On June 18, 2008, President Ma Ying-jeou was interviewed by Mr. Keith Bradsher and Mr. Edward Wong of the New York Times, and Mr. Leonard M. Apcar of the International Herald Tribune.

Following is an edited version of the interview

New York Times/International Herald Tribune (NYT/IHT): I want to start by saying thank you. We appreciate your giving us an hour today. I know that over the years you've talked to many correspondents from the New York Times and the Herald Tribune, and I know you're in the first month of your administration¡Xthis is a busy time. So we genuinely appreciate the time you're giving us, and thank you. I wanted to begin with, perhaps, just an introductory question. You've particularly enlivened the news over the last few days. If you can give us a sense of, under your leadership over the next several years, where you would like to see the relationship with the mainland go, and where you would like to see it not go. In other words, what would be the trajectory, if you will, of how you want to lead this relationship?

President Ma Ying-jeou: Simply put, we don't want to see war, and we want to see peace and prosperity.

NYT/IHT: And beyond that kind of conflict, or pulling back from that kind of conflict, ideally, what kind of economic, social, cultural, and military, strategic, and security relationship would you like to have?

President Ma: As you know, we took the initiative in opening up to the mainland as early as 1987. On November 2 [of that year], we allowed Taiwan residents to go to the Chinese mainland for family reunions. Actually, people snuck into the mainland before that and set up shops over there. But the formal permission to go to the mainland obviously brought a lot of the changes that followed. I think in 1988 trade between the two sides, which was at that time unrecorded, was probably US$1.1 billion or so, but last year it was US$120 or 130 billion. Mainland China has become the largest destination of our exports. Forty percent of our exports went to the Chinese mainland and Hong Kong. For Taiwan's economic growth, foreign trade plays a dominant role.

On the one hand, Taiwan has roughly 100,000 companies investing on the Chinese mainland. That figure, of course, is just an estimate¡Xnobody really knows exactly how many. And these firms have hired more than 10 million workers, creating an economy which is probably one-half or even two-thirds the size of Taiwan's. This has helped the mainland's development immensely. On the other hand, these companies also play an important role in importing goods from Taiwan. The bulk of the trade between the two sides has been investment-driven trade. And what we are trying to do is to normalize the relationship. By that, we mean trade and investment between the two societies.

First of all, the transportation has been pretty awkward. You have to make a detour to Hong Kong, South Korea, or Japan. I'll give you the most insane case. To transport goods from Taiwan to the mainland, ships have to stop over in Naha in Okinawa. To get a stamp there, it costs 15,000 Japanese yen, which adds up to a lot of money because there are thousands of ships that carry cargo to the Chinese mainland. At one point we joked, why couldn't the officials in Naha just give us the stamp, then we could get the stamp in Keelung, a northern port city in Taiwan, without having to make that detour? So that has to be changed. And that is exactly the rationale behind the inauguration of direct flights in July.

On the other hand, there are millions of mainland residents who want to visit Taiwan. People on the mainland have become much more affluent than they were before, and many of them have already visited other countries. Taiwan has been off limits to them, and they want to come.

Technically, they are allowed to come, but this is limited to those who have established permanent residency in a foreign country or who first travel through a third country. So that severely limits the number of mainland tourists who can come to Taiwan. There are two categories [of people indirectly from mainland China]¡Xcategory two and category three¡Xwhat we're doing now [concerns] category one¡Xthose who come directly from mainland China to Taiwan.

These are only the beginning steps for an across-the-board normalization of at least economic relations with the mainland. But in the process, we hope to achieve not only prosperity but hopefully peace as well. And we hope such a peace would exist not only across the Taiwan Strait but also in the international arena. That's why I called for "reconciliation and truce" between Taiwan and the mainland in their contest for diplomatic recognition in the international arena.

NYT/IHT: Can you elaborate a little bit more on security? On the security question in terms of, over the years, there has been tension across the Strait. How would you like to see that normalized?

President Ma: As you know, we had a civil war with the mainland on the Chinese mainland. They tried to take over Taiwan by taking over offshore islands. They failed miserably in 1949. And they tried again between 1949 and 1954 in a series of moves. They succeeded on some [of the islands], but these were not vitally important. In some cases, we withdrew our forces voluntarily. In 1954, we signed a mutual defense treaty with the US, which guaranteed Taiwan's security for the following 25 years, until June 1979.

