March-April 2008 | By Ted Galen Carpenter

SITTING AT the edge of international attention are states in all but name. Although existing as highly functioning nations, they rest also on the edge of extinction. Taiwan. Kurdistan. Somaliland. Kosovo. With little meaningful international diplomatic recognition, each still often exercises effective self-rule, frequently possessing a vibrant economy and a unified body politic.

But they face one unremitting threat: the ownership papers for many of these twilight states are held by others. China won't let go of Taiwan. Iraqis are slow to relinquish control of Kurdistan. Serbia and Russia won't accept an independent Kosovo. Each of these de facto states could claim independence and spur international crises. The threat of wars over these disputed territories is ever present. And once started, conflicts could draw in other powers. The only solution for these twilight states is to lie low and find satisfaction in the cohesion they continue to enjoy.

The modern international system is not well equipped to handle such entities--they simply do not fit. Operating in a kind of twilight zone, enjoying varying degrees of economic, cultural and (sometimes) informal diplomatic interaction with other societies, these de facto states have little or no outside recognition of their legal right to exist. And that doesn't seem likely to change anytime soon.

DESPITE INTERNATIONAL prominence, some of these twilight states, such as the Turkish Republic of Northern Cyprus (TRNC), enjoy almost no international recognition. Turkey is the only country to recognize the TRNC. All other governments regard it as part of the Republic of Cyprus and nothing more than Cypriot territory that Turkey invaded in 1974 and has illegally occupied ever since. Economically, the TRNC is very weak and remains heavily dependent on Ankara's largesse. Turkey also makes the decisions on most meaningful policy issues.

In a roughly similar position is Somaliland, the breakaway northern region of Somalia. That entity has performed better than the TRNC in terms of economic development, and it has escaped the bloody chaos that has engulfed the rest of Somalia since the early 1990s. For nearly two decades now, Somaliland has established and successfully defended a degree of political autonomy that is indistinguishable from independence. Yet, Somaliland does not have a patron the way the TRNC can rely on Turkey's support and protection. Not a single country recognizes Somaliland's independence. And whereas the Republic of Cyprus has neither the ability nor inclination to attempt to forcibly put an end to the TRNC's nominal independence, the situation is less certain with regard to Somalia's long-term ambitions.

The international situation involving Kosovo is even more thorny. This province has enjoyed de facto independence under UN tutelage since 1999. The majority Albanian population wants to formally separate from Serbia--but Belgrade, citing the Security Council resolution passed after the NATO intervention, will only offer extensive autonomy. A Kosovo that unilaterally declares independence would enjoy widespread international recognition--far more than the other de facto states--since the United States would establish ties as would most of the countries in the European Union and the Muslim world. But Russia has made it clear that Kosovo will not be allowed to join the United Nations, and Moscow, Beijing and many other governments will refuse to recognize the new country, concerned about the troubling precedent that NATO's forcible amputation of a part of Serbia's territory will set. In a worst-case scenario, the unwillingness of Serbia and other countries to accept the legitimacy of an independent Kosovo could reignite armed conflict in that part of the Balkans.

Then there is the Republic of China (Taiwan), which is recognized by twenty-three countries. (Granted, all of them are small, poor countries--mostly in Africa and the Caribbean--that the Taiwanese government has successfully bribed.) Even more important than its diplomatic position and vibrant self-government, though, Taiwan is one of the world's major economic players--and can't be easily ignored.

Somewhere between such states as the TRNC and Somaliland at one end of the status spectrum and Taiwan at the other is Iraq's Kurdistan region. As in the case of the former countries, Kurdistan lacks any international diplomatic recognition. But like Taiwan, it not only exercises complete control over its political and economic affairs, but is also a relevant player in the regional and global economic arenas.

A CLOSER look at two key twilight states, Taiwan and Kurdistan, illustrates both the achievements of those societies and their precarious positions. Taiwan is easily the most complete and mature of the de facto states. It has its own government, flag, currency and, most important, its own rather capable military. (Taiwan's modern air force, in particular, is a reasonable match for the Chinese planes and missiles deployed on the other side of the Taiwan Strait.)

Taiwan began an independent existence when Chiang Kai-shek's government in mainland China lost a civil war to the Communists and fled to its last remaining outpost in 1949. From Taiwan, Chiang's regime even maintained a claim to be the legitimate government of all China. Key in this case, Chiang had the crucial backing and military protection of the United States that prevented China's forces from conquering Taiwan. Even when Washington shifted diplomatic relations from Taipei to Beijing in 1979, the United States retained a commitment under the Taiwan Relations Act to help Taiwan defend itself. Consequently, the United States is today in the peculiar position of having an implicit obligation to defend a "country" that it does not even officially recognize. Washington's official stance is that Taiwan's legal status remains undetermined.

To complicate matters further, the economic and political situation on Taiwan has undergone a major transformation in the past two decades. Taiwan has done very well in the real world, despite not being a member of the United Nations, the International Monetary Fund, the World Bank and other key international bodies. Economically, reforms begun in the 1970s have paid handsome dividends. Taiwan now has the world's twentieth-largest economy and is America's eighth-largest trading partner. Taiwanese firms are major factors in a variety of industries, especially semiconductors and other high-tech enterprises. Not only does it enjoy a brisk pace of commerce with the United States, Japan, the European Union and even China, but most nations maintain informal diplomatic ties with Taipei while preserving the fiction that Taiwan is not really an independent country.

