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

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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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YOUNG