During those 25 years the 1958 Taiwan Strait Crisis happened. So there was a military confrontation from 1949 to the early 1970s when [US] President Nixon went to the mainland and concluded the Shanghai Communiqué. All the hostilities came to a stop beginning in 1979 when the United States recognized mainland China. Even before that, shells fired from mainland China at Quemoy and Matsu no longer carried high explosives [as they once had], but rather propaganda leaflets. So when they exploded, you'd see the portrait of Mao Zedong. That's what happened.

Beginning in 1979, all bombardment ceased and they tried to initiate, for instance, the three links, and other non-violent forms of propaganda. The peace issue is still very much relevant because just across the Taiwan Strait they have deployed more than 1,000 short-range and intermediate-range missiles targeting Taiwan. That is why when Hu Jintao proposed to have a peace accord with Taiwan¡Xwhich actually the former chairman of the KMT [Lien Chan] had conceptualized in part¡Xwhen he made that proposal in November of last year, my response as a presidential candidate was, we welcome this move, but we certainly demand that they remove those missiles before we go to the negotiating table.

The idea is quite simple. We don't want to negotiate a peace agreement while our security is threatened by a possible missile attack. They haven't formally responded to our request yet, but we heard that they might think about that possibility. So the security issue is also important because we're also willing to conclude a peace accord with them, which hopefully would include a mechanism that would take care of confidence building. In other words, between the two militaries there would be some kind of confidence building measures to make sure that there will not be any accidents.

NYT/IHT: How close are you, for example, to having a hotline between the two militaries? Has there been any actual discussion of that so far?

President Ma: No, but certainly if we are able to come to a peace agreement, I think a hotline is only natural.

NYT/IHT: Do you have to have the removal of the missiles targeting Taiwan before you can even discuss a hotline? Does the hotline have to wait until after removal of missiles and the peace agreement? Why not do that first?

President Ma: We haven't discussed the issue in this detail, but we certainly would not rule it out. But the most important issue at the moment is that neither side is prepared to start such negotiations now. Why? Because there are more urgent issues. Nobody really expects the outbreak of a hot war between the two sides in the near future. But if we can't improve the transportation system, millions of travelers will complain. So we certainly would not prioritize the signing of a peace accord in the near future.

On the other hand, the economic issues, particularly transportation, will take precedence over any other issues. But once we start that process¡Xand it's on the right track¡Xwe could talk about issues such as investment guarantees, avoidance of double taxation, uniform specifications for the high-tech industry, permission for Taiwan's financial service industry to do business on the mainland, and of course, a dispute settlement mechanism. All of these, I hope, may be negotiated in my first term.

NYT/IHT: What about Taiwan's international space? This seems like an issue that's very close to the hearts of Taiwanese. When can you start talking with the mainland about this? When can you start talking about participating in international organizations?

President Ma: On the last three occasions after my election victory that we had visitors to the mainland, they all brought to the attention of that side's leaders the urgent need for peace as far as international space is concerned. As you know, Beijing today has diplomatic ties with 171 countries of the world, while Taiwan has only 23. The marginal utility of adding one country to that 171-strong list is decreasing. On the other hand, the 23 countries are very important to us as a source of dignity. We have been engaged in a cutthroat competition¡Xin some cases, the practices have been described as "checkbook diplomacy"¡Xcountries compete to get financial assistance from Taipei or Beijing, which, in a way, tarnishes the international image of both sides. So we certainly hope we could also find a modus vivendi between Taiwan and the mainland based not on zero-sum game, but on pragmatism.

In the latest development, the Chairman of the Straits Exchange Foundation visited the mainland to add the final touches to [an agreement on] weekend charter flights and [allowing] mainland tourists [to visit Taiwan]. He also brought up that issue with Mr. Hu Jintao. Mr. Hu said that certainly the two sides have the wisdom to find the way. So the initial reaction seems to be that they are willing to consider that question. I think the priority of [dealing] issues among the three¡Xeconomic, international space, and security¡XI think that's the order. First is economic normalization, and then international space, and then a peace accord.

NYT/IHT: So right now, you don't have a concrete timeline or deadline by which you would like to start negotiating international space, not only with these countries that currently support Taiwan versus China but also about the World Health Organization or the United Nations organizations. There's no definite timetable right now.

