US embassy cable - 05TAIPEI1201

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001201 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 02/01/2015 
TAGS: PREL, PGOV, MASS, MARR, CH, TW, Cross Strait Politics 
SUBJECT: SPECIAL DEFENSE BUDGET FACING POLITICAL MINEFIELD 
 
REF: A. TAIPEI 118 
     B. TAIPEI 1112 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary: A Pan-Blue leadership vacuum, political 
posturing by key legislators, and a hostile media environment 
may pose major barriers to early legislative action on the 
government's proposed special defense procurement budget. 
The Executive Yuan (EY) on March 16 slashed the funding 
request by more than 130 billion NTD (USD 4.3 billion) from 
the original 2004 estimate in an effort to respond to demands 
by opposition legislators.  The government is also trying to 
leverage President Chen Shui-bian's recent cohabitation 
agreement with People First Party (PFP) leader James Soong to 
win PFP support for the program.  While both the KMT and PFP 
leadership indicate that they will not actively block the 
budget, they appear either unwilling or incapable of 
convincing their legislative caucus leaders to engage with 
the government on how to move forward.  Taiwan executive 
branch officials have reiterated requests that the USG weigh 
in publicly and privately in order to remind the Taiwan media 
and opposition party leaders that passage of the special 
budget will help Taiwan meet its immediate defense needs. 
Thus far, however, neither the President nor the two Pan-Blue 
leaders have been willing to make this case to their own 
public.  End Summary. 
 
Rough Seas Ahead 
---------------- 
 
2. (C) Officials from the National Security Council (NSC) and 
Ministry of National Defense (MND) tell AIT that the current 
political atmospherics surrounding the LY's review of the 
special defense procurement budget in the current LY is even 
worse than last Autumn due to the growing disarray within the 
two Pan-Blue parties.  While the KMT and PFP came out of the 
December 11, 2004 election with their majority intact, a 
combination of skillful political manipulation by the 
President and latent internal discontent seriously weakened 
the ability of James Soong and Lien Chan to control their own 
parties, leaving the government to deal with a scattering of 
factions rather than coherent party structures.  Officials 
complain also that the media environment has also 
deteriorated due in large part to the presence of maverick 
deep-Blue legislator Li Ao on the LY's Defense Committee. 
Li's accusation that Soong and his party are in the pay of 
the CIA and his demands that the USG give Taiwan weapons for 
free have set the tone for Taiwan media coverage of the 
special budget over the past month. 
 
3. (C) For its part, the Chen administration has thus far 
shown significantly greater flexibility in its dealings with 
the opposition than it did last Fall.  Many observers 
suspected that the Chen administration intentionally took a 
hard negotiating line last year in order to force the 
Pan-Blue into openly opposing the package in the lead-up to 
the December 11 LY election.  NSC Senior Advisor (responsible 
for political operations) Lin Jin-chang acknowledged to AIT 
that some of the earlier Pan-Blue demands, such as allowing 
the LY to act separately on the authorization and budget 
bills, were reasonable.  Lin noted that the government has 
already met this and a number of other Pan-Blue requests, 
including by submitting the budget at a significantly reduced 
funding level (480 billion NTD versus 610 billion NTD in 
2004).  NSC aide Navy Cmdr. Yu Hsiao-pin told AIT the Chen 
administration is willing to make further concessions on 
price, and even give Pan-Blue leaders public credit, in order 
to secure early action. 
 
KMT: Party Without a Cause 
-------------------------- 
 
4. (C) While opposition leaders say they are ready to respond 
to the government's gestures in good faith (Ref A), officials 
say it is unclear who they are supposed to negotiate with. 
MND Strategic Programs Department Director Vice Admiral Kao 
Kuang-chi, who is charged with coordinating the MND LY lobby 
effort, complained to AIT that they cannot find a single 
person within either the KMT or PFP who is able to speak for 
the party.  "We have spoken to dozens of opposition 
legislators and received dozens of different demands and 
positions in return," he added. 
 
5. (C) Officials on both sides tell AIT this communication 
problem stems from the growing inability and/or unwillingness 
of the Pan-Blue leadership to take a position much less exert 
control over their respective parties.  On the KMT side, 
officials complain that Lien Chan remains completely absorbed 
on his own personal agenda and is unwilling to engage on 
policy issues of any kind.  The rest of the party appears 
increasingly distracted by the campaign for KMT chairman and 
the selection of candidates for the December 2005 local 
mayor/magistrate elections.  KMT LY Speaker Wang Jin-pyng, a 
long-time central figure in the special budget debate, told 
AIT on March 17 that "no one is thinking about the special 
budget."  Wang, who is seeking allies from pro-unification 
KMT elders to support his bid for KMT chairman, rejected 
AIT's suggestion of using the special budget to respond to 
the PRC's Anti-Secession Law as "overly provocative."  MND's 
Kao told AIT that Ma may be more receptive to this sort of 
appeal, but he acknowledged that Ma's influence over LY 
deliberations is limited. 
 
