AIT CHAIRMAN BURGHARDT AND KMT PRESIDENTIAL

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001384

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/18/2017
TAGS: PGOV TW
SUBJECT: AIT CHAIRMAN BURGHARDT AND KMT PRESIDENTIAL
CANDIDATE MA YING-JEOU DISCUSS DEFENSE, CROSS-STRAIT POLICY

Classified By: Director Stephen M. Young, Reason(s): 1.4 (B/D).


1. (C) Summary: Kuomintang (KMT) presidential candidate Ma
Ying-jeou told Chairman Burghardt on June 16 that he would
honor President Chen's "Four Noes" pledge if elected
president, and he would also reopen dialogue with Beijing
aimed at establishing military confidence-building measures,
a Taiwan-PRC common market, and a "modus vivendi" on Taiwan
participation in international organizations. Burghardt and
Director Young congratulated Ma for the belated passage of
the defense budget, and they urged the KMT to support a
supplemental budget to procure PAC-3 defensive missiles. KMT
legislator Su Chi, who accompanied Ma, tried to claim PAC-3
procurement would require approval by a public referendum,
but he backed down when the Chairman and Director strongly
rejected this specious new argument. Ma assured Burghardt
that the KMT will not support any referenda on sovereignty
issues, such as joining the UN under the name Taiwan. Asked
about wedge issues, Ma said he expects the DPP in the
presidential campaign to try to tarnish him as a Mainlander
who will sell out Taiwan to Beijing. He will emphasize,
however, that the KMT can stabilize cross-Strait relations to
the benefit of Taiwan's economy. Ma said he has already
decided on a running mate, who will be announced at the KMT
party congress on June 24. Ma was tentative concerning plans
to visit the U.S. later this year, but promised to coordinate
with AIT as his plans firmed up. End Summary.

A Second Referendum on PAC-3s? Maybe Not...
--------------


2. (C) KMT presidential candidate Ma Ying-jeou, accompanied
by KMT legislator Su Chi, met with AIT Chairman Burghardt on
June 16. Burghardt, accompanied by Director Young,
congratulated Ma on the Legislative Yuan's belated passage of
the 2007 general budget the preceding evening. Ma and Su
noted that the LY had approved funds for the submarine
exploratory committee, P-3C ASW aircraft, and PAC-2 upgrades.
However, Su added, PAC-3 funding had been stricken to comply
with the KMT position on the "failed" 2004 missile defense
referendum. Burghardt suggested the LY should consider
funding the PAC-3's through a supplemental budget bill, since
Taiwan urgently needs improved missile defenses. Su tried to
claim the PAC-3's would require public approval in a second
referendum on the same issue. Burghardt and Director Young
flatly rejected Su's argument as legal sophistry, prompting
Ma and Su to back away from it. Ma suggested that a KMT-DPP
consensus on the PAC-3's could enable the LY to side-step the
"legal question" of another referendum.

Cross-Strait: Peacemaker not Troublemaker
--------------


3. (C) Ma told Burghardt that if elected President, he would
continue to honor the terms of President Chen's "Four Noes"
and would also implement the "Five Do's": (1) resuming
dialogue with the PRC, (2) establishing military
confidence-building measures, (3) creating a PRC-Taiwan
common market, (4) reaching a modus vivendi on international
organizations, and (5) expanding cross-Strait cultural and
educational exchanges. Ma said he would condition any
negotiation of a peace agreement on the PRC's removal of
missiles aimed at Taiwan, adding that he would accept a peace
agreement of either limited or unlimited duration. Burghardt
predicted that the PRC would attempt to condition any
dialogue on Taiwan's suspending arms purchases from the U.S.
Both Ma and Su deemed this "unacceptable," and predicted that
Beijing would tolerate Taiwan's continued U.S. arms purchases
as long as Taiwan's leadership did not antagonize them by
pushing an independence agenda.

KMT Referendum for "Defensive" Purposes
--------------


4. (C) Ma said the KMT is considering promoting its own
referendum for "defensive purposes." If the Central Election
Commission (CEC) remains under DPP control, he continued, the
presidential ballot will certainly include one or more
referendums designed to attract deep-Green voters to the
polls (e.g., forcing the KMT to disgorge its "illicit" party

TAIPEI 00001384 002 OF 003


assets, and joining the UN as "Taiwan"). Various proposals
have been floated within KMT circles, Ma said, but no
consensus has been reached. Burghardt stressed that the USG
would not support any referendum touching on UN membership or
other sovereignty-related issues. Ma assured the Chairman
and Director that the KMT also would not support referenda on
such issues. Noting that turnout for President Chen's
"defensive referendum" in 2004 was significantly less than
for the presidential ballot, Ma suggested that referenda may
not have the drawing power their proponents maintain.

