DIRECTOR'S INTRODUCTORY CALL ON MINISTER OF DEFENSE

S E C R E T SECTION 01 OF 04 TAIPEI 001194

SIPDIS

SIPDIS

DEPT PASS TO AIT/W

E.O. 12958: DECL: 03/31/2016
TAGS: CH MARR MAS PGOV PREL
SUBJECT: DIRECTOR'S INTRODUCTORY CALL ON MINISTER OF DEFENSE
LEE JYE, MARCH 31, 2006

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Classified By: AIT Director, Stephen M. Young, Reason(s): 1.4(B/D)


1. (S) Summary. In his initial meeting with AIT Director
Young, Defense Minister Lee Jye welcomed continued close
support with AIT on defense subjects. Minister Lee reported
that progress had been made on approval of procurement of
three procurement items (PAC-2 Upgrade, P-3C, Submarine
design) in the annual budget until being sidetracked by the
recent National Unification Council controversy. On
trilateral US-JP-TW cooperation, Minister Lee noted agreement
with US request not to have Japanese observers at 2006 Han
Kuang exercise activities, but signaled his wish for US
support for such activities in the future, possibly as early
as 2007. In response to AIT expression of concern on the
Luke F-16 training program and the MND plan to reduce the
aircraft at Luke for the first time, the Minister
acknowledged the value of replacing the four aircraft that
are scheduled to return to Taiwan. However, he tied this to
their plan to move forward with an additional buy of 40-60
fighter aircraft that is at least three to four years away
from providing Taiwan any aircraft. On counterstrike,
Minister Lee indicated little flexibility on their plan to
develop what he termed the Defensive Countermeasure. He
underscored that the program was only a minor change to the
existing Hsiung Feng 2 missile and that it was only in the
research phase. However, he emphasized that Taiwan needed
some measure that it could employ if foreign assistance could
not be provided to Taiwan in a timely manner. Overall, the
meeting reflected a very forthcoming and positive tone. End
Summary.

Minister Opens with Special Budget
-------------- --


2. (C) Minister Lee opened the discussion by welcoming
Director Young. Minister Lee then provided the Director
with a quick summary of the status of the Special Budget and
the three procurement items. Minister Lee noted resolution
of the three procurement projects, with some changes, looked
favorable. He indicated that PFP Legislator Hu had drafted a
"case" which had been coordinated with the KMT, with the
outcome that the P-3C procurement had been agreed to be
placed in the annual budget, as well as the PAC-2 upgrade and
that they hoped this would include funds for the initial
design phase for the submarine program. He indicated that
this had all been agreed to prior to situation concerning the
National Unification Council and that now they would have to
see what the current situation was.


3. (C) He underscored that President Chen had approved 2.85%
of the GNP for the defense budget for next year and 3.0% for

2008. He noted that they had submitted the financial data to
the EY and that there was good coordination between the MND
Comptroller and the EY. He felt that should achieve their
3.0% goals in 2008. He further noted that this funding level
would provide adequate funds for the three procurement
projects with some residual funds to support other
programs. Minister Lee also expressed the Ministry of
National Defense's desire to split the submarine procurement
into two phases (A Design / Source Selection Phase followed
by Procurement Phase) and his desire for AIT support on this
issue.

Director Desire to Increase Attention to Defense Matters
-------------- --------------


4. (C) Director Young responded to the Minister's
greeting by noting that he had spent a lot of time with
former Defense Minister Tang, Fei and his staff when he was
Deputy Director, as he felt it was important to meet with
Ministry and the Services. As Director, he would spend more
time working with the Minister and his colleagues. He noted
that nothing was more important than security in the
relationship and that this was a critical moment in managing
the security talks. He noted that on his way here, he had
had extensive talks with high-level personnel in the DoD and
had spent two days with PACOM in Hawaii. He indicated that

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there was a lot of work to do. He signaled that this was
something that he would discuss regularly with political
leaders in Taiwan. He pointed out that he had already
discussed this with President Chen and that he looked forward
to discussing this subject with Mayor Ma, Ying-Jieou.


5. (C) Director Young underscored that we (US) were among
the biggest supporters of Taiwan democracy and that it was
Taiwan's best selling point around the world and on the
mainland. However, he noted that he shared the views of the
US leadership that there should be limits on Taiwan political
competition when Taiwan's security was at stake. He said
that he had stressed in his meeting with President Chen and
with leading KMT figures our hope that they focus less on
political competition and more on the security of Taiwan.