PFP: It's Not Just Soong Anymore 
-------------------------------- 
 
6. (C) While Presidential Office aides say they will continue 
to try to leverage the February 24 cohabitation agreement 
with PFP Chairman Soong to secure passage of the special 
budget, PFP politicians tell AIT Soong may be unable to bring 
his party around on the issue even if he wanted to.  Soong 
has thus far failed to win backing from either his two 
"defense specialists" or his party's LY caucus leadership. 
PFP Legislator Mei Chang-chi told AIT a March 10 meeting 
between Soong and the party's LY caucus failed to reach any 
sort of consensus.  She said that PFP Defense Committee 
member (and former Taiwan Navy CINC) Adm. Nelson Ku was 
particularly adamant that the party not allow the special 
budget to pass during the current session.  She added that a 
two hour one-on-one meeting between Soong and Ku failed to 
soften Ku's position.  NSC and MND officials say that another 
complicating factor is the bitter rivalry between Ku and PFP 
Defense Committee Co-Chair Lin Yu-fang.  Contrasting his 
stance with Ku's, Lin assured AIT on March 11 that he was 
willing to engage on the budget in good faith.  However, Lin 
gave no indication he was prepared to back away from his 
public position that the three items in the special budget be 
broken up (Ref B). 
 
7. (C) Even if Soong could persuade Ku and Lin, he might have 
an even harder time gaining support from the increasingly 
independent-minded PFP LY Caucus leadership.  The MND's Kao 
said that the PFP is the only LY caucus that has refused to 
receive briefings from senior MND officials.  PFP Caucus 
Leader Lee Yong-ping told AIT that, in her view, the Special 
Budget is "doomed."  Kao complained to AIT that many 
high-profile PFP legislators view the special budget through 
the prism of the year-end local election.  The PFP's Liu 
Wen-hsiung, for example, recently told Kao that he would not 
even consider voting for the budget for fear of alienating 
his deep Blue supporters ahead his campaign for Keelung City 
mayor.  PFP Policy Chief Vincent Chang told AIT that Soong 
will resume efforts to forge an internal consensus after 
March 21, but he hinted that the PFP might require a major 
concession from the government, such as dropping the 
submarine portion of the special budget package, in order to 
gain full PFP backing. 
 
8. (C) NSC Secretary General Chiou I-jen told AIT on March 18 
that the government's fallback plan in case of an LY deadlock 
is to force a floor vote on the assumption that PFP Chair 
Soong will 1) support the government; and 2) bring at least 
10 (out of 34) of his legislators to join the Pan-Green's 103 
to secure a simple majority.  Chiou asserted that if the KMT 
or PFP blocked action on the special budget, Pan-Green 
legislators could invoke a rarely used procedural mechanism 
to force a floor vote without waiting for the standard 
four-month cooling down period.  However, Democratic 
Progressive Party (DPP) LY Defense Co-chair Lee Wen-chung 
downplayed the likelihood of this scenario.  "What's in it 
for Soong?" Lee asked rhetorically, "all this would achieve 
for him is to show the public that he has lost control of 
two-thirds of his party." 
 
Taiwan's Strategy: Looking to Washington 
---------------------------------------- 
 
9. (C) The DPP's Lee and MND officials say their preferred 
course is to gain KMT and PFP support by a combination of 
horse trading on the pricing for the package and creating a 
positive PR environment.  In this context, officials have 
urged expressions of support from USG officials, whose 
comments the Taiwan media takes more seriously than their 
own.  The MND's Kao requested that senior USG officials find 
a chance to publicly counter opposition claims that the USG 
does not really care whether Taiwan purchases the special 
budget items by reiterating past DOD recommendations over the 
urgency of Taiwan upgrading its anti-air and anti-submarine 
capabilities.  He recommends that DUSD Lawless or another 
senior USG official provide a private interview to a major 
Taiwan news outlet as the best way to get this message out. 
The DPP's Lee separately asked AIT for data on how much money 
the U.S. spends each year to maintain stability in the Taiwan 
Strait.  "We need to refute this argument that the United 
States is only motivated by profits," Lee commented, "I know 
you spend more than we do to help maintain security in the 
Taiwan Strait, but most people in Taiwan do not." 
 
Comment: Leadership Vacuum 
-------------------------- 
 
10. (C) The Chen administration appears to be taking a more 
practical approach to negotiations on the special budget than 
it did last year, but it is too early to be optimistic that 
the results will be any different.  AIT has had only limited 
success in pressing the Pan-Blue to approach the special 
budget from the perspective of Taiwan's security needs, 
especially in light of recent PRC action on the 
Anti-Secession Law.  Ironically, AIT has been equally 
unsuccessful in encouraging President Chen Shui-bian to 
publicly link the two issues, even though other senior 
officials in his government regularly do so.  The problem on 
both sides of the ideological divide appears to be a lack of 
leadership.  While Lien and Soong may not be able to bring 
their parties around even if they wanted to, we have seen 
little evidence that they, or Chen, have made any real effort 
to explain to their supporters why Taiwan needs to provide 
for its own self-defense. 
PAAL