Track II diplomacy is a specific kind of informal diplomacy, in which non-officials (academic scholars, retired civil and military officials, public figures, and social activists) engage in dialogue, with the aim of conflict resolution, or confidence-building. This sort of diplomacy is especially useful after events which can be interpreted in a number of different ways, both parties recognize this fact, and neither side wants to escalate or involve third parties for fear of the situation spiraling out of control.
For example, suppose that a general from the People's Republic of China (PRC) commented that atomic bombs are not out of the question if the PRC and the United States should engage in low-level conflict over the Taiwan question. If the US immediately responded with heavy press coverage and speeches by major officials, the PRC would then be forced to take either of two stances: (1) admission that the general was incorrect, which would inflame the Chinese population and cause grassroots ire and anti-American feeling, or (2) claim that the general was correct, which would be detrimental to world peace and diplomatic relations.
Instead, the US might engage in Track II diplomacy to try to understand whether the initial threat was as serious as it seemed to be. Dialogue would be deliberately invited in order to determine the stance of the PRC without creating a confrontational atmosphere.
The informal nature of Track II diplomacy allows serious and potentially dangerous issues to be discussed in an open, non-official forum.
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