Politically, Taiwan's transformation has been equally dramatic. Domestic sentiment for a distinct Taiwanese identity has grown steadily during the past two decades. Such views are most pronounced in the staunchly pro-independence Democratic Progressive Party (DPP), which has held the presidency for the past eight years, but the desire is evident even among supporters of the more moderate Kuomintang Party (KMT)--Chiang's old political vehicle. Most important, public-opinion surveys show very little support for reunification with mainland China as long as it remains an authoritarian system and not a tremendous amount of support for reunification even if the mainland becomes democratic. Taiwan has evolved into a full-blown democracy. Any government, even a KMT one, must respect public sentiment if it hopes to prosper politically.

Unfortunately, Beijing's views regarding Taiwan are even more adamant. The Chinese government regards Taiwan as a rebellious province, and reunification remains Beijing's ultimate goal. At the moment, Chinese officials would probably be content with a Taipei government that was willing to maintain the status quo and not push the envelope on independence the way the DPP administration did between 2000 and 2008. But Beijing's claim to Taiwan has not slackened, and the long-term goal of reunification is more intense than ever. In fact, the Chinese government continues to pursue a strategy of trying to strangle Taiwan diplomatically. A decade ago, some thirty countries still maintained diplomatic relations with Taipei. Now, it is down to twenty-three, with Malawi switching ties to Beijing in January 2008. Chinese leaders are increasingly confident that they can outbid Taiwan for the allegiance of the remaining small countries and intensify Taipei's diplomatic isolation.

Far more ominous, China has made it clear that its patience regarding reunification is not unlimited. That point was underscored in March 2005 when the National People's Congress passed an antisecession law delineating the conditions under which China would consider using force against Taiwan. Most of the provisions merely restated long-held Chinese positions, for example, that force might be used if Taipei issued a formal declaration of independence, or if a foreign power (i.e., the United States) interfered to promote Taiwanese independence. One provision escalated matters though, since it emphasized that a prolonged refusal by Taipei to negotiate in good faith about reunification could, by itself, be construed as a casus belli.

One must wonder how long China will be content with a status quo that preserves Taiwan's position as a de facto independent state--especially as China's own economic and military power continue to grow. At some point, there is likely to be a showdown on the reunification issue, and that has the potential to ignite a major armed conflict in East Asia. Given Taiwan's strategic location, sitting astride the principal sea-lanes in the western Pacific, Japan would have reason to regard a Chinese takeover of Taiwan as a threat to its own economic and security interests. And the United States, of course, retains an implicit commitment to protect Taiwan's security, a commitment that may become even stronger given the growing enthusiasm in Congress and important opinion circles for Taiwan's vibrant democracy.

Taiwan's continued existence as a twilight state appears secure for the next decade or so, but its prospects after that are highly uncertain. Moreover, unless the Taiwanese people agree to eventual reunification with the mainland, which seems unlikely, Taiwan is a twilight state that may well be the catalyst for an international crisis.

ANOTHER DE facto state that has that potential (although, mercifully, not quite to the same degree) is Kurdistan. Officially, of course, Kurdistan is merely the northern region of Iraq that exercises "autonomy." The reality is quite different. Like Taiwan, Iraqi Kurdistan has its own government, flag, national anthem, currency and army (the pesh merga). The flag issue is particularly revealing. Even though Kurdistan is supposedly part of Iraq, it is a crime to fly the Iraqi flag in that territory.

When Kurdish officials speak publicly, they typically refer to their area as merely a self-governing region of Iraq, but when they speak privately that facade usually disappears. Among the Kurdish population, there is seldom even the pretense of an allegiance to Iraq. Opinion surveys show overwhelming majorities in favor of full-fledged independence.

The underlying problem is that the Kurds are the largest nationality in the world without an officially recognized state. Although the British government promised the Kurds a homeland following the wreckage of the Ottoman Empire after World War I, London reneged on that commitment, and Kurdish territory was divided among Iraq, Iran, Syria and Turkey. Any talk of an independent Kurdistan sets off alarm bells in Tehran, Damascus and especially Ankara, since more than 50 percent of Kurds live in Turkey.

Within Iraq, Kurdistan is one of the few areas that has enjoyed a relative absence of violence. It has remained aloof from the chaos that has afflicted the rest of the country since the U.S.-led overthrow of Saddam Hussein. It is also about the only region in which Americans can walk down the streets without an armed security detail for protection. Whereas opinion polls show that sizable majorities of Iraqi Arabs (both Sunni and Shia) dislike the presence of American troops and want them to leave, most Kurds endorse their presence.

