than 18 million, the "native" Taiwanese, are descendants of Chinese who migrated from Fujian and Guangdong Provinces on the mainland, primarily in the 18th and 19th centuries. The "mainlanders," who arrived in Taiwan after 1945, came from all parts of mainland China. About 475,000 "aborigines" inhabit the mountainous central and eastern parts of the island and are believed to be of Malayo-Polynesian origin. Of Taiwan's total population, approximately one million, or 4.4%, currently reside in mainland China.

Education
A 9-year public educational system has been in effect since 1979. Six years of elementary school and 3 years of junior high are compulsory for all children. About 94.9% of junior high graduates continue their studies in either a senior high or vocational school. Taiwan has an extensive higher education system with more than 160 institutions of higher learning. Each year, over 100,000 students attempt to enter higher education institutes; about 89% of the candidates are admitted to a college or university. Opportunities for graduate education are expanding in Taiwan, but many students travel abroad for advanced education. In FY 2006, over 16,000 U.S. student visas were issued to Taiwan passport holders.

Languages
A large majority of people in Taiwan speak Mandarin Chinese, which has been the medium of instruction in the schools for more than five decades. Native Taiwanese and many others also speak one of the Southern Fujianese dialects, Min-nan, also known as Taiwanese. Recently there has been a growing use of Taiwanese in the broadcast media. The Hakka, who are concentrated in several counties throughout Taiwan, have their own distinct dialect. As a result of the half-century of Japanese rule, many older people also can speak Japanese. The method of Chinese romanization most commonly used in Taiwan is the Wade-Giles system. In 2002, Taiwan authorities announced adoption of the pinyin system also used on the mainland to replace the Wade-Giles system, but its use is not consistent throughout society, often resulting in two or more romanizations for the same place or person.

Religions
According to Taiwan's Interior Ministry figures, there are about 11.2 million religious believers in Taiwan, with more than 75% identifying themselves as Buddhists or Taoists. At the same time, there is a strong belief in traditional folk religion throughout the island. These are not mutually exclusive, and many people practice a combination of the three. Confucianism also is an honored school of thought and ethical code. Christian churches have been active on Taiwan for many years, and today, the island has more than 600,000 Christians, a majority of whom are Protestant.

Culture
Taiwan's culture is a blend of its distinctive Chinese, Japanese, and Western influences. Fine arts, folk traditions, and popular culture embody traditional and modern, Asian, and Western motifs. One of Taiwan's greatest attractions is the Palace Museum, which houses over 650,000 pieces of Chinese bronze, jade, calligraphy, painting, and porcelain. This collection was moved from the mainland in 1949 when Chiang Kai-shek's Nationalist Party (KMT) fled to Taiwan. The collection is so extensive that only 1% is on display at any one time.

HISTORY
Taiwan's aboriginal peoples, who originated in Austronesia and southern Asia, have lived on Taiwan for 12,000 to 15,000 years. Significant migration to Taiwan from the Chinese mainland began as early as A.D. 500. Dutch traders first claimed the island in 1624 as a base for Dutch commerce with Japan and the China coast. Two years later, the Spanish established a settlement on the northwest coast of Taiwan, which they occupied until 1642 when they were driven out by the Dutch. Dutch colonists administered the island and its predominantly aboriginal population until 1661. The first major influx of migrants from the Chinese mainland came during the Dutch period, sparked by the political and economic chaos on the China coast during the Manchu invasion and the end of the Ming Dynasty.

In 1664, a fleet led by the Ming loyalist Cheng Ch'eng-kung (Zheng Chenggong, known in the West as Koxinga) retreated from the mainland and occupied Taiwan. Cheng expelled the Dutch and established Taiwan as a base in his attempt to restore the Ming Dynasty. He died shortly thereafter, and in 1683, his successors submitted to Manchu (Qing Dynasty) control. From 1680, the Qing Dynasty ruled Taiwan as a prefecture and, in 1875, divided the island into two prefectures, north and south. In 1887 the island was made into a separate Chinese province.

During the 18th and 19th centuries, migration from Fujian and Guangdong provinces steadily increased, and Chinese supplanted aborigines as the dominant population group. In 1895, a weakened Imperial China ceded Taiwan to Japan in the Treaty of Shimonoseki following the first Sino-Japanese war.

During its 50 years (1895-1945) of rule, Japan expended considerable effort in developing Taiwan's economy. At the same time, Japanese rule led to the "Japanization" of the island, including compulsory Japanese education and forcing residents of Taiwan to adopt Japanese names.

