U.S. Refuses Taiwan Offer of Gulf Funds

Amid its intensive efforts to raise money overseas to help pay for military operations in the Persian Gulf, the Bush Administration recently turned down an unsolicited offer by Taiwan to contribute roughly $100 million to the United States, The Times has learned.

Although the United States needs the money, the Administration wants to avoid antagonizing China, which holds one of five permanent seats with veto power on the United Nations Security Council and so far has gone along only hesitantly with U.N. resolutions on the gulf crisis. China strongly opposes any U.S. action that could be seen as conveying official recognition of Taiwan’s Nationalist government.

Two weeks ago, President Bush and National Security Adviser Brent Scowcroft held an unannounced meeting at the White House with Han Xu, China’s former ambassador to the United States. Han, who is a longtime personal friend of Bush, came from Beijing to Washington seeking a renewal of high-level contacts between the United States and China and a lifting of the curbs on World Bank loans to China.

Taiwan’s offer of massive financial help to the United States was made during a recent visit to Washington by Vice Foreign Minister C. J. Chen, according to diplomatic sources with direct knowledge of the offer.

So far, Saudi Arabia has pledged about $6 billion, the exiled Kuwait government about $2.5 billion, Japan about $2 billion and West Germany about $1 billion to help offset the costs of Operation Desert Shield, the deployment of U.S. and other forces in the Persian Gulf.

But Taiwan’s offer of about $100 million would have been larger than that for most other nations. For example, South Korea, which is larger and more populous, recently responded to U.S. requests for help in Operation Desert Shield by offering $50 million in cash and $70 million in material and services over a two-year period.

A spokesman for Taiwan’s office in Washington, the Coordination Council for North American Affairs, declined to confirm or deny that the $100-million offer had been made, terming it “a sensitive issue.”

But the spokesman added: “Speaking hypothetically, even if we did make an offer and it was turned down, we should be understanding. You (the United States) have your considerations. The Administration seems to appreciate the efforts the Communist Chinese regime has shown, particularly since they sit on the Security Council. If the sanctions (against Iraq) fail to take effect, the Administration will still need the Communist regime’s cooperation.”

The White House did not respond to a query about Taiwan’s offer. A senior U.S. official, while declining to comment specifically on the offer, acknowledged that Taiwan officials “have indicated they wanted to be helpful.”

“It was at their initiative,” the official said. “Whatever they have done has been something they wanted to initiate.”

When Treasury Secretary Nicholas F. Brady traveled to Asia earlier this month to seek financial help for the Persian Gulf operations, he stopped in Japan and South Korea, but not Taiwan, whose $64 billion in foreign-exchange reserves rank behind the United States and Japan as third-highest in the world. The United States broke off diplomatic relations with Taiwan when it restored ties with China in 1979.

According to knowledgeable sources, when Vice Minister Chen offered the money to the Bush Administration, U.S. officials suggested that the Nationalist regime should instead give the money to Egypt, Jordan and Turkey, the three Middle Eastern countries that have been most financially pressed by the gulf crisis.

Taiwan officials insisted they wanted to give the funds directly to this country to help offset the American costs of the gulf operations. By some accounts, Taiwan officials were annoyed by the American rebuff, but a Taiwan spokesman insisted these reports were untrue.

A few days ago, Taiwan Foreign Minister Frederick Chien announced in Taipei that Taiwan had decided to give $30 million--a much smaller sum than was offered to the Bush Administration--to the Middle Eastern countries hurt by the crisis.

One source familiar with the $100-million offer said the Administration turned Taiwan down in part because it does not want to become a financial clearinghouse for international funds in the gulf crisis. However, the source acknowledged that the Administration also rejected the offer for foreign-policy reasons--primarily its desire to avoid further clouding the unsettled U.S. relations with China.

During the gulf crisis, China has pleased the Bush Administration by supporting all of the U.N. resolutions on Iraq--including the crucial Resolution 661, which indirectly authorizes the use of force to enforce the international embargo.

However, Chinese officials have raised doubts about whether they would endorse any future military action by a multinational force if the embargo fails to pressure Iraq to withdraw from Kuwait. Premier Li Peng and other Chinese officials have emphasized that they oppose any military involvement in the gulf by the superpowers and believe that the solution should come from within the Arab world.

Senior Chinese officials have been unable to see Bush because of the ban--imposed after the crackdown at Tian An Men Square in June, 1989--on high-level contacts between the two countries. Yet Han enjoys such close ties to the Bush family that a month before his inauguration, the Bushes had dinner at Han’s Washington home in what one guest said was “almost a family gathering.”

On Sept. 16, a Sunday, Han, now head of the Chinese People’s Assn. for Friendship with Foreign Countries, went to the White House to see the President. Responding to queries by The Times, Doug Davidson, a White House spokesman, said the session was “sort of a reunion of old friends. He (Han) came by the residence. It was just a private drop-by.”

However, a spokesman for the Chinese Embassy in Washington said Bush and Han “discussed Sino-U.S. bilateral relations and other questions of mutual interest.”