SEF CHAIRMAN HONG ON UN REFERENDUM, CROSS-STRAIT

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 002014

SIPDIS

SIPDIS

E.O. 12958: DECL: 6/15/2032
TAGS: PGOV TW
SUBJECT: SEF CHAIRMAN HONG ON UN REFERENDUM, CROSS-STRAIT
RELATIONS, AND DOMESTIC POLITICS


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


1. (C) Summary: Straits Exchange Foundation Chairman Hong
Chi-chang told the Acting Director on August 30 that Taiwan
clearly understands the US position on the UN referendum.
Most people on Taiwan, nevertheless, believe the island has
the right to be a normal member of the international
community, something that even the opposition KMT supports.
The Acting Director emphasized that the U.S. remains a strong
friend of Taiwan, but views the UN referendum being pushed by
President Chen as an "unnecessarily provocative" move. Hong
explained that President Chen's number one goal is to keep
the DPP in power, calculating that such an issue will garner
votes for the DPP. Hong underscored to the Acting Director
that U.S. public opposition to the referendum is playing into
domestic politics by serving as an "external stimulus" for
the DPP to use to mobilize society ahead of the upcoming
legislative and presidential elections. Hong, nevertheless,
assessed that the UN referendum is likely to fail because of
the high bar for referendum passage and the fact that
competing UN referenda by the DPP and KMT will split voters
along party lines. Hong suggested that despite recent
tensions, Taiwan leaders will be "responsible" when dealing
with cross-Strait issues. He confirmed recent press reports
that Taiwan may be close to an agreement with the PRC on the
route of the Olympic torch through Taiwan. Turning to the
presidential race, Hong said that the DPP and KMT have
fielded two potentially strong teams. The race remains too
close to call, despite KMT presidential candidate Ma
Ying-jeou's lead in most polls. End Summary.

Despite UN Referendum "Troubles"...
--------------


2. (C) Straits Exchange Foundation (SEF) Chairman Hong
Chi-chang, a heavyweight legislator and former DPP New Tide
faction leader, told the Acting Director on August 30 that
Taiwan clearly understands the US position on the UN
referendum. Both sides have already expressed their views on
the issue, but most people on Taiwan nevertheless believe the
island has the right to be a normal member of the
international community, something that even the opposition
Kuomintang (KMT) supports. Hong explained that the dilemma
is that democratic development has created a growing "Taiwan
consciousness" at the same time that the space for Taiwan's
participation in the international community has shrunk as a
result of pressure from China. A democratic Taiwan surely
conforms to U.S. interests in the region, and he hoped the
two sides can work through the issue.


3. (C) The Acting Director emphasized to Hong that the U.S.
remains a strong friend of Taiwan, but sees the UN referendum
being pushed by President Chen as an "unnecessarily
provocative" move. The referendum, whether it passes or
fails, will have no impact on Taiwan's international status,
but risks escalating tensions across the Taiwan strait, added
the Acting Director. Hong responded that as an appointee to
a semi-government association, he understands and supports
his government's position. He suggested that Taiwan could
have chosen other less controversial approaches to building
support for its meaningful participation in international
organizations. However, the choice to proceed on the UN
issue has already been made and there is "no going back" for
Taiwan.


4. (C) Hong said that Taiwan leaders are not naive enough
to believe that passing a referendum will change Taiwan's
international status. He explained that President Chen's
number one goal is to keep the DPP in power and Chen
calculates that pushing popular issues such as UN entry and
referendum will garner votes for the DPP. Even the KMT has
had to respond to this strategy by launching its own UN
referendum campaign. Therefore, on the surface the UN issue
appears to be an international issue, but the driver is
domestic politics. Hong assessed that, moreover, the UN
referendum is likely to fail because of the high bar for
referendum passage and the fact that competing referenda by
the DPP and KMT will split the voters along party lines.


