ROUND TWO IN TAIPEI: TWO MORE DPP CASUALTIES

C O N F I D E N T I A L AIT TAIPEI 001917 SIPDIS SIPDIS NOFORN E.O. 12958: DECL: 06/05/2031 TAGS: PGOV TW SUBJECT: ROUND TWO IN TAIPEI: TWO MORE DPP CASUALTIES REF: TAIPEI 1853 Classified By: AIT Acting Director David J. Keegan, Reasons: 1.4 (b/d) ¶1. (C) June 4 saw the second round of resignations from the Chen administration: NSC Deputy Secretaries General Parris Chang and Michael Tsai both stepped down under instruction. This follows the earlier resignations of Presidential Office Deputy Secretary General Ma Yung-cheng and NSC Senior Advisor Lin Chin-chang. ¶2. (C) In separate conversations with AIT on June 5, DPP Legislator Bikhim Hsiao and former DPP Chairman Shih Ming-teh both concluded, as have others, that Chen's recent actions derive from the extreme pressure he is under over his son-in-law's mushrooming insider trading case. Shih stressed that public anger over this corruption case is very intense and extends to Green as well as Blue supporters. Chen's May 31 statement and subsequent personnel changes are part of the President's fight to keep his position, both suggested, but they doubted Chen's actions will get him out of his current difficulties. Neither sees Chen at this point focusing at all on legacy issues such as constitutional reform; rather, they see him struggling for political survival. Shih suggested that Chen's dumping of Ma Yung-cheng and Lin Chin-chang on June 1 was intended to show that the President was implementing reforms by making a break with the past practice of using Presidential Office and NSC officials to give orders to the Executive Yuan (EY) on personnel and policy issues. ¶3. (C) Both Hsiao and Shih were more puzzled by the announcement of the departure of Michael Tsai than by Parris Chang's leaving the NSC, though Shih suggested that Chen may hope to use these personnel moves to try to demonstrate that he is making significant changes at the NSC. NSC Secretary General Chiou had told the Director last week that he anticipated directed resignations from the NSC, contending that these staff reductions would reflect the President's decision to discontinue presidential direction of Executive Yuan activities. However, it is difficult to make these two resignations fit that logic, since both officials were handling issues involving core presidential responsibilities: Chang in foreign policy and Tsai in defense. Our own theory is that both Chang and Tsai had been imposed on Chiou I-jen, who chose this opportunity to get rid of the two unwanted deputies. Chang was forced on Chiou by Vice President Lu, while Tsai was brought over to enable the President's choice, Henry Ko Chen-heng, to replace Tsai as Vice Minister of Defense. Chiou never included either Chang or Tsai in any meeting we had with him; Ko, by contrast, regularly attended our meetings with Chiou, especially if the topic were national security. Fortuitously or not, Chiou is now in Germany for a week to watch the World Cup as the head of Taiwan's soccer association. ¶4. (C) Chang's case was hurt further by the fact that Chang, who handles Latin American and Middle East issues, does not get along at all with Foreign Minister James Huang, who has been trying to make breakthroughs by secret personal diplomacy in exactly the areas that Chang covers. ¶5. (C) One final note: If the NSC were going to reduce staff to reflect its ceding authority to the EY, one likely candidate would by Counselor Connie Yang, a highly energetic and effective protege of Vice Premier Tsai Ing-wen, who covers economic and trade matters for the NSC. If Yang remains at the NSC, that would suggest that recent personnel changes tell us much more about politics than restructuring. If Yang does depart the NSC, we believe it is highly likely she would land in the Council for Economic Planning and Development (CEPD) or the Vice Premier's office within days or even hours. YOUNG