US embassy cable - 05TAIPEI3675

C O N F I D E N T I A L SECTION 01 OF 04 TAIPEI 003675 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 09/06/2015 
TAGS: PGOV, TW, Domestic Politics, Cross Strait Politics 
SUBJECT: PAN-BLUE DIVERSIFIES CROSS-STRAIT STRATEGY 
 
REF: A. TAIPEI 3454 
     B. TAIPEI 2968 
     C. TAIPEI 2881 
 
Classified By: AIT Acting Director David J. Keegan, Reason(s): 1.4 (B/D 
). 
 
1. (C) Summary:  Hoping to continue the momentum established 
by his May 2005 "five point consensus" with Beijing, and only 
two days before stepping down as KMT Chairman, Lien Chan 
announced a KMT plan to send local KMT officials to meet with 
their Chinese Communist Party (CCP) counterparts.  Lien also 
intends to establish a cross-Strait "Peace Foundation" to 
improve trade, tourism, and other ties.  Senior KMT officials 
have told AIT that Chairman Ma wholeheartedly supports Lien's 
"five point consensus," and had personally asked Lien to 
continue managing the cross-Strait portfolio.  PFP LY 
officials recently organized a cross-Strait financial forum 
in Shanghai, and are jointly planning with Shanghai CCP 
officials another economics and trade forum there for 
mid-September.  The Mainland Affairs Council (MAC) and DPP LY 
leaders have urged the KMT and PFP to avoid doing anything 
that would compromise Taiwan's interests.  End summary. 
 
KMT Economic and Cultural Exchanges 
----------------------------------- 
 
2. (U) On August 16, outgoing KMT Chairman Lien Chan 
announced that the KMT and Chinese Communist Party (CCP) 
would begin a series of exchanges of city and county-level 
party officials in late August.  Lien's announcement followed 
the return to Taiwan of Tseng Yung-chuan, the Director of the 
KMT's Central Policy Committee.  Heading a delegation of five 
senior KMT members, Tseng flew to Beijing on August 15 to 
discuss direct cross-Strait passenger and cargo charter 
flights.  Tseng said publicly that the KMT hopes to 
facilitate approval for cross-Strait passenger charter 
flights in time for the September 18 Moon Festival, without 
adversely affecting ongoing cargo flight talks.  While in 
Beijing, KMT legislator John Chiang proposed future 
discussions of cross-Strait tourist charter flights, and 
direct Taiwan-Shanghai and Taiwan-Shenzhen shipping routes. 
Mainland Affairs Council (MAC) Chair Joseph Wu said August 31 
that cross-Strait flights would not be possible without 
official negotiations.  (Comment:  If Taiwan insists on that, 
it would amount to a rejection of the Macau model, where 
industry-to-industry talks, with technical input from civil 
aviation authorities, resulted in a successful trial run of 
flights during the February 2005 Chinese New Year period. 
End Comment.) 
 
3.  (U) Lien's exchange program includes the following 
visits: 
 
-- August 23-26:  KMT officials from Taichung City visited 
Xiamen 
 
-- August 26-31:  KMT officials from Changhua County toured 
Qingdao 
 
-- August 30-September 5:  KMT officials from Hsinchu City 
visited for Suzhou 
 
-- September 14-19:  KMT representatives from Kaohsiung City 
will tour Fuzhou 
 
-- September 19-24:  KMT city government officials from 
Keelung will visit Ningbo City 
 
-- Mid-September:  A Tainan City - Shenzhen exchange will be 
scheduled for mid-September 
 
In his August 16 announcement, Lien stated that these 
local-level exchanges will not only help "strengthen 
communications and friendship, but will also promote 
cross-Strait exchanges in culture and goods."  Lien added 
that this series of visits is "just the beginning," and that 
other exchanges would follow. 
 
