Europe, China, and the Arms Embargo: The Implications of Sino-European Partnership for American Interests

February 1, 2005

Unedited transcript prepared from a tape recording

11:45 a.m.	Registration
Noon	Luncheon
12:30 p.m.	Introduction:	Radek Sikorski, NAI
	Discussants:	Ellen Bork, Project for the New American Century
		Dieter Dettke, Friedrich Ebert Foundation
		Richard Fisher, International Assessment and Strategy Center
		Robin Niblett, Center for Strategic and International Studies
		David Shambaugh, Brookings Institution and George Washington University
	Moderator:	Daniel Blumenthal, AEI
2:00	Adjournment

Proceedings:
MR. SIKORSKI:  Ladies and gentlemen, may I have your attention, please.

Ladies and gentlemen, I am Radek Sikorski, Executive Director of the New Atlantic Initiative, and I'd like to welcome you here to AEI and congratulate colleagues from the Asian and Securities Studies for putting on this event.

Today, reminds me of the day just over 15 years ago when I was in Angola with the guerillas of UNITA.  It was morning.  I was still in my sleeping bag and switched on the radio and heard the very end of a BBC news bulletin, and there were three items of news.  Two good ones and one bad one.

Number one, Ayatollah Khomeini was dead.  Number two, tanks stormed into Tiananmen Square, and number three, Solidarity won an overwhelming victory in the Polish elections, the first democratic elections in 45 years.

Here we are 15 years later discussing the possibility of lifting the arms embargo that was imposed after Tiananmen Square.  Europe and America have had a very good few weeks.  We have had a possibly highest level of cooperation in years over Ukraine.  We've just had an election in Iraq, which I think diffuses some of the tension.  And we're anticipating President Bush's trip to Europe.

Those who know the New Atlantic Initiative--those who know me--know that we stand for cooperation between Europe and America, and I think it's important to let our leaders know when there are reefs on the horizon, and this is such a reef.

So it's excellent that we're meeting because we're giving our leaders heads up that there may be a problem.

I'd like to invite you to our briefing just before President Bush's visit to Europe on the 17th of February at 11:00 a.m.  NAI will be briefing you on the European part of the trip, and at noon Leon Aaron on the meeting with President Vladimir Putin.

And without more adieu, I'd like to pass on to Mr. Blumenthal.  Please.

MR. BLUMENTHAL:  Well, thank you very much.  And I'm happy to see such a great turnout today for a very important topic with a very distinguished panel that is here today.  We are going to cover the entire scope I think of all the topics raised by the now seemingly inevitable lifting of the European arms embargo on China.

We have with us today Dr. David Shambaugh from the George Washington University, a well-known expert on China and on European-China relations.  We have Ellen Bork from the Project for the New American Century, also an expert on China, on human rights, and on Europe.  We have with us Robin Niblett from the Center for Strategic and International Studies, an expert on Europe, who has written about the potential rifts in the Transatlantic relationship that are sure to come once the embargo is lifted.  We have Dieter Dettke from the Friedrich Ebert Foundation, who will give a German Social Democrat point of view; and Rick Fisher, a very well-known and respected expert on Chinese military and Asian security affairs.

We have a lot of speakers, so we're going to try to impose some discipline and get through, but they have a lot of very important things to say.

I will note that having just left the Pentagon working on China issues, this issue was very important to us.  We were caught a little bit flat footed when it became clear that the Europeans were very serious about lifting the arms embargo, and having been in the Pentagon and looked at a very grim security situation, we were very troubled from that perspective that about what the Chinese might be able to acquire as they continued to modernize their military.

Certainly, American and certainly Japanese strategists are very troubled by this, and others are as well.

So, today, I think we're going to really look at three main topics raised by this occurrence.

The first is, of course, the possibility for destabilizing the East Asian region, and particularly the Taiwan Straight situation.

The second is the tensions that are sure to come in the Transatlantic relationship, as Radek pointed out that it seemed like we were headed in a better direction, and some of the questions raised by the EU commitment to human rights as well, especially in light of the death of Zhao Ziyang, a key leader during the Tiananmen Square massacre, which was the precipitating event that led the EU to put on the embargo in the first place.

So without further adieu, let me turn it over to Dr. Shambaugh, who has written very extensively on the broader issue of EU-China relations.  And let me turn it over to him.  Thank you.

DR. SHAMBAUGH:  Well, thank you, Dan, for organizing today's session and bringing us all together to consider it.  I think the turn out today is quite impressive and illustrative of the rapidly growing interest in Washington and on this side of the Atlantic in the--certainly in the arms embargo issue, but hopefully also in the EU-China relationship.

While the arms embargo issue is obviously of great importance, and a potential major irritant in the Transatlantic relationship, I'd like to suggest to you today that there is more that we should be considering than simply the embargo itself, and that is the broader EU relationship with China and vice versa.

And so I'm heartened that there is such a turnout here, and I would just simply encourage everybody to look at little more closely at the parameters of this relationship that's been growing so quickly for recent years.

I've sort of been laboring alone, along with a couple of other colleagues I guess in the U.S., to study this relationship.  But it's all of a sudden receiving great attention here.  This is I think the fourth event in almost four weeks and Robin and I have been together for a couple of these here in Washington.

So I gather my job is to try and set the scene at the beginning to describe the overall state of the EU-China relationship and then my colleagues on the panel are going to look at different discrete aspects of that relationship and the embargo issue.

So I'll do that, and I'll try and very briefly summarize it, although the article that you have in the packets that were distributed does it in greater length.

But I think it's also important for us to pay a little bit of attention to what some of the contributing factors and background are that explains the state of EU-China relations today.  It didn't just happen overnight and by osmosis.  It is, like all relationships, the product of growth over time and a number of variables that have influenced it.

So I'd like to spend a little bit of my allotted time to try and focus on the how and the why dimension of the relationship, not just the what dimension, if you will.

I mean the how part of it is pretty straightforward.  It dates back to 1995 in Sir Leon Britain's time as Commissioner, when he initiated a series of policy papers that the European  Commission has been putting forth since that time.  They call communications.  There have been a number of these issued, and the relationship, I would argue, has really grown in the course of a decade, from '95 to the present.

Robin is going to speak about the EU's perspective in policies towards China, so I'm going to leave that to him.  But I would only say that in my view the EU has been the real driver in this relationship, the proactive party.  China has been very reactive and much more passive.  Now, to be sure, a partner in the relationship, but you don't see the initiatives in the relationship coming from Beijing.  You see them coming from Brussels.

And I would say from Brussels more than the other member-state capitals in Europe.  The European Commission has become a very important institutional actor driving this relationship.  But I'll leave that to Robin to describe.

In fact, we know much more about the European side of this relationship than, in fact, we do about the Chinese side of it.  And I can tell you as a China specialist and having tried to look into this and tried to interview Chinese officials and academics in Beijing, it's hard to get information about what their perception of this relationship really is.  It's a lot easier to learn what the perceptions and the policies of Brussels are.

But I would say just in brief that there are sort of four factors that have emerged from my discussions with Chinese about what animates their part of the relationship.

First, they see the relationship with Europe as part of their overall omnidirectional foreign policy.  They are working very hard to build their relations within the Asia-Pacific region, as you know, and with the United States.  And Europe is simply another component of a global foreign policy.

So there's no real favoritism in Chinese foreign policy towards Europe.  It's simply a leg, I would say, of at least three legs, along with the United States and Asia.

Secondly, though, China sees the relationship with Europe through its preference to build both a multi-polar and multilateral world.  And here there is obvious convergence with Europe, as many European countries would like to build similar multi-polar and multilateral worlds.  Those are different things.  But the Chinese seek to do both as well, and so there's a convergence there.

Thirdly, China seeks the benefits of the commercial and technological and training relationship with the EU--and I'll describe that in a second.  But China is very much the beneficiary of the relationship.

And finally, China sees it a lot easier to deal with Europe than with the United States for reasons that I'll elaborate now.  So that's sort of broad background.

What about the state of the relationship today?  One can disaggregate that I think into three components:  trade, politics, and security.

And on the trade side, very briefly--I mean the statistics are there--that's probably the most impressive dimension.  This past year, 2004, the EU became China's largest trading partner, and China is now the EU's second largest trading partner after the United States.  Year end figures are not yet in, but if you calculate based on the first eight months of 2004 forward, we're going to have total trade turnover somewhere in the area of 200 billion euros for last year, with a deficit on the European side of somewhere between 80 and 100 billion euros, not an insignificant deficit, but an enormous trade relationship.

