CHEN-SOONG REACH AGREEMENT ON PRINCIPLES, DIFFER

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000773

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 02/01/2015
TAGS: PREL PGOV CH TW
SUBJECT: CHEN-SOONG REACH AGREEMENT ON PRINCIPLES, DIFFER
ON DETAILS


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


1. (C) Summary: President Chen Shui-bian and People First
Party (PFP) Chairman James Soong met on February 24 and
signed a ten-point joint statement pledging to promote
cross-Strait stability, maintain the "ROC" status quo, and
enhance Taiwan's defense capabilities. In a joint press
conference held immediately after their two-hour meeting,
Chen and Soong promised to move beyond past partisan and
ethnic divisions. However, the two leaders offered very
different views on the Special Defense Procurement Budget,
Beijing's Anti-Secession Law, "name rectification," and
Taiwan sovereignty. Privately, officials from both sides
tell AIT that the meeting set a positive atmosphere, but left
a number of contentious issues to be worked out at the staff
level. Democratic Progressive Party (DPP) officials say they
do not expect the meeting to usher in a new era of DPP-PFP
cooperation, but they are hopeful that it will weaken the
opposition's unity and resolve to block the government's
legislative agenda. End Summary.

Chen-Soong Ten Points
--------------


2. (C) After a week of increasingly fevered media
anticipation, President Chen Shui-bian and PFP Chairman James
Soong on February 24 held a two-hour long private meeting.
Afterwards, they issued a ten-point joint statement (see para
11) affirming the two leaders' commitment to maintain
Taiwan's status under the "ROC" constitution, promote closer
cross-Strait economic relations, enhance Taiwan's defense
capabilities, and resolve internal partisan and ethnic
tensions. The statement endorsed Chen's call for
constitutional reform but stated that any future changes to
the "ROC" constitution would be conducted under current
procedures and would not "touch on national sovereignty or
territory or alter the cross-Strait status quo." The
statement also spelled out Chen's May 20, 2000 "five no's"
pledge (Note: Chen did not explicitly restate the "five no's"
pledge during his 2004 inaugural address, reportedly at the
behest of pro-independence supporters. End Note.)


3. (C) The format for the meeting and contents of the joint
statement were agreed upon in advance between Presidential
Office Deputy Secretary General James Huang (Chih-fang) and
PFP Policy Chief Vincent Chang (Hsien-yao) after a week of
negotiations. After the February 24 meeting, Chen and Soong
held a joint press conference to explain their positions on
the ten-point statement. In his opening statement, President
Chen asserted that the meeting demonstrated that the ruling
and opposition parties could cooperate for the public good
without sacrificing their ideals and basic principles. Soong
stated that the meeting represented a first step towards
resolving ethnic tensions at home and confrontation across
the Taiwan Strait.

"One Republic of China, Different Interpretations"
-------------- --------------


4. (C) Despite their joint statement and public commitment to
maintain friendly relations, the two leaders offered very
different positions during questioning from Taiwan reporters.
Soong made a pointed reference to Chen's past assertion that
"the Republic of China is Taiwan" by remarking several times
that "The Republic of China is the Republic of China, there
is no need to elaborate any further." In response, President
Chen stated that Taipei's bottom line is that "The Republic
of China is an independent, sovereign country that belongs to
the 23 million people of Taiwan." Chen and Soong also
offered very different interpretations over the government's
willingness to pursue "name rectification." Soong claimed
that the two agreed to put a hold on recent moves, while Chen
stated clearly that he will continue to advocate changing the
names of government-owned institutions (Note: from "China" to
"Taiwan") in order to avoid "unnecessary public confusion."

Defense: Agreeing to Disagree
--------------


5. (C) Chen and Soong also offered divergent interpretations
of their "agreement" on defense modernization, with Chen
emphasizing the need to accelerate defense procurement (point
number seven),and Soong the importance of avoiding a
cross-Strait arms race (point number eight). Soong told
reporters that the PFP's "opposition to the 610.8 billion
(New Taiwan) dollar special budget remains unchanged." Soong
noted that he recently discussed the procurement budget with
U.S. Deputy Undersecretary of Defense Richard Lawless for two
and a half hours, and made it clear that the PFP would not
agree to the special budget package as currently crafted.
Soong said he also rejected USG warnings that the
cross-Strait military balance is shifting in Beijing's favor.
"We can never expect to keep parity with the Mainland, they
are a nuclear power and we can not become one," he commented.



6. (C) Nevertheless, Soong said that the PFP accepts the need
for foreign arms procurement and would be willing to hold
further discussions with the government over a scaled-down
defense procurement package. PFP Policy Chief Chang later
told AIT that the two leaders only discussed the special
procurement budget in general terms, but Soong accepted
Chen's offer to have Minister of National Defense Lee Jye
provide a private briefing to the PFP leader on the details
of the budget package.

