MORE MAC PESSIMISM ON CROSS-STRAIT INITIATIVES

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000985

SIPDIS

SIPDIS

STATE PASS USTR
STATE FOR EAP/TC
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN/MCHOI
TREASURY FOR OASIA/LMOGHTADER
USTR FOR STRATFORD, ALTBACH

E.O. 12958: DECL: 05/01/2017
TAGS: ECON PREL PGOV PINR EAIR CH TW
SUBJECT: MORE MAC PESSIMISM ON CROSS-STRAIT INITIATIVES

REF: TAIPEI 930

Classified By: AIT Director Stephen M. Young, Reason 1.4 b/d


1. (C) Summary: In a May 1, 2007 meeting with AIT,
Mainland Affairs Council (MAC) Chief Secretary Jan Jyh-
horng expressed pessimism about the likelihood of cross-
Strait agreements on charter flights and tourism during
the remaining thirteen months of the Chen administration.
He further told AIT that the appointment of Chen Ming-
tong as the new MAC Chairman has had a negative impact on
prospects for the two initiatives. He also explained
that Taiwan's principal objection to the Olympic torch
route announcement by Beijing on April 26 was the
nomenclature used for Taiwan rather than the path the
torch would take. Jan's comments suggest that either the
Chen Shui-bian administration has given up hope on
reaching agreement with China on charter flights and
tourism, or that the appointment of Chen Ming-tong as MAC
Chairman reflects a decision to signal a less cooperative
approach to cross-Strait relations, or both. End
summary.

Charter Flights and Tourism Agreements Unlikely
-------------- --


2. (C) MAC Chief Secretary Jan Jyh-horng told AIT on May
1, 2007, that he sees little possibility in the short
term for progress in cross-Strait discussions on weekend
passenger and cargo charter flights and further opening
of Taiwan to PRC tourists. In AIT Director Young's
meeting with MAC Chairman Chen Ming-tong a week earlier,
Chen speculated that the two sides would need to reach
agreement on these initiatives before late July.
Otherwise, intensified campaigning in advance of
legislative and presidential elections would likely
preclude any cross-Strait agreement for the rest of
President Chen Shui-bian's final term (reftel). When
asked about Chairman Chen's hypothetical late-July
deadline, Jan said he was pessimistic that an agreement
would be concluded before then.


3. (C) Jan attributed his pessimism in part to the highly
partisan political atmosphere in Taiwan in the run up to
legislative and presidential elections in late 2007 and
early 2008. He noted that Taiwan President Chen Shui-
bian and Premier Su Tseng-chang's harsh criticisms of the
Kuomintang (KMT)-Chinese Communist Party (CCP) Economic
Forum that concluded in Beijing on April 29 should be
understood in the context of election politics. The Chen
administration's reaction to the previous two KMT-CCP
forums, Jan pointed out, had been more restrained. He
explained that the administration's response had also
been exacerbated by the perception that Beijing is using
the new national association of Taiwan investors in China
to generate political support for the KMT.


4. (C) Jan also cast blame on Beijing for the failure to
reach agreement on the charter and tourism initiatives.
The statement at the KMT-CCP forum by Jia Qinglin,
Chairman of the PRC Chinese People's Political
Consultative Conference, that cross-Strait tourism is not
an issue that should be handled "state to state," Jan
explained, had deeply offended the Chen administration.
Beijing, he continued, had earlier set similarly
unrealistic preconditions that blocked conclusion of a
tourism agreement. During the fourth round of tourism
consultations in Macao on January 27, 2007, he said,
Beijing had surprised the Taiwan negotiators by
presenting a draft text. The document was to be signed
by the civilian organizations assigned to lead the
negotiations but omitted any mention of government
authorization to enter into an agreement. In addition,
that text referred to Taiwan as "China Taiwan" (Zhongguo
Taiwan),a name unacceptable to the Taiwan authorities.
Jan explained that Taiwan insists the tourism agreement
should be similar to the Taiwan-Hong Kong aviation
agreement. That document was signed by aviation industry
organizations but specifically noted that they had been

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authorized by their respective governments to enter into
the agreement. The January 27 meeting, he assessed, had
marked a turning point in cross-Strait negotiations that
has resulted in the current stalemate.