6. (C) Director Young continued by noting that during Ma's
trip to the US, he (Ma) had heard frank talk on the defense
budget. Director noted that he would talk to all concerned
to encourage setting politics aside in the defense budget
debate. He noted that China's growth and economic
prosperity presents problems for the Minister's staff as well
as problems for our staffs as was noted in his discussions
with senior personnel at PACOM. He further noted that
improvements such as P-3C's, PAC-2's and Sub were important.
But there are other "soft" initiatives that our staffs could
work on such as computer simulations, infrastructure
hardening, joint operations and training, and communications
improvements which could combine to provide asymmetrical
improvements to increase Taiwan's capabilities.


Defense is Not Just Budgets
--------------


7. (C) Director Young noted that activities such as the Han
Kuang exercises and the Monterey Talks were important
milestones in our expanded cooperation. Director stated
that he looked forward to visiting the upcoming Han Kuang CPX
(April 06) and that he was considering going to the Monterey
Talks this year. He thanked the Minister for the support
and access that they have been giving to AIT's two military
offices - the Technical Section and the Liaison Affairs
Section. He noted that cooperation with these offices was
the glue that holds cooperation together.


8. (C) Minister Lee responded by indicating that in the past
the MND had talked directly to DoD, but now they talked
through AIT and he felt that this manner of communicating was
more beneficial.

F-16 Training Program / Interim Fighter Procurement
-------------- --------------


9. (C) Director Young recalled that when he was last in
Taiwan the last F-16's, which had been approved by President
Bush senior, were being delivered. At the time, he visited
Chai-Yi AB and had talked to both the US and TW pilots. He
had come away with a sense of the important role the Luke AFB
pilot training program played in ensuring that Taiwan's
pilots were among the best in the world. Director Young
said he recognized that the program was expensive and that it
took the best pilots away from Taiwan for a while. However,
he underscored that the key to defense in the straits was
having the best pilots and the best equipment. He hoped
that the Minister would continue to support this important
program.


10. (C) Minister Lee thanked the Director for his interest
in this program and noted that this program has always been
one of MND's most important programs. He reported that he
had been discussing with the Air Force what their next
aircraft should be -- perhaps either F-15 or a newer version
of the F-16. He noted that they were awaiting a US decision
on the release of aircraft. He reported that four Luke
aircraft would return to the Taiwan as part of the Han Kuang
exercise this year. He indicated that if they (Taiwan)

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moved forward on procurement of new aircraft, perhaps the
first four production aircraft could remain in the US at
Luke. Minister Lee reported that President Chen had
promised never to cease this program. He went on to affirm
that if they establish the future (fighter) procurement
program, the first four aircraft would stay at Luke.
Director Young indicated that that we would look into
situation and appreciate the Minister's support for the
program. Minister Lee closed the subject by noted that the
IDF cannot be seen as the best aircraft and they would soon
need to replace it.


11. (C) Note: Minister Lee was referring to two separate,
but closely related, issues. While the Taiwan Air Force
(TAF) has consistently desired to continue the Luke AFB
training program at its current / expanded scope, the
Minister has allocated less funding, scaled back to
year-to-year approval (instead of multi-year) and directed
return of four (4) of the fourteen (14) TW aircraft at Luke
as part of a Han Kuang exercise. OSD and USAF have
expressed concern at the reduction in the Luke program, in
particular, at the return of 4 aircraft. Concurrently,
Minister Lee has directed the TAF to develop a request for an
additional fighter aircraft purchase of between 40-60
aircraft to replace portions of their F-5, IDF, or Mirage
fleets. The formal request has NOT been submitted to the US
yet, though the Minister's comments suggest that it has. We
expect the request for pricing to include a request for the
F-16 and the F-15, though the Minister's comments indicate
that he recognizes that F-15 approval is not likely. The
offer to put the first four production aircraft in Luke is
the first indication of a response to US concerns about
scaling back the Luke program -- however, the first
production aircraft would not be delivered for at least 2-3
years after program start. After the meeting, MND POC's
called TECH Section to underscore that the MND was moving
forward on the interim aircraft buy request and would like
sign the new FMS case next year in 2007. At this point, it
is unclear whether funding is actually in the 2007 of 2008
budget. Regardless of how quickly the decision moves
forward, the Minister's proposal would effectively reduce the
scale of the Luke training for at least several years.