4.  (C) KMT LY member and Director of Policy Tseng Yung-chuan 
told AIT that Chairman Ma wholly supports the "five point 
consensus" agreed to by Lien Chan and Hu Jintao in May 2005, 
and that Ma had personally asked Lien to continue managing 
the party's cross-strait policy.  Ma also agreed that Lien, 
as a private citizen, should continue to represent the KMT in 
future visits to the Mainland, since Ma, in his official 
capacity as Taipei City Mayor, could not.  KMT Deputy Policy 
Director Chang Jung-kung told AIT in a separate meeting that 
Lien's cross-strait policy had yielded significant public 
opinion gains for the KMT, and that Ma would not deviate from 
that policy before the city-county elections scheduled for 
early December, for fear of alienating potential KMT voters. 
However, Chang said, if the elections turn out to be a 
success for the KMT, Ma may become more confident of his 
leadership position, and he may seek to exert more control 
over cross-Strait policy.  Both Tseng and Chang told AIT that 
although Lien is "in charge" of KMT cross-strait policy, his 
policy decisions must still be vetted by the Central Standing 
Committee, and Ma, as Chairman, will have the final say. 
(Comment:  Given the large number of Wang Jin-pyng 
supporters, who are almost certain to support Lien on the 
Central Standing Committee as well, Ma may find that any 
"final say" may be difficult and costly.  End Comment.) 
 
5.  (C) Blue-leaning National Taiwan University Professor 
Philip Yang told AIT that political and practical reasons 
forced the KMT and PFP to open up dialogue with the PRC:  if 
the Pan-Blues continued to compete with the DPP in 
emphasizing how "bad" China was, the KMT would never win 
another election, since the terms of that debate would always 
favor the DPP.  Six years of the DPP demonizing the PRC and 
restricting the "three links," moreover, had deprived 
Taiwan's economy and its people of opportunities presented by 
China's precipitous economic growth.  Perhaps more 
importantly, they had jeopardized Taiwan's security by 
alienating the Beijing government and the Chinese people.  By 
opening communication channels with China, Yang said, the KMT 
was helping its own political prospects while simultaneously 
boosting economic opportunities for Taiwan. 
 
6.  (C) In a separate conversation, KMT Policy Director Tseng 
said Lien Chan had "defused" the Chinese people's anger 
toward Taiwan, who were now more willing to forego force, and 
rely upon economic and social links to bring about 
reunification.  Director Tseng and Professor Yang both 
dismissed the notion that the KMT was usurping the authority 
of Taiwan's democratically elected DPP government by 
conducting extra-governmental exchanges, arguing that the KMT 
could only influence, and not determine, the cross-Strait 
policy of Taiwan's elected government.  President Chen still 
had the final say on the extent to which the "three links" 
and other cross-Strait policy matters would change. 
 
KMT-PRC Peace Forum 
------------------- 
 
7.  (U) On August 29, KMT Deputy Policy Director Chang 
Jung-kung announced publicly that the KMT will participate in 
a forum on cross-Strait peace, to be held in China later this 
year.  The announcement followed reporting in Taiwan that 
former KMT Chairman Lien Chan had taken initial steps to 
establish a foundation to promote cross-Strait peace.  Chang 
Jung-kung announced that Lien had in fact submitted 
applications to relevant government agencies for approval to 
establish the "Cross-Taiwan Strait Peace Foundation," and 
that Lien had already begun raising public funds for its 
creation.  The China Post reported that KMT Chairman Ma 
Ying-jeou knew of Lien's plans and believed the Foundation 
could serve as a positive force in seeking cross-Strait 
peace.  The KMT is also planning to convene a forum in Taipei 
to enable senior KMT and CCP leaders to discuss means to 
improve and expand the "three links" between Taiwan and the 
PRC.  Invitations have already reportedly been extended to 
several senior CCP officials, but a date has not been set. 
 
8.  (C) KMT Deputy Policy Director Chang explained to AIT 
that the reason Lien sought to establish the Peace Foundation 
was to attract private funds to support the KMT's exchange 
visits to the PRC.  Chang said the KMT had no money, and that 
individual members had been paying their own travel expenses. 
 It is Lien's hope, Chang said, that the Taiwan business 
community, which stands to benefit from improved market 
access, direct shipping routes, and better PRC regulatory 
protections, would be willing to finance the KMT's efforts 
toward those goals.  Chang said the Peace Foundation would 
have the added advantage of no formal ties to the KMT, making 
it a more attractive negotiating partner for Beijing.  NTU 
Professor Yang noted that this configuration could be 
advantageous to Ma, should he need to distance himself from 
Lien's pro-China policies in advance of the 2008 presidential 
election. 
 
