CHEN ADMINISTRATION DISAPPOINTED BY SOONG-HU

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 002164

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 02/01/2015
TAGS: PREL PGOV PINR CH TW
SUBJECT: CHEN ADMINISTRATION DISAPPOINTED BY SOONG-HU
MEETING, POLICY UNCHANGED

REF: A. BEIJING 7503

B. TAIPEI 2126

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


1. (C) Summary: President Chen Shui-bian publicly rejected
People First Party (PFP) James Soong's "two sides, one China"
formulation, announced following Soong's May 12 meeting with
PRC leader Hu Jintao. National Security Council (NSC)
Secretary General Chiou I-jen told the AIT Director on May 13

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that the government views Soong's formula as much worse than
the KMT's "one China, different interpretations." Chiou
attributed the President's strong response to Soong's
announcement to deep disappointment on Chen's part that Soong
not only failed to make progress towards breaking the "1992"
deadlock, but may have complicated future efforts to achieve
a domestic and cross-Strait consensus behind negotiations on
the basis of the "Republic of China." Chiou said the May 12
joint PRC-PFP press statement has also led Taipei to conclude
that Beijing is committed to isolating the Chen
administration, at least for the next several months. That
said, Chiou stated that in the coming week, Taipei will offer
to open talks with Beijing on agricultural, transportation,
and tourism. The President also plans to proceed with
meetings with both Soong and KMT Chairman Lien Chan to work
towards a domestic consensus on cross-Strait and domestic
policy. End Summary.

Dashed Expectations
--------------


2. (C) Senior Chen administration officials expressed deep
disappointment over the outcome of PFP Chairman James Soong's
May 12 meeting with PRC President Hu Jintao (Ref A). During
a TV interview on May 12, President Chen rejected Soong's
formulation of "two sides, one China" (Liangan Yizhong) and
expressed regret that the PRC failed to offer any new
flexibility during meetings with the PFP Chairman. While the
Presidential Office had originally planned not to respond to
a Soong endorsement of the "1992 consensus," (Ref B),NSC
Secretary General Chiou I-jen told the Director on May 13

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that Soong's new formulation went beyond the government's
worst case scenarios for the Soong-Hu meeting. Chiou said
that Chen's decision to respond so quickly to Soong's new
formulation was in part motivated by electoral politics, but
was primarily a reflection of his personal disappointment
over Soong's performance.


3. (C) Chiou said that Chen had also expected Soong to do a
better job than Lien at conveying the Chen administration's
position on cross-Strait relations. Instead, Chiou said that
Soong did more damage to Taipei's position than Lien did.
"We can accept (the KMT's) 'one China, different
interpretations,' since it leaves room for the 'Republic of
China,'" Chiou stated, "but we were unhappy with Soong's new
formula and his public rejection in Xian of 'two Chinas.'"
Chiou said that PFP Secretary General Chin Ching-sheng called
Presidential Office SecGen Yu Shyi-kun after the May 12 press
conference, but only conveyed what was already in the press.
Chiou added that the government will try to get a full
briefing from the PFP over Soong's private discussions with
Hu after Soong's return on May 13.

Proof of Darker Motives?
--------------


4. (C) Chiou said that the government's assessment in the
wake of the Lien/Soong visits is that Beijing is planning to
continue to isolate the Chen government at least until the
Autumn in order to see how much further they can erode the
President's political support base. If Chen manages to keep
in control, Chiou hypothesized, then Beijing may decide it
will talk to him. If the government is forced to cede
cross-Strait policy to the opposition, Chiou continued, then
there would be little reason for Beijing to explore a
dialogue with the government in Taipei. Chiou noted that
Pan-Blue legislators are already demanding that cabinet
ministers implement agreements their leaders reached in the
PRC. NSC Senior Advisor for cross-Strait affairs Chen
Chung-hsin commented separately that the PRC's agreement with
both the KMT and PFP to establish a regularized dialogue
between Beijing and the two parties could indicate a
long-term decision to conduct all communications with the
Pan-Blue. Chen warned that the Democratic Progressive Party
(DPP) administration will not accept a situation where the
Pan-Blue strikes deals with Beijing, then uses its
legislative majority to demand the government implement them.


5. (C) KMT Vice Chairman and LY President Wang Jin-pyng
offered a similar assessment over PRC motives. Wang assessed
that Beijing used the Soong visit to drive a wedge between
the PFP and the DPP while encouraging the Pan-Blue to
solidify its LY majority. Wang told the AIT Director that
Beijing may eventually deal with Chen, but only when they are
confident that they hold all the cards in the relationship.
(Comment: More surprisingly given his reputation as a
statesman, Wang asserted that the KMT is likely to cooperate
with PRC "united front" tactics, since they offer the KMT an
opportunity to steal key DPP constituencies such as farmers,
Septel. End Comment.)

Keeping Open Options
--------------


6. (C) Despite Taipei's renewed concerns over a PRC "united
front" offensive, Chiou told AIT that the government would
maintain a positive tone in dealings with Beijing. Chiou
said that relevant cabinet ministers would publicly announce
next week that Taipei is prepared to engage in technical
discussions with Beijing over PRC offers to Lien and Soong on
agriculture, tourism, and transportation links. Chiou noted
that the Council of Agriculture (COA) will link the opening
of the Mainland fruit market with talks on direct cargo
flights, noting that fruit like lychees spoil too quickly to
be exported by ship. The NSC's Chen expressed regret that
Beijing's offer to use the "Lunar New Year charter" model to
negotiate cargo flights was listed in the Soong-Hu "Six
Points" as coming only after negotiations over the more
complicated subject of passenger flights. Chen asserted that
if Beijing were to agree to Taipei's offer to talk about
direct cargo flights, "everyone from the President on down
would be convinced that the PRC is sincere in reaching out to
Taipei."


7. (C) Chiou told the Director that the President is unlikely
to make any major cross-Strait policy statements in the
coming weeks in order to work on building a domestic
consensus on cross-Strait and other policies. Chiou insisted
that Chen will not waver in his commitment to seek
reconciliation with Beijing in his second term, regardless of
actions by the PRC or opposition leaders. Chiou cited four
factors that underlined Chen's support for cross-Strait
engagement: 1) Chen himself decided to pursue this course
only after a long period of reflection; 2) Chen sees
cross-Strait stability as a legacy issue; 3) the December
2004 election left Chen no other options; 4) USG support and
encouragement. Chiou noted that this last factor has been
especially crucial in defending the President's centrist
policy line from both the opposition and from Pan-Green
fundamentalists. Chiou said Taipei welcomed the USG's recent
statements encouraging Beijing to engage with the Chen
administration. Chiou noted that if Hu Jintao were to offer
contacts on either "high politics" -- finessing the "1992"
deadlock -- or on technical issues like transportation and
trade, Taipei will respond immediately.

Comment: A Hiccup, Not a Derailment
--------------


8. (C) Chen's quick and public rejection of the results of
the May 12 Soong-Hu meeting appears to have been more a
matter of personal pique than a shift in policy direction.
Chen officials may have set overly optimistic goals for
Soong's meetings, and may now be drawing overly pessimistic
conclusions over Beijing's next steps. Nevertheless, we are
encouraged by Chen's continued commitment to seeking
engagement with Beijing, be it over technical or political
subjects. AIT will continue to press Chen and his government
to probe the PRC for new opportunities and will urge Pan-Blue
leaders to resist the temptation to exploit PRC contacts for
domestic purposes. Sustained public and private messages
over our expectations that Beijing will reach out to the Chen
government should also help set a positive atmosphere for
reconciliation, both within Taiwan and across the Strait.
PAAL