Cross-Strait Issues: Continued Friction
--------------


7. (C) While the joint statement affirmed Chen's past calls
for a mechanism to ensure cross-Strait peace and stability,
officials from both sides told AIT that a number of related
issues were left unresolved. In a pre-brief to the Director
on February 23, Presidential Office Deputy SecGen Huang said
that the president was reluctant to accept the PFP's request
to substantially revise the 2001 Economic Development
Advisory Council (EDAC) recommendations on cross-Strait
economic policy. The final text (point number five) split
the difference, offering to consider updating the EDAC
recommendations in order to achieve the organization's
objectives.


8. (C) The two sides were also unable to resolve differences
on the cross-Strait political front. Soong declined Chen's
request to make a joint statement opposing the PRC's
Anti-Secession Law, according to the PFP's Chang. Chang said
that Chen similarly rejected Soong's recommendation that
Taipei take a low-key stance on the PRC initiative in order
to avoid exacerbating cross-Strait tensions. During the
press conference, Soong pointedly blamed actions taken by
Taiwan over the past two years for Beijing's decision to
enact the Anti-Secession Law. When asked by reporters for
his comment on the PRC law, Chen reiterated his veiled
warning to hold a public referendum or pass countervailing
legislation. However, Chen claimed that he has tried to
restrain public reactions in Taiwan, including by instructing
officials in his government not to publicly link the February
19 U.S.-Japan Joint Security Policy Statement with Beijing's
moves on the Anti-Secession Law, but successfully making the
linkage with this remark.

Next Steps
--------------


9. (C) Officials on both sides say that the February 24
meeting is only a symbolic first step in establishing a
working relationship between the DPP and PFP. The PFP's
Chang told AIT after the meeting that he and the Presidential
Office's Huang would meet again in the coming days to discuss
a number of specific policy issues, including possible DPP
support for the PFP's proposed "Cross-Strait Peace Law."
Chang dismissed media rumors that Soong would meet formally
with KMT Chairman Lien Chan. Chang told AIT that the two
Pan-Blue leaders may talk informally by phone, but there
would be no public interaction between them for the
foreseeable future.

Comment: Form Over Substance
--------------


10. (C) For both sides, the February 24 meeting was more
important for its symbolism than its substance. Chen's
promises over the status quo and cross-Strait stability were
lifted almost verbatim from his public speeches of May 20 and
October 10 of last year. They were also tempered by his
renewed commitment on "name rectification" and warnings over
the Anti-Secession Law. Similarly, Soong gave no ground over
his party's stance on the special defense procurement budget.
Nevertheless, this is the first time since the disputed
March 20, 2004 election that an opposition leader has been
willing to meet with Chen in his capacity as president.
Whether this symbolic first step will be followed by actions
on the Legislative Yuan floor may hinge on how effectively
Soong can sell his proposed partnership to his "deep Blue"
support base. Regardless, the meeting significantly weakens
the unity of the Pan-Blue opposition by increasing suspicions
between the two Blue chieftains, PFP Chairman Soong and KMT
Chairman Lien.

Ten-Point Statement
--------------


11. (SBU) The following is an informal AIT translation of the
Chen-Soong 10-point agreement:
1) The country's sovereign status as defined by the ROC
Constitution should be recognized and respected by the two
sides of the Taiwan Strait and the international community.

2) The highest principles for cross-Strait relations should
be respecting the Constitution, maintaining the status quo,
and working together to create cross-Strait peace. President
Chen has promised not to declare independence, nor will he
change the nation's title, include the "state-to-state"
theory in the constitution, hold a referendum on independence
or unification, or abolish the National Unification
Guidelines.

3) Constitutional reform should enhance the nation's
competitiveness and the government's efficiency. Both Chen
and Soong agreed that such reform should not change the
nation's sovereignty, territory, or the status quo in the
Taiwan Strait.

4) A mechanism to ensure cross-Strait peace should be
established through legislative procedures. Military threats
or pressure on Taiwan's international space will not improve
cross-Strait relations.

5) The two sides of the Taiwan Strait should continue to
promote economic, cultural, and academic exchanges and begin
talks to facilitate direct cross-Strait cargo flights. The
government's ban on the three direct transportation links
should be reviewed and adjusted as soon as possible. It has
already been three years since the EDAC met to discuss ways
to improve Taiwan's economic competitiveness, thus it may be
necessary to review and revise its guidelines in order to
achieve the EDAC goal of "deepening Taiwan, globalizing the
economy."

6) Any change to the Taiwan Strait status quo requires the
agreement of the 23 million people of Taiwan. On the basis
of cross-Strait goodwill, we do not rule out any form of
future relationship between the two sides of the Taiwan
Strait.

7) Taiwan must have an adequate national defense to ensure
peace in the Taiwan Strait. Taiwan should purchase the
weapons it needs according to its strategic goals of ensuring
national security and cross-Strait stability.

8) Taiwan has no intention of entering into a cross-Strait
arms race. In order to ease cross-Strait tensions, the two
sides should actively promote cross-Strait
confidence-building measures.

9) Discriminatory speech and actions against any ethnic
groups should be restricted and sanctioned by law in the
spirit of equality under the Constitution. A legal framework
should be established to protect the rights and interests of
different ethnic groups.

10) Both Chen and Soong promised to dedicate themselves to
eliminating ethnic confrontation and promoting ethnic harmony.
PAAL