US embassy cable - 05TAIPEI1969

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001969 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 02/01/2015 
TAGS: PREL, PGOV, PINR, CH, TW, Cross Strait Politics 
SUBJECT: DPP FACTION EMBARKS ON CROSS-STRAIT INITIATIVE 
 
REF: TAIPEI 934 
 
Classified By: AIT Acting Director David J. Keegan, Reason: 1.4 (B/D) 
 
1. (C) Summary: Away from the media glare given to the recent 
Pan-Blue cross-Strait initiatives, the Democratic Progressive 
Party's (DPP) moderate New Tide faction has opened talks with 
PRC authorities about establishing a cross-Strait cooperation 
mechanism to tackle financial crimes.  New Tide elder Hong 
Chi-chang (protect) told AIT that he met with Xin Kuisan, 
head of Taiwan Affairs at the PRC Hong Kong Liaison office on 
April 16-17 to discuss the initiative.  Hong said that he 
engaged in the Hong Kong talks on behalf of fellow New Tide 
leader and Taiwan Stock Exchange Corporation (TSEC) Chairman 
Wu Nai-jen.  While National Security Council (NSC) Secretary 
General Chiou I-jen, the New Tide's third co-leader, is aware 
of the long-standing PRC Taiwan Affairs Office (TAO)-New Tide 
channel, he has not been briefed on the details of the 
current initiative for fear that President Chen Shui-bian 
would find out.  Hong said that the New Tide has maintained a 
separate channel with officials from the PRC State Council's 
Taiwan Affairs Office (TAO) since 1997.  End Summary. 
 
Cross-Strait Contacts: Not Just for the Pan-Blue Anymore 
--------------------------------------------- ----------- 
 
2. (C) DPP Legislator Hong Chi-chang told AIT that the 
moderate New Tide faction has been in contact with PRC 
authorities about launching a series of cross-Strait economic 
initiatives in the coming months.  Hong is one of three 
elders in the faction (the others being NSC SecGen Chiou 
I-jen and TSEC CEO and former DPP SecGen Wu Nai-jen) and the 
DPP's ranking legislator.  Hong told AIT that he had just 
returned from Hong Kong on April 17, where he held several 
hours of talks with officials from the PRC State Council's 
Taiwan Affairs Office (TAO) about creating a mechanism for 
Taiwan-PRC cooperation to tackle financial crimes.  Hong said 
that no decision has been made about whether or when to 
publicize the joint initiative.  Hong noted that no public 
announcement will be made until all the details had been 
worked out.  He added that it would be inappropriate to 
publicize PRC contacts with elements of the DPP now given the 
government's concerns over the PRC's accelerated "united 
front" campaign.  However, Hong said that over the coming 
year, the New Tide plans to press forward with a series of 
economic and technical initiatives aimed at facilitating 
economic activities and stabilizing cross-Strait tensions. 
 
3. (C) Hong said his main interlocutor on April 17 was Xin 
Kuisan, head of Taiwan Affairs at the PRC State Council's 
Hong Kong Liaison office.  Hong noted that Xin has taken the 
lead on the TAO-New Tide channel almost since its inception 
in 1997, when Xin was still stationed at the TAO in Beijing. 
Hong said that he engaged in discussions on the financial 
crimes initiative on behalf of TSEC Chairman Wu.  Hong 
mentioned that former Mainland Affairs Council (MAC) Senior 
Vice Chairman Chiu Tai-san (also a New Tide member) was also 
engaged on the initiative, but Chiu dropped out of active 
participation after leaving MAC in late March to run for 
Taichung County Magistrate. 
 
4. (C) Hong said that his April visit was the second New Tide 
meeting with PRC officials this year.  The first meeting was 
with a larger group of officials from Beijing, including TAO, 
and representatives from the Chinese Communist Party 
Secretariat.  That meeting, Hong remarked, touched on the 
 
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financial crimes initiative, but focused more on the likely 
Taiwan reaction to the Anti-Secession Law (ASL).  (Note: Hong 
had made an indirect reference to this exchange during a 
February meeting with AIT, Reftel.) 
 
