FORMER PREMIER URGES TAIWAN - PRC ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001340 SIPDIS SIPDIS STATE PASS USTR STATE FOR EAP/TC, USTR FOR STRATFORD AND ALTBACH, USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN E.O. 12958: DECL: 01/25/2010 TAGS: ETRD ECON PREL PGOV TW SUBJECT: FORMER PREMIER URGES TAIWAN - PRC ECONOMIC CONSULTATIONS Classified By: AIT DIRECTOR STEPHEN M. YOUNG for reasons 1.5 (b),(d) ¶1. (C) Summary. Former Premier Vincent Siew described Taiwan to AIT Director as politically divided over the appropriate policy on cross-Strait issues. He prescribed consultative mechanisms between the KMT and DPP to resolve domestic issues and consultations, on economic issues only, between Taiwan and China to establish closer economic ties. He sees Taiwan's future prosperity as inextricably linked to China and has urged top Chinese officials to deal directly with Taiwan's elected government. While the PRC and Taiwan continue to have substantial unofficial contacts, Beijing still appears unwilling to engage in any direct discussions with the Chen Administration. End Summary. ¶2. (C) AIT Director Young met former Premier Vincent Siew April 12 to discuss economic and political aspects of cross-Strait issues and domestic Taiwan politics. Siew remains active in Taiwan affairs; he is Chairman of both the Chunghwa Institute for Economic Research (CIER) and the Cross-Straits Common Market Foundation (CSCMF). He just returned from a short trip to Xiamen to represent CSCMF. He is also leading a delegation to Japan April 15-16 and will attend the Boao Forum for Asia annual conference in Hainan on April 21. Siew said that he must get a new visa each time he visits the PRC and in renewing his 'Taiwan Compatriot' documents he saw that he has taken 15 trips to the Mainland. He attends the Boao conference each year and makes additional trips as well. Taiwan Divided over China Links -------------- ¶3. (C) The Director asked why there is such a large divide in Taiwan over the cross-Strait economic issues. Siew immediately responded that President Chen does not want to have a debate in the DPP on cross-Strait issues because the New Tide Faction in the DPP supports greater links with China. He said that Premier Su Tseng-chang, though not a New Tide member, also supports greater links with China. (Note: After Frank Hsieh (Chang-ting) stepped down as Premier in January this year, he publicly called for greater economic links with China. End note.) Siew said that the New Tide asked him for advice on this issue and he urged them to hold an intra-party debate to address the issues, but noted that no debate has taken place. ¶4. (C) Siew believes that President Chen does not know where he wants to go on cross-Strait issues. Siew used to consult directly with Chen, but given Chen's frequent shifts in public positions, Siew now reports his visits to Mainland Affairs Council Chairman Joseph Wu (Chao-hsieh). As an aside, Siew said that he does not like traveling to the Mainland because he is under constant surveillance and added that his wife has refused to go after the first trip. ¶5. (C) When the Director suggested that some of the difficulties over cross-Strait issues have been caused by KMT actions, Siew readily agreed, saying "yes, that is why I am not active in the KMT any more." He said Lien Chan has only been guided by a desire to oppose Chen and the DPP. In Siew's view, Lien Chan's current visit to the PRC creates a potential 2008 presidential campaign problem for Ma as Chen and the DPP will portray the KMT as seeking to unify with the Mainland at any price. Siew believes that Ma is aware of the potential danger and will stick to his public pledge not to visit the Mainland prior to the election. TAIPEI 00001340 002 OF 003 Set Up Consultation Mechanisms -------------- ¶6. (C) Siew's prescription for moving things forward between the KMT and the DPP is for the two sides to set up an efficient consultation mechanism. This will help them to develop a consensus on how to deal with cross-Strait issues. He is concerned that, if the roles are reversed and the KMT is in power, the DPP will follow the KMT's lead and reflexively oppose KMT initiatives. China is Vital to Taiwan -------------- ¶7. (C) Siew believes that Taiwan must preserve its economic strength in order to maintain the status-quo with China. He said Taiwan must secure good economic relations with China to maintain its competitive international position. He emphasized that political issues must be set aside to allow economic relations to fully develop. Thus, he continues to spend his time pushing the idea of a common market. Siew to PRC: Deal with DPP -------------- ¶8. (C) Siew said that he goes to the Boao conference each year because he can have private meetings with senior PRC leadership, and he can tell them things that they don't get in their intelligence reports. He said that he has met with Hu Jintao and Wen Jiabao at past meetings, and he expects to meet Vice President Zeng Qinghong at this year's conference. Last year he told Hu Jintao that Taiwan wants to be its own master because it has been separate for 400 years and because it values democracy, freedom and human rights. He said that Hu must have been listening because Hu used this same phrase of "Taiwan wanting to be its own master" in subsequent speeches. ¶9. (C) During his recent visit to Xiamen, Siew met with a just retired Deputy Minister from the Ministry of Commerce and Director General Gang Aotai and gave them two messages. Siew said that since KMT Chairman Ma Ying-jeou is not Taiwanese (meaning that his family came to Taiwan from the Mainland and that Ma was not born in Taiwan),even if he wins the presidency in 2008 he must still gain the support of the whole island if he is to make progress on cross-Strait issues. Siew's second point was that the PRC must deal with the ruling party on Taiwan and not just the opposition party. He thanked the Director for consistent U.S. statements on this point and suggested the U.S. consider telling the PRC privately that it should seriously consider holding technical-level consultations on economic issues. He thought that there would be no need for any kind of public announcement by either the U.S. or China of his suggestion. ¶10. (C) Just like the KMT and the DPP, Siew believes that Taiwan and the PRC also need to set up an efficient consultation mechanism. The first step is to have a conference to lay out the full range of economic issues that should be discussed. He would be willing to have CIER be the Taiwan sponsor and suggested that the PRC Ministry of Commerce Economic and Trade Institute (Jingmao Xueyuan) could be the PRC sponsor. Siew said officials from both sides should attend the conference along with private sector people. After the conference establishes the list of issues to be addressed, private-sector entities would meet to TAIPEI 00001340 003 OF 003 resolve each issue. He believes officials should participate in these meetings also, but not at or above the ministerial level. Comment -------------- ¶11. (C) Siew has long been a major player in Taiwan's economy and politics and looks like he plans to continue working the issues. His description of conversations with senior Chinese and Taiwan officials confirms that there are a number of channels of communication for messages to pass back and forth between Taiwan and China. Unfortunately, all of the channels appear to be unofficial, emphasizing China's continued unwillingness to deal directly with the Chen Administration on any issue. End Comment. YOUNG