President Ma: Well, there are two aspects of the international space: One is bilateral relations; the other is multilateral. So we're talking about 171, 23¡Xthose are bilateral. Now we're also talking about our membership or status in international organizations, either IGO or NGO¡Xintergovernmental organizations and nongovernmental organizations.

For instance, the WHO¡Xthe World Health Organization¡Xis a vivid case in point. The outbreak of SARS in 2003 made it quite obvious that being admitted to the WHO in order not only to get assistance but also to contribute something [is important]. On the other hand, we have found that [there are] a lot of difficulties getting in, not only the organization but also the activities such as WHA¡Xthe World Health Assembly. In the last two years, the previous administration tried to get in under the name "Taiwan" and to get the status of "member." They were flatly rejected. And the latest one [rejection] being right the day after my inauguration. So we should change, or slightly change, our strategy.

You know the name we're going to use in international organizations can vary. In the past, we all used "Republic of China." That's our official title. But when we restored our membership in the International Olympic Committee, after lengthy negotiations with the IOC, we decided to use "Chinese Taipei"¡Xneither "Republic of China" nor "Taiwan." So "Chinese Taipei." That was the first occasion we used that term, in the late 1970s. And then, in the 80s, we joined APEC¡XAsia-Pacific Economic Cooperation¡Xwhich is an international organization but relatively loosely associated. Again, we used "Chinese Taipei." When we applied for membership in the World Trade Organization in 1990, we used the very long name "Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu"¡XTPKM. It's not only clumsy but also difficult to comprehend. But the organization itself allows the use of such a term because the membership is based on customs territory instead of sovereignty. That is why Hong Kong and Macau could also join before they became part of the PRC.

On the other hand, two years after that, we were admitted as [an] observer to the WTO¡Xat that time, it wasn't called WTO yet. The GATT¡XG-A-T-T. But the organization set up a working party for us, and then changed our title "Separate Customs Territory of TPKM" to "Chinese Taipei" for short. Ever since then, that name has been our semi-official title [since] we were formally admitted in the year 2002.

So there are cases of precedents of a sort of modified name we use in order to get in. So [the] WHO, again, presents such an opportunity for us to use a more flexible name. And we don't know yet whether that would be accepted. But, at least, without using "Taiwan," the mainland side could be much more agreeable than they were before.

And in the future, at least [when] we look at history, "Chinese Taipei" has been used at least three occasions in [an] IGO or NGO. We don't know whether that could be the eventual name we use [in joining international organizations]. But at least we will try all the possible names without sacrificing our dignity [which] could make us successful in getting into international organizations. Now, there are quite a few technical or functional international organizations that don't pay too much attention to political issues. But again, the mainland and [even] the United States are opposed to our admission to any organization that requires statehood as a threshold. So we still have a long way to go.

NYT/IHT: You mentioned a moment ago, when I asked about the question of removal of missiles, that you had not heard anything formally from the Chinese regarding that idea. But you said that you had heard that they were prepared to consider it. How do you mean you've "heard" that? Have they communicated this, probably not through the Foundation's mechanism but perhaps through the party-to-party talks or perhaps even through an academic contact? What has given you that indication that they are prepared to consider missile ¡K

President Ma: They were opinions of some members of the academia, not from the official sources. But scholars and officials sometimes are mixed in mainland China. You never know.

NYT/IHT: We hear that the PLA is much more reluctant to consider issues like this. What is your perspective on that? Do you think the PLA will be willing to bend on issues like this any time in the near future? Or will that be an uphill struggle?

President Ma: Well, at the moment, the only consensus I feel on the part of the mainland is to normalize economic relations with Taiwan. I don't think they have reached any consensus¡Xwe think, you know, [among] the ranks of their officials¡Xon issues of international space and on issues of a peace accord. But Taiwan cannot only have economic relations with the mainland, because if there are hostilities across the Taiwan Strait, or there are more countries that shift their loyalty from Taiwan to the mainland, I think [that] will have serious repercussions on cross-strait relations. And that certainly is not what the mainland would like to see.

