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 TAIPEI 00003640 002 OF 003 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 TAIPEI 00003640 003 OF 003 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