DIRECTOR'S INTRODUCTORY CALL ON TAOYUAN MAGISTRATE

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001245

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E.O. 12958: DECL: 04/07/2016
TAGS: PGOV TW
SUBJECT: DIRECTOR'S INTRODUCTORY CALL ON TAOYUAN MAGISTRATE
ERIC CHU, APRIL 6, 2006


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


1. (C) Summary: Taoyuan Magistrate Eric Chu told AIT
Director Young that now is the time for the KMT to act
responsibly on national defense and other matters, even if it
means sharing credit with President Chen's DPP government.
During an April 6 meeting with the Director, Chu (a close
advisor to KMT Chairman Ma Ying-jeou) said Ma had become a
presidential candidate and therefore had to work with the DPP
government to solve Taiwan's defense impasse or share blame
for its continued existence. Ma could only use the National
Unification Council/Guidelines "excuse" for a month or so,
said Chu, without risking a public backlash. Chu admitted
the KMT had been acting unreasonably on defense, and said now
was the time for the KMT to adopt and execute policies
consistent with those that Ma would endorse as president.
KMT-PRC interactions may be less smooth when the KMT is in
power, said Chu, but the KMT will try to reduce friction by
avoiding Taiwan independence themes. End summary.


2. (C) The Director told Chu that in his meeting with KMT
Chairman Ma Ying-jeou, he had stressed how certain topics
must be sheltered from Taiwan's fractious politics-as-usual,
especially Taiwan's defense needs and the U.S.-Taiwan
relationship. These issues are tied together because the
U.S. is Taiwan's most important political, economic, and
security ally. Chu responded that he had met with Ma in
Taoyuan the day before, and he had tried to impress upon Ma
that meeting with President Chen had changed everything. Ma
was now more visible and therefore more responsible in the
public eye for Taiwan's current situation than he had been
before. Chu said he told Ma that he had become a "potential
presidential candidate." He must now establish a working
relationship with the ruling DPP or face greater blame for
the ongoing stalemate.


3. (C) Chu told the Director that he recently met with
several DPP leaders who said they were preparing their party
to become the opposition. Chu told them the KMT was also
preparing itself to become the ruling party. In light of the
upcoming transition, it was time for both parties to "act
reasonably" again. Chu said the DPP is "stuck" on domestic
issues, unable to make the necessary compromises with the KMT
for fear of looking weak. For its part, the KMT is also
acting unreasonably, especially on defense issues, and
increasingly runs the risk of getting blamed for the decline
in Taiwan's relative security. Chu said he and Taichung
mayor Jason Hu had earlier emphasized this risk to Ma, and
Chu believes this is why Ma agreed to get the KMT to generate
its own "alternative" arms procurement proposal.


4. (C) Chu opined that Ma is using the National Unification
Council/Guidelines debacle as an "excuse" for the delay in
his promised review of the arms procurement budget, but he
can only do so for a month or so before getting into trouble.
Chu predicted that, if the KMT does not come up with its
promised proposal soon, Ma and the KMT will be increasingly
accused of putting politics before national security.
Certain members of the KMT Legislative Yuan (LY) caucus will
always raise objections, cautioned Chu, but the party (read
Ma) must act responsibly, or face the blame.


5. (C) The Director responded that maintaining an adequate
defense posture was also important to Taiwan's relationship
with the PRC. It is important for the PRC to know that,
depite its desire for improved cross-Strait relations,
Taiwan has the will and the capability to defend itself, and
that the U.S.-Taiwan relationship is strong. Only in this
way can the PRC be made to understand that Taiwan will not
submit to the threat of force. The Director said the
increasing perception in the U.S. is that Taiwan's leaders
have allowed its defense policy to "drift." He added that
U.S. decision-makers hold the Greens and the Blues equally
responsible for the problem, as well as for finding a
solution.


6. (C) Chu said he understood the U.S. frustration, and
predicted that all parties would agree to a "reasonable" arms
procurement. The Director asked Chu to help the KMT find
common ground with its opponents on the defense issue. The

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KMT should not defeat future arms procurement proposals
simply because the DPP might get credit. Chu said the time
has come for the KMT to adopt and execute the policies that
it will hold when it assumes power. The parties can continue
to argue about constitutional reform and the existence of
"One China," said Chu, but not about national security. The
Director said he was glad to hear this, noting that, since
Taiwan had lost considerable ground vis-a-vis China, now was
the time to catch up.


7. (C) The Director told Chu that he had heard conflicting
opinions on the state of Taiwan's economy, and he asked Chu's
opinion. Chu replied that Taiwan's economic growth and
performance have dropped off recently, but Taiwan remains in
relatively good economic condition when compared with the
rest of the world. Chu acknowledged that Taiwan's GDP growth
rate had dropped two points from its 2004 seven-year high,
but it still remains at a healthy four percent. Taiwan per
capita income also continues to increase but, for the first
time, is less than Korea's. Chu said Taiwan stands to gain
considerably from PRC tourism. Taiwan businesses could also
benefit from allowing China-trained engineers to work on the
Taiwan economy. He noted that he and Ma have discussed the
idea of removing restrictions on Taiwanese investment in
China, with an eye toward preserving and promoting Taiwan's
niche advantage in tech-intensive, precision manufacturing.


8. (C) The Director commented that as the party in opposition
the KMT enjoys a special but temporary relationship with the
PRC. The KMT should expect China to become much less
flexible once the KMT assumes the presidency. The PRC
continues to hold the traditional view that Taiwan is part of
China, and that the PRC can dictate the terms of Taiwan's
return. The U.S. view is that, whatever future agreements
are reached with China, they must accord with the views of
Taiwan's democratic population. Chu said he expects the KMT
to encounter many of the same problems with China as Chen's
DPP government has. But he hopes the KMT will be able to
reduce friction by assuring Beijing that a KMT government
will not push to change Taiwan's name, its constitution, or
its current status. The KMT will push to preserve Taiwan's
political separation and to increase its diplomatic space,
both difficult tasks. Chu said he expected the PRC to remain
a military adversary until it transforms into a full
democracy.


9. (C) Comment: We found Chu more pragmatic (or at least
more outspoken) about the challenges facing his KMT party
than his boss, Ma Ying-jeou. Chu is believed to be ONE of
Ma's closest advisers. Therefore his views on KMT politics
have heightened importance as Ma consolidates his leadership
position within the party and prepares his 2008 presidential
bid.
YOUNG