KMT CHAIRMAN MA PLEDGES FORWARD MOVEMENT ON ARMS

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003588

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/19/2031
TAGS: PGOV TW
SUBJECT: KMT CHAIRMAN MA PLEDGES FORWARD MOVEMENT ON ARMS
PACKAGE

REF: A. TAIPEI 3273


B. TAIPEI 3233

Classified By: Director Stephen M. Young, Reason(s): 1.4 (B/D).


1. (C) Summary: During a meeting with the Director on October
19, Taipei Mayor/Kuomintang (KMT) Chairman Ma Ying-jeou
expressed confidence that next week the Procedural Committee
of the Legislative Yuan (LY) would approve the 2006 U.S. arms
procurement supplemental for consideration by the full LY.
The Defense Ministry will withdraw the controversial "Special
Defense Budget" bill, and the People First Party (PFP) will
cooperate with their KMT Procedural Committee colleagues to
release the 2006 supplemental from procedural limbo. Ma
claimed to be doing "everything he could" to reach a
reasonable solution on Taiwan's defense budget. Ma also
agreed to consider procedural options to fund the purchase of
PAC-3 missile defense systems in a 2007 supplemental after
March 20, 2007. He indicated, however, that Speaker Wang
Jin-pyng was opposed to this idea (which Wang subsequently
denied to us.) Ma acknowledged the time is not right for a
no-confidence vote against Premier Su, because this would not
result in President Chen stepping down. He continues to
endorse anti-Chen protests, as long as they remain lawful.
Ma will try to preserve good relations with the PFP because
the KMT needs the 21 PFP legislators to maintain Pan-Blue
control of the LY. The Taipei and Kaohsiung races are very
close, Ma said, and the KMT will have to fight hard to win.
End Summary.

Arms Bill To Escape Procedural Committee Next Week?
-------------- --------------


2. (C) During a meeting focused primarily on defense-related
issues, the Director stressed the importance of all sides in
Taiwan putting aside political differences to pass a solid
defense budget during the fall LY session. Accompanied by
defense advisor Su Chi, Taipei Mayor/KMT Chairman Ma
Ying-jeou stated with confidence that next week, the LY
Procedural Committee would approve the 2006 "Supplemental
Budget" arms procurement for consideration by the Defense
Committee and the full LY. The NT$6.4 billion (US$207
million) "Supplemental Budget" bill includes upgrades for
existing Patriot-2 (PAC-2) anti-missile systems, P-3C
anti-submarine warfare aircraft, and modest funding for a
submarine feasibility study (see Ref B).


3. (C) On Tuesday, October 17, KMT and PFP legislators on the
Procedural Committee voted not to consider the U.S. arms
procurement "Supplemental Budget" for the second time this
session. KMT Policy Director Tseng Yung-chuan told the press
that the KMT would not consider the "Supplemental Budget"
until the Defense Ministry withdrew the NT$610.8 billion
"Special Defense Budget" originally proposed in June 2004.
According to Ma, the Defense Ministry had agreed to withdraw
the "Special Defense Budget" bill, clearing the way for KMT
consideration of the "Supplemental Budget" bill.


4. (C) Noting that several PFP lawmakers have continued to
voice strong objections to any form of arms purchase, the
Director asked Ma whether the KMT needed PFP cooperation to
move the arms procurement bill forward. Ma told the Director
that during his October 14 meeting with PFP Chairman James
Soong, he and Soong agreed to keep the arms procurement bill
in the Procedural Committee for one more week. This allows
the PFP this week to push its no-confidence measure against
Premier Su. Ma added that PFP caucus whip Cheng Chin-ling
had promised that the PFP members of the Procedural Committee
would approve the "Supplemental Budget" bill next week.

Ma Doing "Everything He Can"
--------------

5.(C) The Director stressed that Taiwan's inability to reach
consensus on something as critical as self-defense had caused
anxiety in Washington and was increasingly damaging to
U.S.-Taiwan relations. Taiwan's allies in the U.S.
government were counting on KMT leadership to break through
the arms procurement impasse. Secretary Rice, members of
Congress, and others view progress on the defense issue as a

TAIPEI 00003588 002 OF 003


"litmus test" for future cooperation on political, economic,
and defense-related matters. Ma claimed to be doing
"everything he could" to promote a reasonable solution to the
defense question, and reiterated his expectation that the
"Supplemental Budget" would be approved by the Procedural
Committee and listed on the LY agenda in the near future.

