KMT CHAIRMAN WU POH-HSIUNG EXPLORES IDEAS FOR

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000148

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/30/2018
TAGS: PGOV TW
SUBJECT: KMT CHAIRMAN WU POH-HSIUNG EXPLORES IDEAS FOR
DEALING WITH THE UN REFERENDUM ISSUE

REF: A. TAIPEI 0028


B. 07 TAIPEI 2537

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


1. (C) Summary: In a meeting with the Director on January 29,
KMT Chairman Wu Poh-hsiung claimed the KMT was eager to
resolve the UN referendum issue, as a first step to improving
relations with the U.S. and China. President Chen's recent
offers to accept KMT input in selecting a "CEO premier" and
to reach a compromise on the UN referenda were not made in
good faith, argued Wu, and are fraught with pitfalls for the
KMT. In the unlikely event Chen agrees to forego a defensive
referendum and to "de-couple" the referenda from the
presidential election, Wu stated, the KMT LY caucus might
agree to a "binding resolution" to replace both the DPP and
KMT UN referenda. Although it is still too early to say, he
continued, the KMT might even call for a boycott of the two
UN referenda late in the election, if it would help Ma win.
The KMT cannot afford to rest on its laurels after its
landslide LY victory, Wu lamented, because DPP presidential
candidate Frank Hsieh is more "crafty and unpredictable" than
President Chen. End summary.


2. (C) The Director met with KMT Chairman Wu Poh-hsiung at
KMT headquarters on January 29. KMT Vice Chairman John Kuan
(Kuan Chung) and KMT foreign policy adviser Steven Chen
(Hsi-fan) also attended the meeting.

Pres. Chen's CEO Idea a Ruse
--------------


3. (C) Wu asserted President Chen's recent solicitation of
KMT input in choosing a "CEO premier" was merely an attempt
to trick the KMT into sharing blame for the failure of the
Chen administration. When Chen was re-elected in 2004,
recalled Wu, he refused to allow the KMT-dominated LY to
participate in choosing the premier. Now, with his power and
popularity on the wane, Wu continued, Chen is casting about
for ways to take the KMT down with him. The KMT will not
wittingly do anything to help Chen out of his predicament, Wu
declared.

UN Referendum: KMT Wants Out
--------------


4. (C) The KMT is eager to resolve the UN referendum issue,
Wu claimed, because doing so would be the first step toward
improving relations with both the United States and China.
At the same time, he continued, the KMT must be extremely
cautious in its dealings with Chen and Hsieh, both of whom
cannot be trusted. Wu acknowledged meeting with President
Chen on January 25, at Chen's request, to discuss a possible
compromise on the UN referenda issue. According to Wu, Chen
suggested the KMT-controlled LY approve a binding resolution,
proposing UN membership for "our country" instead of
"Taiwan," as a replacement for the two existing referenda.
The KMT rejected this proposal, explained Wu, because it
feared Chen would exploit the language of the KMT-approved
resolution to craft his own "defensive referendum." Chen
still controls the Central Election Commission (CEC),which
would certainly approve Chen's use of the defensive
referendum mechanism, predicted Wu. The KMT would be unable
to appeal the decision because the CEC is the final arbiter
of such questions, Wu continued, and the KMT would be unable
to object to language the KMT LY caucus had already approved.


5. (C) The KMT has two preconditions for any compromise with
the DPP: first, Chen must forswear the use of a defensive
referendum. Two referenda are bad enough, asserted Wu, and a
third, a defensive referendum no less, would only make
matters worse. Second, the DPP must agree to hold the
presidential election and referenda ballots on separate days.
Although Chen might agree to give up the defensive
referendum option, Wu predicted, he will never agree to
"de-couple" the UN referenda from the presidential ballot.
Chen knows that the DPP referendum has a much better chance
of meeting the required participation threshold (50 percent
of eligible voters) if more people come to the polls, and
that the presidential election turnout rate is always high.

TAIPEI 00000148 002 OF 003


Wu said the KMT had not ruled out urging voters to boycott
the UN referenda, backtracking from his January 7 assertion
that Ma would "certainly lose" if the KMT withdrew its UN
referendum (Ref A).

U.S. Interests At Risk?
--------------


6. (C) If the DPP UN referendum passes, argued KMT Vice
Chairman John Kuan, it will adversely affect U.S. interests.
KMT policy adviser Steven Chen (Hsi-fan) suggested that
President Chen might withdraw the referendum if the U.S. were
to threaten specific consequences, such as the suspension of
military sales to Taiwan. Chen also expressed concern that
President Chen might refuse to hand over power if the KMT
were to win the presidential election in March. Taiwan's
democratic institutions are considerably stronger than those
in Thailand or Burma, replied the Director. The legislature,
and more importantly the Taiwan people, would not tolerate a
president's refusal to peacefully transition to a newly
elected government. The Director also reminded his KMT
counterparts that the U.S. remains impartial in the
presidential race, and that the chief U.S. concern is that
Taiwan's next president be committed to repairing the frayed
mutual trust in U.S.-Taiwan relations.

No Rest For The Weary
--------------


7. (C) Wu admitted no one in his party expected the landslide
results of January 12's LY balloting. That said, Chen
Shui-bian's unpopularity and the new single-member district,
"winner take all" electoral system were key factors in the
KMT's victory. The DPP won a slightly higher percentage of
the vote than it did in the 2004 LY elections, Wu conceded.
Unfortunately for the DPP, its voters did not constitute the
majority except in a few districts in the south. Because the
DPP base did not vote at full strength, and the majority of
participating "swing" voters backed the KMT, the KMT won most
of its races by large margins, and lost by only a few points
in some former DPP strongholds, argued Wu.


8. (C) The KMT is still "nervous" about the presidential
election, Wu stressed, because DPP presidential candidate
Frank Hsieh (Chang-ting) is more "crafty and unpredictable"
than President Chen. Hsieh will need to be clever, Wu
quipped, because it is highly unlikely that Chen will change
course on the referendum or make other policy changes to
benefit Hsieh's campaign. Hsieh has less than two months to
convince voters he and the unpopular Chen are not the same,
which might not be enough time to do the job. Nonetheless,
Wu continued, the KMT cannot afford to rest during the Feb.
6-11 Lunar New Year holiday, and will use the time to get out
and "pray" for votes.


9. (C) The KMT expects 75-80 percent of voters to turn out in
the March 22 presidential election, said Wu, an increase of
15-20 percent over the recent LY elections. According to
KMT sources, Wu continued, very few overseas Taiwanese
returned to vote in the LY elections, but more are expected
to do so for the presidential election. Taiwanese doing
business in the PRC typically favor the KMT by a 7-to-3
margin, Wu claimed. (Note: KMT Vice Chairman P.K. Chiang
told the Deputy Director last November the KMT is actively
soliciting such support (see Ref B). End Note.) Victory is
far from certain, conceded Wu, because higher voter turnout
typically favors the DPP, and voter behavior on election day
is always unpredictable.

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


10. (C) The meeting between Wu and President Chen received
widespread attention in the local press. Wu and others in
the KMT believe the UN referendum issue has turned into a
liability for Chen and his party. Further emboldened by the
dismal failure of the two LY election referenda, the KMT now
thinks it holds the better hand on the matter, and can afford
to sit and wait, instead of jumping at risky chances to
"neutralize" the referendum issue. This growing confidence

TAIPEI 00000148 003 OF 003


is also reflected in Wu's change of heart on the
possibilities of a KMT referendum boycott. Wu made it clear
that the KMT's decision to keep or dump its UN referendum
will turn entirely on whether it helps or hurts Ma's
presidential campaign.
YOUNG