PFP CHAIRMAN SOONG ON ARMS PROCUREMENT, MAYORAL

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003640

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/25/2031
TAGS: PGOV TW
SUBJECT: PFP CHAIRMAN SOONG ON ARMS PROCUREMENT, MAYORAL
CAMPAIGN


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


1. (C) Summary: During an October 25 meeting with the
Director, PFP Chairman (and Taipei mayoral candidate) James
Soong promised to publicly reaffirm his support for the P-3C
antisubmarine warfare aircraft and a submarine feasibility
study, but stopped short of committing to pass the
"Supplemental Budget" arms procurement bill before the end of
the year. Soong told the Director many Pan-Blues distrust
the Defense Ministry and question the integrity of the arms
procurement process, and would consider passing the
"Supplemental Budget" handing Chen a political victory. The
Director argued that improving Taiwan's defense is the
responsibility of its political leaders, and would be good
for all of Taiwan. Resolving the defense question will only
become more difficult as both Taiwan and the U.S. enter into
the 2007-2008 election season, so the time to act is now. If
Taiwan's political leaders continue to hold national defense
hostage to domestic political squabbles, the U.S.-Taiwan
security relationship will suffer. The Director told Soong
that many in Washington consider Soong's PFP the chief
obstacle to progress on defense. Soong stressed his pro-U.S.
credentials and his appreciation for unwavering U.S. support
in the past. On the Taipei mayoral race, Soong said his
strong grassroots support could be enough to defeat his
"weak" KMT rival, Hau Long-bin. Soong insisted that,
depending on where he stands in early December, he would
consider withdrawing from the mayoral race if it appeared his
candidacy would result in DPP candidate Frank Hsieh's
victory. End Summary.

PFP Still Viewing Defense Through Political Lens
-------------- ---


2. (C) On October 25 AIT Director met with PFP Chairman James
Soong to discuss his recently announced candidacy for the
Taipei mayoral race. Soong dove right in to discuss the
"Supplemental Budget" arms procurement proposal, which on
October 25 had been voted down by the Legislative Yuan (LY)
Procedural Committee for the fifth time this session and 60th
time overall. Soong told the Director that he and others in
the PFP understand the U.S. position that arms procurement
and Taiwan's national security are matters of national
interest that should not be bogged down in party politics.
Soong claimed to share this concern, but argued that timing
of the passage of the bill was very complicated. Soong
asserted that he supports purchasing the P-3C anti-submarine
warfare aircraft and funding the submarine feasibility study,
but does not want to hand President Chen a political victory
by passing the "Supplemental Budget" bill. Soong added that
he also has reservations about the quantity and price of the
P-3Cs, suggesting that 12 aircraft was four too many. The
Director replied that the U.S. and Taiwan militaries had
already carefully considered the number of P-3Cs needed to
mount a capable anti-sub defense, taking into consideration
maintenance down time and other operational factors.


3. (C) Soong also expressed concerns about the integrity and
transparency of Taiwan's arms procurement process. Soong
asserted that the Defense Ministry's (MND) handling of the
arms procurement and defense budget numbers has engendered
suspicion among LY members and the public. (Note: PFP
legislator Daniel Hwang, who also attended the meeting,
remarked that many Pan-Blue politicians express doubts about
the arms procurement process as a way of signaling to voters
that they are not corrupt. End note.) According to Soong, MND
has on several occasions increased the budget for various
items without any explanation, causing LY members to suspect
the money was added to fund kickbacks and other illicit uses.
The Director assured Soong that any kickback scheme in
Taiwan would also be an indictment of the U.S. arms sales
system, and would trigger harsh reactions by the U.S.
government, which maintains close oversight of all private
and public officials involved in foreign arms sales.

Message from Washington: No More Games
--------------


4. (C) The Director told Soong that he had recently returned
from Washington, and the sentiment there was clear. Although

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the United States respects Taiwan's democratic process very
much, and understands that a democratic society must debate
issues like arms procurement, Taiwan's political leaders must
stop playing partisan games and get serious about Taiwan's
national defense. Prospects for compromise are likely to get
worse, not better, as the U.S. and Taiwan enter their
legislative and presidential election seasons. The Director
explained that over time, President Bush has developed a
strong and productive relationship with Beijing, and on that
basis can manage the U.S.-China relationship while standing
by the United States' historical commitment to help Taiwan
defend itself. Beijing will respect President Bush's
statement that supporting Taiwan's defense is not an
endorsement of President Chen. However, President Bush will
leave office in early 2009. The next U.S. president will
require time to establish with China the kind of rapport and
credibility that President Bush already has, making it more
difficult in the short term for the U.S. to push defense
improvements for Taiwan over PRC objections.