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Taiwan to Be "Responsible" on Cross-Strait Issues
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5. (C) Hong suggested that despite the tensions created by
the UN referendum, Taiwan's leaders will be "responsible"
when dealing with cross-Strait issues. Hong hoped the U.S.
would continue to play a strong role in the region, helping
to stabilize cross-Strait relations. Hong said he has told
his friends in China not to be concerned about the UN issue.
He has urged them to prepare for finding ways to advance
relations next year. He was optimistic that after the
elections the two sides can make progress on the economic
front, noting that discussions of political issues can be put
off another 40-50 years. Beijing is primarily focused on
driving economic development and China for now is content
with the current status quo as long Taiwan does not create
disturbances. Taiwan and China lack a direct mechanism for
communication, hindering negotiations and exchanges between
the two sides. Hong said he took the SEF job with the hope
that after the 2008 election the two sides can revive
institutions such as the SEF as vehicles of communication.


6. (C) Hong confirmed recent press reports that Taiwan may
be close to an agreement with the PRC on the route of the
Olympic torch through Taiwan. He said that Taiwan has agreed
that the torch could go directly from Taiwan to Hong Kong
(and then to Macao) as long as there is agreement on the
description of the route that would not explicitly include
wording that indicates that Taiwan is part of China. He said
a carefully drafted text is now being considered by Beijing
and he appeared hopeful that this would do the trick.

US Opposition Driving Support for DPP?
--------------


7. (C) Hong underscored to the Acting Director that U.S.
public opposition to the UN referendum is strongly playing
into domestic politics. A psychologist by profession, Hong
noted that the DPP had in previous presidential elections
tapped into a growing Taiwan collective consciousness by
pushing identity-related issues to energize supporters and
garner votes. The repeated use of such tactics have had
diminishing marginal returns and in 2008, barring an external
stimulus, will probably have an even weaker effect. Although
China had "learned its lesson" about overreacting to Taiwan
domestic politics in an election year, Hong said that U.S.
opposition to the UN bid is however serving as that outside
stimulus. He suggested that once UNGA meets in September the
UN question would not be as prominent in the campaign because
the DPP cannot run on a one-issue agenda but will begin to
introduce other themes. (Note: Corey Chen (Chien-chung),DPP
presidential candidate Frank Hsieh campaign strategist, told
AIT on August 31 that the UN referendum is only giving Hsieh
a marginal boost. He suggested that President Chen's
strategy of portraying the U.S. as close to China in
suppressing Taiwan is risky and could backfire, reducing
support from moderate voters for Hsieh.)

Presidential Race Will Go to the Wire
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8. (C) Turning to an analysis of the presidential race,
Hong said that the DPP and KMT have fielded two potentially
strong teams and the race remains too close to call, despite
KMT presidential candidate Ma Ying-jeou's lead in most polls.
Hong said DPP presidential candidate Frank Hsieh
(Chang-ting) and Ma do not differ much on substantive
policies. Hsieh's first challenge is unifying his forces
with those of his running mate, former Premier Su
Tseng-chang, and coordinating with the DPP party

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headquarters. The party machinery is not operating smoothly
and has been a hindrance, rather than a help, to Hsieh.
President Chen's policies in the coming months will also be
crucial for giving Hsieh added momentum during the campaign.


9. (C) Hong asserted that overall the Hsieh-Su ticket has a
stronger leadership record than the KMT team of Ma and former
Premier Vincent Siew. Ma enjoys a clean image, which his
corruption trial has failed to mar, but he is still seen as a

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weak and indecisive leader. Siew could help Ma's prospects
by garnering support from the business community, but Siew is
not a strong campaigner, having failed to cultivate and
maintain local political ties in Chia-yi, his hometown, and
central Taiwan. Ma also faces the challenge of maintaining
good relations with LY President Wang Jin-pyng, whose
influence may affect how much support the KMT garners in the
south. Commenting generally on the KMT, Hong said their
greatest weakness is that they have failed to cultivate a
younger generation of leaders. The current leadership is
"basically the same" as it was in 2000, Hong commented.
WANG