e democratic island, because it fears undermining its China-friendly president, Taiwanese analysts say.
The weapons deal, announced Friday, includes missiles, Black Hawk helicopters, information distribution systems and two Osprey Class Mine Hunting Ships. The package, however, dodged a touchy issue: F-16 fighter jets, which Taiwan covets, are not included.
Taiwan and China split amid civil war in 1949. The communist government in Beijing continues to regard the island as part of its territory and reserves the right to use force to bring it back under its control-Washington's main reason for continuing to sell it arms.
On Sunday, Chinese Foreign Minister Yang Jiechi said the planned weapons sale was a "crude interference in China's internal affairs" and would hurt its national security.
Beijing had already suspended military exchange visits with the United States and threatened unprecedented sanctions against U.S. defense companies over the deal. Stephanie T. Kleine-Ahlbrandt, northeast Asia project director for the International Crisis Group, said it was the strongest such reaction from China in recent years.
But Taiwanese analysts said the island's rapidly improving relations with the mainland were not likely to be a victim of the Chinese anger.
"Beijing knows that if it tries to spoil cross-strait relations, it will hurt the standing of Taiwanese President Ma Ying-jeou," said international relations specialist George Tsai of Taipei-based Chinese Culture University. "If Ma's domestic standing is weakened, it will only strain cross-strait relations further."
Since Ma took office in May 2008, he has jettisoned his predecessor's pro-independence policies, reducing cross-strait tensions to their lowest level in 60 years. Besides agreeing to the launching of regular air and maritime services across the 100-mile- (160-kilometer-) wide Taiwan Strait, he is also pushing a partial free trade agreement that will allow the free flow of many goods, services and capital between the sides. Negotiations on the deal opened last week in Beijing.
Wang Kao-cheng of Taipei-based Tamkang University said these talks are unlikely to be affected.
"Despite the arms deal, Taiwan is continuing on the path of reconciliation with China," he said. "Beijing has also made it clear that it will push cross-strait relations forward as much as possible when Ma is still in power."
However, in Beijing, Yu Wanli, a professor from the Center for International and Strategic Studies of Peking University, said the U.S. arms sale to Taiwan could hurt cross-strait relations, because it gave impetus to supporters of formal independence for the island.
"The arms sale to Taiwan by the U.S. sends the wrong signal to Taiwan, that is, that America supports the democratic system in Taiwan which may eventually lead to independence," Yu said. He added that he believed a big proportion of Taiwanese were independence supporters.
Niu Jun, a Peking University international relations specialist, said the U.S. arms sale to Taiwan will have little effect on the military balance between the sides, which most analysts see as now trending strongly in China's favor.
"Ultimately, the mainland will have advantages in terms of military strength" over Taiwan, Niu said.
Tamkang University's Wang agreed.
"The package will redress the imbalance but not in a significant way," Wang said. "Taiwan's air force will face a serious gap in the long term if they need to retire aging planes without F-16 fighter jet replacements."
___
Associated Press researcher Henry Hou contributed to this story from Beijing.
Describing India as an important force for "political stability, peace, and economic progress in South Asia", the Defence Security Cooperation Agency told the Congress: "India intends to use the Howitzers to modernize its armed forces and enhance its ability to operate in hazardous conditions."
"The Howitzers will assist the Indian Army to develop and enhance standardisation and to improve interoperability with US soldiers and marines who use the M777 as their primary means of indirect fire," it said.
The sale of Howitzers will also contribute to the US's foreign policy and national security by helping to strengthen the US-India strategic relationship, it said.
India will have no difficulty absorbing these weapons into its armed forces, the agency said adding the sale will not alter basic military balance in the region.
Besides the US Marine with 380 such systems and US National Guard with 273 of them, Australia (57 guns) and Canada (12) are the only other two foreign countries who have been supplied this state of the art military equipment by the US.
Officials in the Ministry told The Hindu that a pre-bidders conference would be held on February 2 during which clarifications if any would be entertained. The IAF would technically evaluate the aircraft once the proposals were received.
The move to acquire the trainers comes in the wake of the grounding by the IAF of their 125-strong Hindustan Aeronautics Limited (HAL) designed and manufactured ab initio Hindustan Piston Trainer-32 (HPT-32) fleet after one of these aircraft crashed killing two instructors during a flight from the Air Force Academy (AFA) at Dundigal.
