David An is a senior research fellow at the Global Taiwan Institute and was previously a political military officer at the US Department of State.
On June 28, 2017, the US Senate Arms Services Committee (SASC) added text to an early draft of the US National Defense Authorization Act of 2018 (NDAA) which: “directs the Department [of Defense] to implement a program of technical assistance to support Taiwanese efforts to develop indigenous undersea warfare capabilities, including vehicles and sea mines.” The reference to indigenous underseas warfare capabilities and vehicles harkens to diesel-electric submarines, or possibly even mini-subs or unmanned underwater vehicles. This wording, directing the US Department of Defense to help Taiwan develop undersea warfare capabilities and vehicles, remained in the NDAA 2018 up until the conference report was filed on November 9. However, it did was ultimately removed and did not appear in the November 30 final version, which President Trump signed into law on December 12. One can only speculate what insider political wranglings led to the early inclusion of this text, and then to its removal. While SASC’s support of Taiwan is commendable, it was yet another chapter in the now decades-long story of US-Taiwan cooperation in the pursuit of much needed diesel-electric submarines for Taiwan.
Usually when one side expresses an interest in buying a defense item, and the other side expresses willingness to sell it or assist with acquiring it, then the transaction is all but complete. However, this has not been the case with the agreement that the United States made in 2001 to assist Taiwan with submarines. Taiwan first requested submarines from the United States in 1995, half a decade earlier. After all, submarines are essential for Taiwan’s survival, credible deterrence, and asymmetrical advantages. They help maintain open sea lines of communications, and allow Taiwan to burden share alongside the United States in maintaining freedom of navigation in the West Pacific region. Then in April 2001, the George W. Bush Administration agreed to assist Taiwan with submarines—possibly for the US to manufacture them, help Taiwan buy submarines from others, or some other variation. The agreement was in line with the Taiwan Relations Act (TRA), in which the United States committed to making available defense articles and defense services in such quantity as necessary to enable Taiwan to maintain a sufficient self-defense capability.
Most importantly, new diesel-electric submarines in Taiwan’s hands would be a conventional deterrent against aggression and amphibious invasion by a potential adversary. As I wrote in a previous GTB article, unlike aircraft or land vehicles, submarines operate below the water surface and are therefore difficult for an adversary to detect, making them an invisible deterrent. Yet, despite US agreement to assist Taiwan with new submarines, Taiwan has not acquired new submarines since the 1980s, so the results of US commitments have yet to be seen.
Yet, many other defense articles that Taiwan has requested have been approved by the United States and transferred to Taiwan, from Patriot PAC-III missiles, sophisticated Raytheon radars, F-16 A/B aircraft and upgrades, to Black Hawk UH-60M helicopters, etc. Diesel-electric submarines are a rare exception, and worth examining closely, in order to learn from the past and plan for the future. Taiwan’s diesel-electric submarine predicament has a long history, with hold-ups and political complexities on both sides that have led to today.. It is fitting that this special issue of the Global Taiwan Brief with its focus on reassessing the history of US and Taiwan decision making should reassess the history of diesel-electric submarines as well.
The regional (im)balance
The key factor in explaining why it is hard for other countries and their companies to work with Taiwan on submarines—or any arms sales, for that matter—is that China “strongly protests” against Taiwan developing its own indigenous submarines, and especially against any countries that help Taiwan in this effort.” When Taiwan purchased two diesel-electric submarines from the Netherlands in 1981, China retaliated by downgrading diplomatic relations with the Netherlands. The Dutch relented by 1984 and signed a communiqué in which the government promised not to sell any more weapons to Taiwan. Germany has a similar policy in effect.
Yet for all of its protests against Taiwan acquiring eight or less diesel-electric submarines, China itself operates over 60 submarines. These include five nuclear-powered attack submarines, four nuclear-powered ballistic missile submarines, and over 50 diesel-electric attack submarines. The Office of Naval Intelligence estimates that China’s submarine fleet will eventually expand to 75 vessels.
By seeking to acquire new diesel-electric submarines, Taiwan is actually restoring the regional balance in military capabilities. History has created a growing regional imbalance. Over the past four to eight decades, Taiwan’s submarines have stood still while the world moved forward. Taiwan currently possesses two US-manufactured Guppy class submarines from the World War II era, which were cutting edge at the time—80 years ago—but far outdated today. It also possesses two Dutch Zwaardvis-class submarines manufactured in the 1980s, which are now four decades old and long past their operational cycles. Meanwhile, Japan operates a fleet of 16 submarines, South Korea operates 15 submarines, and even the city-state of Singapore operates six submarines. All of these are diesel-electric—similar to what Taiwan seeks to acquire—and none of them are nuclear- powered. This is the current regional context as we look more closely into the key factors in the history of Taiwan and US decision making on submarine cooperation.
Key aspects in the history US decision making
A political crisis between the United States and China in 2001 provided the political cover for the United States to approve a decision to assist Taiwan with submarines. The April 24, 2001, US submarine decision was preceded by the Hainan EP-3 incident on April 1 when China downed a US reconnaissance aircraft east of China, spurring the submarine decision amid the “furor over the spy plane.” At the time, the George W Bush Administration needed to show it was not caving into China, and US officials increasingly discussed the need for an important arms decision for Taiwan, so they decided on approving assistance for Taiwan’s submarine program. However, the official White House explanation by spokesperson Ari Fleischer was that President Bush approved submarines assistance due to “the threat that is posed to Taiwan by China.”