PFP Cross-Strait Activities 
--------------------------- 
 
9.  (U) PFP Secretary General Chin Chin-sheng led a 
delegation of PFP representatives to Beijing August 21-25 to 
arrange a cross-Strait forum on financial and economic issues 
to be held in Shanghai September 14-16.  The forum is being 
jointly organized by the PFP and the PRC Central Office for 
Taiwan Affairs.  Chin told the press the forum would be an 
opportunity for leaders on both sides to exchange views on 
trade and economy in the absence of official contacts.  PFP 
LY member Christina Liu (Yi-ru) told AIT that PFP Chairman 
James Soong will preside over the opening ceremony if PRC 
leaders of comparable stature attend.  Liu said that she will 
not participate in the Shanghai forum because it is 
insufficiently bipartisan.  She recently led a 30-person 
inter-party delegation to Shanghai and Nanjing, August 21-24, 
which focused on currency exchange and Taiwan firms in China 
listing on the Taiwan Stock Exchange.  Liu told AIT that, 
although DPP leaders blocked DPP legislators from 
participating in the delegation, MAC supports the currency 
exchange initiative. 
 
Pan-Green Reaction: Don't Go Too Far 
------------------------------------ 
 
10. (U)  On August 30, DPP Legislative Whip William Lai 
(Ching-de) publicly urged the Pan-Blues to avoid jeopardizing 
Taiwan's survival and sustainable development during their 
interactions with the PRC.  Lai also stated his fear that the 
Pan-Blues would use their slim LY majority to coerce the 
Taiwan government to accept "consensus" documents and other 
agreements generated by KMT and PFP cross-Strait forums. 
Taiwan's Mainland Affairs Council (MAC) on August 10 issued a 
public response to recent KMT efforts to broker zero-tariff 
treatment for various Taiwan fruit exports to the Mainland. 
MAC warned that China's market for high-cost, high-quality 
fruit is limited by China's low per capita income, and that 
PRC trade incentives were obviously a strategy to "divide 
Taiwan's governing and opposition parties, and Taiwan's 
farmers and government."  This issue was discussed more fully 
at reftel B. 
 
11. (C) DPP Director of Chinese Affairs Tung Li-wen told AIT 
that the DPP is fearful the KMT will use its city-by-city 
cross-Strait exchange program to combine and retake control 
of local business organizations and turn them once again into 
part of the KMT political machine.  While the KMT is focused 
on cross-Strait trade and transportation issues, Tung said, 
the PFP is staking its political claim on helping Taiwan 
financial organizations penetrate the PRC's finance, banking, 
and insurance sectors, which, in accord with WTO obligations, 
are due to open soon.  Tung said the most frightening aspect 
of the Pan-Blue cross-Strait agenda is not the prospect of 
Pan-Blue domestic political gains, but rather the creation of 
direct grass-roots links between Taiwan business and 
political leaders and the PRC, which the PRC can exploit to 
learn more about Taiwan's internal political workings.  Tung 
said the DPP must be perceived by voters as doing more than 
simply saying "No" to Pan-Blue cross-Strait proposals. 
Instead, President Chen and the DPP must educate the public 
about their own work on cross-Strait relations, and even 
engage the Pan-Blues in a collaborative process.  Tung also 
suggested that the DPP, taking a page out of the Pan-Blue 
book, would in the near future designate private sector 
agencies to serve as proxies on a number of key cross-Strait 
issues.  Premier Frank Hsieh announced in June 2005 the 
intention to designate non-governmental organizations to 
discuss the "three links" (reftel C), but we have not seen 
much movement in that direction thus far. 
 
12.  (C) Comment:  Lien Chan's role as architect of KMT 
cross-Strait policy seems assured, at least until after 
Taiwan's December 2005 city-county elections.  Chairman Ma 
appears to value the KMT's recent dialogues with the PRC, and 
the prospect that the KMT's resulting new popularity can 
carry the KMT to victory in December's city and county 
elections.  At the same time, Ma's distance from the KMT's 
cross-Strait policy under Lien Chan enables Ma to focus on 
resolving the KMT's numerous internal problems, while 
allowing him to blame Lien should the public sour on the 
party's close contact with the Mainland.  President Chen and 
his Pan-Green allies will continue to feel pressure as long 
as KMT and PFP can continue pushing initiatives that promise 
to expand the "three links" across the Strait.  End Comment. 
KEEGAN