It's The Economy, Stupid
--------------


5. (C) Ma said he expects the 2008 presidential campaign to
be negative, with his DPP opponent Frank Hsieh rehashing
charges that as a Mainlander, Ma does not love Taiwan and
will sell out to Beijing. Ma said he intends to counter such
attacks by emphasizing that the KMT will stabilize
cross-Strait relations, which will produce economic
opportunities. Unlike the DPP, Ma continued, the KMT enjoys
a strong intra-party consensus on cross-Strait policy.
Moreover, while the PRC does not trust President Chen or the
DPP, the KMT already shares common ground with Beijing, both
sides having accepted the "one China, different
interpretations" formulation of the "1992 Consensus." With a
KMT government, and under proper circumstances, negotiations
for a peace agreement and for economic cooperation could
begin immediately, Ma said. Furthermore, he added, a KMT
government would remove the question of Taiwan independence
from the table, stabilizing cross-Strait relations and
thereby enhancing Taiwan's attractiveness to foreign
investors and trade partners.

Cross-Strait Links to Foster PRC Tourism
--------------


6. (C) Ma told Burghardt the gap between rich and poor in
Taiwan continues to grow, resulting from sluggish growth in
real income for Taiwan's wage-earners and decreased foreign
investment. According to Ma, DPP limits on cross-Strait
investment are causing increasing numbers of foreign
businesses to forsake Taiwan as a regional platform.
Moreover, some Taiwan companies have chosen to list on the
Hong Kong exchange, instead of Taiwan, because of the
problems they have encountered. If elected, Ma said, he
would remove the ceilings on Mainland investment and
establish direct transportation links. Taiwan needs to
develop service industry jobs to replace manufacturing jobs
lost to the Mainland, and increased tourism is one way to do
so. Without convenient cross-Strait transit routes, however,
Taiwan's domestic tourist industry will not attract the
investment needed to increase its capacity, Ma observed.

Vice President Won't Impact Race?
--------------


7. (C) Ma said he had already chosen his vice presidential
running mate but would not make an announcement until June
24, the KMT's annual party congress. Ma said he did not
expect the choice of vice presidential candidates, his or
Hsieh's, to affect the presidential race in any significant
way. There is little chance of an independent third
candidate, Ma continued, with the smaller parties already
lining up behind the DPP and KMT candidates. The legislative
and presidential elections will probably be combined, Ma
predicted, but it is not clear exactly how the typically
higher presidential turnout rate will affect the legislative
elections. Ma was rather tight-lipped about divulging the
key members of his campaign team, naming only former premier
Vincent Siew, KMT Vice Chairman P.K. Chiang, and prominent
businesspeople Morris Chang (Taiwan Semiconductor) and
Stanley Shih (Acer Computer) as important economic advisors.
(Note: In a separate June 15 meeting, Siew told Burghardt
that he had declined three offers to serve as Ma's vice
presidential running mate. End note.)

Visit to U.S.
--------------


TAIPEI 00001384 003 OF 003



8. (C) Ma said he hopes to visit the U.S. in the coming
months, but seemed vague on details as if this was not at the
top of his priority list. He agreed to work closely with AIT
to schedule the visit at an opportune time. Burghardt
advised Ma to expect tough questions on defense when meeting
with Washington interlocutors. Ma insisted that he had
honored all of the promises made during his last visit to the
U.S., particularly his pledge to support "reasonable" arms
purchases. The Director noted to Ma that Taiwan's next
president will have to work closely with the U.S. to resolve
the issue of Taiwan's efforts to develop an offensive weapon
capability.

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


9. (C) Burghardt stressed to Ma, as he did in a subsequent
meeting with DPP presidential candidate Frank Hsieh, that the
U.S. views the inauguration of Taiwan's next president as an
opportunity to advance cross-Strait peace and cooperation.
The USG hopes that neither candidate will do anything to
"poison" the atmosphere. Unfortunately, Su Chi violated the
confidentiality of the meeting by holding a press conference

SIPDIS
and heavily insinuating that Burghardt's remarks were an
endorsement of the KMT's and Ma's cross-Strait policy. The
Director contacted Ma Ying-jeou on June 18 to register our
displeasure with Su Chi's public remarks. Ma said he
understood our message and would speak with Su, though we
rather doubt Su would have done this without Ma's tacit
approval.
YOUNG