CHEN WARNS PRC OF CONSEQUENCES OVER ANTI-SECESSION

S E C R E T SECTION 01 OF 03 TAIPEI 000266

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 01/21/2015
TAGS: PREL PGOV TW
SUBJECT: CHEN WARNS PRC OF CONSEQUENCES OVER ANTI-SECESSION
LAW

REF: 04 TAIPEI 2662

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


1. (C) Summary: President Chen Shui-bian announced on January
20 that Taiwan may pass an "Anti-Annexation Law" or hold a
public referendum if the PRC proceeds with plans to enact an
Anti-Secession Law in March. Chen told a Japanese newspaper
that there are growing calls to hold a referendum on the
issue to coincide with a National Assembly (NA) election that
will be organized before May 26, 2005. Chen administration
officials say the president's announcement was calibrated to
lay down a marker with Beijing before it proceeds any further
with the new law. The National Security Council (NSC) has
assured AIT that no formal decision on a referendum or
counter-legislation will be made until Taipei knows the full
contents of the PRC's draft law. Nevertheless, officials say
the president's January 20 warning is consistent with a
broader policy framework that seeks to balance a soft line on
cross-Strait economics with a tough stance on political
relations. While this NSC policy initiative is ostensibly
aimed at protecting Taipei's interests vis-a-vis the
Mainland, senior Chen administration officials admit that
domestic political factors are at least equally central to
the president's calculations. End Summary.

Eye for an Eye
--------------


2. (C) President Chen Shui-bian warned that a PRC decision to
proceed with its proposed Anti-Secession Law could provoke a
public and political backlash in Taiwan, according to a
transcript of an interview with the Japanese Mainichi Shimbun
released on January 20. Chen characterized the proposed PRC
law as a counter-weight to the U.S. Taiwan Relations Act, and
said Beijing's moves have already "hurt the feelings of the
Taiwan people." Chen asserted that public pressure could
"force" his administration to draft an "Anti-Annexation Law"
(fanbingtun fa) or hold a referendum on May 26 to protest the
PRC's action. Chen told a group of distinguished U.S.
scholars on January 20 that the Democratic Progressive Party
(DPP) may also organize massive demonstrations similar to
those held in Hong Kong in 2003 against Article 23 of Hong
Kong's Basic Law.

Coordinated Move
--------------


3. (C) Chen administration officials say that the president's
initiative came at the suggestion of NSC Secretary General
Chiou I-jen. Strait Exchange Foundation (SEF) Deputy
Secretary General Yen Wan-ching told AIT that the president's

SIPDIS
warning was meant to lay down a marker with Beijing before it
finalizes the text of the Anti-Secession Law. "We want to
let them know that a strongly-worded law will be met with a
tough political reaction on this side," he added. Yen said
that the president's comments also fit within a broader
"two-pronged" (liangshou) strategy that combines concessions
on the cross-Strait economic front with toughness on the
political side. "We gave in on almost all of our past
conditions for the charter flight agreement and will continue
to be flexible on economic issues," he added, "but we will
balance this with firmness on the political front."


4. (S) NSC Aide Chang Hsiang-hui contacted AIT on January 21
under instructions to explain the government's decision.
Chang emphasized that the president has not committed to
either a referendum or action on new legislation. Instead,
Chang claimed that Chen's announcement was meant to caution
Beijing that its actions would have consequences. Chang
offered assurances that Taipei would not make any formal
decision to proceed on either a new law or a referendum until
it saw the contents of the PRC legislation. She added that
NSC SecGen Chiou also promised to consult with the U.S. side
before making a formal response to Beijing's proposed law.
When pressed on the timing of the January 20 announcement,
Chang cited growing domestic political pressure to respond
over the PRC draft law.

Domestic Calculations
--------------


5. (C) Other senior DPP officials also cited the domestic
political motives behind the president's remarks. Long-time
Chen confidante and Hakka Affairs Council (HAC) Minister Luo
Wen-chia told AIT on January 21 that moderates in the DPP are
fearful that the PRC's initiative may re-energize
pro-independence fundamentalists still reeling from the
party's December 11 LY electoral setback. "We moderates have
had the upper hand since the election," he commented, "and it
looks like we'll even succeed in purging fundamentalists from
the cabinet next week." However, Luo warned that if the
president appeared to go soft in the face of Beijing's
"ill-timed provocation," Chen would hand Lee Teng-hui and his
allies the chance to make a comeback. Executive Yuan (EY)
Research, Development, and Evaluation Council (RDEC) Vice
Minister Chen Chun-lin offered a similar assessment. He
noted that the president's emphasis on "opposing unification"
is meant to pre-empt calls by DPP fundamentalists to
"accelerate independence" in response to PRC pressure. Chen
joked that "the U.S. should welcome both the PRC's
Anti-Secession Law and a Taiwan Anti-Annexation Law since
both would ostensibly be enacted to prevent the other side
from forcing a change in the status quo."

Fear of the Unknown
--------------


6. (C) Chen administration officials acknowledge that it is
too early to assess the severity of the Anti-Secession Law
draft, but many are already assuming the worst. A common
fear expressed by senior Taiwan officials is that the law
will "criminalize" support for Taiwan independence. Chunghwa
Institute for Economic Research (CIER) Vice President Michael
Chang (Jung-feng) told AIT that DPP officials worry that
Beijing will use threats of criminal action against
ideological opponents in the same way they did during the
Chinese civil war. Chang noted that during the civil war,
many KMT generals cut side deals with the CCP to avoid the
threat of prosecution later on, thus undermining morale
within the KMT's ranks. "Even if they don't enforce a law
aimed at 'splittists,'" Chang assessed, "the fact that
supporting Taiwan independence could carry a criminal penalty
would send a chill through anyone in Taiwan who transacts
business on the Mainland." However, Chang noted that since
the proposed PRC law could well be as benign as Taiwan's
Cross-Strait Relations Statute, Taipei should probably hold
its fire until it sees the full text.

Road Ahead
--------------


7. (C) While NSC officials tell AIT that no formal policy
decision has been reached on a new law or referendum, many
are focusing on President Chen's suggestion of linking a
referendum to the upcoming election to select members of the
National Assembly (NA). The NA will convene to formalize
constitutional changes passed by the LY on August 23, 2004
(Reftel). SEF's Yen remarked that if the president does
decide to schedule a referendum together with the NA vote, he
would do so by invoking Article 17 -- the controversial
"Defensive Referendum" clause -- of the 2003 Referendum Law.
Following the president's announcement of a possible
referendum on May 26, an official from the Central Election
Commission (CEC) clarified to reporters that there has been
no date set for the NA election. The LY voted on January 14
to give the CEC leeway in selecting a date sometime before
May 26.

Comment: Predictable but Problematic
--------------


8. (C) Despite assurances that President Chen's January 20
warning was aimed at moderating the contents of the draft
Anti-Secession Law, the DPP government may well follow
through with a referendum or new law regardless of how severe
or moderate the draft PRC law turns out to be. DPP officials
tell AIT that Chen remains deeply frustrated with the results
of the December 11 LY election and some suggest that he may
seek to use the NA election to recover lost momentum. While
the NA will be elected simply to vote up-or-down on the
package of constitutional reforms passed by the LY last
August, the DPP may well use the campaign to re-energize its
support base ahead of the critical (in domestic political
terms) magistrate/mayor elections in December.
PAAL