I remember when the chairman of the KMT visited the mainland on the 26th of May¡Xthat was two weeks after the [Sichuan] earthquake. And Taiwan, not through the government, but the people of the private sector, was mobilized to have a donation drive. Even I and my wife joined the activity by accepting phone calls. You know, we set up a big phone booth, a phone bank, doing that. I spent only one and a half hours. My wife did it for four hours. Actually, the event was televised live on the Chinese mainland and actually re-run several times. And we also sent a team to Sichuan to help them. I personally donated about US$6,000. But we just consider, you know, them as our compatriots, our fellow citizens in a way, because we had the same problem, a similar earthquake, in 1999.

As far as I know, the government and people over there were deeply touched. So when the chairman of the KMT visited the mainland, he said he wouldn't think it's possible for them to press the button of a missile when they have people in Taiwan demonstrating so much sympathy for the earthquake victims.

So I would think that, in the future, the cross-strait relations will be very different than they were before. And as far as I know, ever since my election victory, the military activities across the Taiwan Strait¡Xparticularly in the area that opposes Taiwan¡Xhave dramatically decreased. And I think if we could continue the current talks with them to achieve economic normalization, I'm sure that the feeling of a peaceful environment would continue to grow. And this is exactly what we have in mind.

Nothing else would be more effective than direct flights. Because direct flights could bring the two sides together and [to a] much closer extent. I'm sure if we can achieve everyday charter [flights], which we hope could be accomplished by the end of the year, a lot of people on either side would probably spend the weekend in the other's place. And the contact of people will be much closer than what is now. Last year, 4.6 million trips were made by Taiwan residents to the mainland, and about 270,000 trips by mainland residents to Taiwan. I'm sure these figures and this ratio will be changed dramatically in the future.

Give you an example, in the year 1987, when we started to have family reunions [across the strait], people could make phone calls, and they could send letters. In the past, the bulk of our mail and telephone [calls] went to the United States and Hong Kong. But just that year, it changed completely. Mainland China became number one. And I think that will happen to our out-of-the-island-travel as well. And as more contacts are made, and many more opportunities created, I think that the chances of hostilities will continue to decrease. And this is exactly what we have in mind. When you have more trade, more investment, more contact¡Xcultural, educational¡Xparticularly among the young people, when they make friends with their contemporaries on the other side of the Taiwan Strait, I'm sure friendship, you know, cooperation instead of hostility, will grow. I'm sure that the perception, you know, of the other side will change dramatically as a result. And this, exactly, is our purpose.

Only by more contact, more understanding, more exchange could we reduce the historical hostilities across the Taiwan Strait. And of course, we can say that we're still in a stage of unfinished civil war, which started 60 years ago. And I think it's time for us to end that.

NYT/IHT: What's the next step on the economic plan. Didn't you say the first economic negotiations have to start with charter flights, tourism¡Xwhat comes after that? What are some two or three concrete steps that will be taken after that?

President Ma: Sure. Even on the issue of charter flights. Now it's weekend charter flights and everyday flights, and then scheduled flights, and then "beyond rides." What does "beyond ride" mean? If we fly from Taipei to Beijing, they could continue the flight to Europe, for instance. And if you fly from Shanghai to Taipei, you continue to fly to Southeast Asia. Something like that. So that's transportation. And then, we'll work on cargo flights, and then on the opening of our international harbor or domestic harbor for direct sea transportation. That will help our farmers in the south because they could export their high-quality tropical fruit to the mainland.

The mainland has a sort of "vacuum period" from September to November in terms of their need for tropical fruit, and Taiwan can fill the void. So when we were in the South, which is supposed to be [home to] the stout supporters of the DPP, they were pretty much by my ear [sic] to export Taiwan's tropical fruit right from their home harbor. And it takes only about less than ten hours to get to the mainland, to Amoy. And that makes a lot of difference in terms of the quality of fruit. If we have to go through Hong Kong first, that will take four days. So we have to pick those fruits pretty early and then have them ripen in the warehouse. And now you can have very fresh tropical fruits and serve the market more directly. So that will have a very positive effect on the people in the southern part of Taiwan. And when they are able to export some of the products to the mainland, that could also stabilize the prices at home.