Over the last 30 years, since '78, trade has grown thirty-fold between the two sides.  There is also a substantial technology transfer dimension to this relationship.  Indeed, these so-called EU-China framework program is the world's largest collaborative government-to-government S&T research project.

Then we have things like Galileo, which I think Rick may talk about--the satellite navigation project and other elements.  But the trade relationship I think is front and center in this broader relationship.

Politically, you have to sort of disaggregate EU and member states because obviously China interacts with all 25 member states, but it also interacts very much with the Commission and the Council in Brussels.

And there is very intensive diplomacy at both levels.  Last year, no fewer than seven European heads of state visited China, and all of China's most senior leaders, the top four ranking members of the Politburo, for example, visited Europe.  And it was no accident that Premier Wen Zhao Bao was the first foreign visitor to Brussels after the expansion from 15 to 25 in May, on May 1st.

So just intensive diplomacy at a kind of head of state level, and within the EU Solana and Proti [ph] and Barroso and all of them are interacting with their Chinese counterparts.  Ministerial, sub ministerial level, even thicker--it's just extraordinary trying to keep track of these exchanges.

But if you move to the sort of sub-state level, one has to also note that there are now many more Chinese students studying in Europe than in this country, for example, over 100,000, 60,000 of which are in the U.K. alone.  We don't know yet in the United States for 2004, this current academic year, how many Chinese are here, but it's probably around 50,000 now having fallen because of our visa policies.

So--and then working level dialogues.  The EU has put together no fewer than 35 I believe separate working groups, bilateral working groups between the EU and the Chinese government in various functional areas that range from, you know, crime to information technology to human rights, various economic areas, non-proliferation, and so on.  And those are ongoing.

Then, finally, in the military strategic realm, there are no EU military exchanges with China per se yet.  They take place at the member-state level, not at the EU level, although last year China--or 2003 I should say--China opened a dialogue with NATO, but not at the EU level.

But at the member-state level, one sees a number of things going on--exchanges of defense ministers, exchanges of senior military personnel.  Just last year, for example, three members of the Central Military Commission, China's Central Military Commission, visited the U.K. alone.  I think only one visited the United States, in contrast.

Last year, both France and the U.K. held naval search and rescue exercises off the eastern coast of Shanghai for the first time.  There are staff college exchanges--Chinese officers studying at Europe's most elite institutions--Sancerre [ph] and Sandhurst amongst them--naval port call visits, and peacekeeping training I would mention.  We now see China's military deployed for the first time really in PKO operations around the world, including Haiti, two African countries--East Timoor and Afghanistan.  Guess who trained them to do so?  Answer:  the U.K.  And there has been a very quiet program going on for since 1992 run by the British military to try and train the Chinese military to assume PKO roles internationally.

Then obviously, and we're going to talk a lot about it, in the military strategic realm is the arms embargo issue.  As Stan suggested, it's not a question of whether it's going to be lifted, but when and how it will be lifted.

I myself am not convinced that it's going to be lifted this year for two reasons:  one is that you need to have a hundred percent consensus first of all, amongst all 25 member-states.  And there are at least six that are still holding out, if you will, unwilling to lift it on human rights grounds; right?  These are the Nordic countries, Ireland, and Poland to be specific.

And then there's the second reason I'm a little cautious, and that is parliaments within a number of these member states, but particularly the Netherlands and Germany and the European Parliament itself, all have passed rather strongly worded resolutions in the last couple months advising against the lifting of the embargo.  So this is a domestic political issue now within a number of these countries.  The House of Commons in the U.K. also.

So these are democracies after all, as the executive branch can't just decide to lift the embargos over the heads of their represented publics; right?

So I'm not sure, for those two reasons, that even though the European Commission has said that the "political will" is there to lift it in 2005, it's necessarily going to happen.  There's still--these two obstacles have to be overcome.  But if it is lifted or when it's lifted, we have to look very carefully at the code of conduct that is being revised that will cover the transfer of not only lethal arms, but defense technologies.  It's being strengthened substantially to include eight new criteria to govern the transfers of arms and defense technologies around the world.  Three of these criteria are very important when it comes to China-Taiwan, namely human rights, the regional security environment, and the national security of allied states, i.e., the United States.

So, you know, the EU is quite conscious of the need to replace the embargo with an even stronger institutional mechanism to control arms sales or tech transfers to China, and I would just say myself I don't see any real possibility of arms sales per se; that is to say lethal, end-use items.

Defense technologies, yes.  But I--except for the French case--don't anticipate arms sales.

I would just read you an operative sentence or two--my time is running out--from the December 17th European Council Presidential conclusions--presidency conclusions.  A very important three sentences.  This is Item 57, from December 17, 2004, for those of you who want to track it down on the Internet.  It says:  "The European Council reaffirmed the political will to continue to work towards lifting the arms embargo.  It invited the next presidency to finalize the well-advanced work in order to allow for a decision.  It underlined that the result of any decision should not be an increase of arms exports from EU member states to China, neither in quantitative nor qualitative terms.  In this regard, the European Council recalled the importance of the criteria of the Code of Conduct in Arms Exports, in particular criteria regarding human rights, stability and security in the region, and the national security of friendly and allied countries.  The European Council also stressed the importance of this context of the early adoption of the revised Code of Conduct and the new instrument on measures pertaining to arms exports to post embargo countries, a so-called tool box."

So I would suggest the EU is not about to act irresponsibly here and is very conscious of the ramifications and the implications of what it's doing.

Now let me just conclude with one minute, if my clock is right, Dan, just to tick off very quickly what I think have been some of the drivers of this relationship.

First of all, the Cold War is over.  The Cold War prevented Europe and China from establishing really their own autonomous relationship.  Both relationship with the other was derivative of each relationship with either Moscow or Washington.  But since the end of the Cold War, they've been able to establish an independent relationship.

Secondly, very importantly, there is no Taiwan issue in Europe with regard to China, and there are no real Taiwan lobbies in Europe, trying to lobby various member states on that issue.

Third, very importantly, Europe has no military presence or strategic interests in East Asia, unlike the United States.  So here, the two issues that hang over the American relationship with China--Taiwan and the strategic balance in the Far East--are simply absent in the EU-China relationship, which allows, obviously, the two sides to pursue a relationship unencumbered by those problematic issues.

Fourth, as I said, there's a convergence of views about the norms of international relations--multilateralism, international law, regimes, multi-polarity, and I dare say a need to constrain American unipolar and hegemonic behavior.

Fifth, complementarity of economies; and finally--and this is what Robin is going to describe to you probably--the EU strategy towards China.  The EU has a very well I think thought through strategy for China.  It's available in these various policy documents they've put forward over time.  But essentially, it has to do with integrating China into international institutions on the one hand, and building domestic capacity inside of China to meet a variety of governance challenges on the other hand.  Because Europe does not see China--and I'll close on this point--so much as a rising power that can potentially destabilize the international system.  Europeans rather see China as a transitional society, trying to cope with a whole variety of complications that emerge from its transition from state socialism to the market and to more pluralistic of society and politics.  So I'll close on that, but if you kind of think of those criteria vis a vis American policy towards China, a very different mindset.  Thank you.

MR. BLUMENTHAL:  Thank you very much, David.  We're going to turn to Robin Niblett now, and then we will continue with Ellen, Dieter, and then last, but not least, and in order to keep you all here, the man with the graphics and the, you know, neat weapons systems on the screen, Rick Fisher.

So if I can just ask the panelists to keep it to 10 minutes just so we can--I'm sure there will be a lot of questions, and so we can have a good question and answer period afterwards.  Thank you very much.

MR. NIBLETT:  Well, hopefully, given to 10 minutes won't be difficult after David's very comprehensive, I thought an excellent presentation.

So I'm just going to try and touch maybe on a few extra points taking my seat--I'm not a China expert.  I work primarily on the European Union.

So let me give my sense of European motivations, thinking, and maybe take it right up to, as much as I can, to today and where the thinking is right now.

Perhaps as I can sit as one side straight away--the point that David ended with, which was the one about the complete difference in strategic perspective between the United States and the EU towards China and its place in the world.  And in that sense, it is a shame, perhaps a great shame depending on what happens in the next few months, to the U.S.-EU debate over China should have been grabbed so quickly by the arms embargo question right now prior to the United States and the EU really being able to share some type of long-term strategic dialogue on how do we handle, how do we think about, how do we interact with China's rise in these national systems, which, as we all know, is one of the defining features of the opening of the 21st century.

