PRESIDENT CHEN WEATHERS POLITICAL CRISIS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003781

SIPDIS

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E.O. 12958: DECL: 11/06/2031
TAGS: PGOV TW
SUBJECT: PRESIDENT CHEN WEATHERS POLITICAL CRISIS


Classified By: AIT Acting Director Robert S. Wang,
Reasons: 1.4 (b/d)


1. (C) Summary: President Chen offered a range of arguments
to defend himself and his wife Wu Shu-chen against corruption
charges in a televised statement to the media and public on
November 5. At the end of his statement, Chen announced
dramatically that he would step down immediately if his wife
Wu Shu-chen is found guilty of corruption; Chen, though
implicated in the case, enjoys presidential immunity until he
leaves office. Predictably, the opposition rejected Chen's
arguments, while the DPP voiced support. According to AIT's
contacts, DPP members and legislators will continue
supporting Chen. One prominent DPP legislator predicted that
the party will maintain unity and discipline in blocking the
opposition's third-time effort to recall the President, which
is expected to come to a vote by November 25. End Summary.



2. (C) In a nearly one and a half hour televised
presentation to the media on November 5, President Chen
Shui-bian defended himself and first lady Wu Shu-chen against
the corruption charges filed against Wu on November 3 (Chen
is implicated but enjoys presidential immunity from
prosecution until he leaves office). Wu has been charged for
using her own and friends' personal receipts to submit
expense claims to the Presidential Office "State Affairs
Fund." President Chen has asserted that the claims were
actually used to cover "secret diplomatic" payments, for
which there were no receipts. Speaking mostly in Taiwanese
to appeal to his DPP base supporters, Chen last night
reiterated this defense, insisting no money went into his
pocket, and stressed he could not reveal details about the
highly sensitive secret diplomacy. He apologized for telling
a "white lie" to the prosecutor to protect "diplomatic
secrets." Chen also argued that accounting requirements

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forced him to submit the false receipts and he complained
about confusing changes in regulations and about the
president's lack of a "special budget" allocated to all other
Taiwan government executives.


3. (C) Chen questioned the logic of the prosecutor's case:
why would he embezzle a relatively small amount of money when
he had voluntarily given up half of his salary to return to
the treasury? President Chen criticized Prosecutor Chen
Jui-jen for issuing an indictment before giving him and Wu
sufficient opportunities to explain and defend themselves.
Acknowledging that Wu had delayed an interview requested by
the prosecutor, President Chen said that was only for health
concerns, which he laid out in some detail. Chen also
accused the prosecutor of revealing state secrets by
identifying some sensitive sources in the indictment.
President Chen saved his most dramatic statement for last: he
would immediately resign if his wife was convicted of
corruption in the first trial. He also expressed confidence
that he would be exonerated. Following the press conference,
DPP Chairman Yu Shyi-kun and other party leaders appeared on
television to express support for President Chen, and the
Government spokesperson also conveyed Premier Su's support.


4. (C) DPP legislator Bikhim Hsiao told AIT that President
Chen's statement last night was helpful and that most of her
DPP colleagues are willing to continue supporting him though
some believe he should explain more. President Chen, who
said he would step down if guilty, is acting courageously in
shouldering responsibility and deserves a chance to defend
himself. Hsiao also thought Chen's points about protecting
national security secrets were credible. The DPP will hold a
Central Executive Committee (CEC) meeting on Wednesday,
November 8, Hsaio noted. Because the DPP majority believes
the President deserves a chance, she did not expect actions
to be taken against him at the meeting. She predicted that
at the meeting on Wednesday the DPP will decide that DPP
legislators will boycott the third recall vote against
President Chen, as they did the previous two votes. While
some individual legislators, for example, from the New Tide

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faction, may express different opinions at the meeting, they
will go along with the decision to support Chen in the
interests of party unity. Among her colleagues, Hsiao
stressed, there is a strong urge to maintain unity. There is
a sense that if the party falls apart, no one will get
through the current difficulties.


5. (C) DPP Taipei Headquarters Executive Director Moda May
told AIT that most party members feel they have no choice but
to rally around the President. Despite the initial shock of
the prosecutor's report, party unity has rebuilt over the
weekend and especially after President Chen's defense on
Sunday night. May acknowledged that stepped-up attacks by
the pan-Blue opposition could lead independent voters to
abandon the DPP. However, such attacks are only heightening
the sense of crisis within the ruling party and causing the
DPP base, especially in the south, to unite in support of
President Chen. In a separate meeting with AIT, several
staffers of DPP New Tide (NT) legislators observed that some
NT legislators would like to see the DPP suspend President
Chen's party rights. However, one of the staffers predicted
that the upcoming December 9 mayoral elections in Taipei and
Kaohsiung would force the party to remain unified at this
time because the candidates, one from the NT faction, would
not want to alienate those voters who support President Chen.


6. (C) KMT legislator Justin Chou told AIT that the third
recall motion against President Chen bill will be placed on
the LY agenda on November 10, after passing the LY Procedure
Committee tomorrow. After two weeks of evidentiary hearings,
the LY will vote on the recall bill by November 25. KMT LY
caucus whip Tsai Chin-lung is leading an effort to persuade
DPP legislators to cross party lines to support the recall.
While DPP legislators are sticking with Chen for the moment,
Chou suggested the situation could change if Premier Su
Tseng-chang or DPP Taipei mayoral candidate Frank Hsieh

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(Chang-ting) decide to support the recall.


7. (C) The Taiwan Solidarity Union (TSU) today withdrew its
earlier decision to support the third recall motion against
President Chen. The party, which announced it would examine
public opinion before deciding whether or not to support the
recall, stated that its "spiritual leader" Lee Teng-hui
respected the TSU position.

Comment
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8. (C) President Chen has survived the immediate crisis
posed by the prosecutor's report. The legal process against
Wu Shu-chen could take many months or even one or more years.
Reactions to the President's speech fell predictably along
party lines, as most people have strong preconceived views
about Chen Shui-bian. The opposition entirely rejected
Chen's defense, while most of his supporters accepted it for
now. To pass, the third recall motion would require support
from the TSU plus an additional 20 or so DPP legislators.
The DPP will enforce party discipline on rejecting the recall
motion, which seems bound to fail. (Note: Party discipline
is imposed upon threat of disciplinary action. To date,
violation of DPP party discipline in the LY has been rare, if
ever. End Note.) The DPP and KMT may focus their efforts
over the next few weeks on the Taipei and Kaohsiung mayoral
races. While Taipei seems a lost cause for the DPP,
Kaohsiung is still in play.
WANG