NYT/IHT: Is it your view that all of these steps¡Xvarious transportation, exchange¡K

President Ma: The best ¡K Only for those very preliminary steps, it will take us about a year or two to finish. But of course one of the most important moves we [must] do is to get the permission to have our banks and financial services industry go to the mainland. And certainly, that would be a two-way street. They could also come to Taiwan to invest. And, when we start the [i-Taiwan] infrastructure project next year, we certainly welcome mainland investment because one-third of the investment is open for the private sector. So, all those things could happen. There is really no limit.

NYT/IHT: So, when you say one to two years, you're including not only all these shipping and transportation points, but also you've got double taxation issues, investment issues, the opening up ¡K allowing Taiwanese financial services, dispute settlement¡Xall of that. We want to see basically a relationship package that includes transportation but a lot of these economic and investment vehicles and agreements to build the relationship. That's in a one- to two-year timeframe?

President Ma: Yes. We have to negotiate that as soon as possible because once you have direct transportation, people will then¡KIf we couldn't do anything, we'll get there. Why do you want to go there?

NYT/IHT: As far as you're concerned, domestically, are you willing to go faster, sooner than one to two years on all these things if you could?

President Ma: Well, it would require some time because they [mainland China] also require changes of their law¡Kand we also need some time to do that. But these are the¡Xas you know¡Xthe infrastructure of the relationship, [the] economic relationship. So that requires some time. But, I used to say it will take two years to finish only the direct flight issue; but now I think one year is enough.

NYT/IHT: One year's enough? Just on the direct flight?

President Ma: Yes. That's my timeframe. If we ¡K

NYT/IHT: Regularly scheduled direct flights? Not just chartered. Commercial [flights].

President Ma: Yes, that's right. That's what we hope. That's our timeframe. But actually, I announced that when I was campaigning.

NYT/IHT: You made a lot of suggestions, during the campaign, that closer economic relations with the mainland would help lift the Taiwanese economy. But now you face very high oil prices, rising inflation, a slowing global economy¡Xhow much will that hurt Taiwan? And if the Taiwanese economy slows, will that hurt your efforts to portray closer relations with the mainland as a way out for Taiwan?

President Ma: Obviously, global inflation will hurt Taiwan. But without our opening to the mainland, I think we'll be even more badly hurt as a result. Now, people are talking about a variety of opportunities brought in by the opening of direct flights with the mainland and by the [coming] mainland tourists. So that creates many opportunities for people to make money in order to fight inflation. And this is exactly the point. Without global inflation, certainly we could benefit [even] more from the opening.

But that is just [one] part of the program. We certainly will deregulate our financial services industry, and to attract back the capital that flew out, you know, we¡Xat the moment¡Xwe still have restrictions on our people purchasing overseas mutual funds. If the fund has more than 0.4 percent invested in the mainland, then it is not supposed to be sold in Taiwan. That [has] actually forced billions, hundreds of billions, out of Taiwan. We hope to call them back. If we change the current rules, I'm sure many of them [investors] would like to do the transaction right in Taiwan. That is why we think if we are able to do that, we may become the assets management center of Asia.

There are so many Taiwanese businesspeople around the area [who] now keep their money out of Taiwan. You know, in the last five, four years, many Taiwanese companies went public on Hong Kong's stock exchange. More than 60 of them. Large companies. Without even thinking about coming back to Taiwan. Some even left Taiwan's stock market to invest in the mainland. So that was really, you know, very bad for Taiwan. Now, we certainly want to change that. We want to attract more foreign capital, and capital of [locally-based] companies that have made billions of dollars on the Chinese mainland.

NYT/IHT: Have your economists given you an estimate for how much you might possibly be able to attract once you start the deregulation process? How much per year in terms of US dollars?

President Ma: The estimate of the capital flight is in the area of about five trillion NT dollars. Five trillion. We hope to get them back.

NYT/IHT: Per year?

President Ma: No, for the accumulated figure. Close to a hundred billion NT dollars a year, depending on the year. These are all [kinds of] estimates. But everybody, every financial expert, talks about that. And they also advise us to change the current regulations to give them more room for maneuver. So this is something we will do. But everybody expects us to, sort of, [act] like a magician. But in two days, the day after tomorrow, [we] will mark the anniversary of our first month [in office]. We have already accomplished quite a lot in the first month. To implement what we have promised during our campaign, that will certainly need more time, and [for us] to put things in order.