So, sadly, we're trying to deal with damage limitation and some very tough calls at a time when ideally we should be thinking about the strategic questions that David raised in his presentation, which I'll touch on right now.

But that's where we are, and so we have to do our best to deal with it.  And I would say part of that equation is clearly the U.S.--the EU needs to understand U.S. security concerns, which, my sense from having spoken to folks in Europe, they have not.  They do now.  I think they've certainly heard it loud and clear after the various meetings they've had either over here in their national capitals with U.S. officials, so there's no doubt at the governmental level of the seriousness of the situation.  But in a way, the train was already running--the horse was already out of the stable, et cetera.

So let me just do a little bit on the European motivation and pick up on some of the points that David mentioned just so we understand what's driving Europe here.

I would start from Europe's view of China as a strategic partner, and what does that mean, a strategic partner.  Strategic is rather a generic and general world.

But I think when Europeans look at China, they see it at the heart of some of the principle global governance challenges that the world will face over the next--already is facing and will face--over the next 15, 20 years--proliferation of weapons of mass destruction, which gets directly to the issue at hand, but even global health epidemics--SARS coming out of the environmental degradation; its role it will play in a post-Kyoto climate change world; intellectual property, its respect for intellectual property--again, a key driver of innovation in the world economy and the kind of position that China plays in that is critical; and obviously, China's position right now in the overall health of the global economy, as obviously U.S. treasury bond sellers know amongst others.  The first point.

The second point would be one that--I'm sorry.  Let me just come back--so, therefore, I think the EU wants to do is obviously engage China in all of these areas, and this again gets back to David's point about the comprehensiveness of the dialogue that is taking place is to really try to engage China--each of the global governance challenges--early on in the process.

The second point.  I think, yes, Europeans and Chinese have a similar view of the importance of multilateral institutions, global governance.  I think there's--I'd put a slight, perhaps nuance, on it.  I don't think that Europe is trying to create, or even the French for that matter, are trying to create multipolar world.  I think they believe there is a multipolar world.  It is here now.  And if it isn't here now, it's as good as here, and there's nothing we're going to be able to do about it over the next while.  So this is not a competition between ideals of freedom and ideals of multipolarity as two alternative visions of how the world should be run.  It's how you deal with your interpretation of what the reality is.

And I' say most European capitals believe that a multipolar world is upon us, and, therefore, one of the key players in it is China.  And how you engage with China is an important element of a strategic relationship with a strategic partner.  And from that obviously would flow its desire for the kind of strategic dialogue we talked about.

In contrast to this, I think Europeans are concerned about a more suspicious approach towards China, and perhaps want to compensate for it.  Some might say overcompensate for it.  But certainly, I think that is part of the driver here.

They see China as now a regional--a responsible regional player.  They take note of the role that China has been playing in the North Korean dialogues, and also, you know, the whole desire to be able to welcome the new Chinese leadership with a constructive bilateral relationship that is not captured by the defining moment perhaps of the tail end of the last Chinese leadership; and, therefore, you know, wanting to open up on the arms embargo is important here.

And we should not underestimate as well the extent to which Europe perhaps relates to the fact that China treats Europe as a strategic partner.  This cuts both ways.  I think the Europeans actually maybe flattered is too strong a word, but there is certainly a natural desire.  Here are two countries willing to work across the range of global issues, thinking about them strategically, et cetera, et cetera.

Now whether China really is a multilateral country would be something I would leave to my China experts.  I suspect there will be some questions about that.  But certainly, I think the European Union is trying to draw China in this direction.

We should not underestimate obviously the economic aspects of this dimension.  I'll just say very simply my viewpoint at least, there is an imbalance in the U.S.--sorry--the EU-China economic relationship which is large.  It has remained large.  It's probably growing.  Obviously, European governments are going to take anything they do to try to close that gap.  Thanks.

And to the extent that the arms embargo is the reflection of a relationship that perhaps makes it harder for European countries to be able for some of the larger infrastructure contracts that I think they are most suited to be able to provide and which are the most lucrative and most important, they will want to do as much as they can, again within this broader strategic context to try to set the EU-China relationship on a new front.

But again, to Dave's point, I don't think is principally about arms.  This is not about supporting the European arms industry.  The place the European arms industry needs to have good access to to be able to survive is America, not China.  And, of course, that's the irony of the situation right here, because they might be shooting themselves heavily not only in the foot, but further up the body, with the steps they're going to take right now.

We should not underestimate, though, on this issue two perhaps related facts: number one, the EU has really taken the brunt of the dollar's depreciation in recent years; and, therefore, China's--[Tape gap.]

It's on--oh, there we go that worked.  Switch on and off.  It's on defense technology as well.  One should not underestimate the extent to which difficulties--I'd say this is particularly the British position--we can maybe come back this more in Q&A.  You know the British have not had an easy time of being able to step into the closer technological defense relationship with the United States that they might have expected having stood so closely to the United States through coalition operations in Iraq and elsewhere.  And there's an element I think for those of you work with the U.K. of impatience, of frustration in dealing with certain parts of the U.S. government on try to achieve that better relationship.

And I'm not saying that this isn't a driver.  This isn't--okay, we're going to get even.  By no means, should I say it that way.  But some of the leverage that the United States and the Administration should have had to be able to argue more strongly with the U.K. is not there.

So let me just come around to my final bit here--yep.  I'm going to stick to my 10 minutes here-on the arms embargo.  I'm not going to say more on how the U.S. and the EU and China are handling the strategic relationship.  I think that the points that David mentioned earlier--all the various different transactional relationships, capacity building, institutional building--are all relevant.

Let's just talk about the arms embargo very quickly at the end.  As I think a report came out very recently, EU exports of defense related technologies to China doubled last year, in 2003.  This is under the arms embargo.  Okay?

So the idea that somehow lifting the arms embargo is going o make some fundamental change to precisely the types of technologies that I think the U.S., the Taiwanese, and the Europeans themselves should be most worried about getting into Chinese hands I think is a mistake. And, you know, as Richard is going to say later on--jet engines, satellites, helicopters, avionics, radar--the British as well as the French, the Italians, others have been involved in continuing to export these non-lethal items for the future.

So the question is what can be done in the near term, and this is clearly what the EU is struggling with right now.  Can they pull together in the space I would argue of potentially two or three months--'cause I think there's a strong likelihood this will happen before it heads over to the British presidency of the EU in the second half of this year, and I think the language in the European Council Declaration would certainly lead us in that direction--what is the EU going to do and what can the EU do in the near term to be able to strengthen its Code of Conduct, which, after all, although again is non-binding and is dependent upon the actions of national export decisions by the EU member states--what can be done in this self-reporting, self-supervisory Code to be able to strengthen the question.

And here's where we're in a race into time to be able to.  Number one, identify some specific technologies that perhaps the United States is most concerned about and that European governments either publicly or informally will commit not to include in future sales going forward.  Because, then, remember it's not the Code or the arms embargo that determines.  It's the national governments that determine which of these items go in and out.

This tool box idea of setting up a special--a set of rules for post-embargo countries again opens up an opportunity for European member states to do some things within this tool box that they may not be comfortable doing in the overall Code of Conduct.  And one particular issue here is the business of notifying not just what you've denied on your sale, but also what you've accepted and allowed to go over there.  And there are some concerns about whether this, you know, is expanded as a precedent to the overall Code of Conduct or not.

Clearly, one of the requirements--I mean my last point here is on human rights.  This was put in place because of a human right decision around Tiananmen Square.  I think the EU view is that China has changed.  It is not the China of 1989, whatever hangovers there may be of that period; and, therefore, we need a new environment in which to act.  However, China will need to ratify the Conventional Civil and Political Rights.  I mean, some practical step will need to be taken before this embargo is lifted, irrespective of what's done on the Code side.  Thank you very much.

MR. BLUMENTHAL:  And now--thank you very much, Robin. A very good presentation.  Let me turn it over to Ellen to give a perspective of American concerns, both from the human rights perspective and also the security perspective.  So over to you, Ellen.

MR. BORK:  Thank you very much.  Those were both really interesting and I think raise a number of questions, some of which I'll be able to address in my prepared remarks.

There are obviously major differences in American and European experiences and responsibilities in Asia generally and towards China specifically.

