DPP LEADERS YU SHYI-KUN AND FRANK HSIEH DISCUSS

C O N F I D E N T I A L SECTION 01 OF 04 TAIPEI 003269

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/21/2031
TAGS: PGOV TW
SUBJECT: DPP LEADERS YU SHYI-KUN AND FRANK HSIEH DISCUSS
DOMESTIC POLITICAL SITUATION


Classified By: AIT Director Stephen M. Young, Reasons: 1.4 (b/d)


1. (C) Summary: In separate meetings with the Director on
September 19, DPP Chairman Yu Shyi-kun and DPP Taipei mayoral
candidate Frank Hsieh both suggested that Shih Ming-te was
hoping to make a political comeback through his ongoing
movement aimed at pressuring President Chen to step down.
Both agreed there was no reason for Chen to step down while
the prosecutor's investigation was underway. The two DPP
leaders also agreed that the party will face very difficult
challenges in upcoming elections because of Chen's travails.
Frank Hsieh suggested an intriguing but difficult to realize
scenario for resolving the ongoing political standoff, under
which Chen would appoint the KMT's Wang Jin-pyng as premier
following a no confidence vote, the President would stay in
office but not interfere in government, and Shih Ming-te
would halt the anti-Chen movement. Yu assured the Director
that DPP-proposed constitutional revisions would not make any
changes regarding the issue of sovereignty. End Summary.

Yu Shyi-kun Stands By His President
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2. (C) The Director, accompanied by DDIR and notetaker, met
separately with Democratic Progressive Party (DPP) Chairman
Yu Shyi-kun and DPP Taipei mayoral candidate Frank Hsieh
(Chang-ting) on September 19 to discuss Taiwan politics and
U.S.-Taiwan relations. Yu suggested to the Director that
former DPP Chairman Shih Ming-te, who is now leading the
"Depose Chen" movement, sees himself playing the role of a
hero. He views the movement as an opportunity to make a
political comeback, and probably has presidential ambitions.
If the anti-Chen movement continues to grow, Shih will
continue, but he will be prepared to back down through
dialogue if support begins to decline. The force behind the
anti-Chen movement is the pan-Blue media, Yu argued. Given
the media's efforts, the turnout of more than 300,000 for the
September 15 anti-Chen march was not that large and was less
than the number of demonstrators who turned out to protest
Chen's disputed reelection victory in 2004. Structurally,
the 2004 demonstrators and the current protesters are the
same people. Taiwan has an identity problem, Yu continued,
with a division between those who identify with Taiwan and
those who support unification and identify with China. Other
than Shih Ming-te, many of the leaders of the anti-Chen
movement identify with China and are trying to take advantage
of the movement to further their own political goals. In
discussing the recent demonstrations, Yu also said the media
had misquoted him as saying that the anti-Chen movement was
"Chinese (i.e., Mainlanders) fighting against Taiwanese."


3. (C) Yu argued that Shih's street protests risk setting
back Taiwan's democratic development and are anachronistic
since Taiwan is now a democracy under the rule of law.
Opponents of Taiwan's next president will be sure to try the
same tactics if Shih succeeds this time. The government
should allow demonstrations, but demonstrations should not
destroy democracy. Yu stressed the importance of condemning
violence in demonstrations and noted that Shih had called off
plans for rallies in other cities. Nonetheless, Yu
suggested, Shih may want to push political turmoil to a point
where he hopes the U.S. will intervene.


4. (C) The DPP policy is to support President Chen so long
as he is not guilty of any crime, Yu stated. Chen's case
should be dealt with according to law; Chen should not be
"tried" by the media or street protesters. While expressing
confidence in Chen's innocence, Yu said the party will not
protect him if he turns out to be guilty. Yu hoped the
prosecutor would complete the investigation quickly so that
the party can move beyond this issue.


