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Now, as always, there is only one rule for resolving territorial disputes: the party who is stronger dictates the solution. Sometimes this party is a party of the dispute, sometimes it's the international community or its part, whenever it decides to get involved for whatever reasons. One can say that the ability to involve the international community on its sides is one of the strengths of the parties participating in the dispute.

Whatever principle is invoked to justify the decision is immaterial, and only serves to rationalize one's position. That there are 2 opposing principles that are routinely used, depending on convenience, only proves this point.

Probably this situation will also continue in the future, since there is no such thing as universal justice.

Being stronger does increase your bargaining power, but there's more to it than that. War always hurts both sides. It just hurts the more powerful side less. This means that the more powerful side will tend to be quicker to threaten war, but the whole thing about not responding to blackmail applies.

Imagine there were two countries that were equally powerful. One of them could demand 10% of the land from the other, saying that if they refuse they'll start a war which will be several times more costly to both sides. It seems like the rational thing would be to give in to the demands, but if you consistently use that strategy everyone will demand territory from you and you'll do poorly. If you use the strategy of defending your territory regardless of cost, then people will quickly stop demanding territory from you, and you'll do better.

This isn't just some game theory thing. People are built for things like this. This is why you get angry when people take stuff from you, and act "irrational" when angry. Countries will act the same way. People will fight illegitimate stuff more, so if you want to actually benefit from making demands to a country, you have to convince them it's somehow legitimate.
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Using might and argument to the stick might render the dispute moot but it doesn't actually solve it, the answer just becomes irrelevant. Taiwan still claims the area that China holds. Even if somebody would declare that Taiwan is ethically right in being entitled to the area China isn't going to give it the area.

Off course one might argue that the original question missed the point entirely and the real question should be "what is a good way of handling land holdership?"
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