AIT CHAIRMAN BURGHARDT VISIT TO TAIWAN

C O N F I D E N T I A L SECTION 01 OF 04 TAIPEI 002006 SIPDIS SIPDIS STATE PASS USTR, STATE FOR EAP/TC E.O. 12958: DECL: 06/12/2016 TAGS: ECON PGOV PREL TW SUBJECT: AIT CHAIRMAN BURGHARDT VISIT TO TAIWAN Classified By: Director Stephen M. Young, Reason(s): 1.4 (B/D). ¶1. (C) Summary and Introduction: From June 8-11, AIT Chairman Burghardt visited Taiwan. This cable reports his meetings with Taipei Mayor and KMT Chairman Ma Ying-jeou, KMT LY President Wang Jin-pyng, prominent Taiwan academics, Foreign Minister James Huang, AmCham business leaders, and Mainland Affairs Council (MAC) Chairman Joseph Wu. Mayor Ma said a growing KMT consensus makes progress on arms procurement a possibility in September 2006, though Ma and Wang said PAC-II upgrades and PAC-III purchases will have to wait until March ¶2007. For the good of Taiwan, Ma argued, the KMT should do what it can to force President Chen out of office. Thinktank academics expect the recall to force the DPP government to moderate its cross-Strait policy, but are divided on whether China will cooperate with a weakened Chen to improve cross-Strait relations. FM Huang thanked the U.S. for its "quick and positive" response to President Chen's affirmation of the "four nos" and pledged stable cross-Strait RELATIONS for the remainder of Chen's term. American business leaders in Taiwan remain frustrated by endemic corruption and political stalemate. MAC Chairman Wu expects regularized cross-Strait charter flights to become a reality. End Summary and Introduction. Ma: Chen Recall Not Just Politics -------------- ¶2. (C) Taipei Mayor and KMT Chairman Ma Ying-jeou told AIT Chairman Burghardt that the KMT began building its consensus on the arms procurement issue in mid-April, and he advised that within the KMT LY caucus, funding for the P-3Cs and submarine exploratory study were no longer controversial, even though Ma said PFP Chairman James Soong is working to retard the growing Pan-Blue consensus. Ma ruled out the purchase of the PAC-III missiles until the referendum-related ban expires in March 2007, and noted that some Pan-Blues are using the failed March 2004 referendum as a basis to object even to the upgrade of existing PAC-IIs. Ma said he remains optimistic that progress can be made this year but said it would likely have to wait until September. ¶3. (C) Burghardt reminded Ma of the considerable time and expense invested by the U.S. to prepare contingency plans for Taiwan's defense, and urged Ma to help Taiwan bear an 
increasing share of that burden. He added that, from the U.S. perspective, it is becoming increasingly difficult to justify that expense if Taiwan itself does not take the China threat seriously. Last time the Pan-Blues used Chen's tampering with the National Unification Council and Guidelines (NUC/NUG) as an excuse to scuttle the arms bill, said Burghardt, and the U.S. hopes that there will not be another excuse to derail progress this time. Ma acknowledged that Taiwan must bear its good-faith share of the defense burden, and for this reason he had been pushing for consensus within the KMT LY caucus. ¶4. (C) Ma justified his decision to support the recall movement against President Chen, citing increasing public opposition to Chen, and the incompetence and corruption of his administration. Ma acknowledged the recall has little chance of success, but said the KMT must do what it can to pressure Chen to step down for the good of Taiwan. Burghardt stated that the U.S. does not want to interfere in Taiwan's internal affairs, but the recall movement against Chen, which everyone acknowledged does not have the necessary LY votes, seems designed to score POLITICAL points, not to improve the government's ability to manage Taiwan's affairs. Ma responded that if he were solely focused on winning the presidency in 2008, he would prefer to leave Chen in office. TAIPEI 00002006 002 OF 004 But, since the corruption of the Chen administration is "unprecedented in Taiwan's history," he had no choice but to go forward with the recall. KMT Caucus Rejects PAC-II Upgrade -------------- ¶5. (C) Burghardt discussed the legislative politics of the defense budget and the effort to recall President Chen with LY President Wang Jin-pyng. On the defense budget, Wang echoed Ma's statement that there is a KMT consensus in favor of the P3-C and submarine design. However, the KMT will continue to block both the PAC III and the PAC II upgrade, arguing that the 2004 referendum defeat precludes either until after March 2007. Wang said that although he personally supports the PAC II upgrade and believes it is not legally precluded by the referendum, the KMT caucus disagrees. ¶6. (C) Wang noted that public support for arms procurement is slowly increasing. According to public opinion polls, Wang said, voters are split 50-50 for/against, an improvement over previous majorities which opposed arms purchases. He attributed this change to KMT efforts to educate the public about the Chinese military threat and to the fact that the price of the arms package had dropped significantly. Burghardt remarked that Washington would view any progress on the arms procurement issue as an important breakthrough. ¶7. (C) On the recall, Wang said that it is entirely the political creation of James Soong, who is using it to increase his chances of winning the Taipei mayoral election. Wang agreed, as have all those we have met, that the recall has no chance of passing, but it will still give Soong a stronger role in the Pan-Blue which is all he is seeking. Recall Could Affect DPP, Cross-Strait -------------- ¶8. (C) With four prominent Taiwan academics, Burghardt discussed the reactions of Taiwan POLITICAL leaders to the recall movement, and how cross-Strait RELATIONS may be affected. Soochow University professor and polling expert Emile Sheng remarked that, by promising publicly to respect Taiwan's constitutional system and to rule out independence, Vice President Annette Lu is trying to calm public anxiety over the prospect of her becoming president. Sheng added that Lu has no supporters within the DPP, and therefore must draw support from outside the party, including KMT LY President Wang Jin-pyng. President Chen, Premier Su, and DPP Chairman Yu Shyi-kun have allied to oppose Lu. Former President Lee Teng-hui is taking a "wait-and-see" approach