U.S. business group faults Bush on Taiwan F-16 delay

WASHINGTON (Reuters) - A U.S. business group accused the Bush administration Friday of jeopardizing Taiwan's security by stalling a potential $4.9 billion deal for 66 advanced Lockheed Martin Corp F-16 fighter jets.

In recent weeks, the administration has heaped pressure on President Chen Shui-bian to abort a planned referendum on United Nations membership in the name of Taiwan.

As part of its drive to derail what it deems a provocation to Beijing, U.S. officials have told Taipei to delay formal efforts to acquire the F-16C/Ds, said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council.

"This is unprecedented in any bilateral U.S. security relationship," Hammond-Chambers said in a telephone interview. "Depriving Taiwan of the arms it needs is inherently destabilizing."

The business council represents about 100 U.S. companies doing business with Taiwan, including top U.S. military contractors such as Lockheed Martin, Boeing and Raytheon Co.

Taiwan's legislature adopted a 2007 defense budget on June 15 that included funds to start buying new F-16s provided the United States released price and availability data -- the first step in the arms-sale process -- by Oct. 31.

Chen said Friday that funds earmarked for the F-16s -- which would supplement 150 F-16A/B models sold to Taiwan by Bush's father, the first President Bush, in 1992 -- would no longer be earmarked for this purchase if Washington failed to meet this deadline.

"Why are they holding back?," Chen asked in videoconference with reporters in New York, speaking through an interpreter. "Why are they waiting until the next president to issue the price quote?"

The business council, in a rare commentary, said any U.S. effort to rein in Chen's independence-minded stance should never be allowed to undercut a long-term U.S. commitment to maintaining a balance of power across the Taiwan straits.

"If Chen's statements and actions regarding U.N. membership are viewed as destabilizing, how does delaying consideration of the F-16s, itself a destabilizing act, constitute an appropriate response?" Hammond-Chambers wrote in the piece.

"It's tantamount to cutting off our nose to spite our face," he said.

A person who monitors U.S.-Taiwan military programs said Friday the administration has told Taipei to delay seeking F-16 "price and availability" data until further notice.

U.S. arms sales to Taiwan are fraught with complications. They are required by a 1979 U.S. law that switched U.S. diplomatic ties from Taipei to Beijing. But China, which claims Taiwan as its own, strongly opposes them, vowing to use force if necessary to bring Taiwan under mainland rule.

In the latest U.S. blast at the proposed Taiwan referendum on U.N. membership, Thomas Christensen, a top State Department official, said this week, "we do not recognize Taiwan as an independent state, and we do not accept the argument that provocative assertions of Taiwan independence are in any way conducive to maintenance of the status quo or peace and stability across the Taiwan Strait."

Even as it has criticized Chen, the State Department has denied critics' charges the F-16s are being held hostage until he leaves office after a presidential election scheduled for March 22, 2008.

"The administration's commitment to fulfillment of TRA requirements remains beyond question," Christensen, deputy assistant secretary of state for East Asia and the Pacific, said in his speech Tuesday to the business council's annual defense industry conference.

TRA is short for the 1979 Taiwan Relations Act -- the law that stipulates that the president and Congress shall determine arms sales "based solely on their judgment of the needs of Taiwan."

The Pentagon notified Congress this week it was planning to to sell Taiwan 12 excess P-3C Orion anti-submarine warfare aircraft as part of a $1.96 billion arms package. The potential total F-16 program value is estimated at $4.9 billion, according to a Sept. 13 Congressional Research Service report.

(Additional reporting by Patrick Worsnip in New York)