KMT VICE-CHAIRMAN JOHN KUAN ON KMT POLITICS, MA

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000275

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/02/2032
TAGS: PGOV TW
SUBJECT: KMT VICE-CHAIRMAN JOHN KUAN ON KMT POLITICS, MA
YING-JEOU

REF: A. TAIPEI 0028


B. TAIPEI 0216

C. TAIPEI 0257

Classified By: Acting Director Robert S. Wang,
Reason(s): 1.4 (B/D).


1. (C) Summary: The Kuomintang (KMT) expected to win the
Kaohsiung mayoral race, and attributes the loss to
underhanded DPP tactics on the eve of the election. Some KMT
view the loss as a blessing, however, because it revealed
that KMT Chairman Ma Ying-jeou's personal charisma isn't
enough to win every election. After stepping down as Taipei
mayor, Ma has spent most of his time working the political
grassroots. He does not intend to change the party name to
the "Taiwan KMT," and is not planning to alter current KMT
cross-Strait policy. Ma currently has no serious competition
for the KMT's 2008 presidential nomination, but his run would
be complicated if he is indicted for misuse of mayoral office
funds. The KMT will continue to hold the annual budget
hostage to force a DPP compromise on the Central Election
Commission. End Summary.

Kaohsiung Loss a Blessing in Disguise
--------------


2. (C) The Deputy Director met with KMT Vice-Chairman and
party strategist John Kuan (Kuan Chung) on January 29 to
discuss the current state of KMT politics. Noting that the
KMT had never doubted it would win the Taipei mayoral race,
Kuan acknowledged that the party also expected to win the
Kaohsiung mayoralty, though by a much smaller margin. The
DPP caused the KMT loss by manufacturing vote-buying
accusations against the KMT candidate in the last few days
before the election, Kuan charged, and "humiliated" the KMT
leadership. In the weeks since the election loss however,
party leaders have come to see the Kaohsiung defeat as a
blessing in disguise. The KMT electoral machinery had become
complacent, he explained, relying too much on KMT Chairman Ma
Ying-jeou's popularity and prestige to win races. Losing
Kaohsiung revealed that Ma's popularity has its limits,
especially in the south, and that the KMT will have to do
much more to ensure victory in 2008. At the same time, he
continued, the KMT lost in Kaohsiung by only about 1,200
votes, or 0.12 percent of the total vote. This is proof that
the KMT has gained considerable ground in the south, Kuan
maintained, since the KMT lost the 2004 presidential and
legislative elections in Kaohsiung by more than 100,000 votes.

Ma Busy Growing the Grassroots
--------------


3. (C) Kuan told the Deputy Director that since stepping down
as Taipei mayor on December 25, Chairman Ma has spent most of
his time cultivating the party's grassroots, in particular
meeting with city-level party officials island-wide. Voters
in the south are "emotional," Kuan explained, and candidates
must prove to be "one of them" before they can expect to
receive their votes. (Note: Kuan interjected that Ma had
made 18 visits to Kaohsiung in the last three weeks before
the election, but it had not been enough to win the majority
over to the KMT. End note.) After the Lunar New Year
holiday (February 19-22),Kuan said, Ma will concentrate on
meeting with party leaders in Taiwan's more rural areas. Ma
is even considering moving to Kaohsiung in the near future,
to become more familiar with and accessible to voters in the
south.

Possibility of Indictment Still Looms Large
--------------


4. (C) Ma and others in the KMT are taking seriously the
possibility that Ma could be indicted for allegedly misusing
his Taipei mayoral office expense accounts (see ref A). Kuan
insisted Ma would honor his promise to step down as chairman
if indicted, but would not necessarily give up on running for
president. Ma is proud of his reputation for integrity and
has been deeply hurt by these accusations, Kuan continued,
but if he succeeds in clearing his name in time, he intends
to stand for the party's presidential nomination. The

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consensus within the KMT, Kuan stressed, is that Ma is the
only KMT candidate capable of bridging the
Mainlander-Taiwanese gap, and is therefore the best candidate
to represent the party. Although LY Speaker Wang Jin-pyng
and others may appear capable of challenging Ma for the
nomination, Kuan confided, no one, including Wang, has the
power base or the financial resources to pull it off.