At the end of World War II in 1945, Taiwan reverted to Chinese rule. During the immediate postwar period, the Nationalist Chinese (KMT) administration on Taiwan was repressive and corrupt, leading to local discontent. Anti-mainlander violence flared on February 28, 1947, prompted by an incident in which a cigarette seller was injured and a passerby was shot to death by Nationalist authorities. The island-wide rioting was brutally put down by Nationalist Chinese troops, who killed thousands of people. As a result of the February 28 Incident, the native Taiwanese felt a deep-seated bitterness toward the mainlanders. For 50 years the KMT authorities suppressed accounts of this episode in Taiwan history. In 1995 a monument was dedicated to the victims of the "2-28 Incident," and for the first time, Taiwan's leader, President Lee Teng-hui, publicly apologized for the Nationalists' brutality.

Starting before World War II and continuing afterwards, a civil war was fought on the mainland between Chiang Kai-shek's KMT government and the Chinese Communist Party led by Mao Zedong. When the civil war ended in 1949, 2 million refugees, predominately from the Nationalist government, military, and business community, fled to Taiwan. In October 1949 the People's Republic of China (P.R.C.) was founded on the mainland by the victorious communists. Chiang Kai-shek established a "provisional" KMT capital in Taipei in December 1949. During the 1950s, the KMT authorities implemented a far-reaching and highly successful land reform program on Taiwan. They redistributed land among small farmers and compensated large landowners with commodities certificates and stock in state-owned industries. Although this left some large landowners impoverished, others turned their compensation into capital and started commercial and industrial enterprises. These entrepreneurs were to become Taiwan's first industrial capitalists. Together with refugee businessmen from the mainland, they managed Taiwan's transition from an agricultural to a commercial, industrial economy.

Taiwan has developed steadily into a major international trading power with $427 billion in two-way trade (2006). Taiwan's accession to the World Trade Organization in 2002 has expanded its trade opportunities and further strengthened its standing in the global economy. Tremendous prosperity on the island has been accompanied by economic and social stability. Chiang Kai-shek's successor, his son Chiang Ching-kuo, began to liberalize Taiwan's political system, a process that continued when President Lee Teng-hui took office in 1988. The direct election of Lee Teng-hui as president in 1996 was followed by opposition Democratic Progressive Party candidate Chen Shui-bian's election victory in March 2000. Chen was re-elected in March 2004 in a tightly contested election.

ADMINISTRATION
The authorities in Taipei exercise control over Taiwan, Kinmen, Matsu, the Penghus (Pescadores) and several other smaller islands. Taiwan is divided into counties, provincial municipalities, and two special municipalities, Taipei and Kaohsiung. At the end of 1998, the Constitution was amended to make all counties and cities directly administered by the Executive Yuan. From 1949 until 1991, the authorities on Taiwan claimed to be the sole legitimate government of all of China, including the mainland. In keeping with that claim, when the Nationalists retreated to Taiwan in 1949, they re-established the full array of central political bodies, which had existed on the mainland. While much of this structure remains in place, the authorities on Taiwan in 1991 abandoned their claim of governing mainland China, stating that they do not "dispute the fact that the P.R.C. controls mainland China."

The first National Assembly, elected on the mainland in 1947 to carry out the duties of choosing the President and amending the constitution, was re-established on Taiwan when the KMT moved. Because it was impossible to hold subsequent elections to represent constituencies on the mainland, representatives elected in 1947-48 held these seats "indefinitely." In June l990, however, the Council of Grand Justices mandated the retirement, effective December 1991, of all remaining "indefinitely" elected members of the National Assembly and other bodies.

The second National Assembly, elected in 1991, was composed of 325 members. The majority were elected directly, while 100 were chosen from party slates in proportion to the popular vote. This National Assembly amended the Constitution in 1994, paving the way for the direct election of the President and Vice President the first of which was held in March 1996. In April 2000, the members of the National Assembly voted to permit their terms of office to expire without holding new elections. The National Assembly elected in May 2005 voted to abolish itself the following month, leaving Taiwan with a unicameral legislature. The President is both leader of Taiwan and Commander-in-Chief of its armed forces. The President has authority over four of the five administrative branches (Yuan): Executive, Control, Judicial, and Examination. The President appoints the President of the Executive Yuan, who also serves as the Premier. The Premier and the cabinet members are responsible for government policy and administration.