That's not just an American viewpoint.  European experts say the same thing.  And I direct you to Franklin Umbach of the German Council on Foreign Relations, who has said that EU policies are guided primarily or even exclusively by trade and economic interests, thus neglecting and overlooking many strategic security challenges.  He's also traced Germany's decision to push for lifting of the EU arms embargo to a "rather unilateral ad hoc decision within its own government without consulting its foreign ministry in advance and without the Chancellor's office having sufficient expertise on the many Asian and global security issues."

Interestingly, Umbach cites that weakness in the way German policy on the embargo was made to indicate that Germany itself is not motivated by a drive to provide a counterweight to the United States and the Asia.

I think that's worth arguing about and certainly a bit debatable, but that's not really the big issue right now.  The big issue is the practical consequences of the embargo.

In contrast to Europe, the United States has obviously had very long experience in Asia that goes well beyond trade interests, and this is so well known to you all that I won't go into it.  But suffice it to say that the United States plays a leading role as the guarantor of security in the region; has longstanding alliances and a deep commitment to Taiwan.

And it's against this backdrop that the EU arms embargo has become a big point of contention between all of us.

America's position on not lifting the embargo comes down to three substantive issues: human rights, the threat to Taiwan, and proliferation concerns. And, in my view, any one of these is a good basis for maintaining the embargo and strengthening it to address its porousness and the problems in its enforcement.

Moving on to human rights.  Proponents of lifting the embargo argue that the human rights situation has changed in China, but I haven't really seen anything serious in the nature of a quantitative or qualitative assessment on what that means.  I think most proponents of that argument say that we're well past the days of the 1970s, when there were mass campaigns and catastrophic death tolls.  And that may be true.

But under the current state of affairs, human rights in China is still extremely dire in a number of categories.  One of these I'd point out is the death penalty about which Europe is often very concerned.  According to one Chinese source, as many as 10,000 people a year are executed without due process in China.  I think that's--there's no way to know.

Religious repression has increased and is extremely brutal.  It targets Christians, Tibetan Buddhists, and the Falun Gong. Labor protesters and political activists face persecution.  Tibet is in desperate condition.  China has combined its western development program with the manipulation of the global war on terrorism rationale to take aim at the Uighurs of Xinjiang.  And as for the difference between now and the conditions of Tiananmen Square, I think the fact that China--the Communist Party has not reversed the verdict on Tiananmen Square means that we're still in roughly the same situation.  It still remains dangerous to and even lethal to advocate democracy in China.

Then there's China's record of not meeting promises on human rights, including, for example, not allowing the International Committee of the Red Cross into its prisons, as it once promised to do in order to bring about a visit by President Clinton.  It has not ratified the Covenant on Civil and Political Rights, and I don't think there's really a great deal of expectation that if it were to do so that it would really enforce it.

The State Department has recently referred to broken promises undertaken over the last several years and used that to support its conclusion that there is an ongoing deterioration in human rights in China, and I think we can all, again, we should all consider whether lifting the embargo at this point actually is likely to induce any more commitments or actual respect for human rights.

And I'd add here that there are prominent Chinese dissidents inside China who are asking for continued pressure on China for human rights.  One of them is Bao Tong, the associate of the recently deceased Zhao Ziyang.

I think I'd like to address this one argument that often comes up in connection with the European arms embargo and that is that China doesn't belong in the same category as other countries to which Europe denies arms. And these are Sudan, Burma, and Zimbabwe.  That's a category that doesn't have uniform criteria for admission.  It simply means that there are several countries that European policy and public opinion can't countenance arming.

Zimbabwe, for example, actually has an opposition party, even though it's persecuted.  And neither Zimbabwe nor Burma is building up an aggressive military capacity to take over a democratic country, which China is.

And that brings us to the situation in the Taiwan Straight.  I think the human rights situation has not changed enough to warrant lifting the embargo, but the situation in the Taiwan Straight actually has become much more serious and warrants maintaining it.

Here I think I--harkening back to what David said that Europe lacks a lot of issues so speak, baggage as we say, regarding Taiwan and China is a bad thing.  It prevents Europe from being able to make a serious security assessment that it needs to make in order to make this decision.  Taiwan is even more isolated in Europe than it is in the United States.  And President Chirac, for example, has insisted that there's no threat to Taiwan that lifting the embargo is "obviously not likely to change the strategic balance of power."

As long as leaders of European countries pushing to lift the embargo are saying things like that, I think there's bound to be a huge disconnect that frankly ought to be fixed before we move any further at all.

Recently, the Pentagon, as Richard Lawless of the Pentagon testified to the U.S.-China Commission about the great difference in conditions in the Taiwan Straight today vis a vis even a few years ago.  And in that sense the embargo makes more sense today than it did in 1989.

And, again, just briefly on the Taiwan point.  I'd say that European governments are--well, let's just say President Chirac and Chancellor Schroeder have largely begun to adopt Chinese rhetoric on Taiwan, and again this really displays a lack of appreciation of the course of Taiwan's democratic development, and the way its international isolation makes it even more vulnerable today and militates again for not lifting the embargo.

Last point on--substantive point I'd say is that China is a major proliferator of weapons of mass destruction and related technology and missile technology, and it doesn't have a legal regime or a political system that's able to limit this.  And here, again, I think considering the record, China's record, on proliferating to Iran, Europeans again need to take the proliferation matter quite seriously.

A few weeks ago the Bush Administration sanctioned eight Chinese firms.  And that came after a year of--in 2004 of sanctioning well over a dozen, maybe nearly two dozen, Chinese firms for proliferation activities with Iran.

Britain's foreign secretary said that America's position on the embargo--that our lack of understanding of the European position is a presentational problem, which I assume means that if the EU presented its position better, Washington could accept the lifting of the embargo.

I think that also means we're still very apart on understanding each other's positions and certainly on Europe understanding America's position.

There's some other strange arguments that we need to talk about, which are the claims by leaders like Mr. Solana and Mr. Chirac that they don't actually intend--they want to lift the embargo, but they don't actually intend to sell Beijing weapons.  It's not very reassuring, especially when the Code of Conduct itself is too close and it would not particularly constrain any country from selling.  And I have to say once one country, it's very difficult to predict the consequences, the implications for other countries getting on board, and even countries outside the EU, like Russia, which, although it is the largest supplier to China, would be much more emboldened were the embargo to be lifted.

The bottom line is that restraints on selling China arms are political.  We can use words like embargo and Code of Conduct, but really this is a political restraint, and the political restraint is only as strong as all of our attitudes about security and human rights and the consequences of arming China.

We talk a lot--I think it's very hard for Americans sometimes to categorize European attitudes.  We know that they're not monolithic, and we know that many Europeans opposed lifting the embargo, and, as David said, two national parliaments--I guess three.  I didn't realize the House of Commons had done that--had opposed lifting the embargo and the EU parliament as well had done that--we welcome that.  I think that we have our own dissension over China within our country as well, and what we're really trying to do is move ahead and find the best way to deal with this extraordinary challenge.

I think that Europeans often feel that Americans want to keep Europeans out of Asian policy making, and actually that's not true.  I think we've all been looking forward to finding ways to work together that Europe wants united and having dealt with its own major security threats would be able to turn and look to Asia, which is, of course, this growing, growing source of tension and security in the world.

So having--rather than wishing to prevent that, we look forward to doing that and it's, above all, it's really important that we all recognize that we have much more in common with each other than either of us has with China--the current Chinese regime I should say.

MR. BLUMENTHAL:  Thank you very much, Ellen.  And I'm going to turn it over to Dieter for a perspective from Germany.

MR. DETTKE:  Thank you very much.  Ellen I agree with the last sentence, and I disagree with a lot you said before and just one quick response.  I guess you said Europe somehow bought the Chinese position on Taiwan.  I don't think that's true.  I think Europe and the United States agree on a one-China policy.  And there's no doubt in my mind that this is our common foundation.

And one point also real quick.  I don't think that you can make Europe responsible for Chinese help, if you wish, for Iran's nuclear program.  I mean, that's not Europe's fault by any stretch of the imagination.

So, and again, and the basic point we would also disagree, of course.  I don't think it's a good idea to keep the arms embargo as it stands now.  I think it doesn't work.  It's brittle.  It is leaking, and just one little fact here.  David, David Niblett that is, mentioned that Europe's arms exports double in the last two years from whenever that is to China.

