CHIEF EXECUTIVE DONALD TSANG AND THE DAB: CORE

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 001819

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DEPT FOR EAP AND EAP/CM
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 05/02/2031
TAGS: PGOV PHUM PINR PREL HK CH
SUBJECT: CHIEF EXECUTIVE DONALD TSANG AND THE DAB: CORE
PARTNERSHIP

REF: HONG KONG 943

Classified By: E/P Chief Simon Schuchat. Reasons: 1.4(b,d).


1. (C) Summary: Since his early March return from the
National People's Congress (NPC) annual meeting in Beijing,
Chief Executive (CE) Donald Tsang has drawn closer to Hong
Kong's leading pro-Beijing political party, the Democratic
Alliance for the Betterment and Progress of Hong Kong (DAB).
Beginning in mid-March, Tsang made several high profile
overtures to the DAB, leading to the April 4 announcement of
the Government's "core partnership" with the DAB. DAB
Chairman Ma Lik acknowledged that Beijing had prodded both
sides to see the benefits of a closer alliance, adding that
the failure of his political reform package in December had
impressed upon Tsang the importance of a closer partnership
with pro-Government parties. Many analysts cynically have
noted that Tsang needed the DAB's support for the
Government's plan to construct a new headquarters at Tamar,
which he only secured after announcing the "core
partnership." The Government's partnership with the DAB
apparently has inspired a competitive response from Hong
Kong's other pro-government party, the Liberal Party (LP): LP
Chairman James Tien reportedly observed that his party and
the Government shared a similar philosophy and therefore had
a closer relationship with the Government than the DAB. End
Summary.

Tsang Seeks Closer Ties with DAB

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2. (C) Since Chief Executive (CE) Donald Tsang's return in
early March from the National People's Congress (NPC) annual
meeting in Beijing, where mainland leaders reportedly
reaffirmed their full support for him, Tsang has drawn closer
to Hong Kong's largest pro-Beijing party, the Democratic
Alliance for the Betterment and Progress of Hong Kong (DAB).
In sharp contrast to speculation in late February that the
DAB had spearheaded an "anti-Donald Tsang" campaign, in
recent weeks the CE and the DAB have gone out of their way to
proclaim their "core partnership" (Ref A).


3. (C) In response to the defeat by pro-democracy legislators
of his constitutional reform proposals last December, Tsang
stated his intention to focus on economic and "livelihood"
issues for the remainder of his current term, and also
reassess the Government's relationship with Hong Kong's
various political parties. Beginning in mid-March, Tsang has
made clear that this meant strengthening the administration's
ties with the generally pro-Government DAB. Tsang made his
first overture to the DAB on March 19, attending the opening
ceremony of former DAB Chairman Jasper Tsang's new district
office along with nine of his policy secretaries. Next,
during an April 3 interview with the "Oriental Daily News,"
Tsang rank-ordered his relationship with Hong Kong's

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political parties, saying he had a better relationship with
the DAB than the Democratic Party (DP) and a better
relationship with the Liberal Party (LP) than the Civic Party
(CP). On April 4, the Chief Executive and John Tsang,
Director of the CE's Office, took the unusual step of
accepting an invitation from the DAB to attend their Central
Committee meeting, during which CE Tsang emphasized the
importance of developing a long-term "core partnership"
between the DAB and the Government.


4. (C) Following on the heels of the CE's appearance at the
DAB meeting, Chief Secretary Rafael Hui and Secretary for
Constitutional Affairs Stephen Lam participated in the DAB's
policy retreat in Dongguan from April 8-9. There, DAB
Chairman Ma Lik told the press that the party had formed a
consensus on two guiding principles: the party would actively
monitor government policies, and it would strengthen its
cooperation with the Government. The appearances of senior
level officials at DAB events have sparked discussion about
the motives surrounding this close alliance between the DAB
and the Government.

Building Trust (With a Little Push From Beijing)
-------------- ---


5. (C) Since his accession to CE last year, Hong Kong's
traditional leftists have been suspicious of Tsang due to his
career in the British colonial administration. In February,
however, relations between the DAB and Tsang fell to an
all-time low following the CE's appointment of two democrats
who had been sharply critical of pro-Beijing individuals to
relatively important positions in his administration. DAB
members viewed the appointments as particularly insensitive

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to their concerns and a provocation by the Government.


6. (C) Since the NPC meeting in mid-March, however, there has
been a sea change in attitude. On April 13, Ma told "The
Standard" that the DAB "underwent a period of overcoming our
prejudice to trust someone from a different background." He
did not deny the party's rocky relationship with the
Government, but told the "Hong Kong Economic Journal" that
there had been a lack of mutual trust in the past. According
to Ma, following the failure of the constitutional reform
package, Tsang now understood the importance of seeking a
closer partnership with pro-Government parties.


