AIRLINE NEGOTIATOR BLAMES TAIWAN FOR SLOW

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000838 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: 04/13/2017 TAGS: EAIR ECON PREL CH TW SUBJECT: AIRLINE NEGOTIATOR BLAMES TAIWAN FOR SLOW PROGRESS IN CHARTER FLIGHT DISCUSSIONS REF: A. TAIPEI 673 ¶B. TAIPEI 609 Classified By: AIT Director Stephen M. Young, Reason 1.4 d ¶1. (C) Summary: Taipei Airlines Association (TAA) Chairman Tony C.C. Fan blamed Taiwan delay tactics for the failure to reach an agreement on cross-Strait charter flights. He believes that the Chen administration might be trying to delay an agreement until after the presidential primary to preserve support from the Deep Green pro-independence base. He also speculated that a high-profile announcement on tourism and charter flights at the Kuomintang (KMT)-Chinese Communist Party (CCP) Economic Forum in late April could signal the PRC's unwillingness to reach a deal with the Chen administration in its last thirteen months in office. Fan's comments differ from what we've heard from Mainland Affairs Council (MAC) senior officials. His opinions could be colored by his political views. End summary. Taiwan to Blame for Delay -------------- ¶2. (C) TAA Chairman Tony C.C. Fan, who is also chairman of TransAsia Airways, told AIT on April 12 that there has been no progress recently in cross-Strait discussions on implementing daily cargo and weekend passenger charter flights. As chairman of the industry association, Fan nominally leads the negotiations for Taiwan acting under instructions from the Mainland Affairs Council. In contrast to comments from MAC officials (refs A and B), Fan blamed the Taiwan side for the delay. Fan said that some of the conditions that Taiwan had recently set gave him the impression that the Chen administration was intentionally trying to hold up the discussions. He explained that he had been instructed to request additional cargo flights. According to Fan, most parties agree that it is more important to just get the flights started. The number of flights can easily be increased after a deal has been implemented. Fan also cited a demand put forward by Taiwan in tourism discussions, which he noted the PRC had tied to successful conclusion of charter flight discussions. Fan said that Taiwan had proposed that PRC tourists to Taiwan be issued Taiwan entry-permits in their PRC passports. He believes that Taiwan officials know this to be absolutely unacceptable to Beijing and proposed it only to delay the negotiations. Waiting Until After Presidential Primary -------------- ¶3. (C) Fan suspects the Chen administration is trying to delay an agreement until after a Democratic Progressive Party (DPP) presidential candidate is chosen in June. He surmised that the administration might want to temporarily preserve support from the Deep Green, pro- independence base, which, according to Fan, composes about 15 percent of the electorate but about one third of the DPP voters. After a candidate is chosen in late May, the administration might then be willing to move forward with a charter flight deal, which would cultivate support among the large body of Taiwan's centrist voters. Although this approach would appear to favor Premier Su Tseng-chang, Fan would not speculate that Su was driving SIPDIS such a strategy. He did, however, point out that the perceived delay tactics began about the time that Chiou I-jen took over as Secretary General of the Presidential Office. KMT-CCP Economic Forum Will Send Signal -------------- ¶4. (C) Pointing to the April 28-29 KMT-CCP Economic Forum in Beijing, and KMT Honorary Chairman Lien Chan's participation, Fan speculated that the two parties might try to reach agreement on some of the above issues. The Chen administration, he explained, was concerned about this possibility and had instructed him to tell his PRC counterparts that the KMT-CCP forum should not include discussion of the tourism and charter flights TAIPEI 00000838 002 OF 002 initiatives. If the KMT tries to take credit for the initiatives at the forum, Fan explained, the DPP administration will be forced to reject a deal. He conjectured that a high-profile KMT and CCP announcement on tourism and charter flights at the Beijing forum would indicate that Beijing is not willing to make a deal with the DPP administration. That, in turn, would signal there would not be any deal under the current administration, Fan concluded. Comment - Outlook Gloomy -------------- ¶5. (C) Fan's analysis of who is to blame for delay is directly at odds with the comments of MAC Chief Secretary Jan Jyr-horng to us on March 22, as well as MAC Chairman Joseph Wu's repeated insistence to the Director that Taiwan is ready and willing and it is Beijing that is holding up an agreement. Fan has never expressed a political affiliation to us before, but he has frequently voiced strong frustration with policies of the Chen administration. His political views may color his opinions on the state of cross-Strait charter flight discussions and who is to blame for delay. Nevertheless, both Fan and MAC's Jan agree that the pace of discussions has slowed, the late April KMT-CCP meeting could worsen the situation, and the outlook for an agreement is not good. YOUNG