5. (C) Although the DPP has been conducting party business
in normal fashion, including preparing for elections, the
controversy surrounding President Chen has reduced the
effectiveness of the party's efforts, Yu acknowledged. DPP
politicians are focusing on grass-roots work, and the party
hopes to turn crisis into opportunity. While DPP candidate
Frank Hsieh faces a difficult challenge in Taipei, he is a
fighter who previously defeated a popular incumbent in
Kaohsiung, and he may have an opportunity after the anti-Chen
campaign comes to an end. DPP candidate Chen Chu has a

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better chance of winning because of the structure of the
electorate in Kaohsiung City. Although now trailing slightly
in the polls due to the unfavorable political atmosphere
overall, she remains within striking distance of her KMT
opponent.

Frank Hsieh Sketches Out a Wild Scenario for Reconciliation
-------------- --------------


6. (C) In a separate meeting with the Director on September
19, DPP Taipei mayoral candidate and former Premier Frank
Hsieh echoed the view of Yu Shyi-kun and others that Shih saw
the anti-Chen movement as his opportunity to make a political
comeback. Although Shih is emotional and will not give up
easily, Hsieh suggested that Shih would be prepared to back
down when necessary to prevent violence, explaining that he
is doing so in the larger interests of Taiwan. Hsieh
believed that one important goal of Shih and the opposition
was to put pressure on the prosecutor investigating Chen and
his wife.


7. (C) Chen has no intention of stepping down, Hsieh
stressed, adding that the President would lose all his power
and could face trial if he resigned. From the DPP point of
view, there is no legal basis for Chen to step down. If Chen
stepped down for no legal reason, society would question
whether political motives were at work such as Annette Lu's
desire to become president. In internal meetings, Chen has
argued that his stepping down would be bad for the party,
Hsieh noted, adding he agreed that Vice President Lu's
becoming President would cause problems within the party.
Despite such considerations, Hsieh said, the DPP is worried
about the effect of Chen's remaining in office on its
election prospects. The challenge for the DPP is to find a
way to reestablish society's trust in the party.


8. (C) Hsieh laid out for the Director a complex scenario to
resolve the current political standoff, involving a
KMT-supported no confidence vote against Premier Su.
Initially, the KMT would let the PFP do the work of promoting
a no confidence vote. While Ma may continue to object to
such a vote for now, he will eventually go along when
Pan-Blue public opinion supports the idea. Wang Jin-pyng,
who controls the Non-party alliance legislators, will be able
bring them around in support of the no confidence vote.


9. (C) Following the no confidence vote, Hsieh suggested,
Chen would appoint a non-DPP premier, three possible choices
being LY Speaker Wang Jin-pyng, former Control Yuan President
Fred Chien, and KMT Vice Chairman and Legislator Chiang
Pin-kung. The opposition would not, however, agree to former
Academia Sinica President Lee Yuan-tseh. Wang Jin-pyng
actually wants to be premier, despite having said he does not
want the position, Hsieh assured the Director. As Premier,
Wang could continue to represent the KMT, and the KMT would
gain 500 or more government positions. Chen and Wang would
reach agreement to pass important bills such as arms
procurement and Control Yuan appointments. Shih Ming-te
would accept the outcome if Chen promised not to interfere
with the government, Hsieh predicted. Hsieh seemed to
discount the possibility that a no confidence vote might
cause President Chen to dissolve the LY, followed by snap
elections, because of the heavy losses the DPP could expect
in such elections at this low point in party fortunes,


10. (C) Hsieh said he had agreed to run for Taipei mayor out
of concern over a possible DPP collapse. Also, DPP city
council candidates needed a strong mayoral candidate to have
a chance in their own elections. Hsieh acknowledged there
would need to be a change in the political situation for him
to win in Taipei. He had chosen not to attend the September
16 rally, though Chen had asked him to go and he was also
under great Green pressure to participate. Hsieh noted he
had criticized Ma for his decision to approve round-the-clock
demonstrations against Chen. If the demonstration situation
spins out of control, Hsieh said, he could win the election
because James Soong, Hau Lung-bin, and Ma had all attended
the anti-Chen rally. Taipei should not permit
round-the-clock demonstrations, and Hsieh planned to make
that an important election issue. Hsieh also said he would
campaign on his clean record, which compared favorably to Hau
Lung-bin and his father, former Premier Hau Pei-tsun, who

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still used a government car and driver with no legal basis
for doing so. Hsieh pointed out that he and other Kaohsiung
officials had all been fully cleared of any wrongdoing in
conjunction with the Kaohsiung Metro project during the
period he was Kaohsiung mayor.


