US embassy cable - 05TAIPEI118

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000118 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 01/13/2015 
TAGS: PGOV, PREL, TW 
SUBJECT: LIEN CHAN ON SPECIAL BUDGET, CROSS-STRAIT, AND PFP 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary:  KMT Chairman Lien Chan told AIT Director on 
December 12 that the KMT Legislative Yuan (LY) caucus intends 
to pass half (approximately USD nine billion) of the USD 18 
billion as soon as the legislation is resubmitted in the next 
LY session, beginning February 1.  On the cross-Strait Lunar 
New Year charter flights, Lien gave credit to the KMT 
delegation that traveled to Beijing to meet with the Taiwan 
Affairs Office for "paving the way" for further discussions 
between Taiwan and PRC representatives, and said he is ninety 
percent certain direct flights will be implemented.  On the 
media speculation of DPP cooperation with the People First 
Party (PFP), Lien said that the DPP has a strategic interest 
in promoting the rumors, but that he is certain the Pan-Blue 
alliance will remain intact.  End Summary. 
 
Special Defense Budget 
---------------------- 
 
2. (C) KMT Chairman Lien told AIT Director in a December 12 
meeting that the KMT is committed to maintaining a viable 
military capability for Taiwan and that reports that the KMT 
opposes to arms procurement are misleading.  Lien did say, 
however, that the KMT objects to the DPP's submission of the 
Special Budget and the Special Budget Authorization Bill as a 
package.  Lien pointed out that the requirement for separate 
legislation authorizing a Special Budget was a feature that 
the DPP pressed to be enacted in 1996. 
 
3. (C) Asserting that there is not enough time for action in 
this LY session, Lien then conveyed the intention of the KMT 
LY caucus to pass half (approximately USD nine billion) of 
the USD 18 billion as soon as the legislation is resubmitted 
in the next LY session, beginning February 1.  After a quick 
telephone call to KMT LY caucus leader Tseng Yung-chuan, Lien 
told the Director that there is no need for a six-month delay 
in resubmission by the Executive Yuan (EY), as National 
Security Council Secretary General Chiou I-jen contended in 
previous conversations with AIT.  Rather, Lien said that if 
the EY accepts the Ministry of National Defense's 
recommendation to separate the authorization and spending 
bills, the KMT will cooperate to pass the bill in the first 
week of February.  He noted that the KMT would support PAC-3, 
P-3, and other acquisitions, leaving an additional 
approximately USD one billion for purchases of needed 
ammunitions such as Standard missiles for Kidd destroyers and 
AMRAAMs for the Taiwan Air Force.  While the submarines are 
desirable, Lien explained, eight at one time is too many for 
Taiwan to handle.  Since it was the KMT that had originally 
proposed purchasing the submarines, he continued, the party 
did not want to be seen as opposing it, so would instead 
advocate buying piecemeal. 
 
Cross-Strait Chartered Flights 
------------------------------ 
 
4. (C) On the cross-Strait Lunar New Year charter flights, 
Lien credited the KMT delegation that traveled to Beijing to 
meet with the PRC's Taiwan Affairs Office (TAO) with "paving 
the way" for further discussions between Taiwan and PRC 
representatives.  Lien told the AIT Director that the KMT 
decided to get involved in the issue because many Taishang 
(Taiwan businessmen working in the PRC) complained to the KMT 
that the DPP government had made no progress.  He said that 
after receiving a positive response from the TAO welcoming 
the KMT's involvement, KMT Legislator John Chang (Hsiao-yen) 
led a delegation to meet with TAO Director Chen Yunlin on 
January 10.  Lien said that he was 90 percent certain that 
the proposals negotiated between Chen and the KMT delegation, 
including direct reciprocal flights between the Mainland and 
Taiwan servicing multiple routes, would be implemented in 
time for the Lunar New Year.  Lien said he hoped the DPP 
would not obstruct the KMT's accomplishment by politicizing 
the charter flight issue. 
 
5. (C) Lien told the Director that when the KMT briefed the 
Mainland Affairs Council (MAC) on the talks between the KMT 
delegation and the TAO, MAC officials insisted they would 
follow the "Hong Kong Model" for negotiations (i.e., in which 
MAC officials had been members of the Taiwan negotiating team 
nominally headed by an airline industry official).  Lien said 
the Hong Kong formula is not necessarily the ideal model, for 
if Taiwan is independent and sovereign, then why should it be 
downgraded to Hong Kong's status.  In passing, he criticized 
the 2002 "Hong Kong model," arguing that it was not 
appropriate for Taiwan national officials to have been 
negotiating with mere Hong Kong municipal authorities.  Lien 
concluded by stating that since the LY election the KMT has 
concluded that it should play a more active role in 
cross-Strait affairs, even  taking the lead in areas where 
the government cannot. 
 
Rumors of DPP-PFP Cooperation 
----------------------------- 
 
6. (C) Commenting on the media speculation of DPP cooperation 
with the People First Party (PFP), Lien told the AIT Director 
that the DPP has nothing to lose in promoting the rumors.  If 
the DPP were to succeed in courting the PFP, the DPP would 
gain a working LY majority and effectively divide the 
Pan-Blue, Lien explained, however, he is certain the Pan-Blue 
will stand fast.  Lien said that before PFP Chairman James 
Soong departed Taiwan he assured him that although KMT-PFP 
merger is not possible in the immediate future, the PFP will 
continue to cooperate with the KMT.  Soong had told Lien that 
on the premise that the DPP government is responsible for 
safeguarding the ROC, he would consider cooperating with the 
DPP on specific issues involving the people's livelihood. 
Lien also stated that Soong told him the PFP would support 
Wang Jin-pyng for LY Speaker in exchange for the KMT 
supporting a PFP member for Vice Speaker.  Lien noted that 
although Chen Shui-bian has suffered a setback in the LY 
election, Chen's policy direction will not change. 
Therefore, Lien argued, it is in the interest of Taiwan, and 
the U.S., to have a viable opposition alliance. 
 
Comment: Emerging from Post Election Haze? 
------------------------------------------ 
 
7. (C) Since the March 2004 presidential election, Lien 
focused almost exclusively on the Pan-Blue's challenge of the 
presidential election result, first in the streets, then in 
the courts, to the detriment of other party affairs.  Lien 
was not fully involved in the KMT LY campaign effort.  KMT 
Vice Chairman Vincent Siew told AIT that many LY members in 
Central and Southern Taiwan did not want Lien to stump for 
them.  The KMT's unexpected success in the LY election 
appears to have reinvigorated Lien, who did not hesitate to 
step back into the limelight.  So far, however, Lien has only 
used the KMT's victory to oppose the DPP, showing few signs 
that he has even begun to address the many internal problems 
in the Pan-Blue alliance. 
PAAL