DIRECTOR DISCUSSES TAIWAN POLITICS IN MEETINGS

S E C R E T SECTION 01 OF 04 TAIPEI 003903

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/20/2031
TAGS: PGOV PREL TW
SUBJECT: DIRECTOR DISCUSSES TAIWAN POLITICS IN MEETINGS
WITH PREMIER SU AND DPP CHAIRMAN YU


Classified By: AIT Director Stephen M. Young,
Reasons: 1.4 (b/d)


1. (S) Summary: Premier Su Tseng-chang and DPP Chairman Yu
Shyi-kun both expressed strong reservations about the
possibility of Vice President Annette Lu replacing President
Chen during separate meetings with the Director on November

16. Both agreed Lu enjoys little support within the party,
and Su characterized Lu as an "unpredictable" leader who
could cause great damage on cross-Strait relations or other
issues. Su and Yu were optimistic that the DPP has a good
chance to win the December 9 mayoral election in Kaohsiung.
Although both were concerned that a loss in Kaohsiung would
be divisive and damaging for the party, Su did not expect
President Chen would step down in such a situation. Yu said
categorically that he would resign as party chairman if the
party fails to win in Kaohsiung, no matter how close the
results. Noting the President's weak political position, Su
doubted that he could generate much movement on
constitutional issues. Yu questioned whether constitutional
revision will become a major campaign issue, because the
public will reject "empty talk" about something that cannot
be accomplished. End Summary

Meeting with Premier Su: Annette Lu as President
-------------- ---


2. (S) Premier Su Tseng-chang spoke candidly to the Director
and DDIR about a number of important issues and personalities
in Taiwan politics during a three-person lunch at the
residence November 16. The usually cautious Su gave a
surprisingly blunt assessment of Vice President Lu when
queried about the possibility of her taking over the
Presidency. Su said that the Vice President is completely
"unpredictable" in her thinking and behavior and suggested
that Lu could cause great damage if she were to become
President, including in the area of cross-strait relations.
Lu does not have a party base, Su noted, and is surrounded by
a group of personal supporters who are just as unpredictable
as she. He cited the chaos within the party when Lu took
over as acting DPP Chair for a one-month period at the end of
last year. He claimed that a Lu presidency is something that
most DPP members fear. When asked what would happen to him
if Lu were to move up, Premier Su laughed and said that he
would resign before Lu has a chance to dismiss him.

President Chen's Crisis and Upcoming Mayoral Elections
-------------- --------------


3. (S) Su said that he had wanted to resign shortly after
the Prosecutor's report came out on November 3. Learning of
this, President Chen had called Su over to the Presidential
Office to try to talk him out of it. According to Su, Chen
said that the government would collapse if Su were to
announce his resignation at that critical juncture. Su felt
that he had a responsibility to keep the government
functioning and the economy stable, and Chen eventually
talked him into staying. Su said that he supported the
recommendation that the President should step down if the
First Lady is convicted of corruption in the initial trial,
arguing that this would help to pacify DPP supporters and the
general public. The President made a credible case as a
practiced defense lawyer in his presentation on November 5
and managed to mollify DPP supporters for the moment. Su
predicted that, despite the decision of two key DPP LY
members to leave the LY, there would be no further defections
in the run-up to the December 9 elections, as the DPP wanted
to avoid damaging its election prospects. Nonetheless, Su
observed that Chen Shui-bian had basically lost the trust of
the public and no longer had the moral standing needed to
mobilize the party.


4. (S) Turning to the December 9 mayoral elections in Taipei
and Kaohsiung, Su indicated that losing both contests would
be devastating for President Chen as well as damaging to the
party. The pressure on Chen to resign would be great
although, Su said, he still does not believe the President

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would step down voluntarily. Su believed that the DPP still
has a good chance of winning the Kaohsiung race because KMT
candidate Huang Chun-ying is relatively weak. Su added that
he had been in Kaohsiung the day before campaigning for DPP
candidate Chen Chu. There was no discussion of the Taipei
race, except for Su's comment that People First Party (PFP)
Chairman James Soong, running as an independent, is basically
out of the picture with a four percent support level in the
most recent poll.

Taipei Mayor Ma Ying-jeou's Difficulties
--------------


5. (S) Su noted that Mayor Ma Ying-jeou's recent problems
with his use of the city's special fund have taken some
pressure off President Chen. This could also affect Ma's
prospects for 2008, as there is increasing talk about
alternative candidates such as LY Speaker Wang Jin-pyng and
even Honorary KMT Chairman Lien Chan.

Cross-Strait Relations
--------------


6. (S) Responding to the Director's point about the need for
President Chen to maintain his commitments to the United
States regarding cross-strait relations, Su suggested that
Chen is currently too weak to be able to generate much
movement on constitutional issues. The Director nonetheless
stressed the need to be very cautious on this sensitive issue
at this time. Premier Su then expressed his own support for
lifting the 40 percent restriction on investments in the
mainland by listed Taiwan companies. He said, however, that
this can only be done when the Taiwan government is more
stable and more in control.

