Identifier
Created
Classification
Origin
07TAIPEI1950
2007-08-24 10:34:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

PREMIER CHANG ON DEFENSE BUDGET, CROSS-STRAIT

Tags:  PGOV TW 
pdf how-to read a cable
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DE RUEHIN #1950/01 2361034
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O 241034Z AUG 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6528
INFO RUEHBJ/AMEMBASSY BEIJING 7165
RUEHUL/AMEMBASSY SEOUL 8847
RUEHKO/AMEMBASSY TOKYO 9011
RUEHCN/AMCONSUL CHENGDU 2053
RUEHGZ/AMCONSUL GUANGZHOU 0490
RUEHHK/AMCONSUL HONG KONG 8420
RUEHGH/AMCONSUL SHANGHAI 1305
RUEHSH/AMCONSUL SHENYANG 6022
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI
C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001950 

SIPDIS

SIPDIS

E.O. 12958: DECL: 6/15/2032
TAGS: PGOV TW
SUBJECT: PREMIER CHANG ON DEFENSE BUDGET, CROSS-STRAIT
RELATIONS, AND DPP POLITICS


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

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001950

SIPDIS

SIPDIS

E.O. 12958: DECL: 6/15/2032
TAGS: PGOV TW
SUBJECT: PREMIER CHANG ON DEFENSE BUDGET, CROSS-STRAIT
RELATIONS, AND DPP POLITICS


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


1. (C) Summary: Premier Chang told the Director on August
23 that the proposed 2008 defense budget raises defense
spending to 3 percent of GDP and is important for Taiwan.
Chang said Taiwan continues to work on the expansion of
charter flights across the Taiwan strait and the lifting of
restrictions on PRC tourists to Taiwan, but assessed that
Beijing would be unlikely to compromise on these issues in an
election year. The formation of the Hsieh-Su presidential
ticket will help the DPP to restore party unity and has
greater appeal than a Hsieh-Yeh ticket would. In an aside,
one-on-one conversation, the Director emphasized the on-going
U.S. opposition to President Chen's UN referendum. He also
underscored that the "normal country" resolution currently
being debated within the DPP, possible constitutional
changes, and the tabling of a defensive referendum remain
areas of U.S. concern. The Premier assured the Director that
the latter three issues would not gain much traction, but
emphasized that the consensus to pursue the UN referendum was
quite strong within the party and Taiwan society as a whole.
End Summary.


2. () In a meeting with Premier Chang Chun-hsiung on
August 23, the Director commended the Premier for putting
together a 2008 annual budget that raises Taiwan's defense
spending as a proportion of GDP to 3 percent. The Director
noted that this is a strong sign to the U.S. of Taiwan's
determination to boost its defenses. The Premier responded
that he had personally insisted on meeting the 3 percent
level, noting it was important for Taiwan.


3. (C) Chang told the Director that Taiwan continues to
discuss with Beijing the expansion of charter flights across
the Taiwan strait and the lifting of restrictions on PRC
tourists to Taiwan. Chang said the administration has also
made clear to Beijing Taiwan's position on the Olympic torch
route and nomenclature, but so far he is uncertain of
reaching a resolution. Chang acknowledged, however, that
Beijing would be unlikely to compromise with the DPP
administration on these issues in an election year. Noting
that Beijing now has a more sophisticated approach to dealing

with Taiwan than in the past, Chang believes China is
unlikely to interfere in Taiwan's domestic politics in a way
that would advantage the DPP presidential candidate or stoke
anti-China sentiment among Taiwan's voters.


4. (C) Turning to discuss domestic politics, Chang said the
"external" situation in 2008 favors the DPP as it did in 2000
and 2004. This time around, however, the party underwent a
fierce internal competition to produce its presidential
candidate and the resulting fissures will take time to heal.
The formation of the Frank Hsieh (Chang-ting)-Su Tseng-chang
ticket will help to restore party unity and appeal more
widely to voters than Hsieh's initial plan to team up with
now Presidential Office Secretary-General Yeh Chu-lan. While
the Hsieh-Su match is progress, Chang suggested the DPP
leadership still has to do more to unify the party and
prepare for the upcoming presidential and legislative
elections.


5. (C) Yeh's agreement to continue to work for the Hsieh
campaign will help the DPP keep its share of Hakka
supporters, Chang asserted. The DPP will also have to work
with its pan-Green partner, the Taiwan Solidarity Union
(TSU),to try to field only one Green candidate per district
to maximize the pan-Green seats in the next legislature.
Chang noted that he was still holding some positions in his
cabinet open in the hope of bringing TSU members into the
fold and boosting the prospects for cooperation. Chang
emphasized that failing to reach a compromise with the TSU
could have a negative effect on the DPP's prospects in the
legislative races, but would have no effect on the
presidential race. (Comment: TSU Legislator Lai Hsing-yuan,
however, told AIT separately on August 24 that this
coordination effort has completely fallen through, and that
the TSU is moving to nominate a full slate of legislative
candidates. Unless the DPP bends and either allots some
seats to TSU candidates or, more likely, buys them off with

TAIPEI 00001950 002 OF 002


job offers, Lai told AIT, the DPP could end up with less than
35 of the 75 LY district seats. End Comment.)

Director's one-on-one with the Premier
--------------


6. (C) In an aside, one-on-one conversation, the Director
emphasized the on-going U.S. opposition to President Chen's
UN referendum, which AIT has clearly communicated to Chen and
other DPP leaders. The Director also underscored that the
U.S. is concerned by other initiatives proposed by DPP
Chairman Yu Shyi-kun and others within the DPP that could
further damage an already fragile bilateral relationship.
The Director specifically mentioned the "normal country"
resolution currently being debated within the DPP, possible
constitutional changes, and the tabling of a defensive
referendum as areas of U.S. concern.


7. (C) Chang explained that Chairman Yu has been
aggressively pushing these initiatives, but had failed to
forge unity within the party on them. Yu is increasingly
isolated within the party because of these initiatives and
his poor performance in general, Chang said, predicting that
as a result Yu was unlikely to remain party Chairman through
to the elections. The Premier assured the Director that the
"normal country" resolution, constitutional change, or a
defensive referendum would not be approved by the party in
the remaining months of the Chen administration.
Nevertheless, he said the U.S. needs to understand that in an
election year there will be a certain amount of rhetoric on
such subjects and that the consensus to pursue the UN
referendum was quite strong within the party and Taiwan
society.
YOUNG