Many analysts believe Lee Teng-hui's statements on cross-Strait relations were aimed at boosting the chances of his heir apparent, Vice President Lien Chan, in next year's presidential election. TIME's Terry McCarthy and Don Shapiro spoke with Lien last week in Taipei. TIME: What has been the public reaction in Taiwan to President Lee Teng-hui's statement that relations between Taiwan and mainland China should be on a special state to state basis? Lien: My understanding is that President Lee's statement was backed by the majority of the people--73% in one opinion poll. There is a very strong consensus. TIME: What determined the timing of the statement? Was it related to next year's presidential elections? Lien: The statement is basically a clarification of our standing position. We have always proclaimed our point of view that the Republic of China is a sovereign, independent nation. We believe if you want to solve the problems between the two sides of the Strait, you must start from the reality. What is the reality? This is what President Lee tried to clarify. Specifically, I think Mr. Wang [Daohan, head of Beijing's Association for Relations Across the Taiwan Straits] is expected to come here in the near future. At least this is scheduled. If the two sides are to take up political dialogue during Mr. Wang's visit, it will be a significant policy move for Taiwan. Therefore, we must first clarify the status of cross-Strait relations. There were some opinions raised in the U.S. expecting both sides to agree to political discussions. In particular, we are concerned that an American policy shift toward Beijing will be unfavorable to our advocacy of parity. The interviewer was a German--he used the term renegade province in his question--he was using a terminology that is used by Beijing--in front of our President! The request of the Voice of Germany for an interview with President Lee came at a time when we were looking for an opportunity to make the clarification. Germany offers an apt example of how two states, with the same cultural heritage and historical ties, could achieve the common goal of integrating when both the time and the conditions are right. We are thinking of the long-term development of our country. The statement cannot be related to any specific issues of the moment (like the election campaign)--we don't handle affairs of that importance in such a way. In 1991 we clearly pointed out that the Republic of China is a sovereign state, but that we would like to treat each other as 'political entities.' This was not responded to favorably. Instead Beijing has tried to force something called the One Country, Two Systems formula on Taiwan. We think if you really want to solve the problems you must first clarify the reality. TIME: How has this policy change been accepted? Lien: It has been a little inconvenient for some people. The world is once again reminded of the situation here. But to clarify a situation does not mean you are changing the situation. Why a clarification was construed as a change we do not understand. TIME: So it was not aimed at domestic political opinion? Lien: You cannot do that. But I will not rule out that it will become a campaign issue. In the election, the issue of relations between the two sides of the Strait will be one issue, but not to the exclusion of other issues. TIME: Were you consulted in advance? Lien: As Vice President I am constantly consulting with the President. TIME: How do you see the mainland's reaction? Lien: From the crisis three years ago, we draw some lessons. The more irrationally Taiwan is treated, the more unfavorable our attitude will become. We hope nothing in that direction will happen. TIME: Who lost in 1996? Lien: I must point out very frankly that mainland China was the loser of that game. Subsequent developments in the region showed that. I hope they will learn from the recent past. But with mainland China, who are you talking about? The hard-liners? The bureaucrats? The military? It is not a military problem. It is simply a problem of comparison of two different systems for the Chinese people. What we have been striving for here in Taiwan is to provide a viable alternative for Chinese people to choose eventually. We are not thinking in terms of confrontation. TIME: Will economic concerns make China moderate its response? Lien: I think it will always be a good thing to be cautious--economic factors should always be considered by any government. Particularly as far as Taiwan in concerned. We are major trading partners and we are very important investors in the mainland. I think economic relations should be considered by economic considerations alone. TIME: Are you confident of U.S. support in case the situation deteriorates. Lien: That is a big in case. We believe our policy is consistent with the U.S. and other countries in the region--we believe the problems on the two sides of the Strait should be solved by peaceful means. We believe the U.S. will act in accordance with the Taiwan Relations Act. TIME: Were you concerned by President Clinton's telephone conversation with President Jiang? Lien: Taiwan's aspiration is quite simple. Twenty-two million people here on this island should be treated justly; our voice should be heard, our presence should be respected. At this moment Taiwan is being isolated around the world, and the frustrations among our people are mounting. We don't believe this is a justified policy to treat Taiwanese people like that. We hope the international community will read our clarifications; through a far-sighted perspective. We are not asking any more, but we cannot ask for less. A sovereign independent Republic of China here in Taiwan serves the interests of peace and security in the area. Promoting independence for Taiwan is another story--that is adventuristic. But the Republic of China was established in 1912 and has been in existence as a sovereign state for 88 years. Therefore we are entitled to all rights of a sovereign state. We proclaim three no's and three yes's. No to independence for Taiwan: Taiwan should not go for independence. No reunification: we simply cannot reunify with communist China, a very closed, undemocratic society and government. No one on this island in his right mind would pursue that policy. No confrontation or antagonism: it is not our purpose to provoke each other and generate insecurity--that is not wise. Yes, we want peace--no conflict. Yes to exchanges, including personal, economic and cultural. Yes to a win-win situation, in which both sides benefit from bilateral exchanges. TIME: Do the majority of Taiwanese support the government standing up to Beijing? Lien: What other alternative is there? People here want to have a more reasonable development of the situation. TIME: How can you make national policy when you have to take into account the stock market? Lien: The stock market is volatile in a free market--it has its ups and downs. But I think the majority of people understand the government's clarification. TIME: Is Taiwan confident that if the worst came to the worst, it could withstand an attack by the mainland forces? Lien: The relation between the two sides is not a military one. We hope to solve the problems peacefully. But up to now the communist government has not renounced the use of force against Taiwan. That is part of the picture. Therefore we must be prepared for all eventualities. That is what we have been doing in the past years, upgrading our military capability. Should the situation occur, we must have the capabilities and the confidence and the competence to defend ourselves. TIME: What about Theater Missile Defense? Lien: I think we should reserve the right to participate. That doesn't mean we will. It depends on the response from the mainland. TIME: How about the U.S. reaction? Lien: In the past few days we have been clarifying the clarification. But if any more questions are to be answered, we are ready to do that. The 22 million people on Taiwan are not troublemakers; we want to be heard and respected. We can do a lot of good for the international community, yet we are being isolated for so long, being treated unjustly. The survival of the ROC is a plus for everybody--what we have been doing in Central America, in Kosovo, in Africa testifies to our goodwill. Yet we are being treated as a pariah. TIME: Do you see a danger of Washington currying favor with Beijing by being hard on Taiwan? Lien: I have seen this analysis. But it is better to have a long-term, far-sighted perspective. It is absolutely not a matter of convenience. They should keep the two issues separate. Taiwan does not want to score any points in U.S. relations with Beijing. But at the same time we don't want to see the relations between Washington and Beijing conducted at our expense. We hope the tension between Washington and Beijing will be minimized through consultation--we don't want to see the tensions continued and enlarged.