POLITICAL POSITIONING IMPACTING FOREIGN POLICY

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003139

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 10/10/2013
TAGS: PREL PGOV PINR CH TW
SUBJECT: POLITICAL POSITIONING IMPACTING FOREIGN POLICY

REF: A. TAIPEI 1619


B. TAIPEI 3002

C. TAIPEI 2806

D. TAIPEI 1684

Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D)


1. (C) Summary: Internal political maneuvering for the 2008
presidential nomination is increasingly spilling over into
the cross-Strait and foreign policy arenas. Premier Yu
Shyi-kun's advocacy of a cross-Strait "balance of terror" is
the latest in a string of unauthorized statements that
insiders say are aimed at shoring up his position within the
Democratic Progressive Party (DPP). President Chen Shui-bian
has publicly rebuked Yu on more than one occasion, but
observers say he is unlikely to take firmer action against
either Yu or Vice President Annette Lu for fear of
unbalancing the competition among the four contenders for
future DPP leadership. Chen's willingness to award key
foreign policy posts to followers of Yu and Lu, the clear
underdogs among the would-be candidates, has greatly
exacerbated this problem. DPP moderates hope that Chen will
exert more control after the December legislative election,
but many inside the party warn that this situation may
continue until 2007, when the formal party nomination process
begins. End Summary.

Lame Duck or Kingmaker?
--------------


2. (C) A string of recent unauthorized statements by Premier
Yu Shyi-kun and Vice President Annette Lu on cross-Strait and
foreign policy (Reftels) appear to be an outgrowth of
President Chen Shui-bian's decision to encourage a four-way
competition between candidates for the DPP's 2008
presidential nomination. While Presidential Office and
National Security Council (NSC) officials fume over this lack
of discipline, they say that President Chen is unlikely to
curb either Yu or Vice President Lu for internal political
reasons. Presidential advisors tell AIT that Chen fears
that, if a clear front-runner for future leadership emerges
too early, he will find himself a lame duck early in his
second term.


3. (C) While most observers believe only Presidential Office
Secretary General Su Tseng-chang and Kaohsiung Mayor Frank

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Hsieh have a realistic chance of leading the DPP's 2008
ticket, Chen continues to encourage Yu and Lu to maintain
aspirations for the presidency. National Taiwan University
Professor (and former Mainland Affairs Council Senior Vice
Chairman) Chen Ming-tong asserted to AIT that "a four-way
race is less destabilizing than a two-way race." Chen
predicted that the president would keep Yu in the running
until the DPP nominating process opens in 2007. Presidential
Office Deputy Secretary General James Huang told AIT that,
while Yu's ignorance of foreign and cross-Strait policies
make him clearly unqualified for higher office, his control
over Executive Yuan (EY) resources will keep him in the
running indefinitely.

Yu: Puppet with Many Masters
--------------


4. (C) Yu's sudden activism on foreign policy came as a
surprise to many DPP officials, who have longed dismissed the
premier as a colorless Chen Shui-bian yes-man. Some
presidential advisors assess that Yu has fallen under the
influence of a cadre of hard-line advisors. NSC Senior
Advisor for cross-Strait policy Chen Chung-hsin asserted that
Yu is being fed his lines by Executive Yuan (EY) Secretary
General Arthur Iap (Ye Guo-xing) and Government Information
Office (GIO) Director General Lin Chia-lung. "Yu is
completely ignorant about foreign policy," the NSC's Chen
asserted, "Iap and Lin are simply using him as their
mouthpiece." NSC Staffer and Tsai Ing-wen confidante Chang
Hsieng-hwei offered a similar assessment, adding that the
weak-willed Yu provided an easy target for his two aggressive
advisors. "Iap is acting as Yu's spine" she continued, "and
Lin as his brain."


5. (C) Yu's recent references to offensive weapons and
containing PRC expansionism closely track a policy line
espoused by the Taiwan Think Tank (TTT),a group created by
the GIO's Lin in 2001 with substantial financial support from
Chi-mei Electronics Group founder Hsu Wen-lung, a close
relative of Lin's wife. Taiwan Institute for Economic
Research (TIER) Vice President David Hong characterized the
TTT as the intellectual force behind the hard-core "Taiwan
first" school of foreign policy that appears to hold sway
over the premier and his inner circle. TTT Foreign Policy
Studies Director Lai I-chung has told AIT that Taipei's
policy should focus on strengthening cooperation with
like-minded counterparts in the U.S. executive and
legislative branches to counter the "pro-China" bias of the
State Department and AIT. Closer to home, Lai warned that
the growing power of NSC SecGen Chiou I-jen and his moderate
New Tide faction threatens to weaken Taiwan's resolve to face
the PRC threat. The EY's Iap has made a similar case in
conversations with AIT, noting that Taiwan's ultimate goal
should be to serve as the front-line of a U.S.-Japan-Taiwan
alliance against PRC expansionism.

Lu: Flakes and Fundamentalists
--------------


6. (C) While Yu has been more outspoken of late, DPP
moderates also remain wary of Vice President Annette Lu's
potential to cause mischief by pushing her traditional
pro-independence fundamentalist ideology. Many observers see
the vice president's fingerprints on a range of key foreign
policy appointments, including MAC Chair Joseph Wu, NSC
Deputy SecGen Parris Chang, Foreign Minister Mark Chen, MOFA
Policy Chief Yang-huang Mei-shin, Tokyo Representative Ko
Se-kai, and Deputy TECRO Washington Rep. Joanna Chang. NSC
officials tell AIT that the New Tide faction and the vice
president clashed sharply over leadership appointments at
both MAC and the NSC after March 20, with Lu prevailing on
the former and New Tide on the latter (Ref A). In recent
weeks, Lu herself has remained relatively quiet (her allies
in government much less so). DPP insiders point out that her
main strategy of late has been to insist on joining the
president at nearly all of his public events, reportedly
upsetting a presidential security detail still jumpy after
the March 19 shooting incident.

