That will be a real disaster."Peking's military exercises are aimed at reducing voter support for Mr Lee, with China's leaders apparently ignoring the possibility that their strategy might have the opposite effect.Throughout the day, Taiwan's ports resolutely remained open but radio stations broadcast repeated warnings to fishermen to stay away from the target zones. Amid a growing siege mentality, many banks were running out of US dollar notes, and were restricting purchases to $2,000 (pounds 1,300) as people queued to transfer money into a safer currency. The Bank of America said it would fly in more notes on Monday to meet the shortage. Shops saw brisk sales of rice and staple foods.The Taiwan government tried hard to calm people's nerves, and lambasted the mainland for its "crude threats".
The Defence Minister, Chiang Chung- ling, said the island would "fight" if there were an attack which violated its territorial waters. "But the 12-nautical-mile does not represent our bottom line," he added.Government support for the stock market meant it actually gained more than 1 per cent yesterday. The central bank, which has the world's second largest foreign reserves, said it would continue to bolster the local currency. President Lee appealed for calm, and continued his election campaigning.China conducted two series of missile tests last year, following Mr Lee's US visit in June, but the present exercises are taking place much closer to Taiwan's coastline. There has been widespread concern that a misfired missile could land in Taiwanese waters, or even on the island, triggering retaliation by Taiwan and a full-blown military conflict.International condemnation was swift. In the most pointed gesture, Tokyo said it had sent a patrol boat to the area to secure the safety of navigation.
The Prime Minister, Ryutaro Hashimoto said Peking's policy towards Taiwan was taking an "unfortunate direction".The US said the tests were "provocative and reckless". In Washington, a State Department spokesman warned of unspecified "consequences" if the missiles went off course. The Defense Secretary, William Perry, said he and other White House officials protested strongly to Liu Huaqui, foreign affairs director of China's state council."I believe the message we communicated was very clear and straightforward," Mr Perry said. He added that the aircraft carrier Independence was about 200 miles north-east of Taiwan and a cruiser and destroyer were nearby.. The US wants next Wednesday's hastily arranged Middle East summit to produce "concrete measures" to counter terrorism and promote security across the region. The Secretary of State, Warren Christopher, said yesterday the conference, in the Egyptian resort of Sharm-el-Sheikh on the Red Sea, would be co- chaired by President Bill Clinton and his Egyptian counterpart, Hosni Mubarak.
Among those attending will be King Hussein of Jordan, the Palestinian leader Yasser Arafat, President Boris Yeltsin of Russia and the leaders or senior representatives of Saudi Arabia and other Gulf states, and of the European Union - among them Jacques Chirac, the French President. First suggested by Israel and Jordan in the wake of the recent suicide bombings in Israel, the idea of a conference was instantly seized upon by Washington, where Mr Christopher and senior aides have worked night and day this week to iron out the details. The aim, said the Secretary of State, was to create a "firebreak against the march of events in the Middle East". Washington was standing "shoulder-to-shoulder with Israel and other peace-makers in the region," to stop terrorism destroying the peace process. "Concrete steps," he predicted, would come out of the meeting.But it was not clear whether Syria, which has given at least moral support to Hamas and other anti-Israeli terrorist groups, had even been invited to Sharm-el-Sheikh.