In reality, thanks to U.S. assistance, Kurdistan has enjoyed de facto independence since the end of the Persian Gulf War in 1991. When Washington began to enforce no-fly zones over northern and southern Iraq, the Kurds took advantage to establish and consolidate their region's self-rule. Unable to bring his air power to bear, Saddam Hussein could not reestablish Baghdad's control, since the pesh merga were more than a match for Iraqi ground forces. More recently, the pesh merga have been strong enough to prevent infiltration by al-Qaeda or the Arab Sunni and Shia militias.

That stability has enabled Kurdistan to enjoy solid economic growth--again in contrast to the rather dismal situation in the rest of Iraq. A construction boom is occurring in Kurdish cities, and Western firms in an assortment of industries hope to invest in Kurdistan. That interest is most pronounced with regard to Kurdish oil production, but it extends to other economic arenas, even tourism. It is especially revealing that companies wishing to do business in Kurdistan work through the regional government, not Baghdad. Despite vehement complaints from Iraqi leaders (and U.S. occupation authorities), the Kurdish government continues to sign multimillion-dollar agreements with various Western oil companies.

Kurdistan's political system is not quite the mature democracy that Taiwan has become, although the basic features of democracy are present. There is an elected parliament with meaningful powers, there are competitive elections and there exists a reasonable degree of press freedoms. However, the two major political parties are little more than the personal fiefdoms of two leading families, and critics of the regime have an unpleasant tendency to end up in jail. Kurdistan's democracy is, at best, a fragile and incomplete one.

Despite its economic and political achievements, there is almost no prospect for international recognition of an independent Kurdistan. Washington opposes such a step, fearing that proclaiming Kurdish independence would not only lead to further fragmentation of Iraq, but would antagonize all of Iraqi Kurdistan's neighbors, especially Turkey. And the more prudent Kurds understand that going beyond de facto independence would likely produce a regional crisis and possibly lead to the erasure of all they have achieved.

Ankara is already less than pleased with the existence of a de facto Kurdish state in Iraq. And Turkish leaders have reason to be uneasy. The Turkish military has waged a war for more than two decades against Kurdish secessionists, led by the Kurdistan Workers Party (PKK). PKK fighters have taken refuge in Iraqi Kurdistan and, in late 2007, Turkish military forces launched attacks on some of those sanctuaries. U.S. officials convinced Ankara to limit its military operations, and a full-scale war was avoided. But the situation remains extremely tense.

The potential for a major dustup with Turkey over the PKK is not the only situation in which Kurdistan could be the catalyst for a regional crisis. Another flash point involves the future political status of the city of Kirkuk and its oil riches. Kirkuk is an ethnically mixed city of Arabs, Kurds and Turkomen (kinsmen that Turkey has pledged to protect). During Saddam Hussein's rule, Baghdad pursued a blatant policy of Arabization, expelling Kurdish families and replacing them with Arabs. Since his overthrow, that process has been reversed, with Arabs (and some Turkomen) being expelled by Kurdish authorities and Kurds moving in.

The Kurdistan government is pressing for a referendum among voters in Kirkuk on the city's political status, with the goal of incorporating it into Kurdistan's jurisdiction. However the referendum turns out--and given the ongoing ethnic cleansing, the Kurds are likely to win--the results have explosive potential on multiple fronts. The government in Baghdad worries about losing the revenue from Kirkuk's oil. Turkey is agitated about the prospect of its Turkomen brethren becoming an even more discriminated-against minority than they are now. Even more imporant, Ankara fears that control of Kirkuk's oil wealth will enable Kurdistan to become a major economic and political player in the region and allow Kurdish leaders to cast off all pretenses that Kurdistan is anything other than an independent state. Such an entity, Turkish officials worry, would be an irresistible magnet for Turkey's own restless Kurdish minority and risk fragmenting the country. Ankara has repeatedly hinted that it might take forcible action if Kirkuk is incorporated into Kurdistan.

As in the case of Taiwan, Kurdistan is a twilight state that major players in the international system cannot officially recognize without triggering a crisis. Yet, like Taiwan, it has all the attributes of a capable, functioning, prosperous, democratic country. Kurdistan's potential to be a catalyst for a major armed conflict is not quite as great as Taiwan's (a great-power war between the United States and China would be terrifying), but it could trigger a significant regional conflict involving Turkey, Iran and Syria that has the potential to entangle the United States.

CLEARLY, LEADERS of de facto states that enjoy, at best, only partial international legitimacy must learn to tread very carefully. They need policies that satisfice. In many cases, that may mean inaction--not pushing the envelope to seek more international "space." Maintaining an ambiguous status that allows for economic growth is the best practice. Is it really that important to be a member of the UN General Assembly if the country is a significant economic player and is treated as such by other key economic powers?

Even with cautious policies, however, continued enjoyment of de facto independence is not certain for any twilight state. The interest and claims of hostile neighbors are not likely to go away, and the danger of a miscalculation or an unavoidable crisis is ever present. It is a perilous existence at best, and one that has unsettling ramifications for the international system. As primordial identities continue to surface and colonially constructed borders continue to erode, there will be an environment ripe for twilight states. But this may not mean the dawning of a new day.

Ted Galen Carpenter is the vice president for defense and foreign-policy studies at the Cato Institute and a contributing editor to The National Interest.