Other political considerations made the United States briefly hesitate on helping Taiwan with submarines. Global Taiwan Institute advisor Shirley Kan lays out the most authoritative account of US decision making on submarines, since she was previously a specialist at the Congressional Research Service (CRS) and author of the CRS report: “Taiwan: Major US Arms Sales Since 1990.” She explains how US concerns included that the US no longer manufactures diesel-electric submarines, since the US submarine fleet is all nuclear-powered, and that military technology may leak from Taiwan to China involving US military secrets. Notwithstanding such concerns, by November 2001, Northrop Grumman with its Ingalls Shipbuilding shipyard, General Dynamics with its Electric Boat, along with other companies in Germany, Netherlands, France and Spain all submitted bids and concept papers to the US Navy. Despite political concerns from the US side, the US Navy discussed options with Taiwan’s Navy in July 2002 and planned to select the manufacturers to design and build the submarines in late 2003. As a reflection of its seriousness, the US Navy opened an office dedicated managing Taiwan’s submarine program, which was funded by Taiwan.
With the US government fully behind the political decision to assist Taiwan with submarines, the main problem at this point was how the US Department of Defense would receive adequate funding for the required work. In December 2007, Taiwan’s legislature ultimately approved only US $65 million for the first phase of submarine design, though Taiwan’s defense ministry requested US $169 million from the legislature for the first phase, out of a total of US $360 million for the entire design phase. The private sector estimated that the total cost of manufacturing eight diesel-electric submarines would perhaps run around US $6 billion, but the US Navy increased that number to US $10.5 billion to account for costs and risks. For Taiwan to struggle to provide US $65 million in the context of costs as high as $10.5 billion or more throughout the six years since the 2001 US decision to assist Taiwan was far from adequate to ensure the US government would move forward.
Key aspects in the history of Taiwan’s decision making
Taiwan’s delays in submarine procurement stem from Taiwan’s domestic political stalemate over the past two decades. Kan also writes the most authoritative account of Taiwan’s decision making regarding diesel-electric submarines for Taiwan. After the George W Bush Administration agreed to assist Taiwan in acquiring diesel-electric submarines in 2001, the Kuomintang party (KMT) in Taiwan’s legislature blocked efforts and cut funding as they opposed the Democratic Progressive Party’s (DPP) president from 2000 to 2008. As a further complication, Taiwan’s legislatures demanded that several of the submarines be built in Taiwan, which would add $2.5 billion on top of the $10.5 billion for eight submarines. This is because licensed production overseas is typically more costly than when US companies use their own assembly lines. In addition, in 2003 the Bush Administration inquired of Italy about buying eight decommissioned Sauro-class diesel-electric submarines for an estimated cost of $2 billion with delivery starting in 2006, but Taiwan’s military instead opted for new submarines. Re-transferring submarines from Italy to Taiwan would have solved the problems of cost, design, and manufacturing time. However, after the Bush Administration, the principals in the Obama Administration decided not to proceed with the submarine sale and Taiwan lost a valuable window of opportunity.
The major discrepancy between Taiwan’s willingness to pay versus US cost estimates arose out of Taiwan’s fractious politics. The previous section on US decision making regarding costs of assisting Taiwan with submarines illustrated the impasse between what the US Navy estimated as the cost of the program versus what Taiwan was willing to spend. Even by April 2003, just two years after the US decision to assist Taiwan with submarines, the US Navy urged Taiwan to officially start the program, but the US side estimated that the cost of starting up the $10.5 billion program would be $333 million, to which Taiwan offered $28.5 million. These discrepancies are separated by orders of magnitude, and incredibly difficult to overcome.
Conclusion and way forward
The United States and Taiwan have been unable to work closely and directly on Taiwan’s submarine program over the past decade and a half due to domestic politics on both the US and Taiwan sides, in addition to Taiwan’ desire to manufacture submarines within Taiwan, and Taiwan’s much lower budget than US Navy estimates. As of 2014, Taiwan has officially begun the design phase of its indigenous defense submarine (IDS) with production in Taiwan, along the lines of how it produced its own indigenous defense fighter aircraft (IDF), indigenous Hsiung Feng missiles, and other weapons systems it had trouble procuring from abroad. Hopefully, Taiwan will be able to produce its own submarines to fit its budget following this decision to take the lead on the entire process. However, it will still rely on the US and other partners to provide cutting edge equipment to integrate onto the indigenously-produced submarine hull. In this way, the United States and others can help Taiwan develop the most modern, technologically advanced, and capable submarines by approving Taiwan’s equipment and technology transfer requests.
The main point: A reassessment of US and Taiwan historical decision-making reveals how the Bush Administration’s 2001 decision to assist Taiwan with diesel electric submarines has been stalled for over a decade. Taiwan is now determined to produce submarines indigenously but US components and technology transfer approvals are critical to help Taiwan develop the most modern, technologically advanced, and capable submarines.
 Lijun Sheng, China and Taiwan (Singapore: Institute of Southeast Asian Studies, 2002), 98.