NYT/IHT: Your counterpart in South Korea has been in office several months longer than you. He occupies a similar position to you in the political spectrum, and he already seems to be running into a lot of difficulties. How do you avoid running into some of the same difficulties in Taiwan as you also pursue these free market policies like liberalizing prices? And also, do you plan to buy any American beef?

President Ma: First of all, when we made our promise during the campaign, we tried to be not too liberal. In other words, we tried to be conservative. For instance, when I talk about our objective, unlike Mr. Lee, who said "747," [a plan to achieve an economic growth rate of 7 percent, increase per capita income to US$40,000, and make South Korea the 7th largest economy in the world], ours is "633"; "6" means 6 percent [economic] growth, and ["3" means] 30,000 US dollars by the year 2016¡XI'm talking about per capita income¡Xand then [the second "3" means that the] jobless rate [would be] down to less than 3 percent. So our "633" means these things.

And of this year, five months had already passed by the time I took office. So we may not be able to get 6 percent. But our idea is that, we're hoping that, following three to four years, we can get 6 percent on average. At the moment, the government economists are still cautious of being optimistic about that outlook. And on the other hand, we face the same problem as the Koreans¡Xthe rising oil prices. The previous administration decided to freeze the price of oil and electricity. We changed that. So our change can [be less popular]¡K of course amid people's complaints, but just [for] a few days. After that, they are getting used to the high oil prices. But still, Taiwan's price of petroleum is still among the lowest in the region. So the impact wasn't as serious as it was in South Korea. And South Korea's policy to freeze the price, or control the price, of 52 commodities seems to get the opposite result. And we didn't do that. We just let the price float.

Also, we tried to negotiate an FTA with the US. So far, we have not been given the opportunity. South Korea did get it, but in exchange for that, the American beef becomes an issue. So, suddenly the Americans also want to sell their beef and they're [exporting] it to Taiwan. But obviously, the timing isn't very appropriate. I think the Americans understand that.

So we still have a lot of economic problems, for sure, but our team, the government economic team, is relatively experienced, particularly my vice president, Vincent Siew: [He] used to be the premier [and] the chairman of the Council for Economic Planning and Development and the economic ministry [Ministry of Economic Affairs]. And he was the person who let Taiwan pass [through] the stormy Asian financial crisis [unharmed]. When South Korea had to be, you know, controlled by the IMF, when Hong Kong, Singapore had negative growth, we still maintain at first 5.7, and then 4.6 percent economic growth.

The first month, of course, is not appropriate for judgment; but I think we are getting better. And I think we could cope with the high oil prices, high prices of commodities, and so on. But certainly we have to be careful. We have to create more wealth by expanding domestic demand. You see, again, in this area we're different from South Korea as well. I think the [South Korean] government actually has a tax rebate for people. I'm sure you read about it. But in Taiwan, we didn't do that. We used the money to expand domestic demand. So we assembled the local county chiefs to see what can be done before the end of the year, namely short-term investment with about 120 billion NT dollars, so that they could use that to do things that we were not able to do before. All these things are [part of] a strategy to stimulate the economy, but, at the same time, to maintain stability. It's a tough job, but so far, I think we are able to do both at the same time.

NYT/IHT: Just turning quickly to the mainland relationship¡XI have another question. This is obviously a special year for mainland China. It's the Olympics year, the world spotlight is on them. There's also other issues they've had to deal with, such as Tibet, the earthquake. I'm wondering: do you get a sense from your contacts with the mainland that they're eager to have good news and so that their relationship with Taiwan is a chance for them to put some good news forward by working with Taiwan, by smoothing over relations¡Xare they eager to do this? Do you sense that this is a way for them to go forward on a positive note in this very important year for them?

President Ma: After the eight years of very bitter experience with Taiwan, I'm sure they welcome a leader in this country who does not favor de jure independence. Although I refuse to talk about unification in my tenure of office and I also oppose the use of force, generally, I want to improve relations with the mainland. And that would make them slightly relieved because they don't have to take a rather hostile attitude toward Taiwan. What they were most worried [about] is that Taiwan is heading toward de jure independence, which will force them to take action militarily¡Xand that will give rise to very complicated reactions in this region and around the world. As they become much more affluent and more sophisticated, they know that they have to handle the issue carefully. From 1995 to 2005, their strategy was to promote "one country, two systems," which they think is successfully applied in Hong Kong. But Taiwan is not Hong Kong. Taiwan is a democracy. We elect our own president, we elect our own parliament, and we run our own business. So they quietly dropped their promotion of "one country, two systems."

