US embassy cable - 04TAIPEI3957

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003957 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 12/12/2014 
TAGS: PREL, PGOV, TW 
SUBJECT: BOTH CAMPS ADJUSTING TO NEW POLITICAL ALIGNMENT 
 
REF: A. TAIPEI 3490 
     B. TAIPEI 3939 
 
Classified By: AIT Acting Director David J. Keegan, Reason: 1.4 (B/D) 
 
1. (C) Summary:  Both the ruling and opposition camps are 
taking stock of the surprising results of the December 11 
Legislative Yuan (LY) election.  President Chen Shui-bian is 
facing pressure to resign his position as Democratic 
Progressive Party (DPP) Chairman, and speculation is growing 
over a pending change in the cabinet line-up.  KMT officials 
say that no formal decision will be made until the December 
15 Central Standing Committee (CSC) meeting over party 
Chairman Lien Chan's campaign demand that the Pan-Blue 
coalition be empowered to name the next Premier.  While the 
proposal is almost certain to fail, a KMT attempt to pursue 
it could set the stage for continued partisan confrontation 
and renewed gridlock.  Sour post-election relations between 
the KMT and the People First Party (PFP) is also raising 
questions over how solid Pan-Blue's lock on the LY will be. 
PFP Chairman James Soong has expressed strong opposition to 
the proposed Pan-Blue merger, citing KMT "dirty tricks" 
during the campaign.  Major DPP and KMT meetings on December 
14-15 should offer a clearer sense of how both camps will 
adjust to the new political balance.  End Summary. 
 
Adjusting to a Surprising New Reality 
------------------------------------- 
 
2. (C) Both political camps are still taking stock of the 
surprisingly strong KMT showing in the December 11 
Legislative Yuan (LY) election (Ref A).  While the DPP 
marginally increased its number of seats in the election, 
party members are clearly interpreting the results as a major 
setback for the Pan-Green coalition.  President Chen 
Shui-bian has delayed a decision on apportioning blame for 
the election upset, but he has already said he takes full 
responsibility.  Chen is coming under increasing pressure 
from within the DPP to resign from his party Chairman 
position at the December 14 DPP CSC meeting.  Premier Yu 
Shyi-kun and DPP Secretary General Chang Chun-hsiung are also 
likely to be replaced as a result of the DPP's worse than 
expected election performance. 
 
3. (C) Although it is AIT's assessment that tactical errors 
played the key role in the DPP's electoral setback (Septel), 
moderates in the party are touting the results as a 
repudiation of Chen's recent rhetorical shift towards the 
pro-independence extreme.  Members of the DPP's moderate New 
Tide faction, who stand to gain from any post-election 
personnel house cleaning, have been particularly outspoken in 
their criticism of how Chen ran the election.  Veteran New 
Tide legislator Lin Cho-shui publicly blamed Chen's focus on 
"dark Green" voters for the low turnout among centrists. 
Fellow New Tide elder Hong Chi-chang said that Chen needed to 
adjust his cabinet as a result of the election by appointing 
more moderates who could work with the Pan-Blue majority. 
The media has already started handicapping future premier 
candidates, with Presidential Office Secretary General Su 
Tseng-chang, DPP Kaohsiung Mayor Frank Hsieh, and former 
 
SIPDIS 
Mainland Affairs Council (MAC) Chair Tsai Ing-wen topping the 
list. 
 
KMT's Choice: Cooperation or Confrontation 
------------------------------------------ 
 
4. (C) KMT officials and supporters are understandably elated 
over the party's surprisingly strong showing.  However, KMT 
Taipei Mayor Ma Ying-jeou warned party officials against 
irrational exuberance.  "We can celebrate for one night," he 
commented after the election results were announced, "but 
tomorrow we need to remember all the fundamental problems 
Pan-Blue still faces."  Ma has responded cautiously to 
pre-election demands by KMT Chairman Lien Chan that Pan-Blue 
take the lead in forming the next Cabinet (Ref B). 
Constitutionally, the President is given sole authority to 
appoint the Premier and his Cabinet, with no provision even 
for LY approval.  However, some in the Pan-Blue have argued 
that the opposition could technically use its legislative 
majority to force a vote of no-confidence in Chen's cabinet. 
Moderates like Ma and KMT LY President Wang Jin-pyng have 
warned that this approach would give the President the power 
to dissolve the LY and call for new elections.  KMT spokesmen 
say that no decision on this initiative will be made until 
the December 15 KMT CSC meeting. 
5. (C) Another factor deterring the KMT from seeking control 
of the Cabinet was the threat on December 12 by PFP Chairman 
James Soong that his party would not cooperate with the KMT 
on the issue.  Since the December 11 election, Soong has 
repeatedly lashed out at KMT "dirty tricks" that he blames 
for the PFP's 12-seat loss.  Soong told a news conference the 
day after the election that the KMT's lack of sincerity 
during the campaign made a post-election KMT-PFP merger 
impossible.  While KMT officials say privately they are 
downbeat on prospects for a formal merger given the 
ideological and personality divisions that exist between the 
two parties (Septel), KMT leaders have publicly called for 
the PFP to sit down for talks at an early date. 
Post-election suggestions by Lien Chan and close aides that 
the KMT Chairman would not seek re-election at the March 
party congress may add additional pressure for Soong to step 
aside to allow for a Pan-Blue merger. 
 
Comment: Preliminary Reactions 
------------------------------ 
 
6. (C) The dust has yet to settle fully, but it is clear that 
President Chen has been dealt at least a temporary political 
setback.  DPP moderates can be expected to capitalize on the 
party's poor performance to demand a shift towards the 
political center in both policy and personnel.  For its part, 
the KMT is riding high, but ongoing internal divisions and 
friction with the PFP will weaken its ability to effectively 
use its renewed LY majority to confront Chen over issues like 
Cabinet line-ups.  Nevertheless, Chen will need to consider 
the demands for compromise when he selects his new Executive 
Yuan (EY) line-up.  Chen's intentions over the Cabinet, and 
perhaps his future policy priorities, may be clarified in his 
much-anticipated December 14 CSC speech. 
PAAL