Last summer, the U.S. Navy billed the Taiwan government $2.5m to cover the cost of a little-known operation dedicated to helping Taipei close a ground-breaking arms deal to acquire eight American-made diesel submarines. But after investing about $8m since 2001, Taiwan refused to pay, despite Navy warnings in two August 2005 memos that it would shut down its submarine "pre-selection" operation without more money, a move sure to trigger long delays and higher costs. When President Bush approved Taiwan's request for arms in April 2001, the weapons deal was heralded as a turning point in U.S. relations with the Taiwan government, which clamored for years to augment its four aging submarines -- two of them World-War II-era boats from U.S.