Now the focus, as we can see, is on prevention of de jure independence; it is not promotion of unification. They understand that unification is not an urgent issue, whereas prevention of de jure independence is. But now, my administration made it very clear: no unification, no independence, no use of force. We will maintain the status quo of the Taiwan Strait under the framework of the Constitution of the Republic of China. By that, I made it very clear that I will not pursue de jure independence.

NYT/IHT: Will Taiwan continue to cooperate closely with the United States in keeping track of the Chinese military¡Xthis has long been a way that the United States has a listening post on the mainland. Should the United States even maybe be worried about your reconciliation with the mainland in this regard, ¡K[INAUDIBLE] security ¡K?

President Ma: I think our security relationship with the United States will continue. I also made it clear in my inaugural address that we will demonstrate our will to defend Taiwan by making a reasonable defense budget and continuing to buy military hardware from abroad. But we also are committed to becoming a peacemaker and not a troublemaker. And these are very important promises, which we will keep.

NYT/IHT: During this year, perhaps even while you were still campaigning, what kind of contacts did your side have with the mainland so that you could prepare them for what¡Kdeals might take place after the campaign, such as on the charter flights. I mean, you said the finishing touches¡Kwere put on the deal. I know that the discussion that started under the previous administration, but they were stalled. But obviously, during the campaign you promised that there would be very fast movement on this deal. What kind of contacts were there this year in which you laid the groundwork for these deals to go through swiftly once you were elected?

President Ma: The two sides of the Taiwan Strait started to talk about charter flights as early as 2003, and the service started in 2004. It stopped in 2005, but continued in 2006, 2007, and 2008. So, the people who were authorized to talk to the mainland include people from the industry¡Xthe airline industry, and from the tourism industry. [They] have already talked almost everything [through]. In other words, they are very much familiar with the issues and the bottlenecks, so all they had to do during our election campaign was to brief us on their progress and the issues that remained.

And they are more than happy to play a role in this area because they desperately need cross-strait flights to make a profit. [Since] we started the high-speed rail, the airline industry suffered the worst setback in half a century and cross-strait flights are almost their only savior and so they are very eager to engage their counterparts on the other side of the Taiwan Strait to make that happen. That is why by the time we were inaugurated and the Mainland Affairs Council authorized the Straits Exchange Foundation to start negotiations with the other side, the industry provided all the information we needed to make the final touches, the finishing touches.

NYT/IHT: When you do talk to the mainland, what are the different topics that the party-to-party talks address versus the SEF-ARATS talks? Like party-to-party talks, what gets addressed there, rather with the other negotiating bodies?

President Ma: The party-to-party platform was established in 2005. And they initially dealt with issues like those that can be done unilaterally by the mainland. For instance, they removed their [barriers] to tropical fruits and cut excise tax by half on 15 categories of tropical fruit. That was very helpful in increasing fruit export to the mainland in the last three years. They also recognized the diplomas of Taiwan's university graduates and the licenses of Taiwanese doctors, although they still have to take exams in some cases. And they take these unilateral things, which can be done without getting our approval because we were the opposition [in Taiwan politics]. So, I am sure in the future, when a government can take action through the SEF, then suddenly [the party can] move to other areas. And we don't know exactly now what [the party] will talk to the other side [about]. But obviously, those [topics] are [will be] those [that do] not overlap with the "track one."

NYT/IHT: Can I ask you to switch just for a moment to Japan and relations with Japan in the wake of the recent incident in the last week or so? How can you repair relations here? How to expect the two countries to deal with each other? What has to happen first?

President Ma: Our relations with Japan? Well, in the last couple of years we have been able to come to terms with Japan on the abolition of visa requirements for the residents of the two countries [traveling to the other country]. And our residents also obtained Japanese recognition of their drivers license. Those are quite important to travelers between the two sides and that [has] also contributed to the increase of tourism to and from Taiwan. Last year, I think, 1.28 million Taiwanese tourists went to Japan, whereas 1.12 million tourists from Japan came to Taiwan. Both were record highs. And then we are working on other exchanges with Japan as well, so both sides are determined to promote more exchanges.

