China Regains Macau and Fixes its Next Target on Taiwan

FROM December 20 last, Macau became part of China, ending four centuries of Portuguese rule. To all international observers, the return of the Portuguese colony to China was a low-key affair. In their opinion, the real fireworks would begin when the new owners would try to clean up the joint.

Looking back, one of the biggest international stories of 1997 was Britain's surrender of Hong Kong to China - laden with pomp and political anxiety. But in the case of Macau, it barely caused a ripple of interest, even in its down the tree-shaded avenues. The Macau story is a direct echo of the change of destiny for Hong Kong, 60 km away. Chinese President Jiang Zemin did the honour, as he did in 1997, bringing China a step further towards the goal of regaining all its lost territories, including, of course, the dumpling Taiwan. Portuguese President Jorge Sampaio performed the grace-in-withdrawal. When Sampaio departed, Chinese troops marched across the border. It was not clear whether the troops would defend or dismantle China's promise that Macau could keep its independent laws and way of life for at least 50 years.

Macau's population of 430,000 is only one-fifteenth that of its neighbour, Hong Kong, and its economy smaller in proportion. While Hong Kong is a kaleidoscope of trade, finance and high-profit services, Macau is a shadowy blur of blackjack, roulette, poker and prostitution. Since 1996, bloody wars among the secret societies have transformed Macau into a mini replica of 1920s Chicago, replete with machine guns, gangs carrying on assassinations outside casinos.

Macau goes into its transition with a self-censoring press, an antiquated judiciary in need of an overhaul and a partly elected assembly that has virtually shared sovereignty with China for two decades. Democracy was never encouraged and corruption is rife, especially in the police and civil service.

So in Macau, unlike Hong Kong of two years ago, the change of sovereignty elicits less dread than hope: that China will restore peace and lure high-rollers back to the all-important gaming tables.

As the enclave enters a new era, its problems and challenges are already apparent. The future of Macau's people will be constructed in several places: the casinos, the legislature and the schools. Here, the people will be required to thrash out pressing problems such as education and unemployment, while at the same time seeking a new vision for their city. But it is feared that Macau's future could also be unmade in other places: in brothels that have multiplied in recent years and threaten law and order; on the border with China where illegal immigrants and overreaching mainland police threaten to undermine Macau's autonomy; and on the streets secret societies-related crime remains rife.

The following are some of the areas where Macau's future may be won or lost.

Casinos: When business magnate Stanley Ho won a 1961 tender for the exclusive right to operate casinos in Macau, we promised to build a classy hotel to house the enclave's biggest casino. Today that hotel and casino is Macau's most indispensable building, and the largest of Ho's casinos. Together the casinos account for more than half of government revenue and generate jobs for a quarter of the workforce. But they are plagued with crime and low standards of service. Pressure is building up for change when Ho's monopoly expired in 2001.

There are some economists who have observed the situation and said that Macau must reduce its reliance on the gambling industry. They have suggested limitation of casinos to a few venues while encouraging other types of entertainment. As elsewhere, casinos and sex trade are closely linked in Macau. Macau's flagging tourism industry, sullied by commercial sex and attendant crime will depend on a clean-up of the image.

Edmund Ho, the first chief executive of post-handover Macau, talks tough on every major issue facing the enclave. He plans to look at ways to restructure the casino monopoly in order to increase the economic benefits for Macau and reduce casino-related crime.

Legislative Assembly: Although Macau remains far from a democracy, its Legislative Assembly will be an important forum for post-handover debate. With Beijing's blessing, the present legislature will remain in place through the handover. Macau's mini constitution and the basic laws, promise a legislature popularly elected in its entirety, but does not specify a date.

Immigration: Managing the border with China will be crucial to Macau's future. Mainland immigrants are the biggest source of population growth. At the same time, the border is a source of instability. Illegal immigrants swim across the river and they engage in various criminal activities. The mainland police, ostensibly an ally, at times overreach their jurisdiction.

Crime and Security: Macau's crime rate is low by international standards. However, highly publicised murders by criminal groups have scared away tourists, particularly from neighbouring Hong Kong. The security authority proposes to set up special task-force groups comprising members from the judicial and public-security police forces to combat the crime syndicates.

People's Liberation Army (PLA) Garrison: Beijing has decided to deploy a military garrison in Macau to keep watch on the rising trend in the crime situation. The garrison's presence will serve both to frighten organised criminals and as disciplined example for the police. It is felt by authorities that the garrison "will contribute to the long-term stability of Macau" by its mere presence.

Freedom, jobs, security - these are the hopes of Macau's youth as the enclave has returned to Chinese rule after 450 years as a Portuguese colony. Attention will now be focused on whether China can manage a second modern and free enclave besides Hong Kong. Its fate will be of special interest to Taiwan, where sentiment toward reunification with China will suffer if post-1999 Macau is seen as a failure.

Beijing's next and most cherished reunification goal is Taiwan. Chinese President Jiang Zemin insisted in his Macau handover speech that the examples of Hong Kong and Macau "will give a positive push to the early settlement of the Taiwan question."

Beijing's policy-makers are now focussed on trying to deter Taiwan from formalising its separation from the mainland - a separation that has existed for most of the 20th century. The mainland effort has taken on a new urgency since last July, when Taiwan's President Lee Teng-hui outraged Beijing by redefining mainland-Taiwan relations as "special state-to-state relations"- a formulation he has steadfastly declined to retract.

Taiwan's next March 15 election for a new president could provide an opening for an improvement in strained ties between Beijing and Taipei. But mainland-based Taiwan watchers fear that opening could be short-lived if Lee tries to make the "state-to-state" relations official policy after the election but before he leaves office in May. It isn't clear, moreover, whether Beijing will find Lee's successor any easier to work with than Lee himself. Analysts outside the mainland suggest Beijing would serve its interests better if it focused less on deterring Taiwan's independence, and more on persuading Taiwan of the benefits of unification.