Ma Willing to Consider PAC-3s Before Next LY
--------------


6. (C) The Director argued that Ma and the KMT had been
thinking about Patriot-3 anti-missile defense systems
(PAC-3s) in narrow legal and political terms, by refusing to
consider purchasing them until the failed "missile defense
referendum" moratorium expired on March 20, 2007. The KMT
should consider how PAC-3s would improve Taiwan's ability to
defend key political and military assets against the
ever-increasing number of PRC short-range missiles aimed at
the island. Pointing out that the new PAC-3 missile-defense
systems would take at least 2-3 years to install, the
Director urged Ma to put legal and political excuses aside
and act now, instead of waiting another year. Ma admitted
that political considerations, more than legal ones, made
such a move difficult before next March. Ma added that KMT LY
Speaker Wang Jin-pyng had told him that PAC-3s had to be
included in a 2008 annual defense budget, but not in a 2007
supplemental budget proposal after March 20. Ma agreed to
"keep an open mind" if Wang or others came up with a workable
alternative to include PAC-3s in a 2007 budget supplemental
(which Wang later in the day pledged to the Director he would
support. (See septel.)

PFP and KMT Split on No-Confidence
--------------


7. (C) The Director remarked that PFP Chairman James Soong's
decision to run for Taipei mayor, and the KMT's decision to
withdraw support for Soong's no-confidence motion against
Premier Su appeared to indicate a substantial rift between
the two parties. Ma said the PFP had its own reasons for
pursuing the no-confidence vote, which the KMT respected, but
did not support. The Pan-Blues want to use the no-confidence
motion to force Chen to dissolve the legislature, and to call
snap elections, Ma explained, after which the KMT hopes to
have the majority it needs to recall President Chen. Right
now, the new legislative districts remain undrawn. Snap
elections cannot take place if President Chen dissolves the
LY, Ma asserted, and the KMT cannot obtain its desired
legislative majority. For the time being, he concluded, a
no-confidence vote would serve no purpose.


8. (C) Ma told the Director he will continue to negotiate
with PFP Chairman Soong in hopes of getting Soong to leave
the Taipei mayoral race, but cannot predict success. The KMT
might agree to let the PFP candidate represent the Pan-Blue
coalition in certain legislative districts where they might
win. But Ma did not know whether that would be enough to get
Soong to drop his campaign. Ma insisted that KMT Taipei
mayoral candidate Hau Long-bin has a "very good chance of
winning," but would have a "difficult time for sure." The
Kaohsiung mayoral race is very tight, Ma continued, and the
KMT will have to be very careful and invest a great deal of
effort to win. He added that Kaohsiung is a place where the
KMT cannot afford to lose.

Ma Fosters Protest Freedom within the Law
--------------


9. (C) Taiwan should be focused on consolidating and
strengthening its democratic institutions, the Director said.
The disruption of the October 10 "National Day" celebrations
by unruly protesters and grandstanding opposition politicians
was an embarrassment to Taiwan, and damaged its international
reputation. Protests are part of a healthy democracy, he
continued, but must be conducted with decorum and within the
law. Ma asserted that this has been his position all along,
for which he has been criticized for being "too legalistic."


10. (C) Ma said that he had been personally involved in
negotiating permissive terms for the "Depose Chen" protest

TAIPEI 00003588 003 OF 003


movement. When Shih had demanded the right to protest 24
hours a day, Ma agreed on the condition the protest remained
within legal bounds. Shih told Ma he accepted those
conditions. When the "Depose Chen" protest violated
demonstration permit laws on October 10, Ma arranged for
police to allow the protesters to remain in place until 4:30
a.m. Ma insisted that Interior Minister Lee Yi-yang exceeded
his authority in ordering Taipei police to revoke a
demonstration permit issued to the "Depose Chen" movement as
punishment for the October 10 infractions. Nonetheless, Ma
claimed he then revoked the permit himself, to discourage
future unlawful protest activity.

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


11. (C) The negotiations over the arms package have now been
fully joined. Ma sounded fairly convincing in explaining his
support for action this fall. That said, his continuing
willingness to accord the shifty James Soong and his party a
de facto veto over this key legislation makes further twists
and turns almost inevitable. Our bottom line with Ma has
been that in the end he doesn't need Soong's handful of votes
to pass this bill. All he has to do is link up with the DPP
and an overwhelming majority will carry the budget into law.
YOUNG