US embassy cable - 05TAIPEI2144

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002144 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 02/01/2015 
TAGS: PREL, PGOV, PINR, CH, TW 
SUBJECT: COMING WEEKS OFFER KEY OPPORTUNITIES, RISKS 
 
REF: A. TAIPEI 2126 
 
     B. TAIPEI 2001 
     C. TAIPEI 2063 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
1. (C) Summary: The period following the May 14 National 
Assembly (NA) election is expected to offer a critical window 
for movement on both domestic and cross-Strait policy. 
President Chen Shui-bian plans to renew his push to create a 
cross-party consensus behind greater cross-Strait economic, 
and perhaps, political contacts.  Reconciliation between the 
ruling and opposition party leadership will also be required 
to break the deadlock in the Legislative Yuan (LY) that has 
continued since the legislative elections last December. 
There will be only a narrow window between the NA election on 
May 14 and the recess of the current LY session, sometime 
before June 1, to take action on the Special Defense 
Procurement Budget and other key legislation.  If party 
leaders fail to seize this window of opportunity for domestic 
political reconciliation, the July contest for leadership of 
the KMT and the onset of the December 2005 local election 
campaign could put opportunities for major progress in 
cross-Strait relations and domestic policy in jeopardy.  End 
Summary. 
 
Carpe Diem 
---------- 
 
2. (C) The two weeks following the May 14 National Assembly 
(NA) election may offer a critical window for Taipei to make 
major strides in cross-Strait and domestic policy.  Aides to 
President Chen Shui-bian say they will attempt to arrange 
meetings for the President with KMT Chairman Lien Chan and 
People First Chairman (PFP) Chairman James Soong, either 
individually or as a group, as soon as balloting closes on 
May 14 (Refs A/C).  Chen will seek to use the meetings to 
build a consensus behind the government's plans for renewed 
cross-Strait dialogue and, if possible, secure Pan-Blue 
participation in some form of a Cross-Strait Peace and 
Stability Committee.  If and when Chen secures opposition 
support for the government's policy of engagement with the 
PRC, the Chen administration plans to proceed with contacts 
with both Washington and Beijing over the creation of a 
channel and formulation to facilitate cross-Strait dialogue. 
Cross-Strait policy officials also emphasize that Taipei is 
still set to move ahead in June on measures to liberalize 
economic interaction with the Mainland that were delayed by 
PRC passage of the Anti-Secession Law.  Chen's advisors 
believe that recent USG pressure on Beijing to reach out to 
the government in Taipei in the wake of the successful visits 
by the two Pan-Blue leaders may offer the first real 
opportunity for the Chen administration to establish formal 
contacts with the PRC. 
 
Special Defense Budget a Critical Test 
-------------------------------------- 
 
3. (C) Presidential aides say the key test for the 
President's reconciliation initiative will be whether the 
Pan-Blue leaders agree to take action on the Special Defense 
Procurement Budget and other critical legislation during the 
current Legislative Yuan (LY) session (Ref B).  Democratic 
Progressive Party (DPP) officials say that it will be hard to 
bring Chen's own base behind his plans for expanding 
cross-Strait contacts if the Pan-Blue continues to use its LY 
majority to frustrate other government policies, especially 
in the wake of the Lien/Soong visits to Beijing.  However, 
the window for legislative action is limited given the 
requirement that the LY must recess before the NA can meet. 
Under current rules, the NA must meet within 10 days of the 
validation of the May 14 NA election results.  The Central 
Election Commission (CEC) is expected to make this validation 
on or around May 20, with most political observers expecting 
the NA to open on June 1. 
 
4. (C) Legislative floor managers tell AIT that chances for 
the LY completing work on the Special Defense Budget before 
the late-May recess are slim.  However, if the package can be 
voted out of the Procedure Committee during its May 17 
meeting (or May 24 meeting, if the LY is still in session by 
then), then the LY will be able to take action during a 
summer Extraordinary Session.  The Democratic Progressive 
Party (DPP) has already announced it plans to call for a 
Extraordinary Session after the NA recesses, and LY President 
Wang Jin-pyng has publicly suggested he would support a 
session in either July or August (Note: under the 
constitution, the NA can only meet for up to 30 days, and 
given the limited agenda, the NA might finish its work as 
early as mid-June).  While there are still details to be 
worked out over the final composition of the Special Defense 
Budget package, DPP LY officials tell AIT that an agreement 
by the four LY party caucuses to address the issue in an 
Extraordinary Session would signal that the budget will be 
enacted. 
 
Worst Case Scenarios 
-------------------- 
 
5. (C) Presidential aides express concern privately that if 
the Pan-Blue leaders, and Lien Chan in particular (Ref C), 
refuse to participate in a high level meeting after the NA 
election, action on a range of major policy initiatives may 
have to wait until 2006.  Attention in both camps is already 
turning to the December magistrate/mayor election.  While the 
election is likely to focus on local issues, the amount of 
political and economic resources that county magistrate and 
city mayors can bring to future legislative and presidential 
elections make the December campaign critical to both sides. 
Thus, prospects for inter-party reconciliation during the 
Autumn LY session, even if a more pragmatic opposition leader 
emerges from the July 16 KMT Chairmanship race, are dim. 
 
6. (C) Prospects for post-NA election cross-partisan 
reconciliation may be brighter than heated pre-election 
campaign rhetoric would otherwise suggest.  The DPP and KMT, 
which are both campaigning in favor of the proposed 
constitutional reforms, are expected to cooperate in the 
immediate aftermath of the May 14 election to enact 
implementing legislation that will permit the NA to convene. 
A major setback for the DPP on May 14 could provoke a sharply 
negative reaction from within the Pan-Green base, potentially 
weakening Chen's mandate to reach out to the two opposition 
parties.  However, the President has intentionally lowered 
expectations for a DPP victory in the days leading up to the 
vote, reducing the risk for a repeat of the Pan-Green 
backlash that followed the party's setback in the December, 
2004 LY election. 
 
Comment: A Unique Opportunity 
----------------------------- 
 
7. (C) The coming weeks may offer the first real opportunity 
to move beyond the gridlock in domestic politics and chill in 
cross-Strait relations that have plagued Taiwan over the past 
three years.  Leaders on both sides acknowledge that the 
public is losing patience with partisan infighting and 
uncertainty in cross-Strait relations.  AIT will continue to 
press all sides to take advantage of the post-May 14 window 
to establish a domestic consensus behind accelerated 
cross-Strait contacts and to take action on the Special 
Defense Procurement Budget.  AIT will also encourage the Chen 
administration to actively explore positive signs that 
President Hu Jintao may be moving to replace the stale Taiwan 
policy line of his predecessor with something new, and 
perhaps more flexible. 
PAAL