CHEN ADMINISTRATION DENOUNCES KMT-CCP AGREEMENT

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001572

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 02/01/2015
TAGS: PREL PGOV PINR CH TW
SUBJECT: CHEN ADMINISTRATION DENOUNCES KMT-CCP AGREEMENT

REF: A. TAIPEI 1437


B. TAIPEI 1438

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


1. (C) Summary: Chen administration officials denounced a
10-point joint statement worked out in Beijing March 30
between KMT Vice Chairman P.K. Chiang and PRC Taiwan Affairs
Office (TAO) Director Chen Yunlin. Pan-Blue officials hailed
the KMT-CCP meeting as the start of a new offensive to wrest
control of cross-Strait policy from the Chen government.
Ruling party officials responded by accusing the KMT of
selling out Taiwan and warning that the KMT will pay for its
sins at the ballot box. On March 29, President Chen
Shui-bian excoriated Chiang for the "deranged" timing of his
visit which, he asserted, put KMT party interests ahead of
the national welfare. Privately, Taiwan officials warn AIT
that the PRC's attempts to play Taiwan domestic politics will
make it harder to renew cross-Strait liberalization
initiatives suspended in the wake of Beijing's passage of the
Anti-Secession Law. Mainland Affairs Council (MAC) Chairman
Joseph Wu privately expressed disappointment over the State
Department spokesman's positive March 30 comments on the
Chiang visit. End Summary.

If the DPP Can't Do It, the KMT Can
--------------


2. (C) The Taiwan government reacted strongly to reports that
KMT Vice Chairman signed a ten-point agreement with PRC State
Council/Chinese Communist Party (CCP) TAO Director Chen
Yunlin on March 30. Chiang led a large KMT delegation to the
Mainland in what was billed by party officials as a "journey
of reconciliation" that would "break the ice" in cross-Strait
relations. Following a two-hour meeting in Beijing, the two
sides agreed on a joint statement calling on the PRC and
Taiwan to accelerate economic, travel, agricultural, and
student exchanges. KMT Spokesman Chang Jung-kong told
reporters that the most significant aspect of the agreement
was Beijing's pledge to establish a framework to protect
Taiwan investment on the Mainland. In public comments during
his visit, Chiang boasted that the KMT had accomplished on
this one trip what the Democratic Progressive Party (DPP)
government had failed to do in five years of government.


3. (C) Spencer Chang, a senior official in the
pro-unification New Party, told AIT on March 31 that his
party, which has formally aligned itself with the KMT, played
a key role in arranging KMT-CCP contacts. Chang said that he
was in Beijing recently to arrange the KMT-CCP accord,
meeting with a number of senior PRC officials, including Vice
Foreign Minister Dai Bingguo. Chang said that in addition to
the ten issues outlined on March 30, the PRC has agreed to
give the KMT credit for a number of additional future PRC
concessions, including a formula for Taiwan to gain observer
status in the World Health Assembly (WHA). Chang added that
the KMT will also work out an agreement with Beijing to
implement the Three Links, and force the government in Taipei
to respect the agreement by putting it to a referendum. When
pressed on the PRC's reaction to using a referendum to
implement such an agreement, Chang replied that "Beijing
doesn't oppose all referenda, it just depends what the
subject is."

Communists and Their Fellow Travelers
--------------


4. (C) Senior DPP leaders reacted angrily to the Chiang
delegation visit. During a March 29 speech to a youth group,
President Chen Shui-bian charged the KMT with living in a
time warp and of putting the interests of the party ahead of
the nation. Chen was particularly scathing over the timing
of the KMT visit, accusing the opposition party of assisting
PRC promotion of its Anti-Secession Law. MAC Chairman Joseph
Wu asserted to AIT that the Chiang delegation's real purpose
was to pave the way for a visit in May or June by KMT
Chairman Lien Chan. Wu said the visit would be Lien's "grand
performance" to cap "an otherwise failed political career."

