DPP CHAIRMAN YU SHYI-KUN DISCUSSES BUDGET IMPASSE,

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000171

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/23/2032
TAGS: PGOV TW
SUBJECT: DPP CHAIRMAN YU SHYI-KUN DISCUSSES BUDGET IMPASSE,
CONSTITUTIONAL REVISION, AND PARTY PRIMARIES


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


1. (C) Summary: In a meeting with the Director on January
23, DPP Chairman Yu Shyi-kun expressed hope that the
Legislative Yuan (LY) will hold a special session at the end
of the month to pass the 2007 budget, including the budget
for arms procurement. The Director stressed to Yu the
importance of avoiding sensitive sovereignty issues in the
constitutional revision process. Taiwan leaders, including
President Chen and Yu, have the responsibility to draw a
clear distinction between good and bad ideas, the Director
pointed out, adding that the U.S. does not want to be put in
a position where it has to openly criticize President Chen or
other Taiwan leaders. Yu said the DPP understands that
constitutional revisions cannot pass but need to push the
party's "ideals" to consolidate the Deep Green base and
prevent former President Lee Teng-hui's Taiwan Solidarity
Union (TSU) from making gains at DPP expense. End Summary.


2. (C) The Director discussed domestic and bilateral issues
with Democratic Progressive Party (DPP) Chairman Yu Shyi-kun
in a meeting at DPP headquarters on January 23. Noting
Mexico's recent refusal, under PRC pressure, to allow
President Chen Shui-bian's aircraft to fly through its
airspace, the Director observed that this reflected the PRC's
zero-sum attitude toward Taiwan's international activities.
Yu said the Chinese were "very stupid." President Chen and
the DPP had been telling the Taiwan people in an abstract way
about China's unfriendly attitude to Taiwan. The aircraft
incident, which added five hours to the flight from Nicaragua
to Los Angeles, proved the DPP contention in a very concrete
way to the large contingent of Taiwan reporters on the
aircraft, Yu said.


3. (C) The Director noted widespread international concerns
over China's January 11 anti-satellite missile test, concerns
exacerbated by China's lack of transparency. According to
Yu, Taiwan believes the test was an implied message from
China to the U.S. and Japan: "Don't intervene in Taiwan
affairs."

The Budget Impasse
--------------


4. (C) The Director asked Yu about the impasse over the
budget in the Legislative Yuan (LY). Yu argued that the LY's
failure to pass the budget showed that Kuomintang (KMT)
Chairman Ma Ying-jeou could not be trusted to fulfill his
commitments. According to Yu, the DPP cannot negotiate on
the KMT's bill to reorganize the Central Election Commission,
because the bill is unconstitutional, as was demonstrated
last year when the Council of Grand Justices overturned a
very similar bill setting up the National Communications
Commission (NCC). Yu disputed Ma's claim that the DPP has a
15-2 majority on the CEC, and he asserted that Ma's concern
about the CEC reflects his fear that the CEC will allow the
DPP to hold a referendum on KMT party assets at the time of
the 2008 presidential election.


5. (C) The budget has to be passed by the LY, Yu stressed,
and he expressed hope that the LY will decide to convene a
special session at the end of January. The DPP and Taiwan
Solidarity Union (TSU) have already made a proposal, and the
decision whether or not to hold a special session will be
determined at a meeting on January 29. The ruling and
opposition parties have already reached a consensus on the
budget, including arms procurement, Yu said. In a press
conference just before his meeting with the Director, Yu
noted, he had pointed out that the PRC anti-satellite missile
test appeared timed to pressure Taiwan's LY as it considered
the arms procurement budget. Without LY approval of the 2007
budget, government spending continues at established levels.
Of the total NTD 70 billion in new spending that is currently
blocked by the 2007 budget impasse, 80 percent or NTD 54.7
billion is for arms procurement, according to Yu.

The DPP Primary Process
--------------


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6. (C) The DPP will hold primary balloting for legislative
and presidential candidates at the same time in May, Yu said.
The entire primary process will go through four stages:
registration, consultation, a vote by party members, and a
public opinion poll. Candidates will be selected through
consultation when possible. Otherwise, the vote will count
30 percent and the public opinion poll 70 percent in deciding
candidates. Yu did not believe he and other prospective
candidates should be required to leave office while running
in the primaries.

Constitutional Revision
--------------


7. (C) The Director conveyed the strong interest and concern
in Washington over DPP plans for constitutional revision,
especially those involving sensitive sovereignty issues in
the constitution's first six articles. Since constitutional
revisions cannot actually pass due to high thresholds,
officials in Washington are wondering why the DPP is pressing
issues that could raise questions about Taiwan's commitments
to the U.S. and potentially could stir cross-Strait tensions.


8. (C) The DPP understands that the U.S. is concerned about
the process as well as the results of constitutional
revision, Yu said. There is a distinction between personal
beliefs, party positions, and government policies, Yu
suggested. As a political party, the DPP has to stand for
its ideals or it will lose its supporters and therefore lose
to Ma Ying-jeou in the 2008 presidential election.


9. (C) In central and southern Taiwan, Yu said, the view is
common that the DPP has already lost its ideals. If the DPP
does not take steps to consolidate its base, the TSU and
former President Lee Teng-hui will increase influence and
divide the pan-Green. TSU candidates in the 2007 LY
elections could pose difficulties for DPP candidates. In the
recent Kaohsiung election, the DPP won because it turned the
election into a Green-Blue showdown. Although Chen Shui-bian
enjoys only 20-25 percent support, his campaigning in
Kaohsiung was essential to maintain support from the Deep
Green base and prevent its defection to the TSU. If the DPP
does not consolidate its base, the TSU will grow stronger and
run its own candidate in the 2008 presidential elections.
The reason why the TSU was not able to take advantage of DPP
weakness last year was because of DPP rhetoric that appealed
to the base. "The DPP talked louder than the TSU," Yu
observed. If the DPP had been overly moderate in trying to
appeal to middle voters, the TSU would be growing stronger
and posing a threat to the DPP. The DPP is essentially an
election campaign mechanism and does not lead the government,
Yu pointed out. The government, including President Chen and
Premier Su, have the responsibility to ensure that Taiwan
does not surprise or cause difficulties for the U.S.


10. (C) The Director pointed out that, while it is fine for
party members to hold democratic discussions, leaders
including Chairman Yu and President Chen have the
responsibility to draw a clear distinction between good and
bad ideas. It is very important that the constitutional
revision process be carried out in a way that avoids
sensitive sovereignty issues that can damage relations with
the U.S. and raise cross-Strait tensions. The U.S. does not
want to be put in a position where it would have to openly
criticize President Chen or other Taiwan leaders, the
Director stressed; such a development would be bad for both
Taiwan and the U.S.

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


11. (C) Yu understands our points on constitutional reform,
but is trying to establish a distinction between the party
and Chen government. He seemed a bit smug over the
difficulty the budget impasse places on his Blue counterpart,
Ma Ying-jeou. Though we counselled compromise with both
party leaders, there is still potential for a zero-sum
outcome in the LY that leaves Taiwan without the long-debated
arms procurement funds.


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