7. (C) Ma acknowledged that this "core partnership" was
helped along by the Central Government: "It is no secret that
this line-up was stitched against the background of Beijing's
strong directive." Mainland leaders told Tsang to
"distinguish between friend and foe" said Ma, who added that
"Tsang was told to rely on the like-minded 35 lawmakers who
voted for the political reform."

A Pragmatic Alliance?
--------------


8. (C) Many analysts believe Tsang's proclamation of a core
partnership with the DAB also had a pragmatic impetus -- the
Government's plan to construct a new headquarters at Tamar in
the Central district. Last year, Tsang revived the Tamar
plan, previously shelved due to deficit problems and the 2003
SARS crisis. He maintained that the project would raise
administrative efficiency and create 2,700 construction
sector jobs. However, support from the political parties --
which the Government needed to fund the project -- was, at
best, lukewarm: the LP and the Alliance were supportive,
while the DP expressed reservations about the estimated size
of the building but hinted it would vote in favor. The CP
opposed on environmental grounds and requested a new
environmental impact survey, which the Government was not
willing to undertake. To the surprise of many, however, the
loudest protests came from the pro-Government DAB, which
argued that the new headquarters should be built on the old
Kai Tak airport site to help spur urban renewal in East
Kowloon. The DAB also pointed out that the Tamar site was
one of Hong Kong's choicest, most expensive, pieces of
harbor-front real estate.


9. (C) Soon after Tsang's participation at the DAB's Central
Committee meeting on April 4, when he personally lobbied the
party for their support on the Tamar project, the DAB
reversed its position and came out in support of the project.
On April 7, the DAB voted with the LP, DP and the Alliance
to pass the government's proposal to fund a civil service
post to oversee the Tamar project. At the same time,
however, Legco Finance Committee members warned the
Government that this was only the first step to obtain
complete funding for the project. The DAB and the DP said
there was no guarantee that they would support funding for
the full project in the expected June vote. Perhaps in a bid
to secure future legislative support for the Tamar project,
on April 19 the Government released scaled-back plans for
Tamar that included a ten percent reduction in the size of
the building, and it also released other development plans to
generate economic growth in East Kowloon. (Note: Of note in
the Government's release of documents on Tamar was the
inclusion of plans for a new Legislative Council (Legco)
Complex to accommodate up to 120 Legco members. Currently,
the Legco has sixty members. End Note.)


10. (C) Christine Loh, Chief Executive Officer of the local
think-tank Civic Exchange, observed in a March newsletter
that initially many analysts could not understand why Tsang
had invested so much political capital in building the
Government headquarters at Tamar. Even without the DAB's
support, the Government might have been able to get the Tamar
project passed with the support from the DP. Perhaps
remembering the democrats' role in the defeat of the reform
package, Tsang appeared determined to gain the support of the
DAB, even if that included some concessions on development of
East Kowloon. Loh opined that Tsang's insistence on building
Tamar might be linked to his theme of strong governance,
first introduced to the Hong Kong public in his October 2005
policy speech. At the time, Tsang had cited three projects
that he wanted to see through during his two year term: the
passage of the constitutional reform package, the
construction of the West Kowloon Cultural District, and the
development of the new Government headquarters at Tamar.
With the failure of the reform package and a significant
rethink and delay of the West Kowloon Cultural District

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project, announced in late February, some observers believe
that he was unwilling to "lose" the Tamar project as well.

Not Just a Rubber Stamp
--------------


11. (C) On April 11, Jasper Tsang, former DAB Chairman,
explained to the Consul General that the Government sometimes
took support of the pro-Government parties' for granted. He
complained of a lack of consultation at the early stages of
policy formulation. Tsang also emphasized that, although the
two now had a partnership, this did not mean that the DAB
would be a rubber stamp. Maria Tam, DAB Vice Chairman, added
that it was a myth that there was a pact between the
Government and the DAB. The DAB intended to cooperate with
the Government, within reason, and also would monitor the
Government's actions at the appropriate times.

Reaction from Hong Kong's Other Parties
--------------


12. (C) The Government's overtures to the DAB have inspired a
competitive response from Hong Kong's "other" pro-Government
party, the Liberal Party. James Tien, LP Chairman, told the
media on April 14 that the LP and the Government shared a
similar government philosophy and therefore had a closer
relationship than that shared by the DAB and the Government.
He added, "Our relationship is much closer. As they (DAB)
don't share the same vision and philosophy, their
relationship is not profound." Tien also revealed that he
had held monthly talks with the CE on various issues since
October. The response from the democrats has been more
predictable: on April 22, pro-democracy legislator Lee
Cheuk-yan sarcastically characterized the alliance between
the DAB and the Government as "rather than doing it in the
dark, they should get married properly." Perhaps in
reference to the DAB's U-turn on the Tamar issue, CP
legislator Ronny Tong said, "The late night visit of Donald
Tsang to the DAB headquarters made many people (suspect)

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there were under-the table dealings."
Cunningham