The DPP-PFP 10 Points vs. the KMT-CCP 10 Points
-------------- --


5. (C) People First Party (PFP) Chairman James Soong publicly
criticized the KMT in similarly strong terms, dismissing the
Chiang delegation as irrelevant due to its lack of official
authorization. MAC's Wu said that the KMT was clearly intent
on using its CCP contacts to undermine efforts by the DPP and
PFP to develop a cross-partisan consensus on Mainland policy.
Parallels are already being drawn in the Taiwan media
between the Chen-Soong "10 Point Agreement" of February 24
and the KMT-CCP "10 Point Agreement" of March 30. The New
Party's Chang admitted to AIT a major benefit of the KMT-CCP
arrangement was that it undercut Soong's recent contacts with
the DPP.

Adding Insult to Injury
--------------


6. (C) While the President and MAC Chair concentrated their
ire on the KMT, National Security Council (NSC) Senior
Advisor for cross-Strait affairs Chen Chung-hsin said he was
even angrier at Beijing for showing bad faith. "The KMT
delegates were simply props for PRC propaganda," Chen
remarked. Chen, echoing the views of senior working level
MAC officials, asserted that Beijing knows that none of the
ten policy initiatives announced on March 30 can be
implemented by an opposition political party. "They are all
either unilateral PRC actions or issues that will require
cooperation from executive agencies in Taiwan," Chen added.
Chen complained that Beijing's recent moves are making it
increasingly difficult for moderates like himself to advocate
continued engagement with the PRC. "I look like an idiot
arguing to my NSC colleagues that we should look for signs of
sincerity in PRC actions when they (Beijing) pull stunts like
this," Chen fumed.


7. (C) MAC's Wu told AIT that the government has not changed
its fundamental commitment to resuming cross-Strait economic
liberalization policies, but said that the PRC's renewed
"united front" push has made this much harder to do. Wu said
that the government would offer no new initiatives before the
May 14 National Assembly (NA) election for fear that the
Taiwan Solidarity Union (TSU) would use them against the DPP
government. "Any policy we introduce in the current
environment would be mutilated by domestic politics," he
added. At the same time, however, Wu said the May election
for the NA and the December local elections will help the DPP
frustrate Beijing's "united front" campaign. "We (the
government) don't need to punish the KMT for selling out
Taiwan," Wu boasted, "the voters will do that for us in May
and December." A KMT setback in the May NA election could,
however, undermine DPP support for ratification of
legislative reforms passed by the Legislative Yuan (LY) last
August, since the DPP is aligned with the KMT on the issue
against the TSU and PFP.

Not in the U.S. Interest
--------------


8. (C) Wu expressed disappointment at the positive comments
made by the State Department spokesman on the Chiang visit
reported in the Taiwan media March 30. Wu urged the USG to
avoid commentary on the issue, since Beijing's contacts with
the KMT are aimed at dividing Taiwan internally, not
improving cross-Strait relations. Wu added that the KMT's
emerging relationship with the CCP is only likely to increase
chances that the KMT will block Legislative Yuan (LY) action
on the special defense procurement budget during the current
session.

Comment: Poison Pills
--------------


9. (C) KMT attempts to steal the cross-Strait agenda from the
DPP government are more likely to provoke a strong anti-PRC
reaction by President Chen (Ref A) and his government than to
produce a breakthrough over the WHA or the Three Links.
Whether or not Beijing is intentionally accelerating its
"united front" campaign against the DPP, the Hsu Wen-lung
episode (Ref B) and high-level treatment of the Chiang
delegation has already convinced many senior officials in
Taipei that Beijing is uninterested in repairing the damage
from the Anti-Secession Law. More troubling, Beijing's
decision to deliver its cross-Strait "goodwill gestures"
through the KMT may make all ten items poison from Taipei's
vantage point. While MAC's Wu emphasized that Taipei has not
closed the door to renewed economic liberalization, he said
that from his perspective, the PRC's March 30 offers amounted
to a major "bad-will gesture" from Beijing.
PAAL