US embassy cable - 04TAIPEI4035

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004035 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 12/21/2014 
TAGS: PGOV, PREL, TW 
SUBJECT: SPECIAL DEFENSE BUDGET PROSPECTS IN DOUBT 
 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary:  Early passage of the USG 18 billion Special 
Budget for defense procurement appears increasingly unlikely 
as the Pan-Blue continues to block the bill from getting on 
the legislative agenda.  Taiwan MND officials are now turning 
to the USG for assistance in overcoming Pan-Blue resistance. 
LY President and KMT Vice Chairman Wang Jin-pyng told AIT 
that the KMT would work with the DPP on the Budget in 
exchange for Chen Shui-bian's cooperation on the March 19 
Truth Investigation Committee.  On the other hand, he said, 
it would be difficult for the PFP to reverse completely its 
LY election platform of opposing the Special Budget.  Despite 
Taiwan MND and NSC assurances that they would continue to 
lobby the Pan-Blue, prospects for early action on the Budget 
appear dim as the post LY election promises of bi-partisan 
cooperation fade into memory.  End Summary. 
 
MND Asking for USG Help 
----------------------- 
 
2. (C) Action on the Special Budget for the USG 18 billion 
advanced weapons procurement package appears unlikely as the 
Pan-Blue continues to block the bill from getting on the 
legislative agenda of the current lame duck Legislative Yuan 
(LY) session.  Ministry of National Defense (MND) Strategic 
Planning Division (SPD) Director Admiral Kao Kuang-chi asked 
AIT/USG on December 17 to intervene with the Pan-Blue ahead 
of the December 21 LY Procedure Committee.  Kao said it would 
be helpful if AIT and the USG reached out to those close to 
KMT Chairman Lien Chan to emphasize to the Pan-Blue that 
Washington views the special budget as a barometer for 
Taiwan's commitment to defend itself. 
 
3. (C) The Pan-Blue controlled Procedure Committee had 
already failed once again on December 14 to act on the 
authorization portion of Special Budget bill and every other 
DPP Government-sponsored legislation.  The December 14 
meeting was the first time the LY Procedure Committee had met 
since the late November LY recess for members to campaign for 
the December 11 LY election.  Committee approval was not 
expected, however, given the lack of inter-party consultation 
prior to the meeting.  LY President Wang Jin-pyng announced 
publicly on December 13 that LY approval of the Special 
Budget was still a possibility but it would require an 
inter-party consensus.  If no consensus could be reached, he 
said, he would recommend the Executive Yuan resubmit the 
package in the Spring LY session that begins in February 2005. 
 
KMT Quid Pro Quo 
---------------- 
 
4. (C) LY President Wang Jin-pyng told the AIT Acting 
Director on December 16 that he had agreed to a request from 
MND Vice Minister Admiral Lei Kuang-shuh to convene 
cross-party consultations on December 20 aimed at forging a 
consensus on the authorization bill.  However, he 
acknowledged that the current LY dynamics made it difficult 
to envision action during the current lame duck session 
expected to end on January 17.  KMT Chairman Lien Chan, he 
explained, wanted to be helpful, but with the condition that 
the KMT would insist on trading its cooperation on the 
Special Budget to win DPP concessions.  For his part, Wang 
asked the USG to pressure Chen Shui-bian to cooperate with 
the March 19 Truth Investigation Committee (which had some of 
its powers stuck down by the Council of Grand Justices on 
December 15) and to agree to other March 20 election-related 
concessions (Septel).  In response, the AIT Acting Director 
explained to Wang that it is extremely unlikely that the USG 
would get involved in Taiwan's internal politics. 
 
PFP's Opposition Platform 
------------------------- 
 
5. (C) Wang offered even less reason for optimism that the 
People First Party (PFP) would support the Special Budget 
during the current session.  Wang told the AIT Acting 
Director that because the PFP had campaigned during the LY 
election on an anti-Special Budget platform, "some time would 
have to pass before the PFP could reverse its opposition to 
the Special Budget."  PFP LY Caucasus Leader Liu Wen-hsiung's 
office told AIT that opposition to the Special Budget is led 
by PFP Chairman James Soong, as well as Legislators Lin 
Yu-fang and Nelson Ku (Chung-lien).  Kevin Lo, Liu's senior 
legislative aide, said that Lin continues to tell his PFP 
colleagues that the cost of the eight diesel submarines is 
"above the international market rate."  Lo also said Ku 
opposes the entire weapons package on principle, claiming 
Taiwan does not need the weapons.  Lo added that at this 
point only AIT intervention with Soong could reverse the 
PFP's stance. 
 
6. (C) Taiwan National Security Council (NSC) officials told 
AIT that PFP Legislator Lin Yu-fang had informed the NSC that 
he personally was prepared to take action on the Budget 
during the current session but that Soong was intent on 
preventing any action until after February 2005.  The NSC 
officials told AIT that they believe Soong is trying to use 
the Special Budget as a bargaining chip with Wang Jin-pyng 
and the KMT to leverage his party's role in the majority 
opposition alliance.  However, Soong has departed Taiwan for 
a month-long vacation in the United States.  NSC officials 
told AIT they hope to take advantage of Soong's absence to 
persuade Wang to bring the PFP LY members around to the 
Government's position. 
 
Comment:  Casualty of Taiwan's Internal Politics 
--------------------------------------------- --- 
 
7. (C) Taiwan NSC officials tell AIT that they are in active 
consultations with Wang Jin-pyng and Opposition members of 
the LY Defense Committee to press for action on the Special 
Budget in the lame duck session.  However, the Budget appears 
to be falling victim to the contentious relationship among 
all of Taiwan's political parties.  Until recently, the KMT 
merely wanted the MND to trim the price tag of the weapon 
systems, especially the eight submarines.  Now the KMT has 
raised the ante by linking the Special Budget to the March 19 
Truth Investigation Committee.  During the LY election, the 
PFP opposed the Special Budget for electoral advantage.  The 
PFP now finds itself unable to reverse its position, and 
continues to use its opposition as a bargaining chip with the 
KMT.  With the December 11 calls for bi-partisan cooperation 
already fading into distant memory, early passage of the 
Special Budget appears increasing unlikely. 
PAAL