Allies but not Friends
--------------


5. (C) The relationship between Ma and Wang continues to be
poor, Kuan acknowledged. Realizing that Ma does not want him
as a vice-presidential running mate, Wang has resorted to
taking positions at variance with Ma in order to demonstrate
to Ma his usefulness and importance to the party. Kuan would
not rule out Ma offering Wang the vice-presidential spot,
since the two men "don't need to like each other to
cooperate." Kuan added two caveats: that "forming a
presidential ticket is more chemistry than mathematics" and
that the Ma-Wang relationship was unlikely to improve as the
presidential election comes nearer. Wang would also have
second thoughts about giving up the power he holds as LY
president to accept the relatively powerless
vice-presidential position.

No Change in Party Name, Cross-Strait Agenda
--------------


6. (C) Kuan told the Deputy Director that the recent furor
over Ma's supposed intention to change the party's name to
"Taiwan KMT" had been misplaced. According to Kuan, Ma was
just vague in responding to a question about whether the KMT
should change its name to "Taiwan KMT" to strengthen its
connections to Taiwan. In his reply, Ma suggested the
proposed change could be considered alongside other options.
Kuan insisted that Ma has never seriously considered changing
the name of the party, and the issue has since died down
within the party.


7. (C) Ma also has no plans to deviate from Lien's
cross-Strait agenda (see ref C). The PRC doesn't trust the
Chen administration, but does trust the KMT to some extent,
which opens possibilities for improving cross-Strait
relations. If and when the KMT returns to power, Kuan said,
it will acknowledge the "'92 Consensus" but will also push to
increase Taiwan's "international living space." The Taiwan
people, he said want to be represented and to participate in
international organizations, which the KMT will try to
fulfill. KMT leaders are optimistic that once in power, they
will be able to negotiate with Beijing access to
international organizations, and to preserve their current
number of diplomatic allies. PRC leaders will have no choice
but to make concessions, Kuan explained, otherwise, there
will be no way for the KMT to convince the Taiwan public to
support closer ties with China. What about military
procurement from the U.S., asked the Deputy Director, would
that continue? Kuan insisted that PRC objections to
U.S.-Taiwan arms procurement deals were merely pro forma, and
that China had no reason to object as long as it continued to
build up its military capability against Taiwan.

Holding the Budget Hostage
--------------


8. (C) Kuan told the Deputy Director that the LY failed to
reach a compromise on the annual budget because the DPP
refused to relinquish political control of the Central
Election Commission (CEC) (see ref B). The opposition KMT
only has one bargaining chip, Kuan argued, and that is to
hold the annual budget process hostage until the DPP agrees
to restructure the CEC according to party representation in
the LY. Voters might blame the KMT for being obstructionist,
Kuan acknowledged, but the DPP also looks bad for refusing to
"democratize" the CEC. Kuan made it clear that the KMT
intends to continue blocking the annual budget, including the
long-stalled U.S. arms procurement package, until the DPP
blinks on the CEC issue.

Neutralizing the PFP

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--------------


9. (C) Kuan told the Deputy Director that before the
December 2006 mayoral contests in Taipei and Kaohsiung, KMT
Honorary Chairman Lien Chan "pushed" Ma to settle differences
with PFP Chairman and then-Taipei mayoral candidate James
Soong. Lien advocated a KMT-PFP alliance to bring back into
the KMT fold those 15 or so PFP legislators who might cause
problems for the KMT in the December 2007 legislative
elections. Ma and Soong agreed to develop a mechanism to
jointly nominate PFP and KMT candidates for legislative
seats; however, Kuan revealed, the KMT will agree to replace
no more than five KMT candidates with PFP nominees. Soong
knows his party is very close to collapse, Kuan noted, which
explains why his latest remarks about cooperation have been
increasingly "friendly" to the KMT.
WANG