Trilateral Cooperation with Japan
--------------


12. (C) Director Young expressed appreciation for MND's
decision not to invite Japanese observers to the upcoming Han
Kuang exercise. He reported that Japan was a firm US ally
who looked at security challenges in the area with a common
perspective, but that visible trilateral discussions and
cooperation are not advisable and unnecessarily heightened
tensions across the strait. Director Young noted that this
was not in Tokyo's, the US's or Taipei's interest. He
thanked the Minister for his wisdom in this area, but he also
stated that this does not mean that Japan is not looking
positively at cooperation with Taiwan. Minister Lee
responded that the Taiwan initiative to work with Japan had
arisen as a result of Han Kuang18 or 19 (2002/2003) and
discussions with PACFLT (Translated as PACFLT - more likely
PACOM) and that PACFLT (PACOM) had recommended that Taiwan
establish cooperation with Japan. Minister Lee reported that
as of last week, Japan had been planning to send 9 people to
observe the HK exercises. Seven of these personnel were to
be retired general or flag officers. The Minister also
indicated that he would be seeking US support to include
Japanese participation in the Han Kuang exercise next year.
Director Young reiterated that the perception of trilateral
cooperation needs to be kept off the table.


Counterstrike - Thanks For Your Concern - But No Thanks
-------------- --------------


13. (S) Director Young raised U.S. concern with the
research, development, deployment and doctrinal development
of a counterstrike capability against the mainland. He

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noted that although it may not be deployed now, there was
grave concern about the program in the American political and
military leadership in Washington and in Hawaii.


14. (S) Minister Lee responded by indicating that for some
time now, there have been complaints from the US side
questioning Taiwan's commitment to defend itself. He
stated that they had initiated this program in a low key
manner. He stated that the Defensive Countermeasure program
is a modification of an existing Hsiung Feng 2 missile which
adjusts the seeker head and extends the range of the missile
to the Mainland. He stated that this program is only in the
research phase. He underscored that from a defensive point
of view, if there is a situation where foreign assistance is
needed to defend Taiwan, but unable to get to Taiwan in a
timely manner, then Taiwan must have measures that it can
use. The first premise is to prevent war in the Taiwan
Straits. He underscored that the Mainland has been targeting
Taiwan with systems for some time, but Taiwan has not been
targeting the Mainland. He then noted that a war must be
stopped before it starts and that Taiwan would only use its
Defensive Countermeasure if there was no other choice. He
firmly stated that they would not use it against civilian
targets - not as a "counter-value" system. He stated that
they would only use it against military targets. Further,
he stated that they would notify AIT and the USG before the
use of the Defensive Countermeasure system. He continued
by indicating that they are developing regulations for the
use of the Defensive Countermeasure. He reiterated that it
is only a modification of the Hsiung Feng 2 seeker head and
that it was only in the research phase. He continued that
the program had remained in a low profile until a legislator
raised the issue in the LY on the need to attack. He closed
by noting that media reports would need to be taken into
consideration by the Mainland.


15. (S) Director Young responded by indicating that he
thought greater transparency and, at some point, a discussion
of doctrine, might be valuable. Minister Lee responded
that would certainly be feasible. He closed by indicating
that if the US would be willing to release critical
components for the program, it would be most helpful.

Three Pillars
--------------


16. (C) In closing, Director Young noted that he wanted to
emphasize three areas and that the need to support
democratization is the base starting point for his three
areas of emphasis.

-- First, he noted that he wanted to work with Minister to
establish a 21st century defensive capability that could
accurately and prudently address the threat across the
strait.

-- Second, he wanted to cooperate in every way to ensure
that the economy would remain a competitive 21st economy and
competitive in the region.

-- Third, he wanted to carefully work with both sides and
with an increasingly prosperous China to push it in more
productive and peaceful directions.

Director closed by noting that if we look at these
priorities, it is easy to say that time is on Taiwan's side.
Taiwan can protect its freedoms while waiting for China to
evolve into a more open society which is easier to deal with.


17. (C) Minister Lee indicated his understanding and
agreement with the Director's comments. He noted that if the
Director had special requests with regard to Han Kuang, e.g.
the desire to visit units or troops, he would be glad arrange
things. He closed by indicating that he thought that they
would continue to talk frequently.
YOUNG