The fact is that if you take Chinese arms imports and that's the critical issue here, right?  The fact is that 2.7 percent of these arms imports come from Europe and 6.7 percent come from the United States.  And that proves my point that in spite of the arms embargo, you have a very leaky system.  It doesn't work.  That's the key issue.  And the issue is how we are going to fix  it.  Is keeping a leaking, brittle arms embargo or is it better to look for some new instruments.  And I would plead to do the second.

I disagree with those who say we have that much of a strategic difference between Europe and the United States on these issues.  What we really need is a strategic dialogue on these issues and that's what I would support and certainly embargo and no embargo should be part of the issue.

I think there are better ways to enhance both by the way the security situation regionally.  Europe has strong interest there.  There is no doubt about it.  Economic interests and also security interests.  China is a nuclear power, and I think we should talk about it.  It should be part of Transatlantic strategic dialogue.

The issue is really from my perspective whether we do try to engage China in order to achieve our objectives, or we could--

[TAPE FLIP.]

--the arms embargo, of course, when it was imposed on China in '89 because of the events in Tiananmen Square, but I think there are reasons to look at the situation in a different way today.  Not that everything is fine and hunky dory in China.  No doubt.  Ellen, you talked about the human rights situation, labor rights, freedom of speech, of the press, unions.  That's certainly a very dismal record.  How do you change it?  Do you engage China or do you try to put more pressure on China?  And I think the way that we have taken in the past, by the way, including the United States, bringing China into the WTO created the best condition, from my perspective, to create the conditions of a stronger observance of the rule of law and other regulations.

And I come to the other point about human rights, too.  And that's my approach here.  I think there are better ways to achieve results in that respect, too, if we engage China and try to improve and make our own tools much more effective than they are now.  And that's, of course, the issue of the Code of Conduct of the European Union, which is, at the present moment--you're right--not legally binding and should be I think strengthened.  I'm not in favor of lifting the arms embargo now as is.  I think we have to have some assurances from the Chinese side in order to make that happen and we should have a few changes on the Chinese--as far as Chinese behavior is concerned.

If we can manage to strengthen the European Code of Conduct, I think we could include the respect for human rights, and we are doing that as far as our own policy is concerned.  We include, by the way, the domestic situation there and the question whether there are tensions or even armed conflict, and that would be certainly also a reason not to export weapons.

There is a commitment, by the way, in the Code of Conduct, too, for regional stability.  David talked about it very eloquently and absolutely accurate, and I'm grateful to you for characterizing the European position in a very objective way.  That's what we are trying to do.  You described it correctly.  But there is--and here I would disagree with those who say Europe has no concern for its stability and security in the region.  Not true.

It is part of the--a commitment to maintain regional peace and stability is part of an European Code of Conduct.  I want to make that very clear.  So there is a concern to do that.

And finally, the Code of Conduct would look after the question of whether China respects international law and whether it--and that's another issue, too--whether China helps in the fight against international terrorism.  And I think we have a commonality here, too.

Then, in addition to the Code of Conduct as an instrument to regulate weapons exports to China, I think you have to add the national export laws.  And Germany happens to have very restrictive weapons exports regulations.  I mean, they couldn't be stricter than that.  Some people tell me always the Germans go against the market, because where do you need weapons?  In areas of tension.  What does German export law say?  We can't deliver weapons, send weapons, into areas of tension.  So you can't be stricter than that if, you know, you think about it as a process and as a market process of supply and demand.

But these export laws and regulations in Germany are extremely strict.

Next point is--and that's very important, too.  The main European arms producers--France, Great Britain, Germany, Italy, Spain, Sweden--agreed on a letter of intent--and that's binding, by the way.  That's international law--To limit arms exports as far as transnational projects are concerned.  So there's another instrument, another tool to limit arms exports.

And finally, and that's a very important issue that we haven't discussed here yet, dual use.  Dual use is a very treacherous area and difficult to handle and Europe tried to address it.  There is a European dual use export control system, and it includes a commitment that civilian trade shall not undermine the essential security interests of the member states or their commitment areas to non-proliferation.  Non-proliferation is not only considered, I think it is really strengthened in the regime and in the tools that we can offer for that particular issue.

So products that are subject to control will not be exported without consideration of the implications of non-proliferation, sanctions imposed by the U.N. Security Council, national foreign policy and security policy.

And finally, it's also an important issue--end use of weapons.  Just to limit the risk of diversion.  A very important point.  And that, again, is included in the European dual use export control system.

I mentioned already--I agree.  China has a dismal record, and we need to address it, and I think we have seen some signs that we should mention, too.  We have to be fair to China also.  And if you mention human rights, of course, not totally accepted yet in China, there are steps being taken.  One is Article 33 of the Constitution, which now says that the state respects human rights and finally the accession, by the way, is under consideration.  The accession of China to the U.N. Treaty on Civil and Political Rights.

So it's not a breakthrough.  I agree with that.  But it's not all dismal, and it's not all negative, either.  And the question is how do you really help those you want to help.  Do you do that with incentives?  Or do you do that with pressure?  And I think the European consensus is we should try incentives rather than pressure because it seems to work.

I see that I still have a minute, so let me use it.  I personally would--

MR. BLUMENTHAL:  You have a minute and thirty seconds.

MR. DETTKE: Oh, okay.  Oh, sorry.  Sorry.  But just one quick point, I would agree, by the way, with the position of the German parliament and the European parliament, which says and tells--you know, the German government, and, by the way, the European Union, too--lifting of the arms embargo not unconditionally, but with certain --under certain circumstances it could work.  And that is a legally binding European Code of Conduct.  We talked about that.  Acceptance of the U.N. Treaty on Civil and Political Rights.  Implementation of constitutional changes in China to guarantee human rights, ownership, and autonomy for ethnic minorities, and finally a peaceful solution for the conflict with Taiwan.  There it is.  There's regional security consideration.

So, with that, let me conclude.  I think this is a viable alternative that Europe has to offer and we should talk about it.  It should be part of our strategic dialogue which I value very much.  Thank you very much.

MR. BLUMENTHAL:  Thank you, Dieter.  And over to Rick for a briefing on the technology, the technology that the PLA is looking to acquire and has acquired over the last few years and possibly a discussion, too, of what the United States may do to enact some technology controls.

MR. FISHER:  And I'd like to open by thanking you for this generous invitation to appear on this panel.  Thank you as well for your steady stewardship over China and Taiwan policy while at the Pentagon, as I also thank everybody here today for your profound patience in hearing all of us--to hear all of us out.

I come to this panel rather disappointed and quite pessimistic.  I certainly agree that there is a need for dialogue, and there should be a dialogue.  Well, goodness.  There has been a dialogue.  I think that the Bush Administration has been trying very hard and very politely for the last year especially to convey to our European friends and allies the importance of what they are considering to do, the decision that they are telling us they're about to make, which is to lift an embargo.

I would view a decision to lift the embargo as nothing short than a strategic back stab.  It really has to be viewed in these stark terms. I mean, how can you look at the Taiwan Straight and see on one side a democracy in a painful and difficult transition trying to survive and continue as the first democracy in the history of all Chinese people, but on the other side of the Taiwan Straight you have a country working 48 hours a day to prepare its military to be able to murder the democracy in Taiwan.

Now, our friends, our allies in Europe, are telling us they are going to throw gun powder on this situation.  That is not right.  It has to stop.  And I would hope that President Bush, when he goes to Europe, he would privately convey this sense to our allied heads of state and also publicly remind our European allies to use his bully pulpit as best he can to convey this difference and to implore that our European friends not make this decision, not lift the embargo, but, in fact, strengthen the existing embargo and make it work.

Now I view this--our European allies are truly operating as they move toward this decision to lift the embargo, they're operating under three specific delusions.

The first delusion is that the EU embargo truly worked.  It didn't, and the body of my remarks today will be to prove how badly it hasn't worked.

The second delusion is that the Code of Conduct, which is now being promoted as the answer to the lifting of the embargo will work is also a delusion.  It won't.  It's a voluntary code.  The French are already loudly telling anyone who will listen that any moves to strengthen the Code will be opposed.  They don't want any interference in their future military technical business with the PLA.

The third delusion I think is that Europe does have this sense that they have no real security interests in the outcome of what happens on the Taiwan Straight.  They have a direct security interest.  Now that the EU--or now that China is the EU's largest trading partner, I would ask our European friends to consider the impact of an American and Japanese complete embargo on China and how that would, through various multiplier effects, affect European business with China.