Moderates Muted, For Now
--------------


7. (C) Chen's apparent indulgence of Yu and Lu has not
extended to front-runner Su, according to associates of the
Presidential Secretary General. Taipei County Magistrate and
long-time Su lieutenant Lin Hsi-yao told AIT that Chen
regularly warns Su to keep a low profile, especially when
dealing with the premier and vice president. Lin said Su
feels under enormous pressure in his new post, in part
because he often disagrees with Chen's handling of
cross-Strait policy and constitutional reform. "Su hates
that Chen keeps changing his tune (bienlai bienqu) on these
issues," Lin asserted, "but he knows that if Su's real views
were to get back to Chen, Su's future would be in jeopardy."
Lin added that, for this reason, AIT should view anything Su
says in public or private as reflecting the president's
thinking, not his own (Note: Before assuming his current
post, Su was extremely candid with AIT in his assessment of
controversial Chen initiatives. However, he has been much
more discrete over the past five months, even in private. End
Note.) New Tide political strategist and Strait Exchange
Foundation (SEF) Deputy Secretary General Yen Wan-ching told
AIT that faction leaders recently moved their weekly strategy
sessions with Su from his office to a more secure location
for fear that Chen would find out and suspect Su of
intriguing.


8. (C) DPP moderates hope that the current situation will
improve after the December election. Taipei County's Lin
asserted that the president has clearly tired of Yu's
constant verbal missteps. He estimated the chances that Yu
would be replaced in favor of Su in February at over 80
percent. The SEF's Yen also predicted a shake-up, but he
said it was too early to say whether it will be Su, or
Kaohsiung Mayor Frank Hsieh, who will get Yu's job. Like Su,
Hsieh has kept a low-profile since the election. However,
Presidential Office Deputy SecGen Huang was less confident
about an early turnover in power. "It will be hard for the
president to replace Yu if the DPP does well in the December
election," he assessed, adding that such a move would end
Yu's hopes for future office. Chunghwa Institute for
Economic Research (CIER) Vice President Chang Jung-feng, a
long-time Lee Teng-hui confidante and ex-Chen NSC Deputy
Secretary General, told AIT that it looked like the four-way

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race would dominate DPP politics for the next four years.
Chang said that former President Lee told him on September 27
that recent events have made him increasingly depressed over
Taiwan's future. "All the Pan-Blue thinks about is March 20,
2004 and all the DPP thinks about is March 22, 2008," Chang
quoted Lee as saying, "no one is worrying about the real
challenges facing Taiwan."

Healthy Competition or Balance of Terror?
--------------


9. (C) NTU's Chen Ming-tong urged AIT not to worry about the
emergence of a hard-line faction around the premier or
fundamentalists like Lu and FM Chen, because their positions
will be balanced by moderates at the NSC and Presidential
Office. "Just like in the U.S., policy is the result of a
consultative process among a diverse set of interests," Chen
added. However, Hakka Affairs Council (HAC) Minister (and
long-time CSB "boy scout") Luo Wen-chia warned AIT that if
the president does not exert leadership quickly, the
hard-line and fundamentalist groups, despite their mutual
dislike for one another, may push policy towards the
promotion of a hard-edge "Taiwanese nationalism" that might
sooner or later run head-on with the growing trend towards
Chinese nationalism on the Mainland. "If Chinese and
Taiwanese nationalism clash," he added, "we lose." Luo said
President Chen still has time to head this off, but to do so,
Luo added, he will need to exert leadership now, not simply
remain above the fray.

Comment: Chaos or Calculation?
--------------


10. (C) While the March 20 election has forced almost
everyone in the Pan-Blue to acknowledge that leadership
change is inevitable, President Chen is trying hard to
manipulate and delay the onset of serious debate within the
Pan-Green about his successor. He has strong domestic
political reasons to delay a DPP consensus about his heir
apparent, and that has apparently made him eager to encourage
the aspirations of the two weaker competitors for the 2008
nomination - Yu and Lu - and to tolerate their repeated
diversions from the policy course he laid out in his
inaugural address.


11. (C) Chen, however, has acknowledged that he understands
the costs of these diversions to his cross-Strait and U.S.
policies, and he and the DPP have shown in the past that they
know how to close ranks and enforce discipline when they
choose. This leaves us with only two possible explanations
for why Chen has been willing to tolerate this rhetorical
chaos. The first, and perhaps more charitable, is that he
cares only about winning the December legislative elections,
and he is convinced once again that he can somehow fix the
international side-effects after December. In short, he is
willing to risk Taiwan's security to win greater domestic
political power. The second, and more troubling, is that he
understands and endorses what Yu Shyi-kun, Mark Chen and
Annette Lu are saying and that he has decided that the best
way to advance those proposals is to allow them to stretch
the international envelope. This enables him to maintain
deniability in order to avoid an immediate confrontation with
China or with us. Given Chen's mastery of indirection, we
are not certain which is his real intent.
PAAL