US embassy cable - 05TAIPEI4718

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 004718 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 11/22/2015 
TAGS: PGOV, PREL, TW, Domestic Politics, Cross Strait Politics 
SUBJECT: CROSS-STRAIT HEM AND HAW:  THE GOOD NEWS, THE BAD 
NEWS, AND ELECTION POLITICS 
 
REF: A. TAIPEI 4572 
     B. TAIPEI 0130 
     C. TAIPEI 3454 
 
Classified By: AIT Director Douglas H. Paal, Reason(s): 
1.4 (B/D) 
 
1.  (C) Summary.  Taiwan's back-to-back announcement of a new 
round of Chinese New Year cross-Strait charter flights and 
rejection of a high-level PRC delegation visit to Taiwan was 
intended to strike a domestic political balance two weeks 
before the December 3 elections.  President Chen's government 
sought to demonstrate that the ruling Democratic Progressive 
Party (DPP) can run cross-Strait relations smoothly while it 
neutralizes a potential boon to the opposition Kuomintang 
(KMT) election campaign.  Both Green and Blue contacts agree 
that no further cross-Strait developments will occur before 
the December 3 elections.  Those results, in turn, could have 
important implications for future cross-Strait negotiations 
depending on the outcome.  End Summary. 
 
2.  (C) On November 18, Taiwan's Mainland Affairs Council 
(MAC) made back-to-back announcements of an agreement to 
renew cross-Strait charter flights for the 2006 Chinese Lunar 
New Year on January 29, and refusing permission for PRC 
Taiwan Affairs Office (TAO) Director Chen Yunlin to visit 
Taiwan in mid-December.  While the charter flight agreement 
represented a small step forward over the February 2005 
Chinese New Year charter flight agreement, the rejection of 
the Chen visit ended, at least for the time-being, the KMT 
initiative for a cross-Strait economic and trade seminar in 
Taiwan. 
 
"Yes" to New Year Charter Flights 
--------------------------------- 
 
3.  (C) The charter flight agreement, which MAC announced 
simultaneously with TAO in Beijing, slightly expanded the 
January 2005 cross-Strait New Year charter flight agreement. 
The agreement added Xiamen to the destinations of Beijing, 
Shanghai and Guangzhou offered in the 2005 New Year flight 
agreement.  It increased the number of days from 23 to 25 
days (January 20-February 13) and raised the number of 
flights from 48 to 72.  At the same time, MAC Vice Chairman 
David Huang told AIT, Taiwan succeeded in keeping the number 
of Taiwan airports to two, Taipei and Kaohsiung.  As in 
February 2005, these will be non-stop flights traversing Hong 
Kong or Macao air space.  Beijing, however, would not agree 
to Taiwan's proposal to expand the transit points to include 
Okinawa (Ref A).  While Beijing refused the economically 
beneficial proposal to cut flying distance by transiting 
Okinawa (Note: presumably because this would have 
"internationalized" the flights to a third country. End 
Note), the expansion of passengers will prove economically 
beneficial to airlines by helping fill aircraft on both legs 
of the cross-Strait journey, with Taiwan businessmen in China 
and tourists from Taiwan flying in opposite directions over 
the New Year. 
 
4.  (C) Huang told AIT that the negotiations went quickly and 
smoothly.  Press reports of "three secret meetings" were 
incorrect, he noted, as most of the negotiations were done by 
"other channels," including telephone, fax, and e-mail, 
"greatly facilitating and expediting the negotiations."  The 
"other channel" negotiations left only a few details to be 
worked out, including, Huang noted, what the requirement that 
passengers must have a Taiwan passport and valid travel 
documents means.  (Comment.  Though MAC Chairman Joseph Wu 
told the Deputy Director earlier that the charter flight 
negotiations would follow the January 2005 "Macao Model" in 
which officials on both sides were imbedded in civil air 
delegations -- see Ref B -- in fact AIT understands this did 
not happen this time around, and the civil discussions and 
"other channels" conducted the entirety of the negotiations 
without the involvement of government representatives.  End 
Comment.) 
 
"No" to Chen Yunlin Visit 
-------------------------- 
 
5.  (C) Later the same afternoon, MAC formally rejected the 
opposition KMT application for TAO Director Chen Yun-lin and 
a delegation of 60 to attend a mid-December "Cross-Strait 
Economic and Trade Seminar" in Taipei.  MAC Vice Chairman Liu 
Te-hsun told the press that MAC "does not see how this visit 
could improve relations between the two sides."  A few days 
earlier, MAC Chairman Wu had told the Deputy Director that 
while the Taiwan government welcomed Chen Yun-lin's visit, it 
could only occur if their were official contacts between 
Beijing and Taipei to arrange the visit.  Wu complained 
bitterly that the KMT was playing "a chess game" to hem in 
and check the government.  The invitation to Chen Yunlin, he 
charged, was done for domestic political reasons and intended 
to put the ruling DPP in a difficult "lose-lose" situation: 
approving the KMT invitation would enrage DPP supporters and 
encourage Beijing to think it can bypass Taiwan's elected 
government, while refusal would allow the KMT to castigate 
the government for blocking improvements in cross-Strait 
relations.  It would have fed a media frenzy, moreover, to 
have Chen Yunlin confirm or deny Chen Shui-bian's allegation 
of a secret meeting with James Soong in the US.  The KMT had 
deliberately "created an impossible situation" for MAC and 
the government, Wu argued. 
 
