US embassy cable - 05TAIPEI2167

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002167 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 05/13/2015 
TAGS: MARR, PGOV, PREL, TW, Cross Strait Politics 
SUBJECT: WANG ON SPECIAL DEFENSE BUDGET, PRC CONTACTS 
 
Classified By: AIT Director Douglas Paal, Reason(s): 1.4 (B/D) 
 
1. (C) Summary:  In a May 13 meeting with the AIT Director, 
Legislative Yuan President Wang Jin-pyng said that the KMT is 
committed to early action on the Special Defense Budget, but 
warned that James Soong and the PFP may continue to block the 
budget.  Wang said he has secured support from KMT Chairman 
Lien Chan and would engage Soong after his return from the 
PRC, but Wang cautioned that Soong might have promised 
Beijing that the PFP will continue to block the budget.  Wang 
assessed that prospects for cross-party reconciliation were 
set back after President Chen Shui-bian's attacks on his 
political opponents in the week leading up to the May 14 
National Assembly election.  Wang said that despite Lien's 
public statement that he has not ruled out the possibility of 
meeting Chen, "in his heart," Lien does not want to see Chen. 
 Wang said it is in the KMT's electoral interest to put 
party-to-party relations with the CCP ahead of reconciliation 
with the DPP government.  End Summary. 
 
Prospects for Cross-Party Reconciliation 
--------------------------------------- 
 
2. (C) In a May 13 meeting with the AIT Director, Legislative 
Yuan (LY) President Wang Jin-pyng, a candidate in the 
mid-July KMT Chairman election, said that the Democratic 
Progressive Party (DPP) government should not have rejected 
so readily the "Six Points" that People First Party (PFP) 
Chairman James Soong negotiated with PRC President Hu Jintao. 
 Wang said that even if the government cannot accept Soong's 
reformulation of the "1992 Consensus," it should at least not 
rule out Soong's statement as a basis for future dialogue. 
Wang added that Chen Shui-bian's volatile personality 
continues to complicate cross-party reconciliation.  He 
pointed out that Chen's recent criticisms of former President 
Lee Teng-hui and Soong will only make it more difficult for 
Lee and Soong to justify to their supporters continued 
cooperation with the DPP.  Noting that the February 2005 
Chen-Song meeting had already alienated each party's core 
supporters, Wang asserted that the PRC might yet succeed in 
pressuring Soong to distance himself from Chen.  Wang said 
that he has heard that Chen's attacks on Lee and shift to the 
political center may result in 16 fundamentalist DPP 
Legislators defecting to the TSU in the coming weeks. 
 
3. (C) Wang pointed out that although KMT Chairman Lien Chan 
does not have the difficulties that Lee and Soong have, 
President Chen's attacks on Lien's speech at Beijing 
University have also taken a toll.  Wang claimed that Lien 
had initially decided that he would meet with Chen but has 
had a change of heart since Chen's attack on him in the final 
week leading up to the National Assembly (NA).  Wang told the 
Director that although Lien has publicly stated that he does 
not rule out the possibility of meeting with Chen, privately 
Lien is not so inclined. 
 
4. (C) When the Director asked if it were in the KMT's 
electoral interest to continue boycotting the DPP government 
while focusing on party-to-party relations with PRC leaders, 
Wang replied in the affirmative.  Wang said that pursuing 
economic cooperation with the PRC is precisely what the KMT 
needs to do in order to erode the DPP's advantage among key 
constituencies, such as farmers and small businesses.  Wang 
said that the KMT will continue to negotiate with the PRC for 
concessions on the export to the PRC of Taiwan agricultural 
products and easing restrictions on PRC tourist visiting 
Taiwan.  Wang said that the KMT will seek to use the 
KMT-controlled Provincial Farmer's Association to negotiate 
agricultural liberation with the PRC, bypassing the 
government's Council of Agriculture (COA).  Wang said that if 
the DPP wanted to support these measures, Chen could 
potentially claim credit.  However, Wang said that Chen is 
unlikely to endorse any initiative he did not personally 
craft. 
 
Special Budget 
-------------- 
 
5. (C) Wang told the Director that he spoke to KMT Chairman 
Lien Chan about the Special Defense Budget at length on May 
6.  He said he told Lien that the entire weapons acquisition 
package needs to remain intact and be funded via a special 
budget.  Wang said that Lien agreed that early LY action is 
needed.  Wang contrasted the KMT's position by warning that 
James Soong and the PFP are likely to seek further delays in 
LY action.  Wang said that before Soong departed on his PRC 
trip he had asked to see Soong to discuss the special budget 
but Soong told him that he would not be in a position to 
discuss the budget until after the NA election.  With only a 
few more weeks left in this LY session, Wang said that it was 
unlikely that the LY will take any action, even moving the 
budget bill out of the Procedure Committee.  He said he is 
calling for the LY to go into an extraordinary session, but 
for reasons not entirely clear, the PFP and TSU are opposing 
the suggestion.  Wang downplayed the significance of the 
budget's failure to clear the LY Procedure Committee, arguing 
that once a cross-party consensus has been secured, moving 
the budget through the various LY committee would be quick 
and a matter of formality. 
 
6. (C) Wang said he believes that Soong did promise President 
Chen the PFP would cooperate with the DPP on passing the 
Special Budget after the NA election.   However, Wang warned 
that Soong may have made a secret deal with the PRC not to 
support the Budget.  The Director told Wang that Taiwan would 
be sending a very negative signal to the United States if the 
LY failed to take any action on the Special Budget during the 
current session, especially if passage during a summer 
extraordinary session is still in doubt.  He said that while 
the U.S. supports cross-Strait dialogue, in order to achieve 
positive results with the PRC, it is essential to negotiate 
from a position of strength. 
 
Comment: Grim Outlook 
--------------------- 
 
7. (C) Wang's comments on both the prospects for the Special 
Defense Budget and future cross-party reconciliation were not 
encouraging.  The current dynamics in Taiwan's political 
world make it all too easy for one of the many moving parts 
to clog up the entire system.  If there is no quick return to 
cross-partisan talks after the May 14 NA election, we could 
be in for another period of political gridlock.  AIT reminded 
Wang that Washington is tiring of partisan gamesmanship and 
will be looking for all sides to take real action on the 
Special Defense Budget and cross-Strait policy. 
PAAL