The main lawmaking body, the Legislative Yuan (LY), was originally elected in the late 1940s in parallel with the National Assembly. The first LY had 773 seats and was viewed as a "rubber stamp" institution. The second LY was not elected until 1992. The third LY, elected in 1995, had 157 members serving 3-year terms, while the fourth LY, elected in 1998, was enlarged to 225 members. The LY has greatly enhanced its standing in relation to the Executive Yuan and has established itself as a major player on the central level. With increasing strength, size, and complexity, the LY now mirrors Taiwan's recently liberalized political system. In the 1992 and 1995 elections, the main opposition party--the Democratic Progressive Party (DPP)--challenged the half-century of KMT dominance of the Legislature. In both elections, the DPP won a significant share of the LY seats, leaving only half of the LY seats in the hands of the KMT. In 2001, the DPP won a plurality of LY seats--88 to KMT's 66, PFP's 45, TSU's 13, and other parties' 13. In the December 2004 LY election, the Pan-Blue coalition won a slender majority of 114 of the 225 seats (later increased to 115) compared to the Pan-Green coalition's 101 (later reduced to 111 and 97 seats, respectively, of the 220 occupied seats). Taiwan has created single-member legislative election districts and will halve the number of LY seats from 225 to 113 during the next election, scheduled for January 2008.

In 1994, when the National Assembly voted to allow direct popular election of the President, the LY passed legislation allowing for the direct election of the Governor of Taiwan Province and the mayors of Taipei and Kaohsiung Special Municipalities. These elections were first held in December 1994. In a move to streamline administration, the position of elected Governor was abolished at the end of 1998, and most other elements of the Taiwan Provincial Government have been eliminated.

The Control Yuan (CY) monitors the efficiency of public service and investigates instances of corruption. The 29 Control Yuan members are appointed by the President and approved by the National Assembly; they serve 6-year terms. In recent years, the Control Yuan has become more activist, and it has conducted several major investigations and impeachments. Since December 2004, however, the pan-Blue dominated LY has refused to approve the new slate of CY members proposed by President Chen, leaving the CY inactive.

The Judicial Yuan (JY) administers Taiwan's court system. It includes a 16-member Council of Grand Justices (COGJ) that interprets the constitution. Grand Justices are appointed by the President, with the consent of the National Assembly, to 9-year terms.

The Examination Yuan (EY) functions as a civil service commission and includes two ministries: the Ministry of Examination, which recruits officials through competitive examination, and the Ministry of Personnel, which manages the civil service. The President appoints the President of the Examination Yuan.

Principal Leaders
President--Chen Shui-bian
Vice President--Annette Lu (Lu Hsiu-lien)
Premier--Chang Chun-hsiung
Vice Premier--Chiou I-jen
Legislative Yuan President--Wang Jin-pyng
Judicial Yuan President--Weng Yueh-sheng
Defense Minister--Lee Tien-yu
Foreign Minister--James Huang (Huang Chih-fang)
Minister of Justice--Shih Mao-lin
Mainland Affairs Council Chairman--Chen Ming-tong
Government Information Office Minister--Shieh Jhy-wey
Cabinet Spokesperson--Shieh Jhy-wey

POLITICAL CONDITIONS
Until 1986, Taiwan's political system was effectively controlled by one party, the Kuomintang (KMT), the chairman of which was also Taiwan's President. As the ruling party, the KMT was able to fill appointed positions with its members and maintain political control of the island.

After 1986, the KMT's hold on power was challenged by the emergence of competing political parties. Before 1986, candidates opposing the KMT ran in elections as independents or "nonpartisans." Before the 1986 island-wide elections, many "nonpartisans" grouped together to create Taiwan's first new political party, the Democratic Progressive Party (DPP). Despite the official ban on forming new political parties, Taiwan authorities did not prohibit the DPP from operating, and in the 1986 island-wide elections, DPP and independent candidates captured more than 20% of the vote. In 1987, President Chiang Ching-kuo lifted the emergency decree, which had been in place since 1948 and which had granted virtually unlimited powers to the President for use in the anti-communist campaign. This decree provided the basis for nearly four decades of martial law under which individuals and groups expressing dissenting views were dealt with harshly. Expressing views contrary to the authorities' claim to represent all of China or supporting independent legal status for Taiwan was treated as sedition. Since ending martial law, Taiwan has taken dramatic steps to improve respect for human rights and create a democratic political system. Almost all restrictions on the press have ended, restrictions on personal freedoms have been relaxed, and the prohibition against organizing new political parties has been lifted. Lee Teng-hui succeeded Chiang Ching-kuo as President when Chiang died on January 13, 1988. The Civic Organizations Law passed in 1989 allowed for the formation of new political parties, thereby legalizing the DPP, and its support and influence increased. Lee was elected by the National Assembly to a 6-year term in 1990, marking the final time a President was elected by the National Assembly. In the 1992 Legislative Yuan elections, the DPP won 51 seats in the 161-seat body. While this was only half the number of KMT seats, it made the DPP's voice an important factor in legislative decisions. Winning the Taipei mayor's position in December 1994 significantly enhanced the DPP's image. The DPP continued its strong showing in the 1995 LY race, winning 45 of the 157 seats to the KMT's 81. In 1996, Lee Teng-hui was elected President and Lien Chan Vice President in the first direct election by Taiwan voters. In the November 1997 local elections, the Democratic Progressive Party (DPP) won 12 of the 23 county magistrate and city mayor contests to the Kuomintang (KMT)'s 8, outpolling the KMT for the first time in a major election. In the 2001 LY elections, the DPP won a plurality of seats for the first time. In March 2000, DPP candidate Chen Shui-bian became the first opposition party candidate to win the presidency. His victory resulted in the first-ever transition of the presidential office from one political party to another, validating Taiwan's democratic political system. In a hotly contested election on March 20, 2004, President Chen Shui-bian was re-elected by 50.1% of the popular vote to a second term. The election was marred by a shooting incident the day before the election during which President Chen and his running mate Vice President Annette Lu were slightly wounded. While the opposition contested the results, it was the first time that the DPP had won an outright majority in an island-wide election.

