THE DPP TORTURED IN DEFEAT

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004840

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 12/09/2015
TAGS: PGOV PREL TW CH
SUBJECT: THE DPP TORTURED IN DEFEAT

REF: TAIPEI 4818

Classified By: AIT Director Douglas Paal, Reasons: 1.4 (b/d)


1. (C) Summary: While President Chen remains largely silent
and out of the public view, others within the DPP are
speculating on the future course of the president and the
party and doing what they can to influence the outcome. Two
moderate DPP figures, Hong Chi-chang and Wu Hsiang-jung, told
AIT that party moderates have urged the president to step
back from the political arena and to consider a financial
expert as premier in January. Both Wu and Hong expect Vice
President and Acting Party Chairman Lu Hsiu-lien to seek
election as party chairman in January, presumably to help her
campaign to win the DPP nomination for president in 2008. Wu
and Hong agreed there will be resistance within the DPP to
Lu's wish to become chairman. Wu and Hong both said they
expect the DPP government to continue gradually opening
cross-Strait relations. End Summary.


2. (C) DPP Legislator Hong Chi-chang, a member of the DPP
New Tide faction, told AIT that he recently told President
Chen Shui-bian that public dissatisfaction with DPP
corruption and ineffective governance were responsible for
the DPP defeat in the December 3 local elections and that
Chen would have to take some actions to restore public
confidence. One such step, Hong suggested, could be to
require all senior officials to sign a clean government
agreement. Hong said he also advised President Chen to step
back from the political party arena and to say less, which
would be in line with his role as president. The DPP
chairman and not the president should take the lead on
inter-party issues, including meetings with the leaders of
other parties, Hong said. According to Hong, Chen listened
more and spoke less than usual during their recent meeting.
Hong added that he does not expect Chen to make a more formal
public statement, following his lengthy but vague message on
the internet in which he promised improved performance to
fulfill public expectations.


3. (C) DPP Policy Research and Coordinating Committee Deputy
Director Wu Hsiang-jung (protect) told AIT that he expects
Chen to name a new premier by mid-January. That would allow
sufficient time to form a new cabinet prior to the resumption
of the Legislative Yuan (LY) session on February 1. Wu
suggested that Chen might appoint someone with financial
expertise such as Central Bank Governor Perng Fai-nan (Peng
Huai-nan) in order to improve government performance. It is
also possible, however, that Chen could appoint a figurehead
premier so that he could play a greater role in managing
government policy, a role he enjoyed playing when he was
mayor of Taipei, Wu added.


4. (C) Recent media reporting on Kuomintang (KMT) LY Speaker
Wang Jin-pyng as a possible candidate for premier may have
been a trial balloon, Wu speculated. Hong said he had heard
no "inside story" indicating the president is thinking of
Wang, but added that he did not rule out such a possibility.
Hong pointed out the difficulties a Wang appointment would
entail. Wang represents the KMT as an at-large legislator,
and therefore would have to have KMT party concurrence or
betray the KMT to accept a DPP appointment. The DPP is still
embittered over its experience with KMT heavyweight, retired
General Tang Fei, as Premier in 2000.


5. (C) Wu and Hong both said they believe Vice President and
Acting DPP Chairman Lu Hsiu-lien clearly hopes to be elected
party chairman next January or she would not have taken on
the interim position. Wu suggested that Lu would probably
not win a vote against some of the other potential candidates
such as former Council of Labor Affairs Minister (and New
Tide member) Chen Chu. Hong, who may be interested in the
position himself, said the New Tide faction will not make a
proposal because to do so would cause other factions to unite
in opposition. The New Tide would support either defeated
Taipei County candidate Luo Wen-jia or Presidential Office
Secretary General Yu Shyi-kun, Hong said, and it would oppose

SIPDIS
either Lu or Legislator Trong Chai (Tsai Tung-jung),who are
hardliners on cross-Strait policy.


6. (C) According to Wu, there is no plan for the DPP Central
Standing Committee (CSC),which adopted a report on the
reasons for the election reverses, to debate future policy.
The CSC attends only to party affairs, Wu explained, and it
does not consider or approve policy issues and decisions,
which come from the president and his senior advisors. Wu
expressed concern that Lu might try to use the party chairman
position as a platform to publicize her policy views in hopes
of burnishing her credentials as a presidential candidate.
In addition to being unfair to other candidates, this could
lead to a situation in which there are three competing DPP
power centers: president, premier, and party chairman. Wu
noted that both Lu and Yu Shyi-kun already have set up
well-staffed presidential campaign offices in downtown
Taipei, adding that former DPP Chairman Su Tseng-chang, who
enjoys far greater public support as a potential DPP
presidential candidate in 2008, does not have such an office.



7. (C) Both Wu and Hong said they expect the DPP government
to continue gradually to open cross-Strait relations.
According to Wu, the Executive Yuan postponed implementing a
series of minor new cross-Strait steps when the topic became
an election issue, but these steps will be coming. Hong said
he is working to promote cross-Strait opening, and said he
hopes that working level dialogue and cooperation can help
build confidence between the two sides, based on maintaining
the status quo. Hong criticized the PRC for interfering in
the recent local elections by advising Taiwan businesspeople
to contribute to the KMT and its candidates. Such
interference, if continued, will make the development of
cross-Strait relations more difficult, Hong said. Hong also
suggested that Chen's susceptibility to pressure from those
who oppose opening cross-Strait relations, such as VP Lu and
Trong Chai, explains some of his shifting statements and
stances on the issue.


8. (C) National Security Council Secretary General Chiou
I-jen told the Director on December 8 that President Chen is
conflicted between embarking on rebuilding the DPP for the
2008 elections, and stressing concrete achievements during
the two-plus years remaining in his term. Chen is
discovering many contradictions. For example, if he replaces
Premier Hsieh to get better performance out of the Cabinet,
Chiou said, he will reduce the number of qualified candidates
for 2008. Chiou said Chen needs more time to sort these out.

Comment
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9. (C) A power struggle between fundamentalist and moderate
factions and individuals within the DPP seems inevitable
because of the election reverses, Chen,s lame duck status,
and competition for influence and power. Many DPP officials
and politicians blame Chen for the problems that have led to
public dissatisfaction and the election reverses, and they
hope Chen will accept a reduced role in the interests of
restoring the party's credibility with the public. Chen,s
intentions are not clear at this point. Until they are, the
party will continue to drift.

PAAL