Taiwan lawmakers yesterday passed a proposal that gives the island leader the power to hold an independence referendum in case of ``external attacks.''

Two Kuomintang legislators display a jeering placard reading "There he flees! Tsai Tung-jung" referring to the DPP legislator after a vote in the "parliament" November 27, 2003. Tsai's version of the referendum law, which was without restrictions, was voted down by the legislature. [China Daily HK Edition]

The measure, part of a bigger referendum law, was passed with a 106-80 vote although the whole bill excludes future referendums on issues such as changing the island's name, anthem, flag and "constitution.''

The election, called a "defensive referendum,'' would be held if the mainland tries to use force to make Taiwan agree to its demands to unify.

"Although the imminent danger of Taiwan independence has been get rid of, the so-called defensive referendum clause may give rise to more potential troubles in bilateral relations,'' said Liu Guoshen, director of the Taiwan Research Institute at Xiamen University in East China's Fujian Province.

"After all, the referendum law has managed to create a legal basis for Taiwan independence, which the mainland has strongly opposed.''

On Wednesday, Zhang Mingqing, spokesman with the Taiwan Affairs Office of the State Council, pledged to respond strongly if Taiwan passes "a referendum law without restrictions'' that creates such a legal basis for independence.

Liu expressed his relief at the failure of the "legislative yuan,'' or the top legislature in Taiwan, to approve an unrestricted referendum law to allow a future plebiscite on formal independence.

Instead, legislators passed a watered-down version put forward by the opposition Kuomintang Party and People First Party by 113 votes to 94.

Under the new law, the legislature can block referendums on issues involving the constitution and sovereignty issues.

"That suggests there exists still a rational force on the island that opposes radical moves to undermine cross-Straits ties by promoting independence referendums,'' Liu told China Daily.

The researcher, however, added that granting the Taiwanese leader the power to hold a possible referendum vote on independence has handed a time bomb to some separatist forces.

"A handful of die-hard separatist members may still take advantage of the legal mechanism to provoke the mainland and trigger tension in bilateral relations,'' Liu said.

Wang Kebin, secretary-general of the China Council for the Promotion of Peaceful National Reunification, yesterday warned the passage of the referendum law will further undermine Taiwan's social stability and economic development.

"The extremely irresponsible move, which goes against the fundamental interests of Taiwanese people, will be finally cast aside by the public,'' Wang said.

As proof of the uncertainty caused by the vote, the island's jittery stock market closed 2 per cent lower amid fears the referendum proposal would fuel new tensions in cross-Straits ties.

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