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 -------------- ¶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 TAIPEI 00003269 002 OF 004 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 TAIPEI 00003269 003 OF 004 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 TAIPEI 00003269 004 OF 004 no confidence vote that could cost them their seats if Chen went off script and dissolved the LY. YOUNG