DPP FACTION EMBARKS ON CROSS-STRAIT INITIATIVE

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001969

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STATE PASS AIT/W

E.O. 12958: DECL: 02/01/2015
TAGS: PREL PGOV PINR CH TW
SUBJECT: DPP FACTION EMBARKS ON CROSS-STRAIT INITIATIVE

REF: TAIPEI 934

Classified By: AIT Acting Director David J. Keegan, Reason: 1.4 (B/D)


1. (C) Summary: Away from the media glare given to the recent
Pan-Blue cross-Strait initiatives, the Democratic Progressive
Party's (DPP) moderate New Tide faction has opened talks with
PRC authorities about establishing a cross-Strait cooperation
mechanism to tackle financial crimes. New Tide elder Hong
Chi-chang (protect) told AIT that he met with Xin Kuisan,
head of Taiwan Affairs at the PRC Hong Kong Liaison office on
April 16-17 to discuss the initiative. Hong said that he
engaged in the Hong Kong talks on behalf of fellow New Tide
leader and Taiwan Stock Exchange Corporation (TSEC) Chairman
Wu Nai-jen. While National Security Council (NSC) Secretary
General Chiou I-jen, the New Tide's third co-leader, is aware
of the long-standing PRC Taiwan Affairs Office (TAO)-New Tide
channel, he has not been briefed on the details of the
current initiative for fear that President Chen Shui-bian
would find out. Hong said that the New Tide has maintained a
separate channel with officials from the PRC State Council's
Taiwan Affairs Office (TAO) since 1997. End Summary.

Cross-Strait Contacts: Not Just for the Pan-Blue Anymore
-------------- --------------


2. (C) DPP Legislator Hong Chi-chang told AIT that the
moderate New Tide faction has been in contact with PRC
authorities about launching a series of cross-Strait economic
initiatives in the coming months. Hong is one of three
elders in the faction (the others being NSC SecGen Chiou
I-jen and TSEC CEO and former DPP SecGen Wu Nai-jen) and the
DPP's ranking legislator. Hong told AIT that he had just
returned from Hong Kong on April 17, where he held several
hours of talks with officials from the PRC State Council's
Taiwan Affairs Office (TAO) about creating a mechanism for
Taiwan-PRC cooperation to tackle financial crimes. Hong said
that no decision has been made about whether or when to
publicize the joint initiative. Hong noted that no public
announcement will be made until all the details had been
worked out. He added that it would be inappropriate to
publicize PRC contacts with elements of the DPP now given the
government's concerns over the PRC's accelerated "united
front" campaign. However, Hong said that over the coming
year, the New Tide plans to press forward with a series of
economic and technical initiatives aimed at facilitating
economic activities and stabilizing cross-Strait tensions.


3. (C) Hong said his main interlocutor on April 17 was Xin
Kuisan, head of Taiwan Affairs at the PRC State Council's
Hong Kong Liaison office. Hong noted that Xin has taken the
lead on the TAO-New Tide channel almost since its inception
in 1997, when Xin was still stationed at the TAO in Beijing.
Hong said that he engaged in discussions on the financial
crimes initiative on behalf of TSEC Chairman Wu. Hong
mentioned that former Mainland Affairs Council (MAC) Senior
Vice Chairman Chiu Tai-san (also a New Tide member) was also
engaged on the initiative, but Chiu dropped out of active
participation after leaving MAC in late March to run for
Taichung County Magistrate.


4. (C) Hong said that his April visit was the second New Tide
meeting with PRC officials this year. The first meeting was
with a larger group of officials from Beijing, including TAO,
and representatives from the Chinese Communist Party
Secretariat. That meeting, Hong remarked, touched on the

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financial crimes initiative, but focused more on the likely
Taiwan reaction to the Anti-Secession Law (ASL). (Note: Hong
had made an indirect reference to this exchange during a
February meeting with AIT, Reftel.)


5. (C) Hong said he has specifically not informed NSC SecGen
Chiou about the details of the latest initiative. While
Chiou has been a participant in past New Tide-TAO channel
contacts, Hong said that the faction decided to keep him in
the dark about the current plan. The main reason for this,
Hong continued, was fear that Chiou may "feel compelled" to
inform President Chen Shui-bian. Hong assessed that Chen,
who deeply distrusts the New Tide, would likely quash the
plan if he learned of its existence.

A Long Relationship
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6. (C) Hong said the New Tide's contacts with the PRC began
in 1997, when a group of New Tide legislators visiting the
Mainland were approached by working level TAO officials about
establishing a dialogue. The two sides have met regularly
since that time, both to exchange views on general trends and
to discuss specific substantive issues. Hong claimed that
the 2003 Lunar New Year charter flight initiative was the
outgrowth of New Tide-PRC discussions. Hong said that the
New Tide faction seeks to serve as a bridge between the PRC
and the rest of the DPP. Unlike many other elements of the
DPP, Hong said the New Tide is no longer wedded to
independence as the only final option for Taiwan's political
future. In discussions with PRC counterparts, Hong said he
continue to stress that Beijing needs to understand that the
mainstream view in Taiwan is that the island is Chinese
culturally, but different in terms of political system,
society, and general outlook. These differences can be
bridged over time, but attempts by Beijing to force Taiwan
into a premature settlement will only provoke Taiwan to seek
further political distance from the Mainland. Hong expressed
concern that Beijing's regular Pan-Blue interlocutors fail to
present a balanced picture of Taiwan's society and
inadvertently encourage the PRC to take counter-productive
measures. While the New Tide shares the Pan-Blue's view on
many cross-Strait economic initiatives, Hong said that the
opposition's constant attempts to explore final political
formulas will only lead to false expectations in Beijing.

Comment: Pan-Green Realists
--------------


7. (C) Once the DPP's most radicalized faction, the New Tide
has transformed itself into the most centrist force in the
party. The New Tide now forms the core of a moderate stream
of thought within the DPP on cross-Strait policy, whose
members also include Premier Frank Hsieh and DPP Chairman Su
Tseng-chang. However, the New Tide's cross-Strait moderation

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may not be completely altruistic. The faction has leveraged
its reputation for policy acumen and cross-Strait realism to
attract major financial support from the business community,
especially the high-tech and financial sectors. The New
Tide's ability to drive the government's policy agenda,
however, is constrained by the tense relationship between
President Chen and the faction. This friction has put NSC
SecGen Chiou in a particularly difficult position. While
Chiou continues to maintain regular contact with Hong and
other faction leaders, his faction colleagues see his primary
loyalty, for the moment at least, as resting with the
President.

BioNotes
--------------


8. (C) Hong told AIT last July that he stepped down from the
DPP's Central Standing Committee in order to allow more
flexibility for interacting with PRC interlocutors. Hong
remains the Chairman of the Taiwan Economy and Industry
Association, a group he established in 2001 to boost DPP
interaction with the business community. Hong noted that the
PRC has issued him a multiple entry permit for Hong Kong to
minimize the risk that his visits will be revealed.


9. (C) In the past year, we have also noticed increasing
contacts between PRC academic visitors and other influential
New Tide members, including some like Taipei County
Magistrate Lin Hsi-yao who would not normally interact with
Mainland cross-Strait specialists. In addition to Hong,
faction members Yen Wan-ching (currently DPP Deputy SecGen),
Chung Chia-bing (Yen's predecessor as DPP Deputy SecGen),DPP
LY Defense Committee Co-Chair Lee Wen-chung, and former MAC
Vice Chair Chiu are also engaged in the faction's
cross-Strait activities. The local media reported that Chung
was seen by journalists at a conference in Beijing in late
April.
PAAL