TAIWAN: CONTACTS PREDICT KMT VICTORY, DEFEAT OF

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001038

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/19/2033
TAGS: PREL MARR MOPS CH TW
SUBJECT: TAIWAN: CONTACTS PREDICT KMT VICTORY, DEFEAT OF
DPP REFERENDUM, DIFFER OVER LIKELY PRC RESPONSE

REF: BEIJING 959 AND PREVIOUS

Classified By: Political Minister Counselor Aubrey Carlson.
Reasons 1.4 (b) and (d).

Summary
--------------


1. (C) Three days before Taiwan's March 22 presidential
election and vote on competing referenda concerning Taiwan's
participation in the UN, Embassy contacts continue to predict
a victory for the KMT's Ma Ying-jeou and defeat of the two
referenda. Opinions continue to diverge, however, over
Beijing's likely reaction in the event the DPP-sponsored
referendum passes (reftel). Two contacts cautioned that the
referendum's passage would elicit a "strong" PRC reaction.
According to another scholar, however, although the DPP
referendum's passage alone would likely cause a "rhetorical
crisis," there is virtually no chance of it leading to PRC
military action. The key to Beijing's response, this scholar
argued, will be how Taiwan leaders interpret any passed
referendum. Scholars also expressed concern over the
possible passage of the KMT's competing referendum on UN
membership. In the aftermath of a probable Ma Ying-jeou
victory, contacts predicted cross-Strait relations would
improve but played down prospects for a dramatic
breakthrough. End Summary.

Ma Likely to Win, Referenda to Fail
--------------


2. (C) As Taiwan's March 22 presidential election and vote on
referenda concerning Taiwan's participation in the UN draw
near, Embassy contacts continue to predict a victory for the
KMT's Ma Ying-jeou and defeat of the two competing referenda.
Cao Huayin (strictly protect),Deputy Secretary General of
the China Reform Forum (CRF) think tank, told PolOff on March
18 that it is "almost certain" that Ma Ying-jeou will win the
election and that the two referenda will fail. Frank Hsieh's
last-minute politicking and the Tibet issue appear to be
narrowing the race, but neither appears sufficient to swing
the election in favor of the DPP, Cao stated. Well-connected
journalist Chen Jieren (strictly protect) expressed a similar
view on March 17, finding it "highly unlikely" that the
DPP-sponsored referendum would pass, given that "even Frank
Hsieh," the DPP presidential candidate, "doesn't really want"
the referendum to succeed.


3. (C) Xu Shiquan (protect),Chairman of the National Society
of Taiwan Studies and former Director of the Chinese Academy
of Social Sciences (CASS) Institute of Taiwan Studies, told
PolOff on March 17 that he saw "virtually no chance" for the
DPP's UN referendum to pass, though he was concerned about
the prospects for the KMT-sponsored referendum (see para 7
below). Regarding the presidential race, Xu said two
Mainland pollsters he trusts on Taiwan both predict a Ma
Ying-jeou victory. One pollster assesses that, at a minimum,
Ma will garner 53 percent of the vote, while Hsieh will get
no more than 47 percent. The other pollster, who Xu said has
been quite accurate in the past, has it at 61-39 for Ma. Xu
predicted that Ma would win by seven to eight percentage
points. He found it more likely that Ma would win by a huge
margin of 20 points or more than it would be for Frank Hsieh
pull out a victory.

Surprise Factor?
--------------


4. (C) Xu Shiquan said he expects the DPP's Frank Hsieh to
"try some tricks" this week before the election, much as he
and his supporters reportedly did in the Kaohsiung mayoral
race a few years back when they falsely claimed that the KMT
was paying 500 New Taiwan Dollars for votes on election day.
Xu assessed, however, that the KMT had inoculated the Taiwan
electorate to such moves by repeatedly warning of expected
"dirty tricks" by Chen Shui-bian or Hsieh. The recent
"invasion" of Hsieh's campaign headquarters by KMT
legislators was "ill-conceived," but Hsieh is not getting the
mileage out of it he wanted, Xu argued, because it is
becoming clear the legislators did not "kick down the doors"
as alleged and because Ma has been very "humble and
apologetic" about the incident. Similarly, Hsieh does not
appear to be getting traction on the "green card issue." In
contrast, Xu worried about the "one-China market" issue
causing concern among the Taiwan working class, but he did
not think its impact would be significant enough to swing the
election. Xu agreed with Cao's assessment that, while the
Tibet issue might be making the race slightly closer, it

BEIJING 00001038 002 OF 003


won't play a significant role in the outcome, given that both
candidates had condemned the PRC crackdown in Tibet.

