Washington-Beijing spat threatens Asian stability

By Erin Prelypchan

BANGKOK (Reuters): The standoff between Washington and Beijing over the collision of two of their planes highlights the dilemma many Asian nations face in juggling relations with China and the United States.

While there is little Asian countries can or should contribute to the standoff, analysts say smaller nations may face problems if U.S.-China strains persist.

"When elephants fight, the grass dies," said Simon Tay, chairman of the Singapore Institute of International Affairs. "Asian countries are hoping for the best but fearing the worst."

Analysts said the standoff -- centred on a U.S. spy plane which collided with an F-8 fighter jet of China's southern coast -- so far had little effect on diplomatic or business sentiment in the region.

But they said if the plane's 24-member crew were held on China's Hainan Island for much longer, or if the rhetoric sharpened, ripples could spread throughout the region.

"If either side's reaction goes beyond measured, we do have the potential for escalation," said Bob Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong.

For many Asian countries the U.S. remains a key trading partner -- and in some cases an even more important defense ally.

But these same countries have to be wary of China's growing importance -- both economically and politically -- and be wary of upsetting the region's biggest power.

As always, Taiwan has most to lose or gain from any change in Sino-U.S. relations.

The United States is due next week to review its policy of arms sales to the island, which Beijing still considers a breakaway province.

Washington has for years supplied Taipei with weapons and has said it would come to Taiwan's aid if China ever attacked -- a threat China has made but never carried through.

President George W. Bush's Republican party historically enjoys a closer relationship with Taiwan than did former president Bill Clinton's Democrats, leading many to speculate that Washington's favors may be about to swing.

"The arms sale decision (next week) will show whether Taiwan has benefited from the situation," said Robert Karniol of Jane's Defense Weekly in Bangkok. "If this works out Taiwan's way, the U.S. could re-evaluate Taiwan's needs."

The Taiwan government, meanwhile, is taking a wait-and-see approach.

"If ties between the United States and Communist China are bad, it's not necessarily good for us," Foreign Ministry spokeswoman Chang Siao-yue told Reuters. "If ties between them are good, it's not necessarily bad for us."

"This is between the United States and Communist China. We will not get involved," she said.

Comment from other governments in the region has ben generally low key since the saga began five days ago, but political analysts said a protracted dispute could see countries being forced to take sides.

"This has the potential to turn into a nasty scenario," Tay said. "Not only could we see security tensions, but we could see political and diplomatic tensions as well.

The Philippines and South Korea -- both of which have played host to the U.S. military -- may find themselves drawn closer to their traditional ally if the dispute continues.

But Singapore and Thailand are likely to try remain neutral as they already benefit from stable relationships with both the U.S. and China.

Analysts said countries like Vietnam and Malaysia -- which are traditionally less aligned with the U.S. -- had more room to criticize Washington.

But Vietnam is in a particularly delicate situation, trying to negotiate a better trade relationship with the U.S. while at the same time maintaining close ties with its communist ally.

Analysts do believe, however, that the current standoff will blow over sooner rather than later.

Karniol said Washington should write off the los of the sensitive spy plane as unlucky for the U.S and lucky for China, while Tay also suggested they should take it on the chin.

"We're not looking at another Cuban Missile Crisis," he said.