The High Price of Chinese Embassies

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One bombed-out embassy in Belgrade: $28 million. Repairing U.S. relations with China over the matter: Priceless. At least that's what the Clinton administration hopes after agreeing to pay China $28 million in compensation for inadvertently wrecking the country's Belgrade embassy during the Kosovo conflict. In return, Beijing will pay Washington $2.87 million for damage to the U.S. embassy during the ensuing protests in China's capital. "Bombing the Chinese embassy in Belgrade was a terrible mistake that dramatically set back relations with Beijing and fueled China's paranoia about Washington's intentions," says TIME U.N. correspondent William Dowell. "The challenge was to find a compensation amount that would bring closure to the matter while allowing the Chinese to save face, and that's what this deal appears to have achieved."

The compensation agreement, however, requires congressional approval in the next federal budget, and it may prove a tempting target for legislators critical of the administration's China policy. "A lot of reactions from Congress are based on an imperfect understanding of international affairs," says Dowell. "And a lot of people on Capitol Hill still imagine China in terms of a 'Red Threat' or a 'Yellow Peril.' That could create difficulties when this deal gets to Congress." If the agreement becomes the focus of a domestic political fight, that could further cloud U.S.-China relations — after all, despite the compensation deal, Beijing hasn't yet accepted that the embassy bombing was an accident.