U.S. should revive flagging ties with Taiwan: study

WASHINGTON (Reuters) - U.S. neglect of its traditionally close ties with Taiwan is raising the risk of a damaging conflict as the island faces military and diplomatic pressure from China, a study warned on Friday.

To defuse mounting tensions across the Taiwan Strait, the Taiwan Policy Working Group recommended that Washington step up official contacts with Taiwan -- dealings that have declined in frequency and level in recent years under Chinese pressure.

"A broken dialogue increases the likelihood that what is now a dangerous situation will develop into an even more dangerous crisis," their study said.

The United States switched diplomatic relations to the communist government in China in 1978 after decades of recognizing Taiwan. Taiwan has been ruled separately since the Nationalists fled there after losing a civil war in 1949.

China claims Taiwan as a renegade province that needs to be reunified eventually, by force if necessary. U.S. law requires Washington to provide Taiwan with armaments needed for its defense, but direct official contacts are circumscribed -- often in ways seen by democratic Taiwan as demeaning.

The study said Communist China's growing military power and efforts to isolate Taiwan internationally, combined with efforts by frustrated Taipei leaders to counter this isolation, have created a dangerous cycle.

The United States has responded increasingly by criticizing or pressuring Taiwan at China's behest, but will endanger its interests in Asia if it fails to change course, warned the group

"This dynamic is not sustainable," said the group of analysts and former U.S. government officials, led by Asia security experts Dan Blumenthal of the American Enterprise Institute and Randall Schriver of Armitage International.

"Taiwan will either cave in to pressure in ways that harm long-term U.S. interests or embark on a more dangerous course. Beijing will continue to pressure both Washington and Taipei and miscalculate that the United States has abandoned Taiwan," said the report.

In recent months, President Chen Shui-bian upset U.S. officials by pushing a referendum asking voters whether the island should seek United Nations membership under the name "Taiwan," a move implying a formal split from Beijing, possibly provoking action by China.

Among a broad set of recommendations for Washington and Taipei, the group calls for liberalizing U.S. restrictions on political interactions with Taiwan to allow Taipei leaders to visit and speak directly with American counterparts.

The two democracies should also formalize their defense relationship and help push Taiwan to improve its defense capabilities and more actively cooperate in the areas of counter-terrorism, intelligence sharing and disease prevention, it said.

(Reporting by Paul Eckert; editing by Stuart Grudgings)