CHEN SHUI-BIAN VERSUS MA YING-JEOU, AND TAIWAN'S

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003663

SIPDIS

E.O. 12958: DECL: 09/02/2030
TAGS: CH PGOV PREL TW US
SUBJECT: CHEN SHUI-BIAN VERSUS MA YING-JEOU, AND TAIWAN'S
FUTURE

Classified By: ADIR DJKeegan; reason 1.4 (b,d).


1. SUMMARY. Over the next several months President Chen
Shui-bian and the Chinese Nationalist Party (KMT) Chairman Ma
Ying-jeou will compete to shape Taiwan's future. Each has
chosen a strategy, and the victor will be determined by whose
party wins two critical elections in December 2005 and March

2008. Taiwan's long-term interests will be considered only if
the offer either side a political advantage. Our challenge
will be to call clearly and impartially for both sides to be
constructive and avoid provocation. END SUMMARY.


2. Looking toward the end of his presidency, President Chen
has decided that his strategy, his legacy and the key to the
survival of the Democratic Progressive Party (DPP) will be a
new Taiwan identity (ren-tong). His repeated provocative
pronouncements, including most recently his August 25 call
for Taiwan to reject the "One-China myth," are intended to
persuade Taiwan independence advocates that he has won
acceptance by the people and friends of Taiwan that
reunification with China is impossible now or at any time in
the future and that Taiwan is, at least psychologically,
independent. At the same time, he has sought to retain a
veneer, however tenuous, of continuity with the form of the
Republic of China in order to claim to Washington and Beijing
that he has not crossed China's red-line by declaring de-jure
independence. Chen is trying to win sufficiently broad
support for this identity that whoever emerges as the DPP
candidate for President in 2008 will be obliged to campaign
and govern as the champi
on of Taiwan's independent identity.


3. Chen's major challenge over the intervening months will
be to resist allowing increased ties with China that risk
compromising Taiwan's independent identity. Since Beijing
invited former KMT Chairman Lien Chan to visit China in late
April, it has relentlessly urged Taiwan to allow fruit
exports, passenger charter flights, and Mainland tourism in
Taiwan. Chen has resisted by denigrating the value of these
proposals, insisting on government talks or the closest
possible equivalent, and warning of dangers and difficulties.
Throughout he has insisted, probably accurately, that
implementing these cross-Strait linkages could help undermine
his campaign for a new independent Taiwan identity. Chen's
problem is that Taiwan's prosperity relies on linkages to the
Chinese economy. At least half a million people from Taiwan
live and work in China (some estimate the real figure could
be two million, or 0.8 percent of Taiwan's population).
Millions more work in businesses that are now or soon could
be dependent on
linkages to China. Throughout Taiwan, for example, new
hotels and shopping malls are being built with the hope that
thousands of Chinese tourists will come, many on direct
flights, to fill them.


4. Ma Ying-jeou hopes to offer Taiwan a contrasting vision
of clean, reasonable, and effective leadership. After months
of reticence and indecision (what we called in one cable Ma's
"Achilles spine"),Ma challenged KMT Chairman Lien Chan and
the party organization's chosen successor, Legislative Yuan
President Wang Jin-pyng, and won election as KMT Chairman
with over 70% of the vote. He campaigned by promising to
remake the KMT into a cleaner and more youthful party that
can challenge President Chen's DPP for the hearts and minds
of Taiwan.


5. Immediately after his victory, Ma overcame a series of
challenges from Wang and the KMT organization. Wang demanded
Ma apologize for suggesting that KMT politics, including
Wang's campaign, bought votes through gift-giving and
banquets. Ma politely "apologized" but made it clear he
stood by his criticisms. Wang organized opposition to Ma at
the KMT party convention August 16-19 and, Wang associates
tell AIT, is still in no mood to forgive or cooperate with
Ma. By the end of the convention, Ma had clearly prevailed,
despite some confusion and the election of several Wang
loyalists to the KMT Central Standing Committee. At the
first meeting of this new Central Standing Committee, August
31, Ma won approval of his first reform - selling off party
real estate acquired through the KMT's authoritarian, often
brutal, rule.


6. Having won the first battles with the KMT party
organization, Ma must reshape the party. He must persuade
the party faithful that the KMT offers Taiwan the prospect of
an ethical effective government. He must attract younger
voters who abandoned Lien's uninspiring gray KMT for the more
youthful DPP. He must persuade the KMT and its "Pan-Blue"
allies who control Taiwan's Legislative Yuan to cease simply
defeating the DPP government's legislation and begin
initiating and passing alternative legislation. (It should
be noted that one rationale for President Chen's unrelenting
emotional agenda has been his inability to initiate
government reforms as long as the Pan-Blue LY refuses to pass
any government legislation.) Next, Ma must offer an
emotionally satisfying vision of how the KMT represents
Taiwan and the ROC even while it opposes, or at least does
not support, Taiwan independence. To accomplish this, he must
overcome the DPP accusation that the KMT is an "alien"
political party that used force to imp
ose itself on Taiwan. Finally, Ma must present a vision of
how Taiwan can co-exist with the Mainland in ways that offer
practical benefits to the people of Taiwan without giving the
DPP an opening to portray Ma as a Mainlander who does not
really care about Taiwan.


7. Since Chen won election in 2000, the KMT has focused its
efforts on criticizing him personally. Since Ma won election
as KMT chairman the DPP has returned the favor. It has
clearly concluded, as has almost everyone in Taiwan, that Ma
is the presumptive Pan-Blue presidential candidate for 2008.
The DPP campaign for the next two and a half years will focus
on defeating Ma. The first real test of strength between
Ma's KMT and Chen's DPP will be the December 2005 election
for Taiwan county magistrates and city mayors. Except for
the Taipei and Kaohsiung city mayors, every local leader will
be up for election. If either the KMT or DPP exceeds
expectations, that will give Ma or his DPP opponent a major
edge in the race to 2008.


8. Both the KMT and the DPP are completely focused on
winning these two elections. Both remember that President
Chen won his second term by less than one-third of one
percent. Strategic issues including self-defense,
international relations, and economic reform will be pursued
only to the extent that they affect the battle for domestic
political control.


9. If Ma succeeds in making the KMT into a competitive
centrist party, he will also force the DPP to move away from
Chen's platform of independent identity to compete for
Taiwan's pragmatic center. This could make Taiwan a more
cooperative partner for the U.S. in a variety of endeavors.
If Ma fails, Chen may feel further emboldened to expand his
current campaign, increasing the risks for regional security
and U.S. policy.


10. The challenge for the U.S. in the months ahead will be
to state both publicly and privately our expectation that
Taiwan's leaders be constructive, seek mutually beneficial
cross-Strait linkages and avoid provocation without favoring,
even inadvertently, the domestic political efforts of either
side.
KEEGAN