TAIWAN: EMBASSY CONTACTS DOWNPLAY POTENTIAL FOR

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001075

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E.O. 12958: DECL: 03/21/2033
TAGS: PREL MOPS CH TW
SUBJECT: TAIWAN: EMBASSY CONTACTS DOWNPLAY POTENTIAL FOR
REFERENDUM-BASED CRISIS, WARN OF OTHER SURPRISES

REF: A. BEIJING 1069

B. BEIJING 1038

C. BEIJING 959

D. BEIJING 549

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.
4 (b) and (d).

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


1. (C) On the eve of Taiwan's March 22 presidential election
and vote on UN referenda, three Embassy contacts tell us they
are "not worried" about the upcoming vote leading to a
cross-Strait crisis. While both referenda on Taiwan's UN
membership are expected to fail, even if one were to pass,
Beijing's response would most likely be limited to harsh
rhetoric, especially if the United States were to criticize
the result. These observers nevertheless are concerned about
the transition period between the presidential election and
the end of current President Chen Shui-bian's term on May 20.
Chen Shui-bian might "manufacture" a cross-Strait incident
during the March-May period, two journalists speculated,
while one academic warned Chen may try to use "undemocratic
means" to refuse to transfer power on May 20. Some in China
actually hope the DPP's Frank Hsieh wins the presidency, a
journalist claimed, because a victory by the KMT's Ma
Ying-jeou could bring pressure on the Mainland to
democratize. End Summary.

"No Worries" about Referenda Vote
--------------


2. (C) In advance of the March 22 Taiwan presidential
election and vote on referenda concerning Taiwan UN
membership, Mainland observers continue to offer opinions on
possible outcomes as well as probable PRC reaction (reftels).
The latest commentary from three Embassy contacts this week
has been that the election and vote on UN referenda almost
certainly will not lead to a cross-Strait crisis. Wang Wen
(strictly protect),editor at the People's Daily-affiliated
Global Times newspaper, told PolOff March 20 that there is
"no way" the Taiwan election result this weekend will create
a cross-Strait crisis. He assessed that both of the
competing referenda on the ballot are likely to fail. Even
if the DPP-sponsored referendum were to pass, China will not
respond militarily, Wang averred. Instead, China would react
"strongly," but this would likely be limited to rhetoric
only. In sum, Wang said, he is "not worried at all" about
this weeend's events in Taiwan.


3. (C) Chang Shaoyan (strictly protect),Senior Edior at
the Legal Daily, conveyed similar views to PolOff on March
19, commenting that he is not worried about the March 22
votes and could "envision no scenario" under which the
election or referenda results would lead to a cross-Strait
crisis. Chang agreed that even if the DPP referendum, for
example, were to pass, it would have no impact on Taiwan's
international status or ability to join the UN. Chang said
he had no sense that China is gearing up for a cross-Strait
crisis, declaring that "everyone in China," including
leadership, recognizes that a cross-Strait crisis would be a
"disaster" for all concerned. Whatever one says about future
cross-Strait prospects, Chang reiterated, the events of this
coming weekend will almost certainly not be the cause of any
"crisis."


4. (C) Shi Yinhong (strictly protect),an international
relations expert at Renmin University, told PolOff on 20
March that there is "no hope" for the DPP referendum. Some
observers in Beijing believe the KMT-sponsored referendum has
a greater chance of passage, but Shi disagrees because the
KMT has been "low-key" about supporting it. A successful KMT
referendum would draw a "rhetorical response" from Beijing,
but it would not be as sharp as China's reaction were the DPP
referendum to pass. In any event, Shi said he expected
Beijing's response would be limited to rhetoric, as long as
the United States and other countries criticized the passage
of the referendum as having "no validity."

Chen Shui-bian Remains Wild Card
--------------


5. (C) Observers this past week appeared to be worried more
about the potential for President Chen Shui-bian to make
"trouble" than they were about the fallout from the election

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and referenda votes. The Legal Daily's Chang Shaoyang
expressed concern that one possibility for a cross-Strait
"crisis" would be if Chen Shui-bian "radically" interpreted a
successful referendum vote as being equal to a formal
declaration of independence. Global Times' Wang Wen had
similar views, arguing that the only way passage of the DPP's
referendum would lead to cross-Strait tension is if President
Chen or the newly elected president used the referenda result
to push for de jure Taiwan independence. Wang asserted,
however, that there is "no one" in Taiwan who would actually
do so. If Ma Ying-jeou wins the presidential election,
chances are greater that Chen Shui-bian will "stir up
trouble" before stepping down in May, Wang assessed. Chang
Shaoyang separately agreed, speculating that Chen very well
may "manufacture some crisis," but that would most likely be
in the March-May timeframe, not this weekend.


