US embassy cable - 05TAIPEI4840

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004840 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 12/09/2015 
TAGS: PGOV, PREL, TW, CH, Domestic Politics 
SUBJECT: THE DPP TORTURED IN DEFEAT 
 
REF: TAIPEI 4818 
 
Classified By: AIT Director Douglas Paal, Reasons: 1.4 (b/d) 
 
1.  (C) Summary: While President Chen remains largely silent 
and out of the public view, others within the DPP are 
speculating on the future course of the president and the 
party and doing what they can to influence the outcome.  Two 
moderate DPP figures, Hong Chi-chang and Wu Hsiang-jung, told 
AIT that party moderates have urged the president to step 
back from the political arena and to consider a financial 
expert as premier in January.  Both Wu and Hong expect Vice 
President and Acting Party Chairman Lu Hsiu-lien to seek 
election as party chairman in January, presumably to help her 
campaign to win the DPP nomination for president in 2008.  Wu 
and Hong agreed there will be resistance within the DPP to 
Lu's wish to become chairman.  Wu and Hong both said they 
expect the DPP government to continue gradually opening 
cross-Strait relations.  End Summary. 
 
2.  (C) DPP Legislator Hong Chi-chang, a member of the DPP 
New Tide faction, told AIT that he recently told President 
Chen Shui-bian that public dissatisfaction with DPP 
corruption and ineffective governance were responsible for 
the DPP defeat in the December 3 local elections and that 
Chen would have to take some actions to restore public 
confidence.  One such step, Hong suggested, could be to 
require all senior officials to sign a clean government 
agreement.  Hong said he also advised President Chen to step 
back from the political party arena and to say less, which 
would be in line with his role as president.  The DPP 
chairman and not the president should take the lead on 
inter-party issues, including meetings with the leaders of 
other parties, Hong said.  According to Hong, Chen listened 
more and spoke less than usual during their recent meeting. 
Hong added that he does not expect Chen to make a more formal 
public statement, following his lengthy but vague message on 
the internet in which he promised improved performance to 
fulfill public expectations. 
 
3.  (C) DPP Policy Research and Coordinating Committee Deputy 
Director Wu Hsiang-jung (protect) told AIT that he expects 
Chen to name a new premier by mid-January.  That would allow 
sufficient time to form a new cabinet prior to the resumption 
of the Legislative Yuan (LY) session on February 1.  Wu 
suggested that Chen might appoint someone with financial 
expertise such as Central Bank Governor Perng Fai-nan (Peng 
Huai-nan) in order to improve government performance.  It is 
also possible, however, that Chen could appoint a figurehead 
premier so that he could play a greater role in managing 
government policy, a role he enjoyed playing when he was 
mayor of Taipei, Wu added. 
 
4.  (C) Recent media reporting on Kuomintang (KMT) LY Speaker 
Wang Jin-pyng as a possible candidate for premier may have 
been a trial balloon, Wu speculated.  Hong said he had heard 
no "inside story" indicating the president is thinking of 
Wang, but added that he did not rule out such a possibility. 
Hong pointed out the difficulties a Wang appointment would 
entail.  Wang represents the KMT as an at-large legislator, 
and therefore would have to have KMT party concurrence or 
betray the KMT to accept a DPP appointment.  The DPP is still 
embittered over its experience with KMT heavyweight, retired 
General Tang Fei, as Premier in 2000. 
 
5.  (C) Wu and Hong both said they believe Vice President and 
Acting DPP Chairman Lu Hsiu-lien clearly hopes to be elected 
party chairman next January or she would not have taken on 
the interim position.  Wu suggested that Lu would probably 
not win a vote against some of the other potential candidates 
such as former Council of Labor Affairs Minister (and New 
Tide member) Chen Chu.  Hong, who may be interested in the 
position himself, said the New Tide faction will not make a 
proposal because to do so would cause other factions to unite 
in opposition.  The New Tide would support either defeated 
Taipei County candidate Luo Wen-jia or Presidential Office 
Secretary General Yu Shyi-kun, Hong said, and it would oppose 
 
SIPDIS 
either Lu or Legislator Trong Chai (Tsai Tung-jung), who are 
hardliners on cross-Strait policy. 
 
6.  (C) According to Wu, there is no plan for the DPP Central 
Standing Committee (CSC), which adopted a report on the 
reasons for the election reverses, to debate future policy. 
The CSC attends only to party affairs, Wu explained, and it 
does not consider or approve policy issues and decisions, 
which come from the president and his senior advisors.  Wu 
expressed concern that Lu might try to use the party chairman 
position as a platform to publicize her policy views in hopes 
of burnishing her credentials as a presidential candidate. 
In addition to being unfair to other candidates, this could 
lead to a situation in which there are three competing DPP 
power centers: president, premier, and party chairman.  Wu 
noted that both Lu and Yu Shyi-kun already have set up 
well-staffed presidential campaign offices in downtown 
Taipei, adding that former DPP Chairman Su Tseng-chang, who 
enjoys far greater public support as a potential DPP 
presidential candidate in 2008, does not have such an office. 
 
 
7.  (C) Both Wu and Hong said they expect the DPP government 
to continue gradually to open cross-Strait relations. 
According to Wu, the Executive Yuan postponed implementing a 
series of minor new cross-Strait steps when the topic became 
an election issue, but these steps will be coming.  Hong said 
he is working to promote cross-Strait opening, and said he 
hopes that working level dialogue and cooperation can help 
build confidence between the two sides, based on maintaining 
the status quo.  Hong criticized the PRC for interfering in 
the recent local elections by advising Taiwan businesspeople 
to contribute to the KMT and its candidates.  Such 
interference, if continued, will make the development of 
cross-Strait relations more difficult, Hong said.  Hong also 
suggested that Chen's susceptibility to pressure from those 
who oppose opening cross-Strait relations, such as VP Lu and 
Trong Chai, explains some of his shifting statements and 
stances on the issue. 
 
8.  (C) National Security Council Secretary General Chiou 
I-jen told the Director on December 8 that President Chen is 
conflicted between embarking on rebuilding the DPP for the 
2008 elections, and stressing concrete achievements during 
the two-plus years remaining in his term.  Chen is 
discovering many contradictions.  For example, if he replaces 
Premier Hsieh to get better performance out of the Cabinet, 
Chiou said, he will reduce the number of qualified candidates 
for 2008.  Chiou said Chen needs more time to sort these out. 
 
Comment 
------- 
 
9.  (C) A power struggle between fundamentalist and moderate 
factions and individuals within the DPP seems inevitable 
because of the election reverses, Chen,s lame duck status, 
and competition for influence and power.  Many DPP officials 
and politicians blame Chen for the problems that have led to 
public dissatisfaction and the election reverses, and they 
hope Chen will accept a reduced role in the interests of 
restoring the party's credibility with the public.  Chen,s 
intentions are not clear at this point.  Until they are, the 
party will continue to drift. 
 
PAAL