and, if convinced of Chen's guilt, will "fire the last shot" which will effectively force Chen out. ¶9. (C) Sheng also opined that PFP Chairman James Soong may opt out of the Taipei mayoral race to "legitimize" the recall by silencing accusations he is using it only to boost his mayoral chances. Soochow University professor Lo Chih-cheng remarked that the DPP can only defend against the recall by casting it as a POLITICAL or ethnic issue; Sheng added that the DPP, by choosing to stand by Chen instead of cutting him out of the party, has bet the party's future on Chen's credibility. If the KMT offers concrete evidence against Chen or his wife, the party will then need years to win back the public's trust. ¶10. (C) Professor Lo (a DPP stalwart) said cross-Strait relations will remain stable despite, or perhaps because of, President Chen's recent POLITICAL setbacks. Chen has lost TAIPEI 00002006 003 OF 004 his legitimacy and will remain a lame duck for the remainder of his term, with insufficient POLITICAL capital to push controversial, sovereignty-related issues. Should Chen be forced out, Premier Su would likely push for a moderate cross-Strait policy to help his presidential chances in 2008. Lo and Sheng disagreed on whether cross-Strait RELATIONS could improve during the coming two years: Lo said China will not help the weakened Chen or his successor by, for example, agreeing to expand direct links. Moreover, if Ma is elected in 2008, there will be "no presents left over for (Ma's) honeymoon" if the PRC gives them to Chen or President Lu. Sheng said China is thinking long-term, and wants to win the hearts of the Taiwan people. If realizing direct flights seems possible, then China will agree, even at the cost of helping Chen or the DPP government. Four Nos Will Ground Foreign Policy -------------- ¶11. (C) Burghardt opened the meeting with Foreign Minister Huang by remarking that the general sense in Washington and around the world is that cross-Strait RELATIONS are stable and will remain so, as long as neither side becomes complacent or acts to provoke crisis. President Chen helped ensure future stability by his public re-affirmation of the "four nos" on June 8, a decision which was very welcomed in Washington. FM Huang conveyed President Chen's deep appreciation for Washington's quick and positive response. ¶12. (C) Closely related to cross-Strait stability is the question of constitutional reform, Burghardt continued. Washington understands Taiwan's 1947 constitution gives rise to practical problems, and requires structural reform. Washington has told the PRC leadership to learn to distinguish between pragmatic reforms which do not touch on sovereignty and those that do. Burghardt urged FM Huang and the DPP government to narrowly focus any constitutional reform efforts on good governance. ¶13. (C) FM Huang said President Chen's affirmation of the "four nos" would be the guiding principle for Taiwan cross-Strait policy and international affairs for the next two years, with an emphasis on stability. FM Huang added that the embattled DPP government does not have the capacity to raise controversial issues like sovereignty, national territory, or national title. He promised that neither the Executive Branch nor the DPP LY caucus would raise these issues, and there would be no organized party campaign to foster such discussion. However, since Taiwan is a democracy, the government could not prevent "deep-green fundamentalists" from voicing their opinions. ¶14. (C) FM Huang said Taiwan's top foreign policy priority was to protect and improve RELATIONS with the United States, through better communication, reduced misunderstanding, and strengthened mutual trust. Huang said he was most appreciative of the U.S.'s willingness to work closely with Taiwan to resolve the NUC/NUG issue, preventing Beijing from "driving a wedge" between the U.S. and Taiwan. Burghardt responded that he hoped his remarks to the press earlier in the day had driven a stake through the NUC/NUG issue for the Taiwan media once and for all. Huang said Taiwan's second foreign policy goal is to defend its diplomatic relationships. FM Huang told Burghardt he is very concerned about possible defections among Taiwan's diplomatic allies and he is eager to have consultations with the U.S. on this subject. Taiwan understands it is a small player in regional affairs, but hopes to be a constructive partner of the U.S. in the region. TAIPEI 00002006 004 OF 004 AmCham: Politics and Corruption Retard Progress -------------- -- ¶15. (U) AmCham members from the banking, finance, chemical, transport, and military technology industries met with AIT Chairman Burghardt June 9. AmCham participants agreed that Taiwan's government was increasingly ineffective. The inability of POLITICAL parties to reach acceptable compromises and recurring examples of deeply entrenched corruption combine to restrain Taiwan's economic progress and ultimately threaten Taiwan's security. Impending regulations adopting European standards for auto parts manufacturers are symptomatic of a government bent on directing the economy without consultation with industry. Financial reforms, including the creation of the Financial Supervisory Commission (FSC),have not resolved problems. Burghardt acknowledged the AmCham's gloomy outlook and briefed participants on his key messages to Taiwan government officials. MAC: Charter Flights Are Delayed, But Will Arrive -------------- -------------- ¶16. (C) MAC Chairman Joseph Wu said that on May 24, Taiwan and the PRC reached agreement on a "small package" of passenger charter flights and special "ad hoc" cargo charter flights. This agreement was to be made public by joint announcement within a few days. The Chinese, possibly waiting to see what happens to President Chen, have stalled. Wu says he remains optimistic that the announcement and charter flights package will go forward, as long as the PRC delay is not motivated by Taiwan's internal POLITICAL problems. ¶17. (C) Burghardt asked Wu for an update of the RELATIONS between the Straits Exchange Foundation (SEF) and the Association for RELATIONS Across the Strait (ARATS). Wu explained that while policy contact has been completely stopped for years, SEF continues to perform a variety of "consular-type" services for the large Taiwanese community living in the Mainland. YOUNG