6. (C) Renmin University's Shi Yinhong also was worried about
Chen Shui-bian causing trouble, but he thought that was more
likely to result in internal Taiwan unrest rather than
provoking a cross-Strait incident. For example, Shi cited
Chen's statement at a March 19 rally in southern Taiwan that
he would not turn the presidency over to a "green-card
holder" as evidence that Chen is reluctant to allow the KMT
to assume power. Such a refusal would lead to widespread
unrest on the island, Shi said, arguing that both the KMT and
DPP are "political animals" who are going "crazy" in run-up
to the election. Furthermore, the DPP are "revolutionaries,"
not democrats, and will "do anything" to stay in power. The
United States should make clear that any extra-legal or
undemocratic procedures affecting a smooth transition of
power would not be tolerated, along with making "quiet" but
specific threats about the consequences of such steps, Shi
recommended. Even though serious internal unrest in Taiwan
could be a possible justification for PRC intervention, Shi
said China is not in a position to do so. The United States,
he argued, has the most influence and is in the best position
to ensure that the transition of power goes smoothly.

Maybe Frank Hsieh Would Be Better Than Ma?
--------------


7. (C) Wang Wen told PolOff that he and many of his
journalist colleagues hope that DPP's Frank Hsieh wins the
election, arguing this result would bring about a more
"stable" cross-Strait situation. At a minimum, Hsieh is "a
moderate" who will not pursue Chen Shui-bian's "radical"
Taiwan independence agenda. A Ma victory, however, even
though this is what the PRC Government wants, could lead to
instability and long-term friction with Beijing, Wang argued.
For example, Ma has said that he would consider
reunification, as long as the Mainland democratizes first.
Wang argued such a statement puts the PRC in a "very
difficult spot," especially since it is the PRC that has been
rooting for a Ma victory all along. Beijing would have a
hard time responding effectively to calls for democracy from
the new Taiwan leader.


8. (C) Shi Yinhong also thought a President Frank Hsieh would
be an improvement over the Chen Shui-bian administration but
still expressed a preference for a Ma Ying-jeou victory. If
Hsieh wins, he is likely to diminish Chen's influence in the
DPP if he is able to claim the presidency, Shi said. Shi
thought Ma Ying-jeou would pose some challenges for the
Chinese leadership, noting, for example, that Ma used harsh
language to criticize Premier Wen Jiabao's recent statements
on the Tibet unrest. Nevertheless, Shi, like most Chinese
interlocutors, said he strongly hopes Ma will win, believing
that if a transition to a Ma presidency were managed well, we
could be "very optimistic" about an improvement in
cross-Strait relations. President Hu Jintao's offers of
dialogue and a "peace agreement" are not just "nice words" to
encourage the Taiwan electorate and placate the international
community, but are "real possibilities" if Ma wins, Shi
asserted.

Indefinite Maintenance of the Status Quo Untenable
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9. (C) While Wang Wen said he is "not worried" about a
cross-Strait crisis in the short term, he is concerned about
long-term developments. Indefinite maintenance of the status
quo would mean that Taiwan will continue to inch closer and
closer to independence, Wang argued. The Chinese Communist
Party has staked its legitimacy on preventing Taiwan
independence, Wang said, noting that the CCP will be exposed

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as "powerless" and "incompetent" if it fails in this regard.
Thus, after this weekend's vote is over, China will still be
faced with this long-term problem. For this reason, Wang
said, PRC hardliners on Taiwan policy have a following.
Tsinghua Professor Yan Xuetong, who advocates a tough line of

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"solving the Taiwan problem sooner rather than later,"
including by force if necessary, is "quite influential" and
has many supporters, Wang said. Wang said such views are not
in the majority, but they should not be ignored and will need
to be dealt with in the long run.

RANDT