SINGAPORE AND TAIWAN - BETTER DAYS AHEAD?

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000071

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/17/2018
TAGS: PREL PGOV ECON ETRD TW SN
SUBJECT: SINGAPORE AND TAIWAN - BETTER DAYS AHEAD?

REF: 07 SINGAPORE 1932

Classified By: Deputy Chief of Mission Daniel Shields. Reasons 1.4(b)(
d)


1. (C) Summary: Singapore and Taiwan have significant
security and economic ties; however, their once close
political relations have been strained for a number of years.
The GOS believes Taiwan President Chen Shui-bian and his
predecessor have jeopardized regional stability with
irresponsible rhetoric on cross-Strait relations. The GOS
remains concerned that Chen may try to provoke China for
electoral advantage in the run up to Taiwan's March 22
presidential election, according to MFA. The GOS expects
that either KMT presidential candidate Ma Ying-jeou or the
DPP's Frank Hsieh will be an improvement over Chen and help
stabilize cross-Strait ties. While a change in leadership in
Taipei may improve Singapore's political ties with Taiwan,
some strains are likely to continue. At the same time,
Singapore values the practical benefits of its relationship
with Taiwan, notably the ability to conduct military training
in Taiwan and a substantial amount of trade. End Summary.

A Close Relationship, Once
--------------


2. (C) In the 70's and 80's, Singapore and Taiwan had close
political, security, and economic relations, epitomized by
the personal ties between former Prime Minister Lee Kuan Yew
and then-President Chiang Ching-kuo, respectively. Singapore
also played a role in cross-Strait developments, hosting the
historic 1993 meeting between Koo Chen-fu and Wang Daohan.
In deference to the sensitivities of its Southeast Asian
neighbors, some of whom feared Singapore might be a front for
China, Singapore was the last country in ASEAN to switch
diplomatic recognition from Taipei to Beijing in 1990.


3. (C) GOS leaders believe regional stability is the sine qua
non for Singapore's security and economic development and
place a lesser value on democracy. As Taiwan democratized
through the 1990's and Presidents Lee Teng-hui and then Chen
Shui-bian promoted a separate Taiwan identity, Singapore
leaders worried about the possibility they would provoke an
open conflict with China. In recent years, Prime Minister
Lee Hsien Loong and Minister Mentor Lee Kuan Yew have been
highly critical, in public and private, of Lee Teng-hui's and
Chen Shui-bian's reckless management of cross-Strait
relations (Reftel).

Worried about Chen
--------------


4. (C) As Chen reaches the end of his presidency, the GOS
remains concerned that he will continue to bait China by
playing the independence card for electoral advantage in the
run up to Taiwan's March 22 presidential election, MFA
Northeast Asia Directorate Deputy Director Ong Siew Gay told
us. The abysmal performance of Chen's Democratic Progressive
Party (DPP) in the legislative elections this month has not
lowered Singapore's apprehensions. In Singapore's view, Chen
has little to lose at this point and is looking to secure his
historical legacy, as well as shift attention away from the
corruption scandals that have enveloped him and his family.


5. (C) In comparison to previous elections, China has done a
much better job this time in not reacting to events in Taiwan
and thus help the DPP, commented Ong. In part, this is due
to the USG's clear stance against Taiwan moves toward
independence, he argued. For example, the USG's series of
strong statements opposing Chen's March 22 referendum on
joining the UN under the name "Taiwan" reassured China and
encouraged a moderated response.

Ma and Hsieh
--------------


6. (C) Either KMT presidential candidate Ma Ying-jeou or the
DPP's Frank Hsieh would be an improvement over Chen, averred
Ong. With Chen out of the picture, Taiwan and China could
find creative ways forward on establishing the "Three Links"
(direct transportation, trade, and postal links),possibly by
working through trade associations, if direct talks were not
feasible. Ong suggested that Ma would likely make more
progress on improving cross-Strait ties than Hsieh; Beijing
will be more willing to work with Ma since his starting point
for cross-Strait ties is the "1992 consensus" of "one China,
each side with its own interpretation." A Hsieh presidency
could also make some progress on improving ties, but it will
be harder for Beijing to accept working with him given his

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DPP background and the party's support for Taiwan
independence.


