US embassy cable - 05TAIPEI1803

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001803 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 04/15/2015 
TAGS: PREL, PGOV, MASS, MARR, TW 
SUBJECT: SPECIAL BUDGET REMAINS IN POLITICAL LIMBO 
 
REF: A. TAIPEI 1112 
 
     B. TAIPEI 1201 
 
Classified By: AIT Director Douglas H. Paal, Reason 1.4 (b/d) 
 
1.  (C) Summary.  Rising political discord among Taiwan 
political parties is complicating prospects for passage of 
the Defense Procurement Special Budget in the Legislative 
Yuan (LY).  The political parties are largely focused inward 
on the domestic political debate and jockeying for short-term 
political advantage, to the disadvantage of larger security 
issues, including cross-Strait relations and the Special 
Budget.  End Summary. 
 
2.  (C) Vice Minister of National Defense Michael Tsai 
(Ming-hsien) told AIT on April 13 that the government is 
losing hope for passage of the Defense Procurement Special 
Budget in the current LY session scheduled to end in May 
(though it could extend into June).  The growing political 
discord among Tawan political parties, he explained, will 
likely prevent early passage of the bill.  He noted the 
separate Kuomintang (KMT) and People First Party (PFP) 
legislative boycotts on cooperation with the ruling 
Democratic Progressive Party (DPP) -- the KMT in retaliation 
for the government investigation of Chiang Ping-kun for 
leading the KMT delegation to Beijing, and the PFP angry over 
DPP refusal to support the PFP "cross-Strait peace bill." 
Tsai, who is government point person in lobbying the LY to 
 
SIPDIS 
pass the Special Budget, said he was increasingly pessimistic 
on early passage.  AIT notes that this represents a continued 
deterioration of the prospects for the Special Budget 
reported two weeks ago (Ref B). 
 
3.  (C) Vice Minister Tsai noted that he had been hit hard in 
LY Defense Committee questioning over the last two weeks, 
particularly by PFP legislator Lin Yu-fang on the "excessive" 
amount of the Special Budget, and by independent maverick 
legislator Li Ao with one of his typically erudite but arcane 
points of order.  Li Ao told Tsai that the U.S. should honor 
its pledge under the Taiwan Relations Act (TRA) to "give" the 
weapons systems in question to Taiwan.  (Note:  Li was trying 
to interpret the word "provide" -- "tigong" -- in TRA Sec 
2(b)(5) to mean "give" in the sense of gratis.)  Tsai 
responded by reminding Legislator Li Ao what Professor Li Ao 
had told Taiwan student activists, including Tsai himself, 
back in the 1960's -- "there is no free lunch," he quoted the 
1960's Li Ao. 
 
4.  (C) After Vice Minister Tsai departed to return to the 
afternoon session of the Hankuang 21 military exercise, his 
Special Advisor, Dr. York Chen (Wen-cheng), told AIT that MND 
is trying to work out a possible deal with Pan-Blue 
legislators to move the Special Budget out of the Procedure 
Committee into the Defense Committee, so that the bill would 
automatically carry over to the fall LY agenda.  MND is 
trying for a package reducing the Special Budget to NT 
$380-400 billion (US $12-12.7 billion at current exchange 
rates), down from the Executive Yuan's early March 2005 
budget submission of NT $480 billion (US $15.2 billion). 
Opposition Pan-Blue legislators, however, continue to push 
for greater cuts in the NT $300-360 range.  The MND and DPP 
legislators are floating a number of trial balloons to see if 
a compromise package can be devised.  One of those "balloons" 
is a proposal to reduce the number of PAC-III missile 
batteries from six to five and moving the sixth battery to 
the regular budget cycle.  When AIT explained (again) to Chen 
that the U.S. is opposed to splitting up the Special Budget 
and, in particular, hiving off the PAC-III missiles (Ref B), 
he responded that MND understands this, and is only 
considering possible "fiddling" on the margins of the PAC-III 
missiles because they are the easiest of the three missile 
systems to obtain further support for in the regular defense 
budget cycle.  Trying to move submarines or P3C's to the 
regular budget cycle, on the contrary, would stir up strong 
opposition.  He emphasized again that MND is simply floating 
trial balloons at this point, in search of possible areas for 
compromise, given the extremely querulous state of 
inter-party relations these days.  "We have no choice but to 
compromise," Chen said, but emphasized that MND would keep 
AIT advised of any developments. 
 
5.  (C) Comment.  Special Budget prospects in the LY have 
deteriorated in direct proportion to the centrifugal forces 
at work on the Taiwan political scene.  With DPP, KMT, and 
PFP each mad at the other two, and each wholly intent on 
squeezing any and all political mileage out of every 
available issue, it will take a major shock to halt the 
political disintegration and to resurrect the now moribund 
"reconciliation" approach of Premier Frank Hsieh.  The 
pending visit to Mainland China by KMT Chairman Lien Chan 
would further complicate the Special Budget process, as the 
KMT would likely stonewall the legislative process prior to 
such a trip.  AIT will be urging such discussion and 
reconciliation in public and privately with recalcitrant 
Pan-Blue political leaders in meetings over the next several 
weeks, but until Taiwan political parties at least moderate 
their political bickering, the Defense Procurement Special 
Budget appears set to remain one more available political 
football to be put in play for short-term political advantage. 
PAAL