It would have a profound impact.  Europe has a direct impact or direct interest in security on the Taiwan Straight.

Now moving to the leaky embargo and how leaky it really is, I'd like to go through a series of slides.

In 1998, Brighton and Tsinghua University entered into an agreement to co-develop micro and nano satellites.  This was the first one, launched in 2000.  In April of last year, China succeeded by launching its first nano satellite.  And here is a micro satellite--a reconnaissance micro satellite that is now being marketed.  You can buy it, if you'd like.

Why is all this important?  Well, as--if you ask almost anyone at the high levels in the Pentagon, this is a cutting-edged transformational military technology.  Small satellites are the wave of the future, both for civil applications and military applications.  You marry this nano satellite with this new Chinese solid fuel and mobile space launch vehicle, you have a direct ascent anti-satellite weapon.

Are the Chinese moving in this direction?  You bet they are.  Are they going to use them?  In the first minutes of a Taiwan Straight conflict against American satellites?  You bet they will.

Second example.  In the 1980s, when we all sold military technology to the Peoples Republic of China, the British and Rolls Royce and the PLA tried to complete a deal to sell what for the Chinese at the time were advanced military turbo fan engines.  The deal went asunder.  The Chinese spent the next 15 years or so trying to copy the Rolls Royce Spey turbo fan, but they failed miserably.

Well, realizing this failure and the fact that they wanted to make a confident domestic fighter bomber, by the end of the 1990s, they came to a new deal. The Rolls Royce Spey is now being co-produced in the PRC as the Kinling [ph] turbo fan engine.  The success of this program has enabled the Chan [ph] Aircraft Company to produce the JH-7A Fighter Bomber.  These are now being produced for the PLA Navy and the PLA Air Force, with modern radar, modern weapons, top of the line cockpit systems.  This engine has enabled this weapon to be fielded for possible use against Taiwan and possible use against American naval forces that would come to Taiwan's rescue.

At sea, German and French marine diesel engines are helping to modernize China's Navy.  Officials from Germany's MTU Diesel Engine concern are quite happy to admit, to me, personally, that their diesel engines are now powering new German conventional submarines.  You can read in the Jane's Fighting Ships, a very fine British publication, about how French-designed marine diesels power a new Chinese stealth frigate that looks very much like the stealth frigates that France sold to Taiwan and diesels are also powering new logistics supply ships to give PLA Navy operations more length and more endurance.

And on the ground, we have really since--it really didn't stop since the beginning of the '89 embargo, Euro Copter has been selling helicopter technology to the PLA, enabling the PLA to produce new helicopters, attack helicopters.  This attack helicopter has just gone into production.  This helicopter right here is part of a new Euro Copter--Chinese co-development deal that will result in a modern, advanced six-ton helicopter that will go into production in--at Lymes [ph] in France and in China by the end of the decade.

The auto industry in China is very rough and tumble.  A lot of profits to be made, but the PLA is taking its profits, too. This is an Italian military truck that is co-produced in China and is now outfitting PLA airborne units.  If you have a nice truck that you can drop out of a airplane, that means you can attack a target at greater distance.  And when you get on the ground, you can rush up to it and face those defenses with greater surprise.

Now looking to the future, even if the Code of Conduct succeeds in preventing France from selling aircraft carriers, like they were tempted to do, or reconnaissance satellites, there is still a great deal of technology that could leak to the PLA to its benefit.  Space technology is one of them.

But as we look at this from a perspective of American policy, I think we have to go at it from two directions.

First, the United States needs to maintain the strength of its own example.  We maintain a legally binding embargo on military and dual use technology to China.  Right here we have a Humvee that is now being produced in two factors in China, and this example has surface-to-air missiles attached to it.

And as you read today, Bill Goertz reports in the Washington Times about a possible Chinese diversion of Boeing transport aircraft for military purposes.

But if the Europeans are truly serious about lifting the embargo, I think the U.S. government has not choice but to defend itself--defend our troops, defend our interests.

I would hope that the Congress would consider its own Code of Conduct for American technical relations with European firms who decide to sell military technology to China.  We have to be very serious about this.  There are, by my count, 104,000--over 104,000 permanent American--eternal American residents today in Europe.  They stand truly as testament to our kinship, our shared sacrifice--the degree to which Americans are willing to go and have gone over the last century to help Europe with its transformation towards democracy.  Let's not let those souls stand as testament to Europe's indifference to militant nationalism or to totalitarianism.  This is not the time to lift the embargo.  It is every bit the time to strengthen it.  Thank you.

MR. BLUMENTHAL: Well, thank you very much, Rick.  And let me just offer one observation and then open it up for questions.

We've obviously had a diversity of opinions and a very comprehensive briefing here.

I think the observation I would offer is it strikes me that having worked in the administration that for the last couple of years, the United States' approach to China has been very good on the atmospherics and very good on the rhetoric.  But as soon as something like this happens, it starts to spark a debate and sort of rise to the top all the issues of tension between the United States and China, and I think that both caught Americans and Europeans by surprise, and part of that is I think a failure for--of the United States to really explain its tensions and to sort of paper over some of its differences with China over the past few years with its European allies, and I think we've touched on a lot of them.

Underneath the veneer I think of good relations with China, we have a lot of issues that trouble Americans deeply--the security of Taiwan, human rights issues, and proliferation.  And oddly, the European move to lift the embargo to essentially say that China is a normal state has actually provoked these feelings within the U.S. administration, and I think also in the Congress.

So with that as just an opening--as a closing comment, let me open it up to questions, and if I could just impose some ground rules here.  Please state your name and affiliation.  Please ask a question rather than--wait for the microphone, ask a question rather than commentary.  Thank you.

MS. GIACOMMO:  Carol Giacommo [ph] with Reuters.  I think somebody mentioned this in passing, but I'd like--and any speaker could do this--somebody to explore what the follow-on impact would be if the embargo is lifted and how would Russia take advantage of this?  What could Russia sell to China that would be a concern?

MR. DETTKE: Thank you for the question.  I have to start with one remark to Richard because we can't let that stand that you accuse Europe of indifference towards totalitarianism.  I mean, that's so useless to do that.  Why do we slander each other  on these issues?  I mean, we should have rational dialogue, and I am all in favor of it, but to accuse Europe of indifference to totalitarianism is useless.

MR. BLUMENTHAL:  Okay.  Can we please stick to the question?

MR. DETTKE:  To the question here, the real issue is indeed that the largest supplier for China in terms of weapons is Russia.  And, of course, if you would try to strengthen the embargo, you know, they will all go to Russia and to other sources.  What you do at the end is you create an environment that's much more hostile to us than it is now.  And to give Russia that advantage is not very useful.

I think there are better ways to do it--and to, by the way, include this dependence of China on Russia now.  I think that could be balanced off if we, you know, have a meaningful strategic dialogue.

MR.          :   If I could sort of forward this question to our friend from the Pentagon, because I have heard two views.  One is that the lifting of the embargo will crowd out some of the Russian exports.

The other view is that what the Russians export is actually heavy stuff.  And what the Chinese need from Europe is the soft stuff; is the integration technology.

So would it be complementary for Russia or would it be a competition for Russia?

MR. FISHER:  What you'll have and what you're already seeing is that Europe's very loud movement toward the lifting of the embargo has prompted the Russians to preemptively offer greater and more dangerous technology.  Over year ago, the prospect of greater amounts of European submarine technology going to China prompted the Russians to publicly discuss whether they should sell wholesale co-production for advanced Russian submarines to China.

Either way you look at it, a lot of that Russian technology is already going into the latest classes of Chinese submarines, so in a sense that would put even greater pressure on European firms to remain competitive.

So there is a very evil dynamic that is in the offing just on that score.

Now looking to the long term, it's my opinion that the Chinese view Russian technology as the stuff they need for the war they want to fight this decade, the war over Taiwan.

The war that they want to be able to win against the Americans in the next decade that technology is going to come from Europe.  And here's how it's going to work.

The European technology is going to be exchanged for simply Chinese investment capital.  We're already seeing examples of this.  In October of 2003, EADS [ph] entered into an investment alliance with AVEC-2.  AVEC-2 produces helicopters, training aircraft and most recently tactical missiles.  Why lay this groundwork?  Why create these alliances?

