AIT DIRECTOR'S SEPT 12 MEETING WITH NSC SECRETARY

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003165 SIPDIS SIPDIS E.O. 12958: DECL: 09/13/2016 TAGS: PGOV MASS TW SUBJECT: AIT DIRECTOR'S SEPT 12 MEETING WITH NSC SECRETARY GENERAL CHIOU I-JEN Classified By: Classified by AIT DIR Stephen M. Young. Reasons: 1.4 b, d. Summary -------------- ¶1. (C) During a September 12 meeting, the Director discussed the internal situation and defense budget with NSC Secretary General Chiou I-jen. Chiou discounted the staying power of Shih Ming-de's street protests, claiming President Chen remains calm about the threat to him. Chiou said Ma Ying-jeou is the key player in getting a suitable defense budget passed this fall, and needs to rein in PFP Chairman James Soong. END Summary. Internal Politics -------------- ¶2. (C) Chiou professed himself not overly concerned by the "Dump Chen" sit-in taking place just down Katagelan Boulevard from the Presidential Palace (chants from the crowd were dimly audible from his reception room). Nor did Chiou believe Shih himself intended to shade into violence or illegality as this process plays itself out, though he was less confident in Shih's ability to control the crowd, which was already somewhat frustrated by their lackluster effect thus far. Chiou predicted the movement would begin to fizzle after September 15 (when the current demonstration permit expires), and would be further diminished when the Legislative Yuan begins its fall session on September 19th. ¶3. (C) According to Chiou, President Chen had underestimated the gravity of problems with his family and advisers when corruption charges began to surface last spring. He then went into a period of frustration over the mounting storm. But now Chen is "calm" and convinced he can ride out this latest storm to finish his term in May, 2008. The Chen Administration is aware of the need to give Shih enough face to step back from his current confrontation without too much loss of dignity. President Chen's public expressions of concern over Shih's health were part of a plan to offer him an easy exit from the present standoff. Looking ahead to the fall, Chiou was dubious that the LY would seek another recall motion, since they still do not have the 2/3 votes to put this to a popular referendum. ¶4. (C) A vote of no confidence in the Premier was a trickier game, with Ma Ying-jeou caught in a dilemma as he looks to securing his party's nomination for the presidency in 2008. Some of his strongest supporters want to use this tactic to put greater pressure on Chen, though others -- particularly LY members who would have to stand for early reelection -- are much more hesitant to force a showdown with Chen that could result in dissolution of the legislature. On top of that, Ma faces his own worst nightmare, from Chiou's perspective. If an LY vote of confidence is used by President Chen not to dissolve the legislature, but to name a new premier, and if current LY Speaker Wang Jin-pyng were Chen's nominee, this would put Ma in a real pickle. Wang, Chiou argued, would definitely have to leave the KMT to take the premiership, and he would pull several "nativist" KMT legislators with him. Thus this action would precipitate the third KMT split in the past 16 years, with the real danger that the pan-Blue's thin LY majority would slip away with Wang's departure from the ranks of the faithful. ¶5. (C) Asked how being struck down from the premiership would affect Su Tseng-cheng, Chiou argued this would be a wash, neither good nor bad. Su could begin concentrating on his candidacy for the DPP nomination for president. Frank Hsieh is also a contender, but lags behind Su at this point. Chiou carefully avoiding revealing a preference for either candidate, but neither did he mention Yu Shyi-kun or Annette Lu as potential contenders, appearing to signal that this would be a two man race. Defense Budget -------------- ¶6. (C) Chiou stated that the KMT and DPP were drawing closer TAIPEI 00003165 002 OF 002 together in their views on the defense budget, giving cause for optimism that a suitable funding bill could pass the LY this fall. The only danger was that James Soong would emerge as a spoiler once again. Thus Ma Ying-jeou had an obligation to instill some discipline into the pan-Blue ranks. He needs to call Soong's bluff on the Taipei mayoral race, rather than giving Soong a veto over defense spending, Chiou argued. In Chiou's opinion, KMT candidate Hau Long-bin would win with or without Soong's candidacy. When asked about Frank Hsieh's chances, Chiou was dismissive, saying only that it would be "difficult," but that Hsieh was gaining favor within the DPP by serving as the party's "sacrificial lamb" in this contest. Chiou also told us that Defense Minister Lee Jye is quite seized with the problem of plussing up munitions for both existing battle platforms and any new F-16's that might be authorized for purchase in the future. Comment -------------- ¶7. (C) Chiou's sense of calm about these latest challenges to his president and party did not seem feigned. His description of President Chen as relaxed and determined to ride this wave of protests out also is consistent with our impressions of Chen Shui-bian through this long, hot summer of discontent. Ironically, this transparent continuation of the pan-Blue effort to unseat Taiwan's first non-KMT president may be muffling differences within the DPP as they draw together around their embattled leader. YOUNG