6.  (C) Ambassador Stephen Chen (Hsi-fan), who organized the 
cross-Strait seminar sponsored by the KMT-affiliated National 
Policy Foundation, told AIT that the KMT fully expected the 
MAC rejection the moment President Chen tied a Chen Yunlin 
visit to Beijing approval for Legislative Yuan (LY) Speaker 
Wang Jin-pyng to represent Taiwan at the Pusan APEC leaders' 
meeting.  Now, MAC's refusal to allow the Chen Yunlin visit, 
Ambassador Chen said, effectively cancelled the conference. 
Nevertheless, he continued, planning is underway for two more 
cross-Strait conferences in Taipei next year, and counterpart 
conferences will continue on the mainland. 
 
Near Future:  More of Macao Model 
--------------------------------- 
 
7.  (C) MAC Vice Chairman Huang told AIT that the December 3 
election could have a major impact on the future of 
cross-Strait negotiations.  If the DPP fares badly, he mused, 
Beijing will conclude, "incorrectly," that the DPP is on the 
way out, and will refuse to negotiate and wait for 2008.  If, 
on the other hand, the DPP does relatively well, then Beijing 
will have to think twice about its stonewalling the DPP 
government.  Meanwhile, Beijing will give nothing before the 
December 3 elections; what happens afterwards will depend in 
part on the election results, he said, evidently discounting 
Beijing's agreement to charter flights. 
 
8.  (C) MAC Chairman Wu told the Deputy Director that he 
envisions future cross-Strait negotiations will be based on 
the "Macao Model" of negotiation, in which substantive work 
is done by officials imbedded in ostensibly civil delegations 
(Ref B).  The obvious next steps forward would be on Chinese 
tourists and on cargo and passenger charter flights.  Beyond 
this, the Renminbi exchange in Kinmen and Matsu has worked 
out very well, he said, and the government is now considering 
extending the exchange to Taiwan itself, but only after a 
thorough review of rules and regulations by the Finance 
Ministry. 
 
Over the Horizon:  Little Food for Thought 
------------------------------------------ 
 
9.  (C) Despite several leading questions, Chairman Wu was 
unable to present a clear vision of the future of 
cross-Strait or international relations.  While acknowledging 
Taiwan's shrinking diplomatic ties, given Senegal's recent 
severance of relations with Taiwan, Wu insisted Taiwan has a 
strong fundamental diplomacy based on development assistance 
to its diplomatic partners.  Taiwan's development program in 
Burkina Faso, for example, is so strong that ties with that 
country are rock solid, Wu maintained.  Taiwan's activism in 
international disaster relief efforts for the South Asian 
tsunami, the Pakistan earthquake (although Islamabad refused 
 
SIPDIS 
Taipei's assistance) and Hurricane Katrina relief, he said, 
were another venue for pressing Taiwan's case internationally 
and vis-a-vis the PRC. 
 
10.  (C) Wu then told the Deputy Director that Taiwan's best 
hope for improving its international situation is for an FTA 
with the U.S.  Taiwan's isolation by the PRC, he argued, 
endangers Taiwan's stability.  An FTA, he continued, would 
show the way for other nations, build Taiwan confidence and 
prevent growth of Taiwan radicalism.  When the Deputy 
Director questioned whether an FTA would accomplish so much 
and urged that Taiwan not look only to the U.S. for help but 
to recognize and deal with the reality of its rapidly 
developing neighbor across the Strait, Wu did not have a 
response and appeared not to have given much thought to 
long-term cross-Strait relations.  Vice Chairman Huang argued 
that the PRC commercial allure was something of a passing 
fancy, as China's comparative advantage, especially in labor 
costs, would soon disappear and Taiwan business would move 
elsewhere. 
 
Comment:  Hard Stick, Soft Stick 
-------------------------------- 
 
11.  (C) The ruling DPP responded to the calculated KMT move 
of inviting TAO Director Chen Yunlin to Taipei, with an 
equally calculating response.  Both the New Year charter 
flight announcement and the Chen visit rejection had been in 
the works for several weeks.  The juxtaposed responses on 
November 18 allowed the DPP government both to play to its 
deep-Green support base in rejecting the Chen Yunlin visit 
and to counter KMT efforts to sideline President Chen and the 
ruling DPP.  President Chen attacked the KMT and the Chinese 
Communist Party (CCP) over the weekend as "brothers" 
(xiongdi), because Pan-Blue's proposed "Cross-Strait Peace 
Bill" and Beijing's "Anti-Secession Law" are two peas in a 
pod.  Unlike the MAC's ham-handed effort in July to block the 
PRC's offer to import Taiwan fruit duty free, which backfired 
and came back to haunt the Chen government, these two paired 
actions appear to have played well domestically in Taiwan. 
At a minimum the DPP government has avoided any political 
damage from these cross-Strait announcements.  The 
cross-Strait agenda, however, remains driven by Beijing's 
initiative and only modified by Taipei. 
Paal