In my opinion, it's quite complementary.  Europe needs investment.  The European arms industries need investment capital in order to remain competitive with advanced American technology.  The Chinese need European technology to be ever more competitive with the Americans.

MR. SHAMBAUGH:  Just one add further to the question about reverberating effects of the lifted embargo and that is here in this country if the embargo is lifted and if European firms begin to transfer and sell technologies, much less weapons, which I don't foresee, but technologies to China, you can bet that American defense contractors are going to be knocking on the door at 1600 Pennsylvania Avenue and up on Capitol Hill saying what about us?  We aren't competitive.  And that's going to put the Bush Administration into very difficult and sensitive position in explaining its strategic policy towards China and will reopen the so-called China threat debate that was raged in this city during the 1990s. And the Bush Administration, which enjoys I think it's fair to say the best relationship that we've had with China at least since 1989 is going to be put in a real tough spot.

MS. CHAO:  Nadia Chao [ph], Liberty Time correspondent in Washington, I just have a question for Mr. Dettke--because you mentioned there are four conditions that you raised considering the Code of Conduct if you want to lift the arms embargo to China.  One is that it would require a peaceful resolution in Taiwan Straight.  And recently, China is trying to promote--imposing an anti-succession law, which is trying to give a legal framework that using force against Taiwan.

I wonder how Europe will see this?  You know, because this doesn't--definitely not a guarantee of a peaceful resolution in the future, and which might be contradictory to the policy.  Thank you.

MR. DETTKE: I know whether I understood the question correctly.  What Europe can do under the circumstances, and maybe you should ask that question to one of our American friends here because there is much more of a defense commitment to the defense of Taiwan involved here.  As far as Europe is concerned, all we can do I think we tried to do, which is to tie any exports, technological weapons exports, to a commitment of China to resolve the issue of Taiwan peacefully.  That's all the pressure we can marshal.

MR. FISHER:  Just to follow on because in your earlier presentation, you mentioned that the United States and Europe have the same position on Taiwan.  I hate to disagree, but it's not quite the case.

The United States has a one-China policy, under which it is--has been for many years recognized that the status of Taiwan is undetermined and the United States government acknowledges the Chinese position that Taiwan is part of China.  That's the language from the relevant communiques.

Europe accepts the one-China principle, which is China's position that Taiwan is part of sovereign Chinese territory.  So, in fact, Europe has accepted a different definition of Taiwan's status than is American policy.

And just to clarify on your Bundestag resolution, what it actually says--it doesn't say about peaceful resolution--it says that China must renounce the use of force against Taiwan as one of the eight criteria that would permit the Chancellor in the German state, in this case, to lift the embargo.  Slight difference, but the day that China renounces the use of force against Taiwan is--

MR.          :   Really in practice, this policy is very, contradictory.  Germany refuses to sell reconnaissance satellite technology to Taiwan.  It also refuses when the Bush Administration approached them over two years ago to sell relevant technology to allow submarines to be manufactured in the United States and sold to Taiwan.

But at the same time, German MTU diesels are powering the most modern Chinese attack submarines.  Thank you.

MR. BLUMENTHAL:  Right over here.

MR. DANZIGER:  I'm Rafael Danziger [ph] with APEC [ph] and my question is address probably to Richard Fisher.  Maybe here  somebody else can add.

There was mention of Chinese proliferation and Iran was mentioned as well.  Could you give us some more details about what kind of proliferation has taken place and what are the concerns about proliferation in the future?

MR. FISHER:  Well, let's tie the issue of proliferation directly to the lifting of the embargo and the issue of technologies going to China.

It was--Robin I believe mentioned the ongoing Chinese participation in the Galileo navigation satellite.  On the surface, you would think what can this hurt?  This provides greater redundancy to American navigation satellites. Everything from passenger aircraft to cell phones depends on this technology.  The more navigation satellites we have the better.  Yes.  I accept that.

But allowing China secure, unfettered access to highly accurate navigation satellite signals is also going to reduce deterrence between India and Pakistan.

Let me explain.  China has sold to Pakistan a number of missile systems, the most modern of which use satellite navigation signals to achieve profound accuracy, allowing these missiles to forego being armed with nuclear warheads, giving the leadership in Pakistan in certain strategic circumstances a temptation to use these missiles with the possible mistake of precipitating a larger, possibly nuclear conflict.

Europe has proceeded in this program of allowing China to participate as partner in Galileo in my opinion with really no thought of the wider consequences.

MR. NIBLETT:  Can we quickly.  They're very specific questions, and I'm not sure if I'll get a chance to make this point later on.

But I think you get the impression we got the snake eating its tail over here, because what I keep hearing is how lifting the embargo is terrible, but at the same time how the embargo isn't doing anything that's helpful.  So I'm not quite sure what, you know, where we're going.  There's this rather circular argument.  The embargo isn't working; therefore, don't--I mean, you're not going to make any--or one line stronger in a communique.  What you need to do is have something that's stronger.  I have no idea if the Code of Conduct will be stronger, but we need something better than the arms embargo, and lifting it is going to make no difference.

MR. BLUMENTHAL:  Ellen made a point about that earlier.

MS. BORK:  I'm not sure what excellent point I made earlier, but I would just--I'm not sure why--

MR. BLUMENTHAL:  I didn't say excellent.

MS. BORK:  If something is not working, you move away from it on one side of the spectrum rather than improve it, especially by augmenting that with a much greater understanding and agreement among allies faced with the same problem about what we need to do.

So I'm not sure why a faulty embargo shouldn't be plugged and improved.  And, by the way, here I should add something about the question of dual use items, which do not come under anybody's embargo.  It's a really huge problem and America is vulnerable on this point.  And there's no reason for anybody who takes the position I do not to acknowledge that and not to fault successive American governments for that, and we all need to work on that.  The point is not that the regime is--you know, the rules we're working on are a problem, so let's abandon them.  The problem is they're not working.  Let's fix them and improve them and extend them where necessary.

MR. NIBLETT:  But improving the arms embargo is the Code of Conduct.  The arms embargo is one line--you've all seen the communique.  It's six lines under these circumstances--I point to under these circumstances of the Tiananmen Square massacre, a bunch of little comments about no travel and [inaudible] visits and so on, which have all be lifted and then one line, one line--there's no policy there.  The Code of--

MS. BORK:  It is a policy.  It is a policy.

MR. NIBLETT:  It's a policy, but you can't strengthen one line.

MS .BORK:  You can--certainly--sure you can--we're not talking about the language.  We're talking about the commitment of states who undertook that commitment to adhere to it and so we're really arguing about what people think, not about what one line--

MR. NIBLETT:  Which is [inaudible] Code of Conduct.

MR. .BLUMENTHAL:  Back there.

MR. WINOGRAD [ph]:  Yeah.  My name is Jeffrey Winograd [ph].  I'm the editor of Focus's Real Newsletter here in D.C., and my question to Heir Dettke, and just by way of full disclosure, probably you were finishing your graduate studies I served with Yabo Geschwader's Exen Trise [ph] as an American officer, so you might have some idea what I did.

I go to your very first comment, which I heard you say that we can't hold the European Union responsible for Chinese assistance to Iran's nuclear program.

Now, if I heard you correctly, how then can--does that--if that attitude prevails, does that then undermine the position of the EU as an impartial participant in the Quartet when it comes to the Middle East peace process?

MR. DETTKE:  You're right.  I shouldn't have said that.  I should have qualified my remark here.

What I tried to--when I reacted to Ellen was to make sure that what we need is a tougher policy and that this has to happen an that under the circumstances, of course, you are right.  Europe couldn't prevent it.  And that's what I was referring to.

MR. BLUMENTHAL:  We have a question over here.

MS. BESHIMI:  Hi.  I'm Caroline Beshimi [ph] from the Embassy of Sweden.

I would like to know your opinions--I mean, there are different opinions here--on the possibility of creating a climate today in Washington where there could be this kind of discussion between--strategic discussion between the EU and the U.S. on arms exports and the regulations of arms exports to China.  Because until now, the U.S. has toured Europe.  That's for sure.  But to give its own message not really to listen to Europe.

Is there chance to find a common ground for a dialogue or are we really on a course of two crashing trains?

MR. SHAMBAUGH:  Well, I hope that we're not on an inevitable course of crashing, but the dialogue has been noticeably absent at the governmental level, and even at the non-governmental level, although some of us have been involved in non-governmental exchanges.  But I would say, again, the issue here is not just the embargo.  It's understanding the EU-China relationship, of which the embargo is a subset.  That's what the United States has to focus on because once it focuses on that, it'll understand better the rationale for lifting of the embargo.  Whether it accepts it is another question.