5. (C) Taiwan is also moving closer to its own legislative
and presidential elections, the Director noted. Partisan
rivalries will be more intense, making compromise on
sensitive issues like arms procurement more difficult.
Taiwan must take meaningful steps to improve its defense
posture before the end of this year, said the Director,
before this narrow window of opportunity closes. Soong
agreed that Taiwan must act soon to improve its defenses, and
promised to publicly reaffirm his support for the P-3C
aircraft and the submarine feasibility study, but would not
commit to passing the bill before the end of the year. Soong
also agreed to convey to the PFP caucus the U.S. hope that
the LY could debate and vote on the supplemental budget bill
before the end of this calendar year, before Taiwan plunges
into campaigning for next December's Legislative Yuan
elections, and the presidential race in 2008.

6.(C) The Director noted that the PRC has been building its
military for ten consecutive years, and Taiwan's defensive
capability has fallen badly behind in relative terms.
According to a recent U.S.-China Commission study, said the
Director, this gap will reach critical proportions in the
next few years. Since most weapons systems take years to
produce and integrate into existing defense structures,
Taiwan must act now to stave off a future defense crisis.
Soong agreed, and told the Director that without a credible
defense, Taiwan will not be able to conduct future
negotiations with Beijing from a position of strength. Aside
from the supplemental budget proposal, the Director
responded, Taiwan must commit itself to increasing its annual
defense budget -- to 2.85 percent of GDP this year and 3
percent next year -- to make up for years of underspending.
If items are cut from the defense budget, the Director
continued, the LY should redirect those funds to other
infrastructure, communications and modernization needs,
maintaining the 2.85 percent level.


7. (C) The Director emphasized that the U.S. is counting on
Taiwan political leaders of all stripes to get past partisan
politics to do what is best for Taiwan. A sensible
resolution of the defense issue was critically important to
Taiwan's welfare, but will also affect future U.S.-Taiwan
relations. The United States is confronted by commitments
around the globe, and has limited resources. Although the
U.S. does not want to force Taiwan to reach a particular
conclusion on the defense issue, failure by Taiwan to make
some meaningful progress on defense could adversely affect
the clarity of the U.S. role as guarantor of Taiwan's
security. The Director added that many in Washington consider
Soong and the PFP to be the chief obstacles to improving
Taiwan's defense posture. Soong responded that he has always
been a close ally of the United States, and has always
believed that Taiwan cannot survive without strong, close
relations with the United States.


8. (C) Before shifting away from the defense discussion, the
Director pressed for PFP support of PAC-II upgrades and
PAC-III missiles. Soong suggested that he would back a
supplemental budget request to fund the purchase of PAC-3
missile systems, after the "missile referendum ban" expires

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in late March, 2007.

Soong: I'm Still a Contender
--------------


8. (C) Soong told the Director that KMT Taipei mayoral
candidate Hau Long-bin is not a strong candidate, and that
Hau is coming under increasing fire from DPP mayoral
candidate Frank Hsieh for the alleged corruption of Hau's
father, former admiral Hau Po-tsun. Soong claimed to have
promised KMT Chairman Ma Ying-jeou months ago that he would
not run for Taipei mayor if the KMT chose a stronger
candidate than Hau, namely Taipei Deputy Mayor Yeh Chin-chuan
or former Taipei Deputy Mayor Ou Chin-de, to run.


9. (C) Soong also explained that by deciding to run for
Taipei mayor, he was signaling to Ma and others in the
Pan-Blue camp that he would not run for president in 2008,
and would not agree to become Premier in the current DPP
administration. According to Soong, President Chen and
former president Lee Teng-hui had already separately offered
him the premiership, which he had declined. Soong insisted
that he still had a chance to win the mayoral race because he
had developed strong grassroots support in Taipei's
less-privileged areas, especially among former Pan-Green
voters disillusioned with Chen and the DPP. Soong estimated
his popularity rating to be in the neighborhood of 20
percent, a full ten points higher than the most recent
telephone survey would suggest.

KMT-PFP Relations "Very Bad"
--------------


10. (C) Soong claimed he was willing to negotiate his
withdrawal from the race with KMT Chairman Ma, but Ma has
refused to negotiate with him in earnest. Ma is "trying to
become the paramount leader of the Pan-Blues," Soong said,
leaving no room for other leaders like KMT LY Speaker Wang
Jin-pyng, Soong, or others. PFP relations with the KMT are
"very bad," Hwang added, because Ma is trying to "force them
into extinction." If his mayoral candidacy threatened to
divide the Pan-Blue vote and throw the race to Hsieh, Soong
said he would avoid committing "political suicide" and would
withdraw from the race.

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


11. (C) Soong was at his most unctuous best with us, and
never once raised reported unhappiness over the Director's
public rebuke for the PFP leader's October 10 disruption.
Yet when we tried to pin him down on specific steps to
advance the defense budget this fall, he bobbed and weaved
around us. The best face we can put on this exchange is that
Soong doesn't want an open rupture with AMERICA over the arms
budget. But we left him in no doubt that we will begin
speaking out on all who impede a real discussion aimed at
passing this bill before the LY ends its current session.
YOUNG