The March election also included a "defensive referendum." Historically, the issue of referenda has been closely tied to the question of Taiwan independence, and thus has been a sensitive issue in cross Strait relations. There were two referenda before the voters on March 20. The first asked in light of the P.R.C. missile threat whether Taiwan should purchase anti-missile systems. The second asked whether Taiwan should adopt a "peace framework" for addressing cross Strait differences with the P.R.C. However both referenda failed to obtain support from over 50% of eligible voters, as required to be valid.

President Chen Shui-bian called for major constitutional reforms by 2006--later changed to 2008--aimed at further reducing layers of government, and making other structural changes aimed at improving governance. The People's Republic of China has accused Chen of using the constitution issue to move Taiwan towards independence. Chen pledged, however, in his May 20, 2004 inaugural address not to use constitutional reform to alter the constitution's approach to Taiwan's status vis-à-vis China.

The final National Assembly passed a set of constitutional amendments in June 2005 that will halve the number of LY seats from 225 to 113 and create single-member legislative election districts beginning with the next legislative election, scheduled for 2008. The constitutional revisions also abolished the National Assembly and provided for the public to confirm or reject future constitutional amendments passed by the LY. President Chen has called for "Round Two" of constitutional revision focusing on the form of government (presidential or parliamentary, 5-branch or 3-branch) and on human, labor, and aborigine rights. He has pledged not to include independence or name change in his proposed constitutional revisions.

In the December 2004 Legislative election, the ruling DPP won a plurality with 89 of the 225 seats, gaining 2 seats more than it did in 2001. The opposition KMT won 79 seats, or 11 more than it did in 2001. The KMT's "pan-Blue" coalition partner, the PFP, won only 34, 12 fewer than it won in 2001, while the DPP's partner, TSU won 12 seats. The New Party won one seat. The ruling "pan-Green" coalition's inability to secure a majority has left the LY in virtual gridlock since the election. The KMT won a landslide victory in December 2005 local elections, however, winning 14 of the 23 city mayor and county magistrate races to the ruling DPP's 6. In December 2006, the KMT won the mayoral election in Taipei City, while the DPP won in Kaohsiung City. Taiwan will hold its next round of legislative and presidential elections in January and March 2008, respectively.

Political Parties
In addition to the KMT (described above in 'History' and 'Political Conditions'), there are three other major parties. The DPP, membership is made up largely of native Taiwanese, and its platform includes outspoken positions on some of the most sensitive issues in Taiwan politics. For example, the DPP maintains that Taiwan is an entity separate from mainland China, in contrast to the KMT position that Taiwan and the mainland, though currently divided, are both part of "one China." In sharp contrast to the tenets of both KMT and P.R.C. policy, a number of ranking DPP officials openly advocate independence for Taiwan.

The People First Party (PFP) was formed in the wake of the March 2000 presidential election, composed of former KMT members who supported former KMT Taiwan Provincial Governor James Soong's presidential bid. PFP and KMT subsequently formed the "Pan-Blue" Alliance to oppose the DPP government. Former KMT President Lee Teng-hui, in turn, broke with the KMT and formed the pro-independence Taiwan Solidarity Union (TSU) in 2001. The TSU, which advocates changing Taiwan's official name and completely replacing the 1947 constitution, allied itself with the DPP as part of the ruling "Pan-Green" alliance.