PRC Response to a Passed Referendum: Divergent Views
-------------- --------------


5. (C) As reported earlier (reftel),Beijing contacts
continue to differ over the PRC's probable response to
passage of the DPP-sponsored referendum, however unlikely
that outcome might be. Journalist Chen Jieren told PolOff
that, in the unlikely event that the referendum passes, China
is "guaranteed to overreact," although that does not
automatically mean taking military action. The PRC
leadership has "painted itself into a corner," leaving it "no
choice" but to overreact. Internal guidance has already been
issued to the People's Daily and other official papers to
"resolutely oppose" the passage, Chen said, warning that
China's opposition in such an event will be totally "over the
top" and "unlike anything we have seen in recent years." Xu
Shiquan also said that passage of the DPP referendum could
lead to a "strong" PRC reaction, though he declined to offer
specifics.


6. (C) The CRF's Cao was more sanguine, telling PolOff that
Washington "should not worry" and arguing that Beijing will
not do anything "rash," even if the DPP referendum passes.
The referendum's passage alone will not lead to a PRC
military response, he declared. Although passage of the
referendum might bring about a "rhetorical crisis," the real
key to Beijing's response will not be the referendum's
passage, but rather how that outcome is interpreted by the
winner of the Taiwan presidential election. If Taiwan's new
president interprets a successful referendum to mean that
Taiwan is independent, then "all bets are off" and we will be
in the middle of a "very serious crisis." But "no one" in
Taiwan is "stupid enough" to do that, Cao argued.
Acknowledging the existence of hard-line voices in Beijing,
many of whom are affiliated with the PLA, Cao said it is
"their job" is to "talk tough" and deter Taiwan independence
moves. But these hard-line elements are not in charge. The
decision on how to respond to a Taiwan crisis is President Hu
Jintao's, together with the nine-member Politburo Standing
Committee, Cao stated.


7. (C) Some Beijing scholars have also begun to express
concern over the possibility that the KMT-sponsored
referendum might pass. (Note: While the DPP-sponsored
referendum calls for joining the UN "in the name of Taiwan"
and has been the focus of PRC official complaints, the KMT
referendum calls for "return" to the UN under the "Republic
of China" or other unspecified name.) The CRF's Cao said the
likelihood of passage of the KMT referendum has increased
following the KMT's decision to boycott only the DPP
referendum, while the DPP is calling on its followers to vote
in favor of both. Although Cao acknowledged the KMT
referendum is "not as bad" as the DPP's referendum, passage
of the KMT measure still "would not be good." Xu Shiquan
expressed a similar concern, saying that some in Beijing even
believe passage of the KMT's referendum could be interpreted
as "an act of sovereignty," which would be a "bitter pill" to
swallow. Nevertheless, even if the KMT referendum passes, Xu
said he expected Ma to downplay its significance by calling
it an expression of the will of the Taiwan people for greater
international engagement. (Note: Central Party School
Professor Kang Shaobang also recently told PolOff that
possible passage of the KMT referendum was a concern, though
he said such an outcome would not be nearly as serious as
passage of the DPP-sponsored referendum.)

Lowering Expectations for a Ma Presidency
--------------


8. (C) If Ma Ying-jeou wins the March 22 election as
expected, Mainland scholars believe cross-Strait relations
will improve, though they played down prospects for a
dramatic breakthrough. According to Xu Shiquan, even though
China hopes to see a Ma victory, there is likely to be only
"moderate improvement" in cross-Strait relations should he,
in fact, win. Initially Ma will have to be "careful" and
will be unable to move too quickly. Instead, Ma will need to
focus on the transition while watching out for his "personal
security." Even if the DPP were to be out of power, it would
likely vigorously protest any moves a President Ma might make
to get closer to the Mainland. The CRF's Cao, while slightly
more optimistic than Xu, also sounded a note of caution. Cao
said Beijing would "take the initiative to improve relations"
following a Ma victory. Nevertheless, Cao cautioned against
expecting a dramatic breakthrough in cross-Strait relations,

BEIJING 00001038 003 OF 003


noting that Ma Ying-jeou is "weak and passive" and therefore
might be "forced" by opponents to demonstrate that he is not
"too pro-PRC," which will serve as a brake on the improvement
of relations.


9. (C) Although both Xu and Cao said Beijing is hoping for a
Ma Ying-jeou victory, they conceded that "anyone" is better
than Chen Shui-bian. Xu thought that if the DPP's Frank
Hsieh does win the election, he will likely be "craftier and
more subtle" than Chen Shui-bian in pushing Taiwan
independence so as to avoid causing a rift in Taipei's
relations with Washington. Cao believed that improved
cross-Strait relations would be possible under a President
Frank Hsieh, arguing that Beijing is prepared to work with
either candidate. The key, Cao emphasized, is not who wins
the election, but rather the victor's "attitude" toward the
cross-Strait issues most important to Beijing.
RANDT