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2005-07-04 23:10:00
American Institute Taiwan, Taipei
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						C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 002881 



E.O. 12958: DECL: 02/01/2015


B. TAIPEI 2786

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

1. (C) Summary: Two close confidantes of President Chen
Shui-bian told AIT that the President is comfortable with the
current state of cross-Strait relations. In separate
conversations, Presidential Office Deputy Secretary General
Ma Yung-cheng and National Security Council (NSC) Senior
Advisor Lin Jin-chang told AIT that Taiwan will sit tight
until the PRC responds to Premier Frank Hsieh's recent
designation of non-governmental organizations to discuss
direct transportation links and agriculture. Chen aides
asserted that the President is unconcerned about PRC attempts
to use the KMT as an alternate negotiating channel. "If they
want progress in cross-Strait interactions, Hsieh has told
them how to get it," Ma stated, "if they want to play
domestic political games with the KMT, it will only back
fire." Ma said that President Chen is convinced that KMT
Chairman Lien Chan's recent visit was a strategic error for
the KMT. The KMT's 2008 candidate will either have to
disavow the KMT-CCP agreement, Ma confidently asserted, or
lose the election. Both Lin and Ma said that President Chen
has written off People First Party (PFP) Chairman James Soong
as a lost cause. End Summary.

Cross-Strait Policy: Content to Wait


2. (C) Two longtime Presidential insiders, Presidential
Office Deputy Secretary General Ma Yung-cheng and NSC Senior
Advisor Lin Jin-chang separately told AIT that President Chen
is confident that the government has regained full control
over the course of cross-Strait relations. According to both
officials, Taipei assesses that Premier Frank Hsieh's June 13
speech (Ref A) has put the ball firmly back in Beijing's
court. By designating non-governmental organizations to talk
about PRC initiatives on direct flights, fruit, and tourism,
both officials stated, Hsieh has offered the PRC a clear
roadmap to achieving progress on cross-Strait contacts.

3. (C) Ma said that if the PRC fails to respond to Hsieh's
initiative and instead tries to play domestic Taiwan
politics, it will only backfire on them. "They misjudged the
long-term impact of the Lien/Soong visits," Ma stated, "they
raised expectations for a breakthrough, but failed to follow
through effectively to maintain the momentum." Ma noted that
if the PRC continues to put all of its eggs in the Lien
basket, it could risk creating a backlash among the Taiwan
public. The NSC's Lin said that the PRC will inevitably try
to use its KMT channels first, but would sooner or later
realize that its interests are better served by dealing with
the organizations designated by Hsieh on June 13 (Note: Lin's
NSC colleague, Chen Chung-hsin, told AIT that if the

KMT-controlled Provincial Farmers Association strikes a deal
to open fruit exports to the Mainland, the government will
sabotage the plan by inspecting the PRC-bound fruit so slowly
that it will rot before leaving the island. End Note.)

Lien Chan: The Last of the Chinese


4. (C) Chen aides say they are also confident that as soon as
KMT Chairman Lien Chan steps down, the KMT will start to back
away from their flirtation with Beijing. "We will ask one
question of the KMT candidates in the 2008 election," Ma
continued, "are you going to implement the KMT-CCP five point
agreement if you win office?" No KMT candidate could answer
in the affirmative and win a popular election in Taiwan, Ma
confidently concluded. For this reason, Ma predicted that
the next KMT Chairman will move quickly to distance himself
from Lien's pro-China policy line and move to repair
relations with the United States, starting by taking a more
positive attitude on defense procurement.

5. (C) Ma said that he has seen reports that one of the major
factors driving the PRC's rush to cut a deal with the KMT
before Lien's resignation is an assessment that Lien
represents the last of a generation of KMT leaders who fully
identify themselves as Chinese. "Lien's frame of reference
is China, he was born in Xian, went to school in China and
thinks that he is Chinese," Ma (himself an ethnic Mainlander)
continued. KMT Chairman candidate Ma Ying-jeou is a
Mainlander, "but he was born in Hong Kong and raised there
and Taiwan -- Mainland China doesn't have that nostalgic pull
for him." Ma Yung-cheng added that Legislative Yuan (LY)
President Wang Jin-pyng's "lack of Chineseness goes without
saying, he is Taiwanese to the bone."

6. (C) While Chen aides are confident that the next KMT
Chairman election will distance himself from Lien's pro-China
line, they assert that Lien and his KMT elders will not go
quietly. Ma said that his office tracks how the KMT handles
the disposal of its assets and, based on a recent slowdown in
divestitures, assesses that Lien is preparing to retain
control over the KMT's funds beyond July 16. Ma added that
by keeping his hand on the purse strings, Lien may calculate
that he can effectively play Wang and Ma Ying-jeou off
against each other. The NSC's Lin offered a similar
assessment, but said that even with control over the money,
Lien will be surprised how quickly he is forgotten.

Pivotal Role No More


7. (C) Chen aides say that the President is finished with PFP
Chairman James Soong. Ma said that Soong seriously
overplayed his hand in the past six months. "He promised
everyone something," Ma stated, "but in the end could not
deliver anything to anyone." Ma asserted that Soong could
have carved out a political niche for the PFP between the KMT
and DPP by supporting cross-Strait contacts and increased
defense spending at the same time. "Instead," Ma continued,
"he chose to race Lien to the pro-China bottom." Ma admitted
that Soong did not meet PRC Taiwan Affairs Office (TAO)
Director Chen Yunlin, but said that the Presidential Office
has solid information that PRC officials have pressed Soong
through intermediaries over the past eight months to use the
PFP's LY Caucus to block the Special Defense Procurement
Budget and amendments that would substitute a referendum for
the National Assembly in confirming future constitutional
reforms. (Comment: the Presidential Office source is likely
long-time Soong confidante Raymond Wu. Wu told AIT that he
has become increasingly disturbed by Soong's willingness to
betray Taiwan's interests with the PRC for personal gain. Wu
was particularly upset over Soong's May visit to the
Mainland. Over the past year, Wu has maintained regular
contacts with NSC Secretary General Chiou I-jen. End

8. (C) Chen advisors dismiss Soong's demand for an apology
over the Chen Yunlin accusation. The NSC's Lin stated that
Soong is using the demand to delay making a decision on what
to do next. Soong cannot make this decision, Lin continued,
until he knows who is the new KMT Chairman. Lin stated that
the Chen administration will ignore Soong and focus its
future efforts on working with the new, and presumably more
reasonable, KMT Chairman to move forward on the government's
legislative agenda. Lin acknowledged, however, that an
isolated and desperate PFP could continue to play a spoiler
role in Taiwan politics, but said that there was little
anyone could do but wait for the party to dissolve. Ma said
that the President is willing to let the Premier offer
incentives to individual KMT and PFP legislators to cross the
aisle (Ref B), but asserted that Chen himself will not
involve himself in the effort.

Comment: Chen Back in the Saddle


9. (C) It appears that the Chen administration's fear that
the Lien/Soong Mainland visits would deprive the President of
control over the pace of cross-Strait policy has not
materialized. Chen aides seem genuinely convinced that
Beijing's divide-and-conquer strategy towards Taiwan will
backfire on China and Taiwan's opposition. This confidence
contrasts with the views of many foreign policy officials in
the EY and ruling party, who continue to fret over the
threats posed by PRC "united front" tactics to erode Taiwan's
interests. Both these postures are unlikely to stand the
test of time as pressures build in agriculture, airlines, and
tourism circles to realize pragmatic gains in cross-Strait