US embassy cable - 05TAIPEI1872

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001872 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 04/21/2015 
TAGS: MARR, MASS, PGOV, PREL, TW 
SUBJECT: KMT CHAIRMAN ON SPECIAL BUDGET AND PRC TRIP 
 
REF: A. SECSTATE 71311 
     B. TAIPEI 00118 
     C. TAIPEI 01684 
 
Classified By: AIT Director Douglas Paal, Reason(s): 1.4 (B/D) 
 
1. (C) Summary:  KMT Chairman Lien Chan told the AIT Director 
on April 21 that the KMT's support for passage of the Special 
Defense Budget at a reduced funding level remained unchanged 
from what he pledged to the Director during their January 12 
meeting.  Lien said, however, that all negotiations between 
the political parties on the Special Budget have stopped 
because of the current tense political atmosphere in Taiwan. 
Regarding his upcoming visit to the PRC, Lien insisted that 
his sole purpose is to improve cross-Strait relations, reduce 
tensions, and promote peace.  He said that he will seek to 
establish a mechanism to promote economic cooperation as well 
as future talks.  He rejected press reports speculating that 
he intended to strike a deal with Beijing to the detriment of 
Taiwan.  Lamenting the DPP attacks on his upcoming visit, 
Lien said he was not hopeful that Chen Shui-bian would follow 
up on any opportunities for progress that his visit might 
create.  End Summary. 
 
KMT Stance on Special Budget Unchanged 
-------------------------------------- 
 
2. (C) In an April 20 meeting with KMT Chairman Lien Chan, 
the AIT Director delivered points outlined in Ref A.  Lien 
told the Director that the KMT position on the Special 
Defense Budget remained unchanged from what he pledged to the 
Director during their January 12 meeting (Ref B).  Lien said, 
however, that all negotiations between the political parties 
on the Special Budget have stopped because of the current 
harsh political atmosphere in Taiwan.  He attributed the 
contentious relationship between the KMT and DPP to the 
Chen's administration's April 5 "Seven Points" statement (Ref 
C), as well as the government's efforts to prosecute KMT Vice 
Chairman Chiang Pin-kun after his return from the PRC in late 
March.  Lien dismissed the Democratic Progressive Party (DPP) 
government's reduced price figures for the Special Budget, 
claiming that they are largely based on the appreciation of 
the Taiwan dollar against the USD and not the sort of 
meaningful reductions for which the KMT has asked.  The KMT, 
he said, intends to continue negotiating the overall cost of 
the package. 
 
3. (C) In response to the Director's question on how the KMT 
would respond should the PRC press the KMT to retract its 
support for the Special Budget in return for concessions by 
Beijing, Lien said that he did not think the PRC would raise 
the Special Budget during his visit.  He added, "if they do, 
I would ask them to remove the missiles targeted at Taiwan." 
 
Upcoming PRC Visit 
------------------ 
 
4. (C) Following the KMT's April 20 announcement of the 
details of Lien's April 26 to May 3 PRC trip (Septel), Lien 
told the Director that the PRC had long ago indicated its 
interest in inviting him and, thus, he was ready accept when 
PRC official Jia Qinglin extended the formal invitation 
during KMT Vice Chairman Chiang Pin-kun's visit.  He 
explained that the purpose of his visit was simple -- to 
improve cross-Strait relations, reduce tensions, and promote 
peace.  He insisted the KMT cross-Strait policy has remained 
unchanged -- maintain the status quo, safeguard the "Republic 
of China," and put aside political differences while 
promoting engagement on common economic interests. 
 
5. (C) During the upcoming visit, Lien said, he specifically 
hoped to establish a mechanism to promote economic 
cooperation.  He said he will propose actions that the PRC 
can take unilaterally to help Taiwan businessmen in China as 
well as initiate discussions on direct links, tariff 
privileges, easing personnel and capital movement between 
Taiwan and China, increasing information and technology 
exchange, and perhaps even establishing a common currency. 
Lien conceded that he would not accomplish all of these goals 
in one visit but hoped to start discussion that could be 
followed up in the future. 
 
6. (C) Responding to the Director's suggestion that Lien 
reach out to Chen Shui-bian before and after his trip, Lien 
told the Director that KMT Secretary General Lin Fong-cheng 
is scheduled to talk to Presidential Office Secretary General 
Yu Shyi-kun on April 21.  Lien said that in addition to the 
economic discussions he also hoped his trip would encourage 
continuing dialogue not just between the KMT and the PRC but 
also between the Taiwan government and the PRC.  However, 
Lien said he is not hopeful that the DPP will follow up on 
either his political or economic discussions.  Lien said that 
he was disappointed with Chen Shui-bian's "very negative" 
response to the KMT efforts to promote cross-Strait 
cooperation.  Saying that he does not understand why the DPP 
behaves in the way it does, Lien lamented the unhelpfulness 
of DPP's "Seven Points" and other recent statements 
criticizing his upcoming trip.  Lien also rejected press 
reports speculating that the KMT might strike a deal with 
Beijing to the detriment of Taiwan. 
 
7. (C) When asked about the recent PRC invitation to People 
First Party (PFP) Chairman James Soong, Lien replied that he 
did not know why the invitation was extended, adding that 
this development is "a little confusing."  Lien asserted that 
Soong had sent emissaries to Beijing to beg for the 
invitation.  He dismissed the significance of Soong's trip 
and said the "Ten Points" reached by Soong and Chen during 
their February 24 meeting were repetitions of the KMT's 
position.  Lien concluded by urging the USG to take a 
positive attitude toward his PRC trip and publicly voice 
support for any effort to reduce cross-Strait tensions. 
 
Comment: Encouraging Tone, Vague on the Details 
--------------------------------------------- -- 
 
8. (C) Lien's reiteration of his earlier promises to take 
action on the Special Budget and to establish contacts with 
the Chen administration on his upcoming PRC visit are 
encouraging.  However, it is unclear how engaged Lien is on 
the details of the Special Budget or any other major policy 
issue, including the KMT's cross-Strait initiatives.  Given 
the increasing factionalization within the KMT, Lien will 
need to demonstrate leadership after his return from Beijing 
if there is any hope of breaking the ongoing political 
deadlock in the LY. 
PAAL