SPECIAL DEFENSE BUDGET PROSPECTS IN DOUBT

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004035

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 12/21/2014
TAGS: PGOV PREL TW
SUBJECT: SPECIAL DEFENSE BUDGET PROSPECTS IN DOUBT


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


1. (C) Summary: Early passage of the USG 18 billion Special
Budget for defense procurement appears increasingly unlikely
as the Pan-Blue continues to block the bill from getting on
the legislative agenda. Taiwan MND officials are now turning
to the USG for assistance in overcoming Pan-Blue resistance.
LY President and KMT Vice Chairman Wang Jin-pyng told AIT
that the KMT would work with the DPP on the Budget in
exchange for Chen Shui-bian's cooperation on the March 19
Truth Investigation Committee. On the other hand, he said,
it would be difficult for the PFP to reverse completely its
LY election platform of opposing the Special Budget. Despite
Taiwan MND and NSC assurances that they would continue to
lobby the Pan-Blue, prospects for early action on the Budget
appear dim as the post LY election promises of bi-partisan
cooperation fade into memory. End Summary.

MND Asking for USG Help
--------------


2. (C) Action on the Special Budget for the USG 18 billion
advanced weapons procurement package appears unlikely as the
Pan-Blue continues to block the bill from getting on the
legislative agenda of the current lame duck Legislative Yuan
(LY) session. Ministry of National Defense (MND) Strategic
Planning Division (SPD) Director Admiral Kao Kuang-chi asked
AIT/USG on December 17 to intervene with the Pan-Blue ahead
of the December 21 LY Procedure Committee. Kao said it would
be helpful if AIT and the USG reached out to those close to
KMT Chairman Lien Chan to emphasize to the Pan-Blue that
Washington views the special budget as a barometer for
Taiwan's commitment to defend itself.


3. (C) The Pan-Blue controlled Procedure Committee had
already failed once again on December 14 to act on the
authorization portion of Special Budget bill and every other
DPP Government-sponsored legislation. The December 14
meeting was the first time the LY Procedure Committee had met
since the late November LY recess for members to campaign for
the December 11 LY election. Committee approval was not
expected, however, given the lack of inter-party consultation
prior to the meeting. LY President Wang Jin-pyng announced
publicly on December 13 that LY approval of the Special
Budget was still a possibility but it would require an
inter-party consensus. If no consensus could be reached, he
said, he would recommend the Executive Yuan resubmit the
package in the Spring LY session that begins in February 2005.

KMT Quid Pro Quo
--------------


4. (C) LY President Wang Jin-pyng told the AIT Acting
Director on December 16 that he had agreed to a request from
MND Vice Minister Admiral Lei Kuang-shuh to convene
cross-party consultations on December 20 aimed at forging a
consensus on the authorization bill. However, he
acknowledged that the current LY dynamics made it difficult
to envision action during the current lame duck session
expected to end on January 17. KMT Chairman Lien Chan, he
explained, wanted to be helpful, but with the condition that
the KMT would insist on trading its cooperation on the
Special Budget to win DPP concessions. For his part, Wang
asked the USG to pressure Chen Shui-bian to cooperate with
the March 19 Truth Investigation Committee (which had some of
its powers stuck down by the Council of Grand Justices on
December 15) and to agree to other March 20 election-related
concessions (Septel). In response, the AIT Acting Director
explained to Wang that it is extremely unlikely that the USG
would get involved in Taiwan's internal politics.

PFP's Opposition Platform
--------------


5. (C) Wang offered even less reason for optimism that the
People First Party (PFP) would support the Special Budget
during the current session. Wang told the AIT Acting
Director that because the PFP had campaigned during the LY
election on an anti-Special Budget platform, "some time would
have to pass before the PFP could reverse its opposition to
the Special Budget." PFP LY Caucasus Leader Liu Wen-hsiung's
office told AIT that opposition to the Special Budget is led
by PFP Chairman James Soong, as well as Legislators Lin
Yu-fang and Nelson Ku (Chung-lien). Kevin Lo, Liu's senior
legislative aide, said that Lin continues to tell his PFP
colleagues that the cost of the eight diesel submarines is
"above the international market rate." Lo also said Ku
opposes the entire weapons package on principle, claiming
Taiwan does not need the weapons. Lo added that at this
point only AIT intervention with Soong could reverse the
PFP's stance.


6. (C) Taiwan National Security Council (NSC) officials told
AIT that PFP Legislator Lin Yu-fang had informed the NSC that
he personally was prepared to take action on the Budget
during the current session but that Soong was intent on
preventing any action until after February 2005. The NSC
officials told AIT that they believe Soong is trying to use
the Special Budget as a bargaining chip with Wang Jin-pyng
and the KMT to leverage his party's role in the majority
opposition alliance. However, Soong has departed Taiwan for
a month-long vacation in the United States. NSC officials
told AIT they hope to take advantage of Soong's absence to
persuade Wang to bring the PFP LY members around to the
Government's position.

Comment: Casualty of Taiwan's Internal Politics
-------------- ---


7. (C) Taiwan NSC officials tell AIT that they are in active
consultations with Wang Jin-pyng and Opposition members of
the LY Defense Committee to press for action on the Special
Budget in the lame duck session. However, the Budget appears
to be falling victim to the contentious relationship among
all of Taiwan's political parties. Until recently, the KMT
merely wanted the MND to trim the price tag of the weapon
systems, especially the eight submarines. Now the KMT has
raised the ante by linking the Special Budget to the March 19
Truth Investigation Committee. During the LY election, the
PFP opposed the Special Budget for electoral advantage. The
PFP now finds itself unable to reverse its position, and
continues to use its opposition as a bargaining chip with the
KMT. With the December 11 calls for bi-partisan cooperation
already fading into distant memory, early passage of the
Special Budget appears increasing unlikely.
PAAL