SPECIAL DEFENSE BUDGET UNDER THREAT FROM PFP

S E C R E T SECTION 01 OF 02 TAIPEI 002510

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 02/01/2015
TAGS: PREL PGOV MARR CH TW
SUBJECT: SPECIAL DEFENSE BUDGET UNDER THREAT FROM PFP
BOYCOTT


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


1. (C) Summary: The People First Party (PFP) is threatening
to derail all Legislative Yuan (LY) deliberations, including
action on the Special Defense Procurement Budget, until
President Chen Shui-bian formally apologizes for accusing PFP
Chairman James Soong of meeting with a PRC official in the
United States. LY President Wang Jin-pyng and National
Security Council (NSC) Deputy Secretary General Henry Ko
separately expressed strong concern to AIT that the PFP's
obstructionism could delay LY deliberations on the budget
until 2006. While the PFP maintains that a Chen apology will
break the logjam, officials in both the KMT and NSC believe
that Soong's recent actions reflect desperation following the
party's March 14 National Assembly (NA) electoral defeat.
The NSC also claims to have information that Beijing had
pressured Soong to stop cooperating with the Chen
administration, an allegation the PFP admits has some
validity. The NA's June 7 passage of legislative reforms and
the July 16 KMT elections are likely to further increase
pressure on PFP members to return to the KMT fold, and thus
make Soong even less likely to cooperate with either the KMT
or the Chen administration. Both the KMT and DPP appear to
have no plan to address PFP obstructionism, other than to
simply wait for the party to collapse under its own weight.
End Summary.

Soong Holds Special Budget Hostage
--------------


2. (C) In recent days, KMT LY President Wang Jin-pyng and NSC
Deputy Secretary General Henry Ko have privately expressed
deep misgivings to AIT over the potential for James Soong and
his PFP to derail the Special Defense Procurement Budget in
the LY. Soong has publicly stated that the PFP will boycott
(effectively vetoing action) on all legislation until
President Chen issues a public apology for his early May
charge that Soong met secretly with PRC State Council Taiwan
Affair Office (TAO) Director Chen Yunlin in the United States
in January. Wang told AIT on June 4 that the PFP could
effectively kill prospects for a summer special LY session to
pass the Special Defense Procurement Budget package by
vetoing consultations on the session's agenda (Note: while a
special session can be called by a petition by one quarter of
the LY membership, all four party caucuses must agree on the
agenda in order for the session to operate). Wang warned
that if the budget is not addressed in a summer special
session, action will be difficult in the Autumn regular
session due to political friction surrounding the December 3
local magistrate/mayor election campaign.


3. (C) PFP Policy Chief, and Soong lieutenant, Vincent Chang
(Hsien-yao) confirmed to AIT that Soong has ordered a total
boycott of all legislation pending a formal apology from the
President. Chang asserted that Chen's allegations have
provoked a serious outcry within the PFP and left Soong
feeling personally betrayed. Chang said the PFP is prepared
to derail the proposed summer special session and use its
veto power over legislation to block the government's agenda
in the Autumn regular session. "Chen may think Soong's anger
will pass with time," Chang asserted, "he is mistaken."
Chang said the longer Chen delays in responding to Soong's
concerns, the more obstructionist the PFP will become.

Hell Hath No Fury Like a Party Scorned
--------------


4. (C) Officials from the Democratic Progressive Party (DPP)
and KMT say that Soong's recent actions are driven by
desperation over his party's plummeting morale following the
May 14 NA election fiasco. The NSC's Ko said that even if
Chen patches up his personal relationship with Soong, the PFP
Chairman would be unable to convince his party's independent
minded LY Caucus to drop its boycott of the Special Defense
Budget bill. Veteran KMT legislator Wu Ten-yi said that
Soong realizes the upcoming leadership transition within the
KMT and the passage of legislative reforms by the NA mean
that pressure will only grow on PFP legislators to abandon
the party for the KMT. The PFP's Chang told AIT that this
sort of "KMT arrogance" is why the PFP, in addition to
boycotting DPP legislation, is also planning to undermine the
KMT by running nuisance PFP candidates in six counties and
cities in the December 3 local election.
Soong's Political Death Throes
--------------


5. (C) DPP officials say they empathize with Soong's
situation, but do not see any easy way out for him.
"President Chen has treated Soong pretty poorly these past
few weeks," commented DPP Secretary General Lee Ying-yang,
"maybe it's time to throw a few favors his way." The NSC's
Ko said the Chen administration will maintain staff-level
communications with the PFP in an attempt to bring Soong
around, but he was pessimistic over the possibility that Chen
would offer a full public apology over his TAO accusations.
Ko said that the government's hope is that the 32 member PFP
Caucus will quickly collapse, leaving Soong greater
flexibility to deliver the votes of the rump 11-12 PFP
legislators who remain loyal to Soong. KMT Speaker Wang told
AIT he will continue to try to engage Soong on the Special
Defense Budget, but noted that Soong remains unwilling to
talk to Wang on the subject. Wang resisted AIT's suggestion
that he communicate directly with the PFP's LY Caucus
leadership on the budget, asserting that he is reluctant to
get involved in internal PFP politics.

A PRC Angle?
--------------


6. (S) The NSC's Ko said that while the Chen administration
will try to repair its relationship with Soong, the
government remains concerned that Soong may have promised
Beijing that the PFP will block the Special Budget. Ko
claimed that during their briefing to the Chen administration
following Soong's return from Beijing, PFP officials stated
that in a small pull-aside meeting in Beijing, Hu asked Soong
to block the Special Defense Procurement Budget in order to
create conditions that would allow Beijing to announce the
withdrawal of missiles from coastal regions opposite Taiwan.
The PFP's Chang confirmed that Hu and Soong did have a
pull-aside meeting to discuss cross-Strait and foreign policy
issues, but denied that missiles or the Special Defense
Budget came up in the meeting. However, Chang said that a
Politburo-level PRC leader (Note: Soong reportedly met with
Politburo members Zeng Qinghong and Jia Qingling) warned
Soong that "we consider Chen Shui-bian a traitor to the
(Chinese) nation and anyone who cooperates with Chen will be
considered 'subject to attack' (douzheng de duishou)."

Comment: Waiting for the End
--------------


7. (C) While President Chen's overzealous NA election
rhetoric has complicated the current political atmosphere, we
doubt that Soong would have been able to deliver his party's
LY Caucus on the budget regardless of external factors.
Faced with the PFP's internal disarray and Soong's
desperation, Chen administration officials are belatedly
coming to the realization that it may be necessary to reach
out to the KMT to get the budget through. Both Wang and
advisors to KMT rival Ma Ying-jeou tell AIT that the next KMT
Chairman is likely to seek a quick conclusion to the deadlock
over the Special Defense Budget. However, neither KMT nor
DPP officials have offered any workable solutions for
breaking down a threatened PFP veto over the bill. Given the
need for PFP politicians to secure a place for themselves
post-James Soong, both the KMT and DPP could offer incentives
to accelerate the dissolution of the PFP. Unfortunately,
both the KMT and DPP believe that it will be easier (and
cheaper) to simply wait for the PFP to collapse on its own
accord.
PAAL