5. (C) Hong said he has specifically not informed NSC SecGen 
Chiou about the details of the latest initiative.  While 
Chiou has been a participant in past New Tide-TAO channel 
contacts, Hong said that the faction decided to keep him in 
the dark about the current plan.  The main reason for this, 
Hong continued, was fear that Chiou may "feel compelled" to 
inform President Chen Shui-bian.  Hong assessed that Chen, 
who deeply distrusts the New Tide, would likely quash the 
plan if he learned of its existence. 
 
A Long Relationship 
------------------- 
 
6. (C) Hong said the New Tide's contacts with the PRC began 
in 1997, when a group of New Tide legislators visiting the 
Mainland were approached by working level TAO officials about 
establishing a dialogue.  The two sides have met regularly 
since that time, both to exchange views on general trends and 
to discuss specific substantive issues.  Hong claimed that 
the 2003 Lunar New Year charter flight initiative was the 
outgrowth of New Tide-PRC discussions.  Hong said that the 
New Tide faction seeks to serve as a bridge between the PRC 
and the rest of the DPP.  Unlike many other elements of the 
DPP, Hong said the New Tide is no longer wedded to 
independence as the only final option for Taiwan's political 
future.  In discussions with PRC counterparts, Hong said he 
continue to stress that Beijing needs to understand that the 
mainstream view in Taiwan is that the island is Chinese 
culturally, but different in terms of political system, 
society, and general outlook.  These differences can be 
bridged over time, but attempts by Beijing to force Taiwan 
into a premature settlement will only provoke Taiwan to seek 
further political distance from the Mainland.  Hong expressed 
concern that Beijing's regular Pan-Blue interlocutors fail to 
present a balanced picture of Taiwan's society and 
inadvertently encourage the PRC to take counter-productive 
measures.  While the New Tide shares the Pan-Blue's view on 
many cross-Strait economic initiatives, Hong said that the 
opposition's constant attempts to explore final political 
formulas will only lead to false expectations in Beijing. 
 
Comment: Pan-Green Realists 
--------------------------- 
 
7. (C) Once the DPP's most radicalized faction, the New Tide 
has transformed itself into the most centrist force in the 
party.  The New Tide now forms the core of a moderate stream 
of thought within the DPP on cross-Strait policy, whose 
members also include Premier Frank Hsieh and DPP Chairman Su 
Tseng-chang.  However, the New Tide's cross-Strait moderation 
 
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may not be completely altruistic.  The faction has leveraged 
its reputation for policy acumen and cross-Strait realism to 
attract major financial support from the business community, 
especially the high-tech and financial sectors.  The New 
Tide's ability to drive the government's policy agenda, 
however, is constrained by the tense relationship between 
President Chen and the faction.  This friction has put NSC 
SecGen Chiou in a particularly difficult position.  While 
Chiou continues to maintain regular contact with Hong and 
other faction leaders, his faction colleagues see his primary 
loyalty, for the moment at least, as resting with the 
President. 
 
BioNotes 
-------- 
 
8. (C) Hong told AIT last July that he stepped down from the 
DPP's Central Standing Committee in order to allow more 
flexibility for interacting with PRC interlocutors.  Hong 
remains the Chairman of the Taiwan Economy and Industry 
Association, a group he established in 2001 to boost DPP 
interaction with the business community.  Hong noted that the 
PRC has issued him a multiple entry permit for Hong Kong to 
minimize the risk that his visits will be revealed. 
 
9. (C) In the past year, we have also noticed increasing 
contacts between PRC academic visitors and other influential 
New Tide members, including some like Taipei County 
Magistrate Lin Hsi-yao who would not normally interact with 
Mainland cross-Strait specialists.  In addition to Hong, 
faction members Yen Wan-ching (currently DPP Deputy SecGen), 
Chung Chia-bing (Yen's predecessor as DPP Deputy SecGen), DPP 
LY Defense Committee Co-Chair Lee Wen-chung, and former MAC 
Vice Chair Chiu are also engaged in the faction's 
cross-Strait activities.  The local media reported that Chung 
was seen by journalists at a conference in Beijing in late 
April. 
PAAL