Taiwan and the Mainland
Despite differences between Taiwan and the P.R.C., contact between the two sides of the Taiwan Strait has grown significantly over the past decade. Taiwan has continued to relax restrictions on unofficial contacts with the P.R.C., and cross-Strait interaction has mushroomed. In January 2001, Taiwan formally allowed the "three mini-links" (direct trade, travel, and postal links) from Quemoy and Matsu Islands to Fujian Province and permitted direct cross-Strait trade in February 2002. Taiwan authorities permitted residents of Penghu Islands starting on April 1, 2007, to begin visiting mainland China via Kinmen and Matsu. Cross-Strait trade has grown rapidly over the past 10 years. China is Taiwan's largest trading partner, and Taiwan is China's fifth largest. Estimates of Taiwan investment on the mainland, both officially approved by Taiwan authorities and investment made by Taiwan firms through third parties, start from $100 billion, making Taiwan and Hong Kong the two largest investors. This trade runs heavily in Taiwan's favor and continues to grow, providing another engine for the island's economy. The trend in cross-Strait economic interaction is one of steady growth with, so far, only temporary setbacks due to political factors such as the P.R.C.'s March 2005 passage of an Anti-Secession Law. In August 2001, President Chen accepted the recommendation of the Economic Development Advisory Council to set aside the "no haste, be patient" policy of the Lee administration and replace it with an "active opening, effective management policy." However, in January 2006, President Chen reversed the policy to "active management, effective opening." In February 2003, Taiwan and the P.R.C. agreed to allow Taiwan carriers to fly non-stop via Hong Kong or Macao to bring Taiwan residents on the mainland home for the Lunar New Year holiday. The two sides agreed to conduct Lunar New Year charter flights again in 2005, with flights operated by both Taiwan and P.R.C. carriers flying over, but not having to land in, Hong Kong or Macau. The two sides agreed on an expanded series of Lunar New Year charter flights in January-February 2006, and in June 2006 regularized these charter flights to include the other 3 major holidays--Dragon Boat festival, Mid-Autumn festival and January 1 New Year. These charter flights continue.

The development of semiofficial cross-Strait relations has been halting. Prior to April 1993, when talks were held in Singapore between the heads of two private intermediary organizations--Taiwan's Straits Exchange Foundation (SEF) and the P.R.C.'s Association for Relations Across the Taiwan Strait (ARATS)--there had been some lower-level exchanges between the two sides of the Strait. The April 1993 SEF-ARATS talks primarily addressed technical issues relating to cross-Strait interactions. Lower-level talks continued on a fairly regular basis until they were suspended by Beijing in 1995 after President Lee's U.S. visit. Unofficial exchanges resumed in 1997 through informal meetings between personnel of the two sides' unofficial representative organizations. Direct SEF-ARATS contacts resumed in April 1998, and SEF Chairman Koo Chen-fu visited the mainland in October 1998. A planned visit by ARATS Chairman Wang Daohan to Taiwan in the fall, however, was postponed following statements made by then-President Lee Teng-hui that relations between the P.R.C. and Taiwan should be conducted as "state-to-state" or at least as "special state-to-state relations." Since his May 20, 2000 inauguration, President Chen has called for resuming the cross-Strait dialogue without any preconditions. President Chen has stated that such talks should be conducted in the spirit of the 1992 Hong Kong talks, a reference to a meeting the two sides held to discuss how to handle political barriers to cross-Strait interaction. The P.R.C. has responded that the Chen administration must acknowledge that the two sides reached a consensus that there is only "one China" before any dialogue can be restarted. In his May 20, 2004 inaugural address, President Chen recognized the P.R.C.'s insistence on "one China" but stopped short of endorsing the concept. He called for a new "Cross-Strait Framework for Peace and Stability" and enhanced political, economic, and social exchanges between the two sides. In the face of the "one China" recognition obstacle and Taiwan's resentment over the P.R.C.'s March 2005 "Anti-Secession Law," Taipei and Beijing have been cautiously feeling each other out on a series of smaller, intermediary steps, including cross-Strait cargo and passenger charter flights, sale of Taiwan agricultural products in the P.R.C., and P.R.C. tourists visiting Taiwan. The United States has welcomed and encouraged the cross-Strait dialogue as a process which contributes to a reduction of tension and to an environment conducive to the eventual peaceful resolution of the outstanding differences between the two sides. The United States believes that differences between Taipei and Beijing should be resolved peacefully in a manner acceptable to people on both sides of the Taiwan Strait.