New MAC Chairman a Setback
--------------


5. (C) Jan Jyh-horng told AIT that he believes the
appointment of Chen Ming-tong as the new MAC Chairman may
have exacerbated the stalemate. He noted that the "name
rectification" campaign to remove "China" references from
the names of official and state-owned entities and
proposals for a new "second Republic of China"
constitution had surprised Beijing and made it less
willing to deal with the Chen administration. The
appointment of Chen Ming-tong, one of the drafters and a
vocal proponent of the second republic constitution, as
MAC Chairman had worsened the situation. The PRC was
unlikely to allow Chen Ming-tong to take credit for a
cross-Strait agreement. Jan noted that China had been
unwilling to deal with the previous MAC Chairman, Joseph
Wu, for the first two years of his tenure, 2004-2005. It
was only after the PRC authorities had time to see Wu in
action and decided they could deal with him that they
began to work more cooperatively with MAC, Jan observed.

Olympic Torch - Nomenclature More Problematic Than Route
-------------- --------------


6. (C) When asked about Taiwan's rejection of the PRC's
proposed route for the 2008 Olympic torch to pass through
Taiwan, Jan explained that the Beijing Olympic Games
Organizing Committee's use of the nomenclature "China
Taipei" (Zhongguo Taibei) in all of its publications and
website was more problematic for Taiwan authorities than
the route of the torch. Beijing, he explained, had
consciously violated a 1989 agreement signed by the
Chinese Olympic Committee and Taiwan's Chinese Taipei
Olympic Committee by consistently referring to Taiwan as
"China Taipei" instead of the agreed "Chinese Taipei"
(Zhonghua Taibei). Taiwan, he said, had repeatedly
complained about this usage but to no avail. On Friday,
April 27, however, the night Taiwan rejected the PRC's
Olympic torch proposal, the Beijing Olympic Committee's
website replaced some (but not all) of the references to
"China Taipei" with "Chinese Taipei," Jan noted. He
surmised this might indicate some flexibility on the part
of Beijing regarding the torch and nomenclature issues.
He believes China is eager to include Taiwan in the relay
as a goodwill gesture to the people of Taiwan. Although
reluctant to speculate, Jan also said he believed the
Taiwan authorities might accept Beijing's proposed route
if it agrees to consistently use the "Chinese Taipei"
nomenclature. He stressed that Beijing would not go so
far as to consider Taiwan's preferred route in which the
torch would both enter and exit Taiwan from a third
territory.

No Cross-Strait Honeymoon After Election
--------------


7. (C) Jan predicted a cool period in cross-Strait
relations after next year's presidential elections
regardless of which party wins. Beijing, he said, has a
fairly favorable opinion of Frank Hsieh, one of the DPP
front-runners, but it will want to wait to see how he
governs before moving forward with closer cross-Strait
cooperation if Hsieh wins. Noting Ma Ying-jeou's
reputation as a strong opponent to communism, Jan
similarly argued that China would want to see how Ma acts
as President if he wins. However, Jan believed that this
period of observation imposed by Beijing would be shorter
for a KMT President than a DPP one.

KMT-CCP Forum Offers Little to Work With
--------------


8. (C) Jan dismissed the possibility that Taiwan could

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act on any of the announced proposals from the KMT-CCP
Economic Forum in Beijing. On China's offer to permit
Taiwan firms to invest in wholly-owned shipping companies
and to operate highways and ports in China, Jan argued
that these measures would face stiff opposition from
Chinese firms that see Taiwan investors as unwelcome
competition. Jan acknowledged that some in Taiwan
believe China's offer to permit Chinese students to
enroll in Taiwan universities might be the answer to
excess capacity in Taiwan's higher education system. But
he argued that Chinese students would be reluctant to pay
Taiwan university fees to enroll in some of Taiwan's less
competitive schools, which suffer most from the shortfall
of students.

Comment - A New Course?
--------------


9. (C) Jan's pessimism on charter flight and tourism
discussions suggests the Chen administration may have
given up hope that an agreement with China is within
reach. In this light, the somewhat controversial
appointment of Chen Ming-tong as MAC Chairman could be
seen as a signal of Taiwan's unwillingness to compromise
any further on these issues. Jan's observations on
Chen's appointment suggest that senior Taiwan officials
must have known it would likely have a negative impact on
cross-Strait relations and may even have made a decision
to follow such a course.


10. (C) As we entered Jan's office for the meeting, his
walls were bare and his shelves emptied of his stacks of
books and files. The new Chairman, he explained, had
decided to select his own Chief Secretary and Jan would
move to a new as yet undetermined position. Jan is a
knowledgeable and politically objective MAC insider, who
has been with the agency since it was established in

1991. While dissatisfaction with his sudden replacement
may have colored Jan's characterization of Chen Ming-
tong's appointment, his dismissal as Chief Secretary
probably does not bode well for the Chairman's cross-
Strait intentions. Jan's replacement may, in fact,
corroborate the above early indications that the Chen
administration has chosen to take cross-Strait relations
in a different direction during its final thirteen
months.
YOUNG