There was an interesting episode when I visited Yokohama, whose mayor is a good friend of mine. We made a promise two years ago [that] if I went to Japan again we should make a speech contest where he speaks Mandarin Chinese and I speak Japanese. And we only need one minute for the contest. We did [that] last year in November. We got five judges to evaluate our performance. They were so polite and diplomatic. They say we were equally good, but I personally believe I did the better job.

NYT/IHT: What about the incident over the last few weeks with the Japanese naval vessel ramming the fishing boat. How do you expect things to move forward now?

President Ma: Well, that incident took place on the 10th of June when a coast guard ship [of] about one thousand tons of the Japanese coast guard, collided with a fishing boat which [was] only 27 tons. The fishing boat actually was cut in half and sank and the 13 [fishermen]¡X[the] captain [and] crew¡Xwere rescued and sent to Okinawa. That actually activated an age-long dispute over the sovereignty of the Diaoyutai islands, which the Japanese call Senkaku. Now, Senkaku means a pinnacle, [and the island was] first named [so] by a British sailor because the mountain on that island, which is about 383 meters high, looks like a pinnacle of a church. Our [name]
"Daioyutai" means fishing platform because that has been a traditional fishing ground for Taiwanese fishermen.

So, at first we didn't [know] what really happened. Once we found out we demanded the Japanese side apologize, release the captain of the ship who was still in detention, [and] we also demanded indemnity for the accident. The Japanese did release the captain and [make some] conciliatory [remarks] and actions but [they] did not use the word "apology." And they also said they would consider questions of indemnity.

As I said this is a very emotional issue. For decades there [have been] groups that supported the movement to defend the Diaoyutais. One fishing boat went again and, well, as government we have to protect them, so we sent our Coast Guard as well. They had a competition, right on the 16th, early 16th, but [both] sides exercised restraint without making any provocative moves. So our fishing boat and our Coast Guard ships circled the island and then they came home. And Japanese Prime Minister Fukuda called for rational and cool treatment of the issue. I responded by agreeing with him. I met him two years ago and had a very, I would say, enlightening conversation and I admire him. He is a very forward-looking statesman. I said certainly we will peacefully settle the issue.

The captain and his family still feel very strongly about the incident. They hope the Japanese side could literally say "sorry" and then compensate [them] for their loss [and] that [would] close the event. On the other hand, we certainly want to negotiate with Japan about fishing rights and about the territorial dispute because the fishing rights come from the land ownership [issue], from [the] sovereignty [issue], and [that] has to be dealt with at the same time. The Japanese refused to discuss that with us, particularly on the territorial issue. On the other hand, we [have had] 15 fruitless negotiations with Japan on the fishing issue. Certainly, we want to change that. And if we are able to solve this issue, I'm sure that will contribute greatly to our bilateral friendship and cooperation.

We traditionally consider Japan a very friendly country. We will continue to do [so]. So, we don't want to have this incident hurt our relations with Japan. I'm sure they also have that sentiment. So I think the negotiations through diplomatic channels have been smooth and cordial.


NYT/IHT: Would you consider to ask for an apology or are you satisfied with their conciliatory statement?

President Ma: This is being discussed with the Japanese side through our foreign ministry because that was our original request.

NYT/IHT: Can I ask one final question? Is time up?

President Ma: OK, time is up.

NYT/IHT: One more question? As you know, on the mainland it has always been popular to be hawkish about Taiwan, like the nationalism that's on the mainland is very hawkish, and for domestic politics it's better for mainland leaders to be hawkish about Taiwan rather than too conciliatory toward Taiwan. What gives you confidence that in the near future after the Olympics that they will be, that there will continue to be warm and open relationships between the two sides, rather than turning back to the traditional nationalistic posture toward Taiwan.

President Ma: I tend to believe that relations will be more cordial even after the Olympic Games because, by then, there will be more flights between the two sides. In the beginning of July, there will be only 18 flights per weekend on either side. I think that will increase after the Olympics because the Olympic Games create a lot of transportation tension. [After] the Olympics are gone, there will be much more room for the increase of the flights. More flights means closer relations so I am sure the former of the two scenarios will be the case.

NYT/IHT: Thank you, Mr. President.

Due to the quality of the recording, certain sections of the interview were inaudible.
¡@