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The Obama Administration promised under Senate pressure last month to make a decision on the sale of 66 new F-16 fighters to Taiwan by October 1, which will finally give an issue that has languished in bureaucratic limbo the attention it deserves. Beijing has made its displeasure clear after previous sales and is lobbying furiously against this deal. But if the Administration gives in, China will conclude it can intimidate the U.S. from assisting its allies, Taiwan’s democracy will be under increasing threat, and the U.S. could pay a heavy price later.

The U.S. is bound under the Taiwan Relations Act to sell Taiwan the weapons it needs to defend itself. And there is no doubt that the advanced F-16s requested by Taipei are badly needed. The Chinese military budget has grown nearly 70% over the last five years, and Taiwan is a main target. The island has older F-16s that it bought in 1992, but these are no longer sufficient to maintain air superiority in case of a Chinese attack.

Preventing the Taiwanese military from catching up with the mainland now could put a future U.S. president in a difficult position. In the case of an attack, he would face the awful decision of whether to sacrifice American lives to defend the island and risk a broader war with China. On the other hand, if the U.S. allowed Taiwan to be swallowed up, American allies everywhere would conclude that U.S. security promises are meaningless.

The F-16s would make this choice less likely, since they would provide Taiwan with the ability to defend itself long enough for the U.S. to resupply it with arms without getting directly involved in the fighting, much as it did for Israel in the 1973 Yom Kippur War.

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Taiwanese President Ma Ying-jeou has repeatedly asked to buy the F-16s because he understands that Taipei must negotiate with mainland China from a position of strength. Mr. Ma is hardly trying to provoke a fight with China. His administration has done more than any recent government in Taipei to improve ties with the mainland. Cross-strait flights have expanded from 108 a week in November 2008 to a new cap of 558 a week this July. Cross-strait trade is booming.

Beijing clearly wants Mr. Ma to win re-election in January 2012 rather than see the pro-independence Democratic Progressive Party regain power. But the U.S. is doing nothing to help Mr. Ma against the charge that he is undermining Taiwan’s ability to defend itself. Taiwanese citizens are not prepared to relinquish their de facto independence, at least not before China embraces democracy. No Taiwanese president can compromise on Taiwan’s sovereignty, a fact that Beijing does not seem to appreciate.

If the Obama Administration is not impressed by these arguments, perhaps it will heed the political cost of losing a valuable export contract. The U.S.-Taiwan Business Council commissioned a study by the Perryman Group that found the Taiwanese order would create more than 87,000 person-years of U.S. employment.

Texas represents the biggest chunk of jobs, but there are also several thousand in Presidential election swing states like Ohio and Florida. Without the Taiwanese order, the F-16 assembly line is due to close in 2013.

Unfortunately, President Obama seems to be leaning against the sale. The Administration only agreed to decide on the Taiwan request after Texas Republican John Cornyn held up the confirmation of one of its appointees. The default position of U.S. diplomats is to avoid a row with a larger power like China, especially when the Chinese threaten unspecified damage to the relationship.

Last week, U.S. Secretary of State Hillary Clinton met in Washington with China’s top official on Taiwan affairs to brief him on the upcoming decision. The most likely outcome is a “compromise”—a deal to refurbish Taiwan’s older F-16s, which has also been requested before and is badly needed, but not sell any new planes. The Administration will whisper that it can always sell Taiwan stealth F-35s later, but this is probably a nonstarter for technology transfer reasons alone.

Such an abdication would make Beijing happy, but it would kick the can of Taiwan’s deteriorating defenses into the future, when it will only become a bigger problem. As important, it would send a message of U.S. weakness when China is explicitly attempting to push the U.S. out of the Asia-Pacific region so it has no political or military rival.