As per the RFP the manufacturer will have to deliver the first 12 aircraft within 24 months of the contract. The remaining trainers will follow in batches.
With the IAF looking to keep the chosen trainer in its inventory for at least 30 years the RFP specifies that the aircraft should have been “recently certified.” The 75 aircraft are part of the government’s go-ahead to the IAF for the acquisition of 181 basic trainers.
Following is a summary of key political risks to watch:
* FISCAL DILEMMA
The government is trapped between the need to prevent the economy from slipping back into recession and Japan's huge public debt, already nearing 200 percent of GDP.
Sliding tax revenues mean government income now covers less than half of spending. Efforts to cut budget waste to find funds for new programmes have so far fallen short of target despite the Democrats' pledge to boost growth without issuing much more debt.
The appointment of Naoto Kan as finance minister this month raised doubts about government resolve to hold down spending given his concern about deflation and the recovery, but Kan has also said fiscal discipline is needed.
Standard Poor's on Tuesday cut its outlook on Japan's AA long-term sovereign debt rating to negative, saying the policy bind could lead to a downgrade unless measures were taken to stem fiscal and deflationary pressure.
The sovereign credit default swap spread widened on the news, but the impact on JGBs <0#jpbmk=> was limited because the vast majority are held by domestic investors. By making JGBs less attractive to foreigners, the downgrade will be a long-term drag on JGB prices, however, analysts said.
What to watch:
-- The government aims to release a mid-term fiscal reform plan by May or June and to unveil a growth strategy in June.
-- Data showing a risk of persistent deflation could prompt calls for extra stimulus ahead of the upper house poll, although the government would be sensitive to any rises in bond yields.
-- A political funding scandal embroiling Democratic Party Secretary-General Ichiro Ozawa could also tempt the government to spend more to woo voters turned off by the affair.
* PRESSURE ON CENTRAL BANK?
The Bank of Japan said this week deflation would be milder than previously forecast but left the door open to further easing to support a fragile economic recovery. December data showed the biggest drop in consumer prices on record.
Kan, a vocal BOJ critic, said this week the BOJ could do more to fight deflation. The central bank could face extra pressure if the economy falters ahead of the mid-year upper house poll.
The government criticised the BOJ for being too rosy on the economy when the bank upgraded its assessment in November. The BOJ later caved in to pressure and last month adopted a new fund supply operation at which it offers 10 trillion yen ($111 billion) in three-months loans to banks at 0.1 percent. It then declared that it wouldn't tolerate deflation.
The BOJ is independent by law but is required to work closely with the government to align policy. Tension over strategy raise the risks for markets, making policy harder to forecast.
What to watch:
-- Persistent deflation could pressure the BOJ to buy more government bonds or expand the new fund supply operation. Increased JGB purchases would push up bond prices and so bring down long-term interest rates.
-- Government rhetoric on the role of the central bank will give clues on how much influence the Democrats will seek to have.
* YEN INTERVENTION
Finance Minister Kan's early comments have led some analysts to argue the government will be less tolerant of a rising yen, although others say intervention is highly unlikely for now.
Kan jolted markets in his first news briefing as finance chief, saying he hoped the yen would weaken further and that many Japanese firms were in favour of dollar/yen around 95 yen 
An injured Afghan National Army soldier is helped by his colleagues to safety during a fierce gunbattle in Helmand province, Afghanistan, on Friday, Jan. 29, 2010. A fierce gunbattle broke out between security forces and a team of Taliban fighters targeting U.N. and government buildings on Friday in the provincial capital of Lashkar Gah. The fighting came nearly two weeks after a similar assault in the Afghan capital of Kabul, once again showing the ability of insurgents to penetrate heavily secured areas.
The body of a suspected Taliban fighter lies on the ground asurrounded by security forces soon at the end of a fierce gun battle in Helmand province, Afghanistan, on Friday, Jan. 29, 2010. 
Afghan National Army soldiers stand in front a building damaged during a fierce gun battle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. 
A British soldier stands by the shattered windows of a building damaged during a fierce gun battle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. 
British soldiers take rest during a fierce gunbattle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. A fierce gun battle broke out between security forces and a team of Taliban fighters targeting U.N. and government building in the provincial capital of Lashkar Gah. The fighting came nearly two weeks after a similar assault in the Afghan capital of Kabul, once again showing the ability of insurgents to penetrate heavily secured areas.
