KMT CHAIRMAN WU ON DEFENSE BUDGET, PRESIDENTIAL

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000862

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/17/2032
TAGS: PGOV TW
SUBJECT: KMT CHAIRMAN WU ON DEFENSE BUDGET, PRESIDENTIAL
RACE


Classified By: Director Stephen M. Young, Reason(s): 1.4 (B/D).


1. (C) Summary: On April 16 the Director met with
recently-elected KMT Chairman Wu Po-hsiung to urge rapid
progress on the defense budget and to discuss the KMT's
strategy in advance of upcoming legislative and presidential
elections. Wu said the KMT is committed to passing a
responsible defense budget but still requires PFP cooperation
to do so. Wu blamed the current legislative deadlock over
the budget on the DPP's refusal to budge on reconfiguring the
Central Election Commission. The KMT will nominate former
Chairman Ma Ying-jeou to be the party's presidential
candidate, even if he is convicted after his first trial. Wu
said he plans to convince Legislative Speaker and Ma rival
Wang Jin-pyng to join Ma as his vice presidential candidate.
End Summary.


2. (C) KMT Chairman Wu Po-hsiung was elected KMT Chairman on
April 7 and assumed office on April 11. Born in 1939, Wu is
one of the KMT old guard and is widely considered to be a
stalwart ally of former KMT Chairman and current presidential
contender Ma Ying-jeou. Two other senior KMT officials
attended the meeting -- KMT Vice Chairman John Kuan (Chung)
(born 1940),and KMT policy adviser and former TECRO
representative Steven Chen (Hsi-fan) (born 1934). Wu told
the Director that prior to becoming Chairman, he had been
"virtually retired," occupying himself with religious charity
work and the like. Now, as Chairman, he was beginning to
feel the pressure of confronting the many challenges to the
party's future.


3. (C) The Director inquired whether the KMT under Wu's
leadership would pass the long-stalled defense budget,
including spending for P-3C antisubmarine aircraft,
Patriot-III anti-missile batteries, and a submarine
exploratory committee. Wu responded that the KMT regards the
U.S. as its most important political ally, and that when the
KMT was in power, it was able to reach strong consensus on
defense planning and spending. Now, as the main opposition
party, the KMT does not object to the defense budget itself,
Wu continued, but to the DPP's politicization of the defense
budget process. Vice Chairman Kuan repeated the old KMT saw
that the DPP should bear most of the blame for allowing three
years to lapse before it presented the defense budget package
to the LY for consideration. The Director rejected these
excuses, and urged Wu, Kuan and the KMT to act responsibly to
preserve Taiwan's military balance with the PRC.


4. (C) Wu observed that the KMT has linked passage of the
defense budget and other pending legislation to passage of a
bill to reform the Central Election Commission (CEC). Wu
asserted that the CEC is packed with pro-DPP partisans, and
the DPP leadership is using the CEC to push anti-KMT
referenda and other electoral tactics designed to favor the
DPP. According to Wu, the KMT wants to balance Blue-Green
membership on the CEC to prevent DPP "rigging" of elections,
but the legislature is deadlocked because the DPP refuses to
let go of its valuable "political tool."


5. (C) With the defeat of People First Party Chairman James
Soong in the December 2006 Taipei mayoral race, and the
continued decline of his party, asked the Director, does the
KMT still need PFP cooperation to pass the defense budget or
other legislation in the LY? Wu responded that, with ten
months left until the next LY election and with so many
important bills still pending, cooperation with the PFP
remains essential to maintain pan-Blue control of the LY. Wu
also made clear that the KMT leadership would not insert
itself directly into KMT LY caucus deliberations, which must
"be decided by the KMT caucus itself."


6. (C) With Ma Ying-jeou's corruption trial underway, the
Director asked how a possible conviction might affect Ma's
ability to remain the KMT's presidential candidate. Wu
stressed that Ma would remain the KMT's candidate under any
circumstances. Current KMT regulations bar those convicted
after the first trial from representing the party in any
election. If necessary, Wu continued, the KMT will amend the
party constitution to bar candidates from running only after
conviction in the third and final (appeals) trial. According

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to Wu, this would bring the KMT policy into line with the
more lenient election statute and with DPP party policy, both
of which impose a ban only after the third conviction.


7. (C) The criminal trial of Ma is politically motivated and
unfair, Wu argued. Five thousand public officials in Taiwan,
including Wu himself, had access to "special accounts" like
those involved in Ma's case. Stephen Chen remarked that for
the eight years while Ma was Taipei mayor, prosecutors had no
interest in his use of these special accounts. They had only
decided to file charges when his presidential campaign drew
near. The KMT cannot allow Ma to be forced out of the race
by such dubious charges, Wu argued. Although many do not see
Ma as the "most capable" politician, Wu continued, most of
the public still consider him to be the "cleanest." As long
as this opinion prevails, Ma will remain the KMT's
presidential candidate, even if he is convicted. If public
support for Ma drops below critical levels, Wu conceded, he
will have to be replaced. Wu lamented that the presidential
race is "very close," and remarked that the KMT's greatest
fear is an election-night surprise like the "two bullets"
which struck President Chen and Vice President Lu the evening
before the 2004 presidential election.


8. (C) Assuming Ma remains the KMT's presidential candidate,
the next step will be to persuade Legislative Yuan Speaker
and Ma rival Wang Jin-pyng to join Ma as his vice
presidential running mate. Wu explained that in fashioning
the KMT's presidential ticket, the party must respect Wang
and his power and position as LY Speaker. Wu told the
Director that he intended to ask Honorary Chairman Lien Chan
to broker a deal between Ma and Wang. Wang respects Lien and
his counsel, Wu continued, and "even Wang must recognize"
that he has little chance of running a presidential campaign
independent of the KMT. (Note: Lien departed Taiwan for
Beijing on April 16, in advance of an April 28-29 KMT-CCP
forum. End note.)

Comment
--------------


9. (C) In our meetings with Ma Ying-jeou when he was party
chairman, there was a clear sense that Ma was in charge, and
the other KMT members in attendance always deferred to him.
In contrast, Wu, Kuan, and Chen participated by turns in this
meeting, leaving the impression that Wu is more "the first
among equals" than a strong party leader. Wu's less
autocratic style may make it easier for him to cut deals, but
building consensus, rather than ruling by fiat, will take
time and effort and not necessarily be successful in all
cases. The biggest challenge faced by Wu and the KMT is to
find a way to placate Wang Jin-pyng and bring him aboard the
Ma bandwagon. We also note that Wu, Kuan, and Chen averaged
roughly seventy years of age, reflecting the decision of the
pan-Blue old guard to hang on to power in lieu of promoting a
younger generation of leaders. One wonders how this affects
morale in the party.
YOUNG