CABINET SHAKE-UP UNDERSCORES CHEN SHUI-BIAN'S

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001077

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E.O. 12958: DECL: 05/14/2032
TAGS: PGOV PINR TW
SUBJECT: CABINET SHAKE-UP UNDERSCORES CHEN SHUI-BIAN'S
CONTINUING CONTROL


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


1. (C) Summary: President Chen, who has accepted Premier Su
Tseng-chang's resignation, named Straits Exchange Foundation

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(SEF) Chairman Chang Chun-hsiung to succeed Su as Premier on
May 14. Chang's reappointment -- he was previously premier
from 2000 to 2002 -- marks the sixth cabinet appointed by
Chen during his seven years as President. Vice Premier Tsai
Ing-wen is also stepping down, and will be replaced by
Presidential Office Secretary General Chiou I-jen. Some
cabinet changes will occur in the next week, though we've
been told the Foreign Minister and Economic Minister will
remain. Tsai told the Director that she expects Chiou and
the cabinet to continue the ongoing work with the U.S. on
trade issues. Comment: With the selection of Chang and
Chiou, who are both close to him, President Chen is
demonstrating that he is not a "lame duck" and intends to
keep his hands on the policy levers during his final year in
office. Chang's appointment may also help strengthen
coordination between the Executive Yuan and the Hsieh
campaign team as the DPP strives to retain power in the 2008
presidential election. End Summary and Comment.

Premier Su Tseng-chang Steps Down
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2. (SBU) At a short press conference on Saturday morning May
12, Premier Su Tseng-chang announced that President Chen
Shui-bian had accepted his resignation. Su, who had recently
lost out to former Premier Frank Hsieh in the contest for the
DPP presidential nomination, explained that President Chen
would need a new lineup to deal with the changed situation
during his final year in office. Su said he would reflect
and return to the grassroots, and would listen to voices from
all quarters at home and abroad to find ways to do more for
Taiwan, the DPP, and the DPP's candidates in upcoming
elections. At a separate press conference later the same
day, President Chen confirmed that he had accepted Su's
resignation and praised Su both for his accomplishments as
premier and for his exemplary decision to put broader
interests ahead of personal ambition by withdrawing from the
presidential race.

Chang Chun-hsiung the New Premier
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3. (SBU) President Chen announced on Monday May 14 that he
was appointing Straits Exchange Foundation (SEF) Chairman and
DPP at-large Legislator Chang Chun-hsiung to succeed Su as
the new Premier. Chen reviewed Chang's experience, including
previous service as premier from 2000 to early 2002, and
discussed five broad policy themes of his presidency. In his
speech accepting appointment as Premier, Chang reiterated
Chen's positive assessment of Premier Su's accomplishments
and praised Su's decision to withdraw from the presidential
primary.

Chiou I-jen to Succeed Tsai Ing-wen as Vice Premier
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4. (C) Vice Premier Tsai Ing-wen (and later in the day,
Chiou himself) confirmed to the Director today that she will
also step down and that Presidential Office Secretary General
Chiou I-jen will succeed her as Vice Premier. Tsai said she
had talked recently to Chiou about the U.S.-Taiwan trade
relationship and was sure Chiou and the cabinet would be
prepared to follow up vigorously on trade issues, including
the TIFA process. Economics Minister Steve Chen will be
staying on, Tsai added. Chiou told the Director he realizes
he has big shoes to fill, and indicated President Chen is
trying to find a place in the reordered government for Tsai,
but she may still opt to leave government for a while.


5. (C) TECRO Council Member Corey Chen, a long-time protege
of Frank Hsieh, told AIT that the announcement of Su's
resignation on Saturday had caught Hsieh by surprise. Prior
to Saturday, Hsieh's expectation had been that President Chen
planned to keep Su on until the Legislative Yuan (LY) passed

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the annual budget, after which he would reexamine the
political situation. According to Corey Chen, Chang
Chun-hsiung, who is close to President Chen, has only
"ordinary relations" with Frank Hsieh and often has
"different opinions." Hsieh has played a passive role as
President Chen has been deciding personnel moves, Corey Chen
said, adding that Hsieh's main request is that Lee Ying-yuan
be appointed to a non-substantive position in the cabinet,
such as Minister without Portfolio, so that he can work full
time as Hsieh's campaign manager. Corey Chen expressed hope
that the new Vice Premier Chiou I-jen, a former leader in the
New Tide faction, will work to ensure that there are no
conflicts or policy disagreements between the EY and Hsieh's
campaign. The Hsieh camp's main concern is to avoid
unexpected difficulties caused by the New Tide.


6. (C) Academia Sinica Research Fellow Hsu Yung-ming
suggested to AIT that President Chen had appointed Chang to
the premiership to maintain the power balance within the DPP.
Chang's main selling point was that he had not been
associated with any particular candidate in the DPP's recent
divisive presidential primary. This should be Chang's last
position, since he is already 69 years old, Hsu suggested,
adding that Chang's age may have led President Chen to assign
Chiou I-jen to assist Chang as Vice Premier.


7. (C) Powerchip (DRAM producer) CEO Frank Huang told the
Director that Chang is likely to be a bit easier for the
business community to work with than Su, and might even
further expand cross-Strait links. But the real question is
what Chen Shui-bian is willing to do in this area. For the
most part, Huang opined, he and his business colleagues are
already looking to Chen's successor as president for major
break-throughs on economic relations with Beijing.

More Changes to Come
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8. (C) Further personnel changes will be announced over the
next several week, including a new Presidential Office
Secretary General to replace Chiou. According to the media,

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Presidential Office Deputy Secretary General Cho Jung-tai, a
protege of Frank Hsieh, may be reappointed Executive Yuan
Secretary General, a position he held when Hsieh was Premier.

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Media reports also indicate that Foreign Minister James
Huang and Mainland Affairs Council Chairman Chen Ming-tong
will stay in place.

Chang Chun-hsiung Bio Note
--------------


9. (C) A lawyer by profession, Chang Chun-hsiung first
became involved in politics when he, along with Chen
Shui-bian, Su Tseng-chang, and Frank Hsieh, was a member of
the team that defended the 1979 Kaohsiung Incident
defendants. Chang, who served many years as a legislator
from Kaohsiung, failed in his bid to win the 1994 Kaohsiung
mayoral election in 1994, one factor in his defeat being
publicity about a long-term extra-marital relationship.
Appointed Vice Premier in August 2000, Chang succeeded
Premier Tang Fei when the latter resigned over the DPP's plan
to discontinue construction of the fourth nuclear power
plant, a controversy that also embroiled Chang during his
term as Premier. Chang was succeeded as Premier by Yu
Shyi-kun in February 1, 2002. Over the years, Chang has also
served as Presidential Office Secretary General, DPP
Secretary General, and President Chen's campaign manager. In

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2005, Chang succeeded the late Koo Chen-fu as SEF Chairman,
though that job has been pretty dull with official
cross-Strait links so atrophied.

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


10. (C) While Su had a productive tenure as premier, his
hard-charging workstyle led to various gaffes and is quite
different from the lower key "love and trust" approach of
Frank Hsieh. During the intense presidential primary
campaign, Su and Hsieh criticized each other over a range of

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policy issues. Therefore Su's departure should reduce the
potential for friction between the Executive Yuan and the
Hsieh campaign team. By selecting Chang and Chiou, who will
listen to him, President Chen doubtless hopes to maximize his
influence in the DPP during his final year in office.

YOUNG