KMT CHAIRMAN MA YING-JEOU ON DEFENSE BUDGET,

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 004104 SIPDIS SIPDIS E.O. 12958: DECL: 12/12/2016 TAGS: PREL PINR TW SUBJECT: KMT CHAIRMAN MA YING-JEOU ON DEFENSE BUDGET, DECEMBER 9 ELECTIONS, AND HIS MAYORAL LEGACY Classified By: AIT Director Stephen M. Young. Reason(s): 1.4 (B/D) ¶1. (C) Summary. KMT Chaiman Ma Ying-jeou told the Director that the 2007 defense budget is moving toward legislative approval in the near future, though he was non-committal on a possible supplemental budget next Spring for PAC-III missiles. Ma was very cautious in discussing the status of KMT pan-Blue coalition partner, People First Party (PFP), which has been the main naysayer on the defense budget but which is now in free-fall following the defeat of its Chairman James Soong in the December 9 mayoral election and his announced withdrawal from politics. Regarding the approaching end of his eight years as Taipei Mayor, Ma said there were numerous accomplishments, including expanding a first rate public transportation system, making Taipei a preeminent wireless city and enhancing physical education for Taipei youths. End Summary. ¶2. (C) To follow up on the December 9 Taipei and Kaohsiung mayoral elections and prepare for his trip to Washington next week, the Director called on Taipei Mayor Ma Ying-jeou on December 12. In two weeks, Ma will step down as Mayor and focus wholly on his other role as opposition Kuomintang Party (KMT) Chairman. Ma appeared more tense than usual, likely reflecting the widespread public criticism that has been levelled at him for failing to ensure the election of the KMT candidate in the Kaohsiung mayoral election. Aftermath of December 9 Mayoral Elections -------------- ¶3. (C) Director began by congratulating Ma on the KMT's victory in the Taipei mayoral election, as well as the party's strong showing in municipal elections in both cities. Ma responded that Taipei mayor-elect Hau Lung-bin will do a good job. This had been Hau's first large-scale campaign, he said, and it was much more difficult than Ma's own 2002 campaign, since Hau faced multiple candidates and a much more formidable chief adversary, DPP's Frank Hsieh. In response to the Director's query about Taiwan's largely inaccurate public opinion polls that underestimated both DPP mayoral candidates by around 20 percent, Ma explained that many DPP supporters "shied away from telling pollsters" their political preferences. The Director praised the elections, particularly the relatively high 64-67 percent voter turn-out in both cities, as an important element in Taiwan's continuing democratic consolidation. ¶4. (C) Ma told the Director that the KMT's pan-Blue coalition partner, the People First Party (PFP),was facing a major crisis in the aftermath of its abysmal showing in the December 9 mayoral and municipal council elections. This had resulted in PFP Chairman James Soong's announcement that he is withdrawing from politics. The KMT's official position on the PFP, Ma explained, is to encourage cooperation, rather than to discuss alliance or merging the two parties. The reason he met Soong several days before the election, a move that aroused considerable criticism, Ma acknowledged, was to discuss cooperation, including in the LY elections next December. Ma explained his cautious approach to the PFP by emphasizing that it is "very important that the opposition maintain its legislative majority." Stepping Down as Mayor -------------- ¶5. (C) To the Director's query about Ma's accomplishments as Taipei Mayor, Ma replied that Taipei as a city had received over 1,000 awards over the past eight years. Ma said he was proud of many achievements. For example, he increased subway ridership from 170,000 to 1.1 million per day. He also noted that he succeeded in making Taipei one of the most advanced wireless cities in the world. During a recent visit to Paris, he had discovered that Taipei is at least a year ahead of Paris, and the Parisian government had asked to send officials to observe Taipei's wireless system. Finally, Ma worked to improve the physical fitness of Taipei youths, explaining that the requirement for all students to pass a TAIPEI 00004104 002 OF 003 swimming test for high school graduation had expanded the percentage of students who could swim, with over two-thirds of middle school students passing the most recent swim test. Defense Budget Update -------------- ¶6. (C) Regarding the Director's visit to Washington next week, Ma emphasized the LY Defense Committee had already passed the 2007 defense budget with three weapons systems (P-3C surveilance aircraft, PAC-II missile upgrades, and a submarine feasibility study). The committee had then sent it back to the LY for what should be pro forma second and third readings, setting the stage for final LY passage in the near future. When the Director pressed Ma as to whether the KMT would support the 2007 defense budget all the way through the LY, Ma responded that the Director could tell Washington that Ma would keep his word. Ma said he had announced his commitment to passing the defense budget in January, but this had been delayed "by politics." Now, he said, the KMT has supported passage of the three weapons system in the regular defense budget, though final passage can only be determined by the LY. ¶7. (C) The Director asked if the KMT would support a supplemental budget next Spring to provide for PAC-III missile acquisition after expiration of the three-year referendum prohibition on March 20, 2007. LY Speaker Wang Jin-pyng, he noted, had told him that he (Wang) supports this idea. A supplemental budget, the Director continued, would be one way to bring Taiwan's defense budget up to the announced 2.85 percent of GDP target. KMT legislator and close Ma defense advisor Su Chi interjected, "the best way to meet that goal would be for the U.S. to approve the sale of F-16 jets to Taiwan." The Director responded that the U.S. prefers to wait until Taiwan first acts on the earlier offered weapons systems before considering any additional requests. ¶8. (C) Su Chi responded that the 2007 regular defense budget is more important than the 2006 Supplemental Budget, which is supplemental to last year's budget. The Director responded that his meeting with Minister of National Defense that morning, December 12 (reported septel),indicated that MND still sees the 2006 Supplemental Budget as important. When the Director then asked if the KMT would support a 2007 defense Supplemental Budget next spring to fund acquisition of the PAC-III missiles approved by President Bush in April 2001, Su responded that he is still working on the legalities of the issue. The Director urged Ma Ying-jeou not to let politicized legal interpretation drive policy, for Taiwan's missile defense is too important to be made hostage to such arguments. If there is political will to defend Taiwan, he continued, a way can be found to approve PAC-III acquisition. Ma responded that the KMT had cooperated to move the regular defense budget to the LY floor for discussion, and the legislative process must be determined by delicate negotiationw among parties in the LY. The Director responded that he is concerned that the next few weeks may be the last chance to pass legislation before the next election cycle commences and renders responsible legislative negotiations nearly impossible. He only halfjokingly offered to hold another press conference to press this point publicly. Ma got the message. Comment -------------- ¶9. (C) Chairman Ma's continued caution in dealing with the PFP, which has been the most recalcitrant player in the defense budget issue these past two years, could complicate the way forward on the regular defense budget, not to mention a possible supplemental budget next Spring. Such treatment has embolded the PFP and given it legislative influence far beyond its numbers. How the KMT deals with the remnant PFP, which still has 22 legislators, could play an important part in whether the regular defense budget is approved in the LY. We left the KMT leader in no doubt that we were expecting leadership from him at this pivotal moment. 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