ECONOMY
Through over five decades of hard work and sound economic management, Taiwan has transformed itself from an underdeveloped, agricultural island to an economic power that is a leading producer of high-technology goods. In the 1960s, foreign investment in Taiwan helped introduce modern, labor-intensive technology to the island, and Taiwan became a major exporter of labor-intensive products. In the 1980s, focus shifted toward increasingly sophisticated, capital-intensive and technology-intensive products for export and toward developing the service sector. At the same time, the appreciation of the New Taiwan dollar (NT$), rising labor costs, and increasing environmental consciousness in Taiwan caused many labor-intensive industries, such as shoe manufacturing, to move to China and Southeast Asia. Taiwan has transformed itself from a recipient of U.S. aid in the 1950s and early 1960s to an aid donor and major foreign investor, especially in Asia. Taiwan is now a creditor economy, holding the world's fourth-largest stock of foreign exchange reserves ($261 billion as of August 2007). Although Taiwan enjoyed sustained economic growth, full employment, and low inflation for many years, in 2001, Taiwan joined other regional economies in its first recession since 1949. The economy began to recover in 2002, but the outbreak of severe acute respiratory syndrome (SARS) slowed growth to 3.5% in 2003. The world economic upturn drove growth in 2004 to 6.2%. However, slower world growth in 2005, higher energy prices and interest rates, and excess inventory dragged 2005 growth to 4.1%. Continued expansion of exports sustained Taiwan's economic growth at 4.6% in 2006. Economic growth is expected to remain well above 4% in 2007.

Foreign Trade
Foreign trade has been the engine of Taiwan's rapid growth during the past 50 years. Taiwan's economy remains export-oriented, so it depends on an open world trade regime and remains vulnerable to fluctuations in the world economy. The total value of trade increased more than five-fold in the 1960s, nearly ten-fold in the 1970s, doubled in the 1980s, and nearly doubled again in the 1990s. In the first half of this decade, exports grew 60%. Export composition changed from predominantly agricultural commodities to industrial goods (now 98%). The electronics sector is Taiwan's most important industrial export sector and is the largest recipient of U.S. investment. Taiwan became a member of the World Trade Organization (WTO) as a special customs territory in January 2002.

Taiwan firms are the world's largest suppliers of computer monitors and leaders in PC manufacturing, although now much of the final assembly of these products occurs overseas, typically in China. Textile production continues to move to lower-cost locations overseas, but is still a major industrial export sector and employs nearly 190,000 people. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports coal, oil and gas to meet most of its energy needs. Reflecting the large Taiwan investment in China, it supplanted the United States as Taiwan's largest trade partner in 2003. In 2006, China (including Hong Kong) accounted for over 27% of Taiwan's total trade and almost 40% of Taiwan's exports. Japan was Taiwan's second-largest trading partner with 15% of total trade, including 23% of Taiwan's imports. The U.S. is now Taiwan's third-largest trade partner, taking 14% of Taiwan's exports and supplying 11% of its imports. Taiwan is the United States' ninth-largest trading partner; Taiwan's two-way trade with the United States amounted to $57 billion in 2005 and rose 7.6% to $62 billion in 2006. Imports from the United States consist mostly of agricultural and industrial raw materials as well as machinery and equipment. Exports to the United States are mainly electronics and consumer goods. The United States, Hong Kong, China, and Japan account for 61.5% of Taiwan's exports, and the United States, Japan, and China provide almost 50% of Taiwan's imports. As Taiwan's per capita income level has risen, demand for imported, high-quality consumer goods has increased. The U.S. trade deficit with Taiwan in 2006 was $15.2, up 19% from $12.8 billion in 2005. Even though Taiwan maintains formal diplomatic relations with about a score of its trading partners, Taiwan maintains trade offices in nearly 100 countries. Taiwan is a member of the Asian Development Bank, the WTO, and the Asia-Pacific Economic Cooperation (APEC) forum. Taiwan is also an observer at the Organization for Economic Cooperation and Development (OECD). These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.

Agriculture
Although only about one-quarter of Taiwan's land area is arable, virtually all farmland is intensely cultivated, with some areas suitable for two and even three crops a year. However, increases in agricultural production have been much slower than industrial growth. Agriculture only comprises about 1.5% of Taiwan's GDP. Taiwan's main crops are rice, sugarcane, fruit, and vegetables. While largely self-sufficient in rice production, Taiwan imports large amounts of wheat, corn, and soybeans, mostly from the United States. Poultry and pork production are mainstays of the livestock sector and the major demand drivers for imported corn and soybeans. Rising standards of living have led to increased demand for a wide variety of high-quality food products, much of it imported. Overall, U.S. agricultural and food products account for more than 30% of Taiwan's agricultural import demand. U.S. food and agricultural exports total about $2.5 billion annually, making Taiwan the United States' sixth-largest agricultural export destination. Taiwan's agricultural exports include frozen fish, aquaculture and sea products, canned and frozen vegetables, and grain products. Taiwan's imports of agricultural products have increased since its WTO accession in 2002, and it is slowly liberalizing previously protected agricultural markets.