7. (C) The GOS harbors other misgivings about Hsieh. Ong
characterized him as a "slippery character" who always makes
you feel like he agrees with you. He added that Hsieh
suffers from the DPP's problem of "selective hearing."

Smoother Ties Ahead?
--------------


8. (C) A less confrontational Taiwan president would bode
well for Singapore-Taiwan ties. Singapore has a habit of
getting into the middle of cross-Strait difficulties. For
example, then-Deputy Prime Minister Lee Hsien Loong's July
2004 "private" trip to Taiwan negatively affected Singapore's
relations with China and Taiwan and set of a cycle of
recriminations. Beijing quickly retaliated against Singapore
by canceling a number of visits and freezing talks on a
bilateral Free Trade Agreement. The appearance that
Singapore then caved to China's pressure then provoked a
nasty bilateral spat with Taiwan; in PM Lee's first major
speech as prime minister he said that if Taiwan "goes for
independence ... Taiwan will be devastated." Since then,
Singapore's leaders have avoided high profile visits to
Taiwan, though Ong told us there have been some GOS
ministerial-level visits to Taiwan which have been kept
quiet. He added that there are vigorous working-level
exchanges.


9. (C) In 2007, both Ma and Hsieh and their running mates
(Vincent Siew and Su Tseng-chang, respectively) made
"private" visits to Singapore and met with senior GOS
leaders, including Minister Mentor Lee Kuan Yew. Their
visits received some coverage in the local press. There have
also been "private" visits by cabinet-level officials from
Taiwan. The Chairman of the Overseas Compatriots Affairs
Commission visited Singapore in December 2007, according to
Lee Rem-Loong from the Taipei Representative Office in
Singapore. The GOS evaluates such proposed visits on a case
by case basis, Ong told us, depending on the visitors
portfolio and "attitude."

Military Ties Ongoing
--------------


10. (C) Since the 1970's, the Singapore Armed Forces have
conducted training exercises in Taiwan. (Note: Given
Singapore's limited territory and high population density, it
relies heavily on access to training fields overseas. End
Note.) Some five to six thousand soldiers a year go to
Taiwan for exercises, according to Lee. Almost every
Singaporean soldier, active or reserve, has spent some time
in Taiwan, observed Ong. In addition, Singapore Navy ships
often make port calls in Taiwan. When Singapore and Beijing
established relations in 1990, the GOS insisted on
maintaining its defense training in Taiwan. While Beijing
accepted that precondition, it probably wishes it hadn't,
commented Ong. Maintaining the defense relationship with
Taiwan also helps Singapore with its Southeast Asian
neighbors, Ong asserted, because it reassures them that
Singapore isn't a fifth column for China. He said Singapore
does allow an occasional, and very quiet, ship visit by
Taiwan naval units. One year, however, the GOS forced the
Taiwan ships to bunker in international waters, Lee told us.

Substantial Economic Ties
--------------


11. (SBU) Singapore's economic relationship with Taiwan
remains important and continues to grow, but pales next to
its burgeoning trade and investment ties with China (and Hong
Kong). Taiwan is Singapore's eighth largest trade partner,
with total trade in 2006 of SGD 39.2 billion (USD 27.5
billion) -- total trade has grown by an average of 19 percent
per year since 2002. In addition, Singapore has SGD 3.7
billion (USD 2.6 billion) in Foreign Direct Investment (FDI)
in Taiwan. By comparison, Singapore's total trade with China
and Hong Kong was SGD 135 billion (USD 95.1 billion) in 2006
and its FDI in China and Hong Kong, as of 2005, was SGD 37.7
billion (USD 26.5 billion).

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


12. (C) The GOS can't wait for President Chen to leave power
and is looking forward to a President Ma or Hsieh to improve
cross-Strait ties. A less confrontational leader in Taipei
would likely lead to improved Singapore-Taiwan ties, given

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Singapore's historical tendency to get in the middle of
cross-Strait disputes. Regardless of who wins the presidency
in Taiwan, however, Singapore will still have to grapple with
the unpredictable nature of Taiwan's democracy and free press
and will occasionally find it difficult to navigate the
complex triangular relationship of Taiwan, China, and
Singapore.

Visit Embassy Singapore's Classified website:
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