Meeting with DPP Chairman Yu: Vice President Lu
-------------- --


7. (S) Following the lunch meeting with Premier Su, the
Director met separately with DPP Chairman Yu Shyi-kun. Yu
was also blunt in his assessment of Vice President Annette
Lu, stressing that very few DPP party workers support her.
He expected she would make major changes if she became
President, including appointing new senior officials who
would be answerable to her. Lu most trusts two advisors --
Yang Hsien-hung and Hu Chung-hsin -- both of whom are talking
heads on the evening television political talk-shows.
According to Yu, Yang and Hu are close to the KMT and hate
President Chen for complicated personal reasons. If Lu
becomes president, she would have to nominate a new Vice
President within three months, and the nomination would have
to win a majority confirmation vote from the
opposition-controlled LY. Yu confided he had heard that
James Soong hopes to become Vice President under Lu. Also
that Soong would support the KMT forming the new cabinet with
possibly LY Speaker Wang Jin-pyng or even Chairman Ma
Ying-jeou becoming premier. If this situation materialized,
the DPP would effectively become the opposition party. Lu
would not be able to get many people from the DPP to join
such an arrangement.

Kaohsiung Election
--------------


8. (C) Yu said he was confident the DPP has an opportunity
to win the December 9 election in Kaohsiung, although the
DPP's internal poll on November 15 showed Chen Chu trailing
by 5 percent. In recent Kaohsiung mayoral elections, the DPP
has done better than polling figures predicted, so Yu said he
would be optimistic about Chen Chu's chances even if she were
behind by 3-4 percent in the polls. Chen Chu appeals to
moderate voters, Yu observed, but the party has not yet been
able to stir up the enthusiasm of the Deep Green base, which
it hopes to do by sending in DPP leaders from Taipei to help
with vigorous campaigning. Potentially, these leaders could
even include President Chen if he wishes to go and Chen Chu's
campaign headquarters thinks it would be helpful, Yu implied.

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The DPP's situation will be stabilized if it wins Kaohsiung,
Yu added.

Taipei Election
--------------


9. (C) In Taipei, Yu pointed out that Frank Hsieh is far
behind KMT candidate Hau Long-bin, with the gap currently 24
percent. The DPP strategy is to work to increase support for
Soong, so that Hsieh might have a chance to win a
three-person race, as Chen Shui-bian did in 1994. Yu said
he planned to attack Soong in the next few days on the KMT
party assets and arms procurement issues. His goal, Yu said,
was not to damage Soong, but to stimulate pan-Blue voters to
support Soong. If Soong can win 12 percent of the vote,
Hsieh would have a chance as he would then only need 44
percent to defeat Hau. Eight years ago, Chen Shui-bian won
45 percent of the votes in Taipei City when he was defeated
by Ma Ying-jeou in his bid for reelection. Hsieh is a
campaign "warrior," Yu observed, and he is holding some
information for late negative attacks on Hau and Ma.


10. (C) The DPP has suffered only limited fall-out from the
prosecutor's indictment of First Lady Wu Shu-chen, because
DPP base supporters accepted the President's explanation, Yu
said. Yu did not believe President Chen, Mayor Ma Ying-jeou,
or First Lady Wu Shu-chen were corrupt. Their current
problems, he suggested, were largely related to inadequate
and unclear systems and practices left over from the
authoritarian period. If Chen and others were corrupt, they
would have taken advantage of opportunities to amass fortunes
in earlier years when there was no oversight. The fact that
they had not done so was a strong indication that they were
not corrupt.


11. (C) Yu predicted the 2008 presidential campaign will
begin December 9, as soon as the mayoral elections are over.
If the DPP loses Kaohsiung, there will be problems for the
DPP, including media and strong internal criticism of
President Chen. Yu said categorically that he would resign
immediately if the DPP loses Kaohsiung, no matter how close
the results. On the way to the elevator after the meeting,
he joked to the Director that he might not be at DPP
headquarters when the Director next visits.

Constitutional Revision
--------------


12. (C) The Director underscored to Yu the importance of not
allowing the issue of constitutional revision to generate
cross-Strait tensions. Yu acknowledged the Director's points
and said that constitutional change is needed to make the
government more effective. However, if there is not a broad
consensus on the topic, constitutional revision will not
necessarily become an election issue. The public would view
discussing something that is impossible as "empty talk," Yu
suggested. While the government deals with the
constitutional issue on the policy level, the DPP as a
political party needs to pursue its ideals, in part to combat
those who identify with China and seek ultimate unification
(i.e., Ma Ying-jeou). Ma's proposed interim peace agreement
would be a surrender of sovereignty to the PRC, Yu argued.
Taiwan needs more educational work to promote Taiwan
identity, because "psychological defense" is even more
important than military defense, Yu maintained.

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


13. (S) Meeting with us alone and outside his office,
Premier Su was especially candid. He seems weary from the
strain of all this domestic political fighting, but
determined to keep the government functioning in hopes that
the situation will improve after the December 9 mayoral
elections. We detected none of the rancor widely rumored in
the media by the premier toward the president, but were
struck by his bluntness in warning about the problems an

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Annette Lu presidency would bring both his party and Taiwan.
Though Chairman Yu seemed optimistic that the DPP can
stabilize itself through a victory in Kaohsiung, he was also
concerned about potentially damaging division within the
party if it cannot pull out a victory. Yu's negative
assessment of Lu, similar to that of Su, appears to represent
the mainstream view within the party.

YOUNG