KMT LEGISLATOR JOHN CHIANG ON CROSS-STRAIT

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004155

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/18/2031
TAGS: PGOV TW
SUBJECT: KMT LEGISLATOR JOHN CHIANG ON CROSS-STRAIT
RELATIONS AND DOMESTIC POLITICS


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


1. (C) Summary: KMT Central Standing Committee and LY
member John Chiang suggested to the Acting Director on
December 18 that PRC leaders' growing confidence in China's
development has made them more accommodating in engaging
Taiwan on cross-Strait economic issues. However, Chiang
believes Beijing will remain tough on issues that touch on
Taiwan's sovereignty and national defense, and he stressed
the KMT's commitment to building up Taiwan's defense to
counter China's military modernization. Turning to domestic
politics, Chiang criticized KMT Chairman Ma Ying-jeou for his
weak leadership and relative inexperience in handling party
affairs. Though Ma currently remains the only viable KMT
candidate for the presidency in 2008, Chiang predicted that
others, such as LY Speaker Wang Jin-pyng will likely
challenge Ma's leadership over the next few months. End
Summary.


2. (C) Kuomintang (KMT) Central Standing Committee (CSC)
and LY member John Chiang (Hsiao-yen),the son of former
President Chiang Ching-kuo, suggested to the Acting Director
on December 18 that current PRC leaders are increasingly
confident in China's development, which has made them more
accommodating when engaging Taiwan on cross-Strait economic
issues. Chiang pointed to ongoing discussions to relax the
ban on Chinese tourists and to expand direct charter flights
across the Strait as examples of Chinese flexibility.
Although doubtful the two sides could reach a final agreement
on these issues by the end of this year, Chiang was
optimistic that progress can be made early next year.


3. (C) Despite its economic overtures to Taiwan, however,
Beijing is likely to remain tough on issues that touch on
Taiwan's sovereignty and national defense, Chiang predicted.
He stressed the KMT's commitment to building up Taiwan's
defense to counter China's military modernization, noting
that close economic exchanges with the PRC do not mean Taiwan
will forsake its right to self-defense or "national
identity." As an example, Chiang underscored the KMT's
willingness to pass a robust 2007 defense budget during this
legislative session. Chiang also predicted that the 2006
supplemental arms budget would be approved by the LY
Procedure Committee on December 19. He did not expect the
People First Party (PFP) to be able to block passage of the
supplemental budget, which would then be sent to the Defense
Committee. (Note: The Procedure Committee blocked the
supplemental budget on December 19 for the 69th time. End
Note.)


4. (C) Chiang suggested that the KMT commitment to building
a strong defense for Taiwan would continue if the party
regains power in 2008. The KMT has sought to work with the
CCP on a "peace pact" to reduce tensions across the strait,
but boosting defense was the only way the KMT could have a
strong bargaining position with Beijing as well as continue
to remain a viable political party on Taiwan. Chiang
characterized the KMT's ultimate aim of reunification as a
policy of "anti-Taiwan independence," rather than a
"pro-China" stance. He underscored that the KMT advocates
that Taiwan's future, whether independence or reunification,
is a matter for the people of Taiwan to decide. For now,
given the PRC's lack of democracy, maintenance of the "status
quo" remains the best option for Taiwan.


5. (C) Turning to domestic politics, John Chiang criticized
KMT Chairman Ma Ying-jeou for his weak leadership and
relative inexperience in handling party affairs. Although
the KMT Central Standing Committee (CSC) must support Ma's
decisions, he enjoys relatively little personal support from
individual CSC members, with only Legislators Lai Shih-pao
and Wu Yu-sheng as "true" Ma supporters. Chiang explained
that native Taiwanese comprise 60 percent of Standing
Committee members and they tend to view Ma, a "mainlander,"
with suspicion. Chiang suggested that Ma's weakness comes
from his inability to forge close friendships and alliances
with other KMT leaders, "having no enemies, he also has no
friends." With Ma stepping down this week as Taipei mayor,

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Chiang said Ma will now enjoy fewer administrative resources
and less media exposure. Chiang contrasted Ma with LY
Speaker Wang Jin-pying, arguing that despite losing out in
the race for KMT Chair Wang actually enjoys broader support
among the party elite.


6. (C) Though Ma currently remains the only viable KMT
candidate for the presidency in 2008, Chiang suggested that
several challenges to Ma's leadership could emerge over the
next few months. Ma's attention will be focused on managing
KMT negotiations with the PFP to reach an accommodation ahead
of the 2007 legislative and 2008 presidential elections.
Failure to convince recalcitrant KMT legislators to at least
tacitly support KMT-PFP cooperation ahead of legislative
elections would be seen as another sign of Ma's weak
leadership, suggested Chiang. Ma will also have to reach an
accommodation with his erstwhile rival Wang Jin-pying, who
has so far has not revealed whether he plans to contest Ma
for the party's 2008 presidential nomination. Ma's most
important challenge, however, could prove to be his handling
of any unfavorable developments related to the ongoing
prosecutor's investigation into his use of the Taipei mayoral
special budget.

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


7. (C) Chiang's message on the KMT's commitment to the
defense budget reinforces reassurances we have recently
received from Chairman Ma and Speaker Wang. The 2007 defense
budget nevertheless has not yet passed in the legislature and
the 2006 supplemental budget, despite Chiang's optimism
yesterday, was blocked in the LY Procedure Committee on
December 19 for the 69th time by a majority comprised of KMT
and PFP legislators. The fact that the Procedure Committee
blocked the supplemental budget means that KMT Chairman Ma,
on this issue especially, needs to show he can exert
sufficient leadership over his party's legislative caucus to
deliver on his defense commitments.
WANG