US embassy cable - 05TAIPEI4778

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 004778 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 12/02/2015 
TAGS: PGOV, TW, Cross Strait Politics, Domestic Politics 
SUBJECT:  CROSS-STRAIT RELATIONS: TAIWAN ELECTION WILL OR 
WILL NOT CHANGE? 
 
REF: TAIPEI 4572 
 
Classified By: AIT Director Douglas H. Paal, Reason(s): 
1.4 (B/D) 
 
1.  (C) Summary.  Kuomintang (KMT) Chairman Ma Ying-jeou 
November 28 predicted that a big DPP defeat in the December 3 
elections would cause President Chen Shui-bian to be less 
confrontational in his cross-Strait policy.  Chen countered 
that a KMT victory would make the PRC less willing to improve 
cross-Strait links.  Government insiders insisted to AIT, and 
President Chen reaffirmed publicly, that Taiwan's 
cross-Strait policy will not change after the December 3 
local elections, regardless of the outcome.  This 
cross-Strait issue arose in the last frantic days of a 
campaign distinguished more for mudslinging than substance. 
It is a late and painful reminder that this election could 
have a real impact on Taiwan's economic future as well as 
U.S. interests.  End Summary. 
 
Chairman Ma Says DPP Defeat Means Cross-Strait Opening 
--------------------------------------------- --------- 
 
2.  (U) KMT Chairman Ma Ying-jeou on November 28 stated that 
a big defeat for the ruling Democratic Progressive Party 
(DPP) would force President Chen to make his cross-Strait 
policy more flexible.  Ma himself was apparently responding 
to reports in the Taiwan media of a Merrill-Lynch analysis 
predicting that Taiwan stock prices might improve with a KMT 
victory.  There were similar press reports on November 28 of 
a CLSA Asia Pacific Markets Outlook forecast that a KMT 
victory would boost the Taiwan stock market because it would 
encourage the DPP government in the direction of greater 
opening towards China. 
 
President Chen Counters 
----------------------- 
 
3.  (U) President Chen responded to Ma on November 30 in a 
campaign speech in Ilan County on Taiwan's east coast.  "If 
Pan-Blue wins a big victory," Chen stated, "cross-Strait 
policy will only tighten (jinsuo), not relax, and will not 
become more open."  KMT Chairman Ma, Chen said, was 
"deceiving voters" with his claim that KMT victory would 
force the DPP government to relax its cross-Strait policy. 
"This will not happen," Chen insisted.  On the contrary, if 
the DPP fares poorly and the KMT wins big on December 3, 
cross-Strait policy "can only tighten, not loosen."  The 
previous day, Chen declared that if the KMT won more than 
half of the races at stake, it would pass a Taiwan version of 
Beijing's "Anti-Secession Law." 
 
Ma Rejoins 
---------- 
 
4.  (U) Chairman Ma responded by shaking his head sadly in 
dismay and admonishing Chen in parental tones not to be 
"spiteful" (duqi).  Tightening up cross-Strait policy, Ma 
cautioned, would only further marginalize Taiwan in East 
Asia.  If the Taiwan government will not loosen its 
restrictions on the three links with China, Ma continued, 
Taiwan will lose its geographical economic advantage with a 
booming PRC. 
 
NSC's Chou Claims Media Exaggeration 
------------------------------------ 
 
5.  (C) National Security Council (NSC) Secretary-General 
Chiou I-jen insisted to the Director that the media had 
exaggerated and misreported Chen's Ilan speech.  Chen, he 
explained, was just  responding to Ma Ying-jeou,s campaign 
claim that KMT victory on December 3 would bring further 
relaxation in cross-Strait relations.  Chiou, a central 
figure in formulating DPP campaign strategy, explained that 
the Taiwan media exaggerated Chen's remarks in the context of 
unprecedented negative campaigning. 
 
MAC's Wu Explains What Chen Meant 
--------------------------------- 
 
6.  (C) Mainland Affairs Council (MAC) Chairman Joseph Wu 
told the AIT Deputy Director that President Chen had made his 
remarks in Ilan with an eye toward both the election campaign 
and government cross-Strait policy.  He explained that 
President Chen had told him (Wu) that he felt it necessary to 
make his Ilan remarks in response to Ma,s statement that 
cross-Strait policy would loosen if the Pan-Blue coalition 
won a major victory on December 3.  Ma's remarks, Chen told 
Wu, would influence voters and therefore he had to respond. 
President Chen emphasized to Wu that Taiwan's cross-Strait 
policy would remain consistent and would continue to move 
forward at a stable pace unless the PRC refuses to negotiate 
on practical issues, such as cross-Strait flights. 
 