But I don't see the U.S. government doing any more than what you've just described.  They have sent several briefing missions over to European countries, with lots of PowerPoint slides about the balance in the Taiwan Straight and to basically warn against the lifting, but they're not listening, as you quite correctly point out.

There's no real dialogue here, and it's partially Europe's fault.  European member states and the Council and the Commission are not coming to Washington.  I would say Europe has a major, major PR problem here.  Jack Straw, you know, misscommunication or misunderstanding--that's an understatement.  And it's Europe's responsibility to communicate a lot more clearly here in this city.

So--and the last point is bureaucratically the State Department, just for example, when it deals with European countries on Asian issues, it's the European office--bureau--that interacts with European foreign ministries, quite understandably.  But in this case, it should be the Bureau of East Asian Pacific Affairs that's interacting with European counterparts.

So there's a bureaucratic problem here, too.

MR. BLUMENTHAL:  Well, let me just make a quick comment and turn it.  The embargo actually got the dialogue--to the extent that it exists--going.  The United States was caught off guard, and I think very surprised about European attitudes towards China and then the government, in a rear guard action, started to send, as David said, briefing teams out to Europe and Europe I think was taken aback by the response by the United States.

So the dialogue has begun.  Unfortunately, a little too late.  But--

MR. NIBLETT:  Just kind of very quickly on that--I think part of the problem is on the State Department and maybe other departments as well.  I think there was a fear early on--I'm doing history here--that talking about the embargo would imply your acquiescing on lifting it.  So my sense is so, therefore, we're coming very late now.  There's a realization the Europeans really are serious and not talking about it isn't going to help.  So we need to--the U.S. obviously is trying to move forward.

I think the problem actually perhaps got to a little thing between Ellen and I just then--the EU is trying not to have something specific on China.  The arms embargo is specific on China.  The Code of Conduct is going to be a policy within which China would be wrapped in, because it's the human rights.  It's the regional security, et cetera, et cetera, et cetera.  And I think that is where we need to overcome that specific part of it.  The EU is going to have be specific enough about China in what it says, either as an addenda or within this tool box idea, or whatever it is.  It needs to be specific enough about China to get to the points that Richard, Ellen, and others have made here today about that concern, the reality of China's huge military modernization across the Taiwan Straights.  Simply saying with the strength of the Code of Conduct isn't enough, 'cause it's not specific to China.

MR.          :   I just wanted to add one point here so that we don't lose it as a possible way of reconnecting our--the necessary strategic dialogue on China with the EU.  David was right.  I mean, we haven't done it.  The EU hasn't done it.  We haven't explained our position specifically enough.  We haven't addressed these issues.  I should add that the United States didn't give Europe much of a chance to do that, but it can be corrected, and I hope it will get corrected.  And one basis of doing it would be, and David Niblett I think mentioned it, is the Code of Conduct that Congress should enact and adhere--you know, why don't we exchange our positions and try to find a way of doing that in a multilateral fashion where it would be much more effective than if everybody, both parties, go ahead and try to do their own thing.

MR. BLUMENTHAL: Question over here.

MR. PETION:  Phillippe Petion [ph], Swiss Embassy.  Assuming a lifting of the embargo, what kind of impact do you see for the multilateral regime export control and--excuse me--and in particular for the [inaudible] arrangement?  Do you see a strengthening or in that direction?

MR. FISHER:  Well, very briefly.  These regimes are very weak to begin with.  What has succeeded--COCOM, in my opinion is just a shadow of that organization and institution and its impact.  The lifting of the embargo not only does it send the wrong political message, but it will also weaken arms control and proliferation objectives vis a vis China overall..  Here--you know, there is a real possibility of war on the Taiwan Straight.  And the lifting of the embargo cannot be read in Beijing other than a legitimization of its goals to reunify with Taiwan by force if necessary.  When Europeans are competing with Russians, competing with Israelis, competing with Americans to sell technologies to the PLA, that undermines all arms control and counter-proliferation efforts.

MR.          :   Hi.  I'm from Anika [ph] newspaper.  Japanese press.  And I remember that U.S. official implied that in case Europe lift embargo, maybe U.S. government have to consider putting new restrictions on the U.S. technology transfer to Europe.  And I wonder if this is a bluff or is U.S. very seriously considering about it?  Maybe I can--I'd like to get some comment from American panelists.

MR. SHAMBAUGH:  Well, none of us are American officials, so we cannot speak officially, although I can show you half a dozen reports that have appeared, especially in the Financial Times in which unnamed U.S. officials do, indeed, make that threat.  And I would view it as quite serious.  We have to take some steps to defend our interests and to defend our people in Asia if the embargo is lifted and higher levels of actual technology or even weapon sales do take place.

MR. BLUMENTHAL:  I think Congress will act.  I think it's a question of what they can do.  Obviously, defense industries are so integrated at this point, that it's very, very difficult to punish targeted companies that are doing business with China, but Congress will--the sense I'm getting is that Congress will act one way or another.  Let's take one more question over here.  And then wrap up.  Thanks.

MR. SCHNIDER:  Charlie Schnider [ph] of the Taipei Times.  I'd like Mr. Dettke and the other panelists if you'd like to comment on Professor's Shambaugh's suggestion that the embargo may not be lifted this year; and also your assessment of the likelihood of a Code of Conduct being strengthened and made, in fact, binding on member states.

MR. DETTKE:  Yeah, I agree with the assessment.  That's not going to happen anytime soon.  I don't see that happening this year, and I think we need some time before the conditions of the European parliament and of the German Bundestag are going to be realized is going to take some time.  So I don't see a lifting of the arms embargo anytime soon.

MR. NIBLETT:  I think it's a 60-40 at least or 65-35 that it will be lifted before the U.K. takes over the presidency of the EU.  I think the battle here--and I know it's going on--I think we all know it's going on in Brussels--they are working day and day out to try to work out the Code of Conduct arrangement--all the things we've talked about today.  How do you specify China?  How do you mention technologies?  To have a dialogue with the U.S. so that--you know, it is race, but the race is on right now to do it in this presidency.  I can't say for certain they'll get it done in this presidency, because again it is a unanimous vote and something could happen, but I personally think it's at least 65-35 that it will happen.

MS. BORK: It's very hard to tell, and most diplomats don't want to say.  But I think the focus on the EU, on the technical side, is warranted, but we're actually hearing that it's really coming down to question of couple of leading European countries, including the U.K., and this is going to be a big issue between us for the next six months, and that the U.K. actually--the theory is wants it to be lifted while Luxembourg is in the presidency so that it won't be a problem, and they won't have a high profile on the U.K. when they take over in the summer, and that's been a real change.  After last summer, it seemed that Prime Minister Blair was wavering and then really came to sort of the U.S position, so this is a real shift and something that is extremely disturbing.

MR. FISHER:  Well, the next thing to watch is the meeting of the National People's Congress in March, where kind of [inaudible] ratify the second covenant, that's the time to do it.  And if it does, then the question is whether the Nordic countries and Ireland accept that as enough movement on the human rights side to justify the lifting.

The Commission has called for not only the ratification but release of a number of political prisoners and Red Cross access to prisons in addition.  So it's not just a question of the Covenant, but the next thing to watch is that. But whether these resolutions passed by the various parliaments, what kind of impact that's going to have is crucial.  I'm told by German friends that Schroeder is willing to override the Bundestag's resolution and pay whatever--he doesn't estimate that there's much political price to be paid for it.  It won't be popular, but he's willing to move ahead with that I'm told.  Well, we're going to have to watch that.  But the first step is the Chinese, and they have to help their own case here on the human rights side.  If they want it lifted, they've go to take some steps.

MR. BLUMENTHAL:  Ellen, you had one last word.

MR. BORK:  It's a minor point, but I have heard from a Czech diplomat that the United States--the Bush Administration is really confined its arguments too much to diplomatic channels and needs to reach out to public opinion much more.  And I think there s a shallow China debate going on in Europe, but it needs to be much deeper, and I think the deeper it gets, the more likely there will be support for maintaining a tough position on channel.

MR. BLUMENTHAL: Well, with that, I'd like to thank everyone very much for coming out here.  I'd like to thank our panelists for a very, very interesting discussion.  And thank you very much.

[Applause.]