SEF CHAIRMAN SEES PROGRESS TOWARD RENEWED SEF-

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000565 SIPDIS SIPDIS STATE PASS USTR STATE FOR EAP/TC COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT TREASURY FOR OASIA/LMOGHTADER USTR FOR STRATFORD, ALTBACH E.O. 12958: DECL: 03/13/2017 TAGS: PREL PGOV ECON EINV CH TW SUBJECT: SEF CHAIRMAN SEES PROGRESS TOWARD RENEWED SEF- ARATS COMMUNICATION REF: TAIPEI 507 Classified By: AIT Director Stephen M. Young, Reason 1.4 d ¶1. (C) Summary: Straits Exchange Foundation (SEF) Chairman Chang Chun-hsiung told AIT that Beijing's decision to allow an SEF official to travel to China is an important breakthrough. Although President Chen's "four wants" speech may slow progress temporarily, he believes the two sides are on track to restore direct communication between SEF and its PRC counterpart, the Association for Relations across the Taiwan Strait (ARATS). On a political note, former DPP Secretary- General Chang noted that any of the leading Democratic Progressive Party (DPP) presidential candidates would be more competitive than the likely Kuomintang (KMT) candidates. He also believes former KMT Chairman Ma Ying-jeou and LY Speaker Wang Jin-pyng are unlikely to run on the same ticket. End summary. ¶2. (SBU) SEF Chairman Chang Chun-hsiung met with the AIT Director on March 13. Chang has been the Chairman of SEF since 2005 and is also a member of the Legislative Yuan. He served as Taiwan's Premier from October 2000 to January 2002. SEF Visit is a Cross-Strait Breakthrough -------------- ¶3. (C) Chang told the Director that Beijing's decision to permit Sun Chi-ming, the head of SEF's Travel Department, to visit Chengdu, China, March 1-6 to attend a travel fair was an important breakthrough in relations between SEF and its PRC counterpart, ARATS. Chang pointed out that no SEF official had been permitted to travel to China since 1999. He acknowledged that further progress would likely be delayed because of President Chen Shui- bian's provocative speech to the Formosa Association for Public Affairs (FAPA),in which he announced his "four wants." However, Chang believes the two sides are still on track to resume direct communication between SEF and ARATS. ¶4. (C) Chang emphasized that this was an important priority for Taiwan, noting the high volume of investment in the PRC by Taiwan firms and the growing number of Taiwan travelers to the Mainland. He argued that it was important for China as well, highlighting the bus accident involving 39 PRC tourists that occurred in Taiwan in October 2006. Commenting on the criticism from the PRC Taiwan Affairs Office (TAO) after Chen's speech, Chang said that even though TAO regurgitated its usual charges against Taiwan independence, it saved its most sincere language to emphasize the importance of peace in the Taiwan Strait. ¶5. (C) On the visit of TAO Economic Director He Shizhong to Taiwan last week, Chang said that SEF had expressed its goodwill toward the visit but had no direct contact with Mr. He. Mainland Affairs Council (MAC) Vice Chairman Michael Y.L. You, who attended the meeting in his capacity as SEF Vice Chairman, said MAC had not had direct contact with Mr. He either. You explained that Mr. He had met with Taiwan industry associations during the visit. When the Director asked if TAO Director Chen Yunlin might visit Taiwan soon, You said that if TAO's Chen is willing to meet with officials, he can come. The Director also asked Chang if he wanted to visit China. Chang replied that he anticipated gradual progress in SEF-ARATS communications, but that a meeting of chairmen would be too complicated at this time. Besides, as far as he knew, China has yet to announce a replacement for former ARATS Chairman Wang Daohan, who passed away two years ago. ¶6. (C) Chang did not have much to say on the progress of cross-Strait tourism discussions. He noted that negotiations are continuing, but was unable to say when they might reach an agreement. TAIPEI 00000565 002 OF 002 DPP Candidates All Better Than KMT Competition -------------- - ¶7. (C) When the Director asked about the DPP presidential nomination process, former DPP Secretary-General Chang asserted that any of the four DPP candidates would be better candidates than their likely KMT opponents and would be more competitive in the general election. The confident Chang speculated that securing the party's nomination would be a bigger challenge for the DPP nominee than the general election. He noted that it would be difficult for President Chen to play a decisive role in this process since he has been weakened politically by the scandals involving his family. He also speculated that whoever is chosen as the DPP nominee will become a likely target for investigation on the use of special funds accounts. Chang pointed out that many Taiwan politicians would probably be found guilty of improper usage of funds if investigated and charged, just as former KTM Chairman Ma Ying-jeou has been. He noted that when he was Premier, he did not concern himself with the regulations for usage of these types of funds and let his subordinates manage them. ¶8. (C) Chang told the Director that it was unlikely that Ma and Legislative Yuan Speaker Wang Jin-pyng would run in the presidential election on the same ticket because they do not get along. He underscored the fact that Wang continued to pursue the party's presidential nomination even though he had lost the election for party chairman so decisively in 2005. However, Chang noted that Ma's edge over Wang was smaller among the public at large than within the KMT. He also pointed out that Ma had lost support within the KMT after it lost the election in Kaohsiung. Finally, Chang expressed confidence that the vote recount underway in Kaohsiung would not reverse the election results. ¶9. (C) Comment: AIT concurs with Chang's assessment that the visit of an SEF official to China is an important breakthrough. However, Chang may be overly optimistic on the prospects for further progress. (He may also be overly optimistic about DPP presidential election prospects.) Investment and travel patterns suggest that Taiwan's interests in restoring SEF-ARATS communication could be stronger than China's. If the process depends on goodwill from Beijing, it could easily be derailed. The fallout from President Chen's "four wants" speech is only the most recent example of the kind of obstacle that could disrupt progress. YOUNG