11. (C) Hsieh expressed concern about students -- classes
have resumed -- and legislators joining the evening anti-Chen
rallies after the rallies move back to Ketagalan Boulevard on
September 21. A second recall effort would not succeed but
would further excite demonstrators. October will be a period
of particular concern because of media and overseas attention
to the October 10 national day. In other comments, Hsieh
described how Chen undercut Hsieh's "conciliatory" policy on
cross-Strait relations when he was premier. Chen endorsed
the conciliatory policy in his 2005 New Year address. One
year later, Chen suddenly reversed course and said the
conciliatory policy was a mistake. This came after Deep
Green leaders told Chen his popularity had declined because
Deep Green supporters had not come out to vote in the
December 2005 local elections. Hsieh said he had asked the
Deep Green leaders how they knew this, and one of them
responded that it was because he and his wife had not voted.
Chen's policy reversal, an effort to grasp support from the
Deep Green and Taiwan Solidarity Union (TSU),made Hsieh's
position as Premier untenable.

Defense Budget
--------------


12. (C) The Director stressed to both Yu and Hsieh the
importance for Taiwan's security and for U.S.-Taiwan
relations of passing a robust defense budget, noting that he
was delivering a similar message to opposition as well as
ruling party leaders. Yu agreed to do his utmost and noted
that Wang Jin-pyng had told him that Ma Ying-jeou had told
Wang that he also supported the defense budget. Yu also
pointed out that the situation is different now than before
because arms procurement has been moved from a special
budget, which was subject to weekly rejection by the LY
Procedure Committee, to the regular annual budget, which will
receive LY consideration.

Constitution
--------------


13. (C) The Director also stressed to Yu the importance of
the DPP not proposing any constitutional changes that involve
sensitive sovereignty issues. Yu responded that the DPP's
proposal for constitutional revisions would not change
Taiwan's name or sovereignty. While some individuals might
have their own opinions and favor a "Republic of Taiwan," the
government understands the importance of relations with the
U.S. and of not giving any "surprises" to the U.S. Up to
this point, the DPP proposal, which is still in draft, does
not make any sovereignty changes, and it is fully consistent
with President Chen's "four no's" commitment.

Comment
--------------


14. (C) Although worried that the scandals surrounding
President Chen have drastically reduced the DPP's
competitiveness, Yu and Hsieh are standing behind their
President for now, as are other DPP leaders. President Chen
appears determined to fight to keep his position no matter
what. The key question now is whether the report that the
prosecutor is expected to issue on the investigation of Chen
and his wife contains damaging material that leads some DPP
leaders to conclude Chen must go. A report that clears Chen
could take wind out of the sails of the anti-Chen movement,
though the Pan-Blue could well claim the prosecutor had
failed to perform his duties. We expect Chen and the DPP to
continue to face very tough times for the foreseeable future,
regardless of the outcome of the investigation of Chen and
his wife. Frank Hsieh's scenario for a Wang Jin-pyng
premiership is intriguing though it seems a stretch to expect
strong political rivals, each with their own interests, to
work together in a way that enables all pieces to fall into
just the right places. Ma Ying-jeou, for one, will surely
not want to see his rival Wang Jin-pyng in a position of such
power. In addition, some pan-Blue legislators may balk at a

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no confidence vote that could cost them their seats if Chen
went off script and dissolved the LY.
YOUNG