US embassy cable - 04TAIPEI3941

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003941 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 12/11/2014 
TAGS: PREL, PGOV, TW 
SUBJECT: NEW LY LINE-UP MAY MODERATE TAIWAN POLITICAL 
DISCOURSE 
 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary: The Pan-Blue's surprise victory in the 
December 11 Legislative Yuan (LY) election should help reduce 
extremism in Taiwan's political discourse.  President Chen 
Shui-bian will be under pressure to moderate his offensive on 
sensitive issues like cross-Strait relations and 
constitutional reform.  KMT Chairman Lien Chan's offer to 
work with the Democratic Progressive Party (DPP) government 
to pursue the national interest appears to signal to the 
voters that he has heard their unhappiness with the gridlock 
of the last four years.  LY action on the USD 18 billion 
special defense procurement budget may be an early test of 
these election night gestures.  The poor showing by both the 
People First Party (PFP) and Taiwan Solidarity Union (TSU) 
should marginalize voices on both ends of the political 
spectrum, theoretically allowing for a more reasoned policy 
debate on defense and other topics.  Of course, early signs 
of cooperation could prove short-lived, and there remains a 
real possibility that the two sides will return to gridlock. 
End Summary. 
 
Move to the Middle 
------------------ 
 
2. (C) The new LY line-up (Pan-Blue 114, Pan-Green 101) 
should help moderate the tone of Taiwan's future political 
discourse.  The Pan-Blue's LY majority greatly reduces 
chances for action in the coming four years on sensitive 
issues like radical constitutional reform.  The Pan-Blue 
majority is also likely to reassure Beijing, and could put 
pressure on President Chen to be seen as moderating his more 
extreme views on cross-Strait policy.  Electoral setbacks for 
Lee Teng-hui's TSU and James Soong's PFP should also 
marginalize voices on both extremes of the political spectrum. 
 
3. (C) A key factor in the future course of policy making 
will be the ability of the DPP to work with the new Pan-Blue 
LY majority.  KMT Chairman Lien Chan's election night offer 
to cooperate with the DPP government on national policy is an 
encouraging sign that the two political camps may seek to 
mend the divisions that have plagued Taiwan's political 
debate since March 20.  Another positive development was the 
fact that Lien did not make reference to his election eve 
demand that Chen give the Pan-Blue the right to appoint the 
next cabinet.  Lien advisor Ho Szu-yin told AIT that the 
cabinet proposal was simply "election rhetoric" and that the 
Pan-Blue would respect the president's constitutional right 
to select his cabinet.  President Chen Shui-bian responded to 
Lien's goodwill offer with a similarly conciliatory message 
in his post-election address at DPP headquarters.  Chen 
characterized the December 11 election  as the start of a new 
era of reconciliation and cooperation between the two 
political camps, but he also promised to try to keep his 
campaign promises. 
 
Special Budget: An Early Test 
----------------------------- 
 
4. (C) An early test case for the two sides' ability to 
cooperate will present itself when the current LY reconvenes 
in a lame-duck session.  The LY is still required to take 
action on the government's regular budget and will also have 
an opportunity to address the USD 18 billion special defense 
procurement budget.  Before the election, senior KMT 
officials promised AIT that they would work with the 
government on the special procurement budget after the 
campaign.  KMT LY Speaker Wang Jin-pyng and other party 
officials cited pressure from Soong's PFP as the cause of the 
KMT's September decision to reverse its previous supportive 
stance on the budget. 
 
Political Realignment: New Variables? 
------------------------------------- 
 
5. (C) The KMT's gains relative to its PFP allies adds a new 
variable to the already strained relationship between the two 
Pan-Blue parties.  In his first public appearance after the 
election results were announced, PFP Chairman James Soong 
suggested that it was KMT's unwillingness to cooperate with 
the PFP that caused Soong's party to lose its 12 seats.  The 
PFP's setback is likely to significantly weaken its hand in 
possible future KMT-PFP merger talks.  For his part, KMT 
Chairman Lien Chan suggested that he may be willing to step 
down from power in the coming months.  Flanked by KMT Vice 
Chairmen Ma Ying-jeou and Wang Jin-pyng, KMT Chairman Lien 
Chan told a crowd at KMT party headquarters that he would 
fulfill his term as party chairman (Note: which runs until 
July, 2005), but said that a major goal of the opposition 
alliance will be generational change among its leadership. 
 
Comment: A Good Result 
---------------------- 
 
6. (C) The new LY line-up reduces some of the more immediate 
problems for U.S. interests.  The Pan-Blue victory makes it 
unlikely that controversial proposals such as radical 
constitutional reform will be implemented in the next three 
to four years.  The poor performance by Lee Teng-hui's TSU is 
also likely to quiet voices opposed to greater economic and 
political engagement with the Mainland.  The KMT's strong 
showing vis-a-vis its PFP coalition partner also offers some 
possibility of a more reasoned debate on defense procurement. 
 If President Chen and KMT Chairman Lien follow through on 
their election night offers of cooperation, Taiwan may also 
have an opportunity to break the gridlock of the past four 
years.  However, the past four years of gridlock between the 
DPP executive and the Pan-Blue legislature is a reminder to 
restrain optimism.  There is a backlog of issues -- ranging 
from rebuilding the military to financial and regulatory 
reform to economic opening to cross-Strait trade and 
investment.  While signs of a more reasoned political 
discourse may be short-lived, the political alignments 
resulting from this election should encourage both sides of 
the partisan divide to move in the right direction. 
PAAL