Combat Fatigue

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Compounding the DPP's troubles is the resurgence of its opponent. After two years of peddling conspiracy theories and wallowing in resentment over its loss in 2004, the KMT has begun to realize that a dyspeptic gridlock doesn't serve its interests. The party is now led by the telegenic mayor of Taipei, Ma Ying-jeou. At a KMT rally earlier this month, Ma, 55, toned down the vitriol and talked mainly about economic reform, saying he'd target Taiwan's escalating credit-card-debt problem and ease restrictions on trade with the mainland. Though the economy in Taiwan isn't badgdp grew 4.1% in 2005 and unemployment is only 3.9%critics say the DPP's fixation on China skews economic policy, making faster growth difficult to achieve: just last week, Chen's government tightened restrictions on companies planning investments in China. "The KMT finally understands that Chen's Achilles' heel is economics," says KMT legislator Lin Yu-fang.

Ma, the early favorite to win Taiwan's 2008 presidential election, has been busy probing other potential weaknesses. The U.S., which has pledged to defend Taiwan against Chinese attack, has been irritated by Chen's compulsion to upset the status quo. During a tour of the U.S. last week, Ma gave speeches at Harvard and to several prestigious think tanks. Although Washington keeps its distance from Taiwan's leaders (there are only informal diplomatic links between the two countries, in keeping with the "One China" principle favored by Beijing), Ma also met privately with U.S. State Department officials. His message, wherever he went, was conciliatory. He advocated dialogue with China, observing: "Without negotiations, I think the current state across the Taiwan Strait could move from stagnation to confrontation." As Ma described it, the goal is a "peace accord that will formally terminate the state of hostilities."

Such statements are bound to play well not just in Washington and Beijing but with voters suffering from independence-debate ennui. Soon, Ma may also move to break the stalemate over the arms deal with Washington. Lin Yu-fang, a KMT member of the defense committee in Parliament, told Time that in the coming months his party will agree to a scaled-back arms purchase along with an increase in the country's annual defense budget to pay for it. The KMT has long maintained that the original deal, which includes several submarines, antisubmarine aircraft and Patriot missiles, was not only too expensive but also gave China a dangerous excuse to accelerate its efforts to beef up its own forces across the Taiwan Strait.

How voters disillusioned with Chen react to a proposed deal of this sort will be critical. Lin Chong-pin, a professor at Taipei's Foundation for International and Cross Strait Studies, argues that there's a large, moderate group of voters in Taiwan who favor a strong defense but are weary of the war of words with China. "A defense deal could win over some of [that] middle ground," says Lin, and would protect Ma from criticism that he's too soft in dealing with China's growing military threat.

Chen, for his part, has moved into damage-control mode. Last week he assured U.S. envoy to Taipei Stephen Young that "the Taiwan government, its people and myself will continue to be a responsible contributor to maintaining peace in the Taiwan Strait." This lower-key approach suits people like 36-year-old Taipei resident Elsa Lu. "Who cares if you are Chinese or Taiwanese," says Lu, who works in her family's Taipei-based printing business. "As long as we all have a good standard of living, either unification or independence will be good." During the presidential election two years hence, whoever can tap into that sentiment may well be Taiwan's political future.