Economic Outlook
Taiwan faces many of the same economic issues as other developed economies. As labor-intensive industries have relocated to countries with low-cost labor, Taiwan's future development will rely on further transformation to a high technology and service-oriented economy and carving out its niche in the global supply chain. Taiwan's economy has become increasingly linked with China. Taiwan official statistics indicate that Taiwan firms had invested about U.S. $55 billion in China through 2006, which is more than half of Taiwan's stock of direct foreign investment. Many unofficial estimates put the actual number well over U.S. $100 billion. More than one million Taiwan people are estimated to be residing in China, and more than 70,000 Taiwan companies have operations there. Taiwan firms are increasingly acting as management centers that take in orders, produce them in Taiwan, the mainland, or Southeast Asia and then ship the final products to the U.S. and other markets. This process is made more difficult by the lack of direct transportation links between China and Taiwan.

DEFENSE
In proportion to its population, Taiwan still maintains a large military establishment. Defense expenditures account for 2.69% of GDP in 2007, and the 2008 central budget proposal increases defense expenditures to 3% of GDP. The military's primary mission is the defense of Taiwan against the P.R.C., which is seen as the predominant threat and which has not renounced the use of force against Taiwan. Taiwan's armed forces were reduced as part of a reform initiative from 1997 to 2001, going from about 450,000 to 385,000, with further reductions since then bringing the total force level down to just under 300,000. Registered reservists reportedly totaled 3,870,000 in 1997. Conscription remains universal for qualified males between the ages of 18 and 30. In 2007 the length of conscription service was dropped from 16 to 14 months, with a view toward eventually creating an all-volunteer force. For qualified applicants, alternative service is available in police and fire departments and public clinics, as well as through teaching in some rural schools. Applicants with advanced degrees may qualify for National Defense Service, consisting of reserve officer training followed by four years of work in a government or academic research institution.

Taiwan's armed forces are equipped with weapons obtained primarily from the United States. In recent years, however, Taiwan also has procured some weapons from other Western nations and has stressed military "self-reliance," which has resulted in the growth of indigenous military production in certain fields. In 2007 Taiwan's legislature approved funding for certain defensive weapons systems the U.S. agreed to sell Taiwan in 2001 and earlier. These included the Patriot Advanced Capability (PAC-2 upgrade) missile defense system, P-3C maritime patrol aircraft, and a preliminary study of diesel-electric submarines. These systems would give Taiwan key capabilities in missile defense and anti-submarine warfare to remedy vulnerabilities in countering the P.R.C.'s accelerated military modernization. Taiwan adheres to the principles of the nuclear Non-Proliferation Treaty and has stated that it does not intend to produce nuclear weapons.

FOREIGN RELATIONS
The People's Republic of China replaced Taiwan at the United Nations in 1971, and Taiwan's diplomatic position has continued to erode, as many countries changed their official recognition from Taipei to Beijing. As of September 2007, Taiwan had formal diplomatic ties with 24 countries. At the same time, Taiwan has cultivated informal ties with most countries to offset its diplomatic isolation and to expand its economic relations. A number of nations have set up unofficial organizations to carry out commercial and other relations with Taiwan. Including its official overseas missions and its unofficial representative and/or trade offices, Taiwan is represented in 122 countries. Recently, Taiwan has lobbied strongly for admission into the United Nations and other international organizations, such as the World Health Organization (WHO). The P.R.C. opposes Taiwan's membership in such organizations, most of which require statehood for membership, because Beijing considers Taiwan to be a province of China, not a separate sovereign state.

U.S.-TAIWAN RELATIONS
On January 1, 1979, the United States changed its diplomatic recognition from Taipei to Beijing. In the U.S.-P.R.C. Joint Communiqué that announced the change, the United States recognized the Government of the People's Republic of China as the sole legal government of China and acknowledged the Chinese position that there is but one China and Taiwan is part of China. The Joint Communiqué also stated that within this context the people of the United States will maintain cultural, commercial, and other unofficial relations with the people on Taiwan.

On April 10, 1979, President Carter signed into law the Taiwan Relations Act (TRA), which created domestic legal authority for the conduct of unofficial relations with Taiwan. U.S. commercial, cultural, and other interaction with the people on Taiwan is facilitated through the American Institute in Taiwan (AIT), a private nonprofit corporation. The Institute has its headquarters in the Washington, DC area and has offices in Taipei and Kaohsiung. It is authorized to issue visas, accept passport applications, and provide assistance to U.S. citizens in Taiwan. A counterpart organization, the Taipei Economic and Cultural Representative Office in the United States (TECRO), has been established by the Taiwan authorities. It has its headquarters in Taipei, the representative branch office in Washington, DC, and 11 other Taipei Economic and Cultural Offices (TECO) in the continental U.S. and Guam. The Taiwan Relations Act (TRA) continues to provide the legal basis for the unofficial relationship between the U.S. and Taiwan, and enshrines the U.S. commitment to assisting Taiwan maintain its defensive capability.

