MA YING-JEOU AND CORRUPTION DEFEAT RULING DPP IN

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004800

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 12/05/2015
TAGS: PGOV TW
SUBJECT: MA YING-JEOU AND CORRUPTION DEFEAT RULING DPP IN
LOCAL ELECTIONS


Classified By: AIT Acting Director David Keegan, Reasons:
1.4 (b/d)


1. (C) SUMMARY. The opposition Kuomintang (KMT) scored a
landslide victory over the ruling Democratic Progress Party
(DPP) in Taiwan's December 3 island-wide local elections.
The KMT victory was made possible by intense public anger at
DPP corruption and dissatisfaction over the DPP's inability
to govern since Chen Shui-bian became president in 2000.
Accusations of corruption against Chen and his closest
associates made the DPP's most active campaigner more a
liability than an asset for the party. KMT chairman Ma
Ying-jeou successfully presented himself as a dynamic, clean
and competent alternative, establishing himself as the
presumptive KMT presidential candidate in 2008. While the
KMT celebrates, the DPP is in disarray, with Party Chairman
Su Tseng-chang resigning and Premier Frank Hsieh offering to
do the same. In contrast to previous elections, President
Chen did not resort to divisive and provocative calls for
Taiwan independence, a separate Taiwan identity, or a new
constitution. END SUMMARY.


2. (C) The opposition Kuomintang (KMT) scored a landslide
victory in local county and city elections on December 3,
winning 14 of the 20 races in which it nominated candidates.
The ruling Democratic Progressive Party (DPP) suffered a net
loss of four districts, including critical Taipei County, and
will now control just five counties and one city, all in
southern Taiwan. Overall, DPP candidates received just 42
percent of the votes while KMT candidates received 51
percent, dramatically reversing the trend in recent years of
growing DPP support. (Further details reported septel.)


3. (C) While the post-mortems are only beginning, the basic
reasons for this dramatic reversal are clear. For the first
time since the local elections in 1997, the DPP failed to
control the campaign. Ever since riots broke out among Thai
laborers on the Kaohsiung Metro in late August, the DPP has
been engaged in damage control. Whether the issue was
gambling holidays at government expense for senior Chen
advisors, who were accused of skimming funds from the
Kaohsiung labor contract, accusations against Premier and
former Kaohsiung mayor Frank Hsieh (Chang-ting) of knowingly
signing a Metro deal that benefited DPP loyalists, or the
bungled effort by the DPP head of the Government Information
Office to close a TV station that publicized the Kaohsiung
allegations, the DPP has been on the defensive. Virtually
its only campaign initiative, cutting retirement benefits for
government retirees, only helped mobilize the KMT base. When
the DPP government publicized an on-going investigation into
corruption involving the acquisition of Lafayette Frigates by
the KMT government under former president Lee Teng-hui in the
final weeks of the campaign, it confirmed to most that the
DPP had abandoned any hope of clearing its own name and had
resorted instead to ensuring that the KMT would also have to
fight corruption charges. President Chen, the DPP's dominant
campaign figure in recent elections, became the symbol of DPP
corruption and missteps.


4. (C) KMT Chairman Ma seized on the DPP's troubles,
proclaiming these elections as a &mid-term examination8 on
the performance of President Chen and his government. By
capitalizing on the DPP government scandals and missteps, he
succeeded in controlling the election agenda from beginning
to end. Ma urged the voters to give the DPP government a
vote of no-confidence in order to force the DPP to reform and
improve its performance. In over 300 campaign appearances,
he presented himself as a dynamic, clean and competent
alternative. Ma's personal campaigning and the ubiquitous
billboards of him posing with local candidates proved the
single most striking and effective campaign tactic for a KMT
still recovering from two disastrous presidential bids by its
former chairman Lien Chan.

Scandal and Ma Decide the Critical Contest
--------------


5. (C) In the critical Taipei County race, the margin of DPP
candidate Luo Wen-jia's defeat (10.5 percent) was magnified
by a late-breaking scandal involving small payments,
presumably by campaign supporters, to participants in a
campaign rally. A bus driver reportedly provided KMT
candidate Chou Hsi-wei's campaign team with video footage
from a bus surveillance camera that showed a man handing out
cash to passengers on a bus heading to Luo's rally. This
video footage was shown over and over during the final days
before the election. According to internal DPP polls, Luo
lost 5-6 percentage points as a result of this scandal. KMT
Chairman Ma Ying-jeou spent so much time campaigning together
with KMT candidate Chou Hsi-wei that voters doubtless
identified a vote for Chou as a vote for Ma.

Dueling Resignation Threats
--------------


6. (C) In the final days before the elections, Ma announced
he would step down if the KMT did not win at least 11
districts, gaining credit for accepting responsibility and
helping to bring out the KMT vote to "save" Ma, the KMT's
best chance to regain power in the 2008 presidential
election. Ma's statement also upstaged a subsequent similar
statement by DPP party chairman Su Tseng-chang, who is one of
the DPP's leading potential presidential candidates in 2008.



7. (C) On the night of the elections, Su immediately honored
his commitment and announced his resignation as DPP party
chairman, an act which earned public respect and may help his
future political career. Premier Frank Hsieh (Chang-ting)
twice offered his resignation, but President Chen responded
that political stability is most important at this point.
Nonetheless, DPP infighting has been growing in recent weeks
as the scope of the likely defeat became clearer. Chen
publicly criticized Hsieh several times during the campaign,
and his future is far from secure. Other significant cabinet
changes are likely; it is just a matter of time.

U.S. Interests
--------------


8. (C) For the first time since 2000, President Chen did not
campaign by appealing to the pro-independence sentiments of
the DPP,s deep Green southern base. In sharp contrast to
the 2004 presidential and legislative elections, he made no
calls for building a Taiwan identity separate from mainland
China or for rewriting the Republic of China constitution to
make is more suitable for the realities of present-day
Taiwan, which many Green supporters understood to be a plan
to create a Republic of Taiwan. Even though President Chen
excoriated then KMT Chairman Lien Chan and PFP Chairman James
Soong when they visited China in April and May of this year,
he hardly mentioned cross-Strait issues in the course of the
campaign. Under pressure on the issue of corruption and poor
performance, DPP leaders may have concluded that pressing
radical themes would only drive more swing voters into KMT
arms. More important, the DPP may be hoping for some gradual
limited opening in cross-Strait relations over the coming
months, realizing that, given the breakthrough in KMT
relations with China, the DPP must show that it can handle
cross-Strait relations effectively if it hopes to stay in
power in 2008.

KEEGAN