7.  (C) Chairman Wu told the Deputy Director that President 
Chen had hoped in early 2005 that it would be possible to 
follow up on the January-February 2005 Chinese New Year 
charter flights with other steps to improve cross-Strait 
ties, such as additional flights.  The Pan-Blue victory in 
the December 2004 LY elections, however, encouraged Beijing 
to push through the Anti-Secession law in March, which 
prevented additional steps to reduce cross-Strait tensions. 
If the Pan-Blue wins big again on Saturday, December 3, Wu 
argued, Beijing might once again seek to work with the 
Pan-Blue opposition and isolate the DPP government.  That 
could complicate any future cross-Strait negotiations and 
make it difficult for the DPP government to implement its 
commitments to move forward on cross-Strait opening. 
 
8.  (C) The government, Wu continued, has placed considerable 
emphasis on the need to make progress on cross-Strait 
transportation, as demonstrated by the renewal of New Year 
charter flights this year.  Taiwan is continuing to negotiate 
with the PRC on other passenger and cargo charter flights and 
hopes the atmosphere for these talks will improve after the 
election.  Wu told the Deputy Director that Taipei considers 
charter flights to be an intermediate step and wants to make 
progress toward direct scheduled flights.  Wu said he also 
hopes there will be movement on cross-Strait tourism after 
the December 3 election.  On November 30, he said, the 
Chinese side sent MAC information on the new cross-Strait 
tourism organization it is establishing (note: presumably the 
Cross-Strait Tourism Exchange Association reported reftel. 
end note), which is currently undergoing registration with 
the PRC Ministry of Internal Affairs.  MAC requested more 
information about the organization so that it can establish a 
parallel Taiwan counterpart in order to begin talks.  Wu 
explained that he hoped the Taiwan side could register its 
organization in about a month and then move forward on talks 
with its Mainland China counterpart as quickly as possible, 
though he would not speculate how long it might take to open 
PRC tourism to Taiwan.  Wu added that he looked forward to 
discussing these subjects in Washington when he visits next 
week.  He did not indicate whether a Blue victory on December 
3 would affect these plans. 
 
Chen Steps Back 
--------------- 
 
9.  (U) On December 1, President Chen took the extraordinary 
step of clarifying the remarks he made the previous day in 
Ilan.  The December 3 election results, he said, will not 
change Taiwan's cross-Strait policy.  He went on, however, to 
charge that an opposition Pan-Blue victory on December 3 
would mean the Pan-Blue Legislative Yuan (LY) would pass the 
"Cross-Strait Peace Promotion Bill," which he and the DPP 
variously call a "surrender law" or a Taiwan version of the 
PRC Anti-Secession Law.  Thus, Chen insisted, the December 3 
local elections are "life and death" for Taiwan. 
 
Comment:  Just Politics? 
------------------------ 
 
10.  (S) President Chen appears to expect that a KMT 
"victory" will lead to an outcome similar to the December 
2004 Legislative Yuan (LY) election results, which, in his 
view, emboldened the PRC to take further repressive measures 
such as the Anti-Secession law passed in March 2005.  Given 
their radically different perspectives on the fruits of this 
year,s CCP-KMT-PFP diplomacy after the passage of that law, 
it is not surprising that Chairman Ma believes the past year 
is beginning to produce improvements in cross-Strait 
relations, and more may flow next year, and that Chen 
believes the opposite.  Less than reassuring was Chiou,s 
message to the Director that another election setback will 
make Chen even more resentful of the PRC,s apparent decision 
to ignore him, and that Chen will be unlikely to advance 
cross-strait initiatives if the PRC continues to prefer to 
talk to opposition parties.  NSC Chiou's and MAC Wu's efforts 
to play down Chen's statements, and possibly Chen's 
clarification, reflect their awareness that AIT and 
Washington are watching events closely. 
 
11.  (C) To the extent that President Chen's rejoinder to Ma 
was "just campaign politics," it will probably not stir much 
resonance beyond Chen's "deep-Green" base.  Recent public 
opinion polls indicate a strong majority of Taiwan people 
favor reducing cross-Strait tensions and increasing economic 
and other ties with the PRC.  Within the DPP itself, 
moreover, there is growing awareness that improved 
cross-Strait relations are unavoidable and even beneficial to 
Taiwan.  On November 28, at nearly the same moment President 
Chen was proclaiming a reduction in cross-Strait relations if 
the DPP loses on December 3, Vice Premier Wu Rong-i was 
announcing that one of the main topics of the second Economic 
Development Conference, which will be held after the December 
3 election, will be improving cross-Strait economic ties. 
The same day, DPP legislator Shen Fa-hui also told AIT that 
Taiwan must open up more economically to Mainland China 
following the election.  While President Chen's rejoinder to 
Ma was a campaign ploy to elicit votes from Taiwan's moderate 
swing voters, it could also foreshadow a reluctance by the 
Chen government to negotiate with Beijing in the event of a 
DPP defeat, which could bring more efforts to slow 
cross-Strait progress like those that followed the DPP's 
December 2004 legislative election setback.  This time, 
however, an empowered and emboldened opposition Pan-Blue 
would push back with its own cross-Strait initiatives. 
Paal