US embassy cable - 05TAIPEI2001

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002001 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 05/03/2015 
TAGS: PREL, MARR, PGOV, PINR, CH, TW, Cross Strait Politics 
SUBJECT: SPECIAL DEFENSE BUDGET: MOVEMENT IN MID-MAY? 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary:  Ruling and opposition party officials 
express cautious optimism that the Legislative Yuan (LY) will 
take action on Special Defense Procurement Budget shortly 
after the May 14 National Assembly election.  President Chen 
Shui-bian will try to meet with the two Pan-Blue leaders, 
either separately or together, between May 14 and May 17, 
when the LY's Procedure Committee is expected to move the 
budget bill into the defense committee.  LY President Wang 
Jin-pyng stated publicly on May 2 that the KMT is facing 
growing U.S. pressure to move the budget, and suggested that 
if the LY failed to act by the end of May, the LY might 
reconvene in special session in July or August to complete 
work on the bill.  KMT and PFP officials insist that they 
will cooperate with the government on the package as long as 
President Chen refrains from publicly condemning their 
leaders over recent contacts with Beijing.  National Security 
Council (NSC) officials insist that the President will do 
everything in his power to maintain a positive atmosphere to 
allow the Pan-Blue to come on board.  End Summary. 
 
Focus on May 17 
--------------- 
 
2. (C) Ruling and opposition officials tell AIT privately 
that the May 17 LY Procedure Committee meeting will be the 
key indicator over whether the Special Defense Procurement 
Budget will be acted upon in a timely manner.  NSC Deputy 
Secretary General Henry Ko told AIT that the PFP has promised 
 
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to vote with the government on May 17, but asked that the 
Democratic Progressive Party (DPP) not press for actions any 
earlier.  PFP members cited James Soong's early May visit to 
the Mainland and threats by the anti-defense budget 
Democratic Action Alliance to denounce the PFP for reversing 
its stance on the eve of the National Assembly vote.  PFP 
Policy Chief Vincent Chang confirmed the tacit agreement, 
adding that as long as President Chen does not condemn 
Soong's meetings in Beijing, the PFP is prepared to cooperate 
with the government.  The NSC's Ko told AIT that Chen is 
cognizant of the need to maintain cordial relations with the 
two opposition leaders in order to secure cooperation on the 
budget.  Ko said that the NSC will soon initiate contacts 
with aides to both Lien and Soong about organizing a meeting, 
ideally on May 15. 
 
3. (C) KMT officials have sent mixed messages over the 
party's intentions.  KMT LY Caucus Leader Chen Chieh, a 
member of KMT Chairman Lien Chan's delegation to the 
Mainland, warned on May 2 that the KMT would not cooperate 
with the DPP on the budget to protest the DPP's "two-faced" 
approach to the Lien visit.  However, LY Caucus Deputy 
Secretary General Cho Po-yuan told reporters on April 30 that 
 
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Lien's agreement with PRC leader Hu Jintao to seek an easing 
of cross-Strait military tensions would not impact on the 
KMT's willingness to support defense procurement.  Cho said 
that the KMT has concerns over the Special Defense Budget as 
currently structured, and looks forward to working with the 
DPP on ways to modify the package. 
 
4. (C) On May 2, LY President Wang Jin-pyng publicly 
committed the LY to early action, noting that Taipei was 
facing growing pressure from the U.S.  Wang stated that he 
believed a budget priced in the 360 to 370 billion NTD range 
would stand a good chance for passage, but noted the need for 
further inter-party talks on the details.  Wang noted that if 
the LY does not have time to complete the budget by the May 
31 recess, a special session may be convened in July or 
August to complete action.  Ranking DPP Legislator Hong 
Chi-chang expressed skepticism that the LY could finish the 
bill in the late May time frame, but said that if all four 
parties committed to convening a summer session specifically 
to act on the Special Defense Budget, the USG could rest 
assured that the package would pass in some form. 
 
Devils Still in the Details? 
---------------------------- 
 
5. (C) Taiwan NSC officials tell AIT they are still 
contending with variables in the LY Defense Committee, 
especially continued demands by PFP Co-Chair Lin Yu-fang to 
move the PAC-III Anti-Missile system to the regular budget 
cycle.  NSC officials say they fully understand the USG's 
negative views on this proposal and would convey to the LY 
that this is not a viable option.  NSC and Ministry of 
National Defense (MND) officials are also grappling with the 
proposal to lease, vice purchase, P-3C anti-submarine 
aircraft.  A number of LY Defense Committee members have 
raised this option in the past in the belief that Taiwan will 
be able to procure the Multi-Mission Maritime Aircraft (MMA) 
within the next ten years.  While Chen administration 
officials are skeptical of Taiwan's ability to secure MMA 
until well beyond ten years, MND Minister Lee Jye told the LY 
on May 2 that he would look into options for leasing the P-3C. 
 
Comment: Light at the End of the Tunnel 
--------------------------------------- 
 
6. (C) If relations between the President and the two 
opposition leaders, especially Lien, can weather the current 
friction over cross-Strait relations, we are cautiously 
optimistic that the LY will finally start taking concrete 
action on the Special Defense Budget.  With the LY scheduled 
to go out of session on May 31, in order to allow the 
National Assembly to meet in early June, it may be difficult 
to secure final passage during the current session.  However, 
a firm commitment to act on the budget during a special 
session would be a major step forward, as it would commit all 
parties to address the budget in a timely manner.  AIT will 
continue to urge all parties to resist the temptation to 
posture over the budget and recent cross-Strait contacts, 
especially in the lead-up to May 17. 
PAAL