WANG ON SPECIAL DEFENSE BUDGET, PRC CONTACTS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002167

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 05/13/2015
TAGS: MARR PGOV PREL TW
SUBJECT: WANG ON SPECIAL DEFENSE BUDGET, PRC CONTACTS

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


1. (C) Summary: In a May 13 meeting with the AIT Director,
Legislative Yuan President Wang Jin-pyng said that the KMT is
committed to early action on the Special Defense Budget, but
warned that James Soong and the PFP may continue to block the
budget. Wang said he has secured support from KMT Chairman
Lien Chan and would engage Soong after his return from the
PRC, but Wang cautioned that Soong might have promised
Beijing that the PFP will continue to block the budget. Wang
assessed that prospects for cross-party reconciliation were
set back after President Chen Shui-bian's attacks on his
political opponents in the week leading up to the May 14
National Assembly election. Wang said that despite Lien's
public statement that he has not ruled out the possibility of
meeting Chen, "in his heart," Lien does not want to see Chen.
Wang said it is in the KMT's electoral interest to put
party-to-party relations with the CCP ahead of reconciliation
with the DPP government. End Summary.

Prospects for Cross-Party Reconciliation
--------------


2. (C) In a May 13 meeting with the AIT Director, Legislative
Yuan (LY) President Wang Jin-pyng, a candidate in the
mid-July KMT Chairman election, said that the Democratic
Progressive Party (DPP) government should not have rejected
so readily the "Six Points" that People First Party (PFP)
Chairman James Soong negotiated with PRC President Hu Jintao.
Wang said that even if the government cannot accept Soong's
reformulation of the "1992 Consensus," it should at least not
rule out Soong's statement as a basis for future dialogue.
Wang added that Chen Shui-bian's volatile personality
continues to complicate cross-party reconciliation. He
pointed out that Chen's recent criticisms of former President
Lee Teng-hui and Soong will only make it more difficult for
Lee and Soong to justify to their supporters continued
cooperation with the DPP. Noting that the February 2005
Chen-Song meeting had already alienated each party's core
supporters, Wang asserted that the PRC might yet succeed in
pressuring Soong to distance himself from Chen. Wang said
that he has heard that Chen's attacks on Lee and shift to the
political center may result in 16 fundamentalist DPP
Legislators defecting to the TSU in the coming weeks.


3. (C) Wang pointed out that although KMT Chairman Lien Chan
does not have the difficulties that Lee and Soong have,
President Chen's attacks on Lien's speech at Beijing
University have also taken a toll. Wang claimed that Lien
had initially decided that he would meet with Chen but has
had a change of heart since Chen's attack on him in the final
week leading up to the National Assembly (NA). Wang told the
Director that although Lien has publicly stated that he does
not rule out the possibility of meeting with Chen, privately
Lien is not so inclined.


4. (C) When the Director asked if it were in the KMT's
electoral interest to continue boycotting the DPP government
while focusing on party-to-party relations with PRC leaders,
Wang replied in the affirmative. Wang said that pursuing
economic cooperation with the PRC is precisely what the KMT
needs to do in order to erode the DPP's advantage among key
constituencies, such as farmers and small businesses. Wang
said that the KMT will continue to negotiate with the PRC for
concessions on the export to the PRC of Taiwan agricultural
products and easing restrictions on PRC tourist visiting
Taiwan. Wang said that the KMT will seek to use the
KMT-controlled Provincial Farmer's Association to negotiate
agricultural liberation with the PRC, bypassing the
government's Council of Agriculture (COA). Wang said that if
the DPP wanted to support these measures, Chen could
potentially claim credit. However, Wang said that Chen is
unlikely to endorse any initiative he did not personally
craft.

Special Budget
--------------


5. (C) Wang told the Director that he spoke to KMT Chairman
Lien Chan about the Special Defense Budget at length on May

6. He said he told Lien that the entire weapons acquisition
package needs to remain intact and be funded via a special
budget. Wang said that Lien agreed that early LY action is
needed. Wang contrasted the KMT's position by warning that
James Soong and the PFP are likely to seek further delays in
LY action. Wang said that before Soong departed on his PRC
trip he had asked to see Soong to discuss the special budget
but Soong told him that he would not be in a position to
discuss the budget until after the NA election. With only a
few more weeks left in this LY session, Wang said that it was
unlikely that the LY will take any action, even moving the
budget bill out of the Procedure Committee. He said he is
calling for the LY to go into an extraordinary session, but
for reasons not entirely clear, the PFP and TSU are opposing
the suggestion. Wang downplayed the significance of the
budget's failure to clear the LY Procedure Committee, arguing
that once a cross-party consensus has been secured, moving
the budget through the various LY committee would be quick
and a matter of formality.


6. (C) Wang said he believes that Soong did promise President
Chen the PFP would cooperate with the DPP on passing the
Special Budget after the NA election. However, Wang warned
that Soong may have made a secret deal with the PRC not to
support the Budget. The Director told Wang that Taiwan would
be sending a very negative signal to the United States if the
LY failed to take any action on the Special Budget during the
current session, especially if passage during a summer
extraordinary session is still in doubt. He said that while
the U.S. supports cross-Strait dialogue, in order to achieve
positive results with the PRC, it is essential to negotiate
from a position of strength.

Comment: Grim Outlook
--------------


7. (C) Wang's comments on both the prospects for the Special
Defense Budget and future cross-party reconciliation were not
encouraging. The current dynamics in Taiwan's political
world make it all too easy for one of the many moving parts
to clog up the entire system. If there is no quick return to
cross-partisan talks after the May 14 NA election, we could
be in for another period of political gridlock. AIT reminded
Wang that Washington is tiring of partisan gamesmanship and
will be looking for all sides to take real action on the
Special Defense Budget and cross-Strait policy.
PAAL