Following de-recognition, the United States terminated its Mutual Defense Treaty with Taiwan. However, the United States has continued the sale of appropriate defensive military equipment to Taiwan in accordance with the Taiwan Relations Act, which provides for such sales and which declares that peace and stability in the area are in U.S. interests. Sales of defensive military equipment are also consistent with the 1982 U.S.-P.R.C. Joint Communiqué.

The United States position on Taiwan is reflected in the Three Communiqués and the Taiwan Relations Act (TRA). The U.S. insists on the peaceful resolution of cross-Strait differences and encourages dialogue to help advance such an outcome. The U.S. does not support Taiwan independence. President Bush stated on December 9, 2003 that the United States is opposed to any attempt by either side to unilaterally alter the status quo in the Taiwan Strait. While the United States welcomes recent exchanges that enhance channels of communication between leaders in Beijing and Taipei, the United States urges Beijing and Taipei to further advance cross-Strait cooperation and dialogue, including direct discussions between the authorities in Beijing and elected leaders in Taipei.

U.S. commercial ties with Taiwan have been maintained and have expanded since 1979. Taiwan continues to enjoy Export-Import Bank financing, Overseas Private Investment Corporation guarantees, normal trade relations (NTR) status, and ready access to U.S. markets. In recent years, AIT commercial dealings with Taiwan have focused on expanding market access for American goods and services. AIT has been engaged in a series of trade discussions, which have focused on protection of intellectual property rights and market access for U.S. goods and services.

Maintaining diplomatic relations with the P.R.C. has been recognized to be in the long-term interest of the United States by seven consecutive administrations; however, maintaining strong, unofficial relations with Taiwan also a major U.S. goal, in line with our desire to further peace and stability in Asia. In keeping with our one China policy, the U.S. does not support Taiwan independence, but it does support Taiwan's membership in appropriate international organizations, such as the World Trade Organization, Asia-Pacific Economic Cooperation (APEC) forum, and the Asian Development Bank, where statehood is not a requirement for membership. In addition, the U.S. supports appropriate opportunities for Taiwan's voice to be heard in organizations where its membership is not possible.

U.S. Representative Offices
American Institute in Taiwan
Washington Headquarters
Suite 1700, 1700 North Moore Street
Arlington, VA 22209
Tel: 703-525-8474
Fax: 703-841-1385

American Institute in Taiwan
Taipei Office
No. 7, Lane 134, Hsin Yi Road
Section 3, Taipei, Taiwan
Tel: 011-886-2-2162-2000
Fax: 011-886-2-2162-2239

American Institute in Taiwan
Kaohsiung Office
5F, No. 2, Chung Cheng 3rd Road
Kaohsiung, Taiwan 800
Tel: 011-886-7-238-7744
Fax: 011-886-7-238-5237

Taiwan Representative Office
Taipei Economic and Cultural Representative Office (TECRO)
4201 Wisconsin Avenue, NW
Washington, DC 20016-2137
Tel: 202-895-1800
Fax: 202-895-0825

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Doing Business in Taiwan: A Commercial
Guide for U.S. Companies
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S.
DEPARTMENT OF STATE, 2007. LL RIGHTS RESERVED OUTSIDE OF THE UNITED
STATES.
• Chapter 1: Doing Business In Taiwan
• Chapter 2: Political and Economic Environment
• Chapter 3: Selling U.S. Products and Services
• Chapter 4: Leading Sectors for U.S. Export and Investment
• Chapter 5: Trade Regulations and Standards
• Chapter 6: Investment Climate
• Chapter 7: Trade and Project Financing
• Chapter 8: Business Travel
• Chapter 9: Contacts, Market Research and Trade Events
• Chapter 10: Guide to Our Services


Change coming to US relationship with Taiwan?
FIGHTER: Although Tom Lantos is set to retire as House Foreign Affairs Committee chairman, all three of his possible successors are likely to remain friendly to Taiwan
By Charles Snyder
STAFF REPORTER IN WASHINGTON
Friday, Jan 04, 2008, Page 3
Read this link:

The US elections may drastically change the US relationship with Taiwan as this indicates:

LOOPHOLE

Long a proponent of the idea that Chen and other Taiwanese leaders should be allowed to travel to Washington, which is still forbidden by the State Department, Lantos sidestepped the prohibition in September 2005 when, as human rights caucus chairman, he arranged a teleconference hookup with Chen during a transit stop in Miami, despite State Department rules against Chen conducting "public" activities during his transit.