KMT VICE CHAIRMAN JOHN KUAN ON MA CABINET

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000545

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/12/2032
TAGS: PGOV PREL CH TW
SUBJECT: KMT VICE CHAIRMAN JOHN KUAN ON MA CABINET
SELECTION, CROSS-STRAIT EXPECTATIONS


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


1. (C) Summary: KMT President-elect Ma Ying-jeou will draw
from previous KMT administrations as well as from those
outside the party to staff his Cabinet, KMT Vice Chairman
John Kuan told the Deputy Director on April 17. Ma is
following his own rules in choosing the new Cabinet, said
Kuan, and he will not permit the party to dominate the
government as it did during distant KMT administrations.
Ma's March 24 public request to visit the U.S. was a
"calculated risk" intended to signal to Washington that
improved U.S. relations were his top priority, with
cross-Strait relations second. Kuan argued that Beijing will
not push Taiwan to forego future U.S. arms purchases because
China understands Ma must prove he is strong on defense if he
is to remain in power and that this would not alter the
status quo. China may not ease up on Taiwan's international
living space soon, conceded Kuan, but there are reasons to
believe progress is possible on this front too. End Summary.

Ma Draws from KMT's Deep Bench
--------------


2. (C) The KMT is ready to put into practice the policies
developed by party leaders and academic think tanks during
the eight years the party was out of power, KMT Vice Chairman
John Kuan (Kuan Chung) told the Deputy Director on April 17.
The KMT enjoys a significant "human capital" advantage over
the DPP, and Ma will draw upon the party's extensive network
of experienced business leaders, seasoned politicians, and
prominent academics to staff his administration. Although
Ma's cabinet may borrow staff from previous KMT
administrations, Kuan insisted, Ma will not let the party
dominate the government as it had in the distant past.
Former president Chiang Ching-kuo began diminishing the power
of the KMT over the government, underscoring that the
government must represent the whole country. This could be
"difficult" for the Beijing leadership to understand, Kuan
remarked, because in China the CCP is essentially the
government.

But Does it His Way
--------------


3. (C) To what degree is Ma consulting the KMT leadership in
selecting the members of his cabinet, asked the Deputy
Director. The KMT leadership is largely out of the
decision-making loop, replied Kuan. In fact, Ma is working
mainly with only three others to choose his cabinet: vice
president-elect Vincent Siew, former KMT legislator and
national security adviser-designate Su Chi, and
premier-designate Liu Chao-hsuan. Ma has indicated that
integrity and competence are to be the hallmarks of his
cabinet, and that he would consider anyone, including DPP
members and those unconnected to party politics, who met
those two basic criteria, with the former being more
important. Ma's top priorities are to expand Taiwan's
economic relationship with the PRC and to win over those
voters who did not support him or the KMT in recent
elections. Ma will therefore choose whoever he thinks will
help him accomplish those goals, suggested Kuan, with or
without approval from the KMT leadership. (Note: In a
separate conversation, KMT Mainland Affairs Director Chang
Jung-kung echoed Kuan's remarks, stating that many in the
party had urged Ma to include more "native Taiwanese" and
fewer "mainlanders" in his cabinet. Ma has ignored these
recommendations, said Chang, preferring to do things his own
way. End note.)


4. (C) Ma's independence from the party old-guard is perhaps
demonstrated best by his choice of Vincent Siew as his vice
presidential running mate, said Kuan. Siew was the only
prominent KMT economic expert to cooperate with Chen
administration efforts to improve the economy. KMT Honorary
Chairman Lien Chan viewed Siew's actions with suspicion, and
to this day the two men do not get along. On the other hand,
Siew's willingness to cross party lines earned him the
admiration and respect of the DPP. One of Ma's goals is to
foster "harmony" between the two parties, Kuan noted. Ma
ignored Lien's objections and chose Siew, reasoning that it
would be easier for the DPP to trust and work with him.

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U.S.-Taiwan Relations Ma's Top Priority
--------------


5. (C) U.S.-Taiwan relations worsened during President Chen's
tenure because Chen sacrificed Taiwan's foreign relationships
for domestic political gain, argued Kuan. Unlike Chen, Ma
understands that Taiwan's economic and military security both
depend on strong U.S. support. Ma also understands the need
to restore the U.S. trust damaged by President Chen's
domestic political maneuvering. Kuan reiterated Ma's promise
that Taiwan will be a "peacemaker," not a "troublemaker," and
opined that as long as cross-Strait relations remain
peaceful, progress can be made. Kuan added that Ma's March
24 public request to visit the United States was a
"calculated risk," not a mistake. Ma understands that some
in the U.S. are concerned that Taiwan will distance itself
from Washington to get closer to Beijing. Hence, he wanted
to underscore that Taiwan's relationship with the U.S.
remains his top priority.

Cross-Strait Depends on Ambiguity
--------------


6. (C) Cross-Strait dialogue will require both sides to seek
areas where cooperation is possible, and to work together to
minimize potential confrontations. Some issues, like
cross-Strait flights and the "1992 Consensus" will also
require the creative use of "ambiguity." Kuan recalled the
dispute over whether charter flights should be categorized as
"international" or "domestic" flights, and how the conflict
was sidestepped by simply using the term "cross-Strait"
flights. By now, Kuan continued, China should understand
that if cross-Strait relations are to improve, economic
cooperation must expand before political compromise can
become possible. China should also understand that it must
make concessions if it hopes to keep Ma and the KMT in power
so that cross-Strait dialogue can continue. As long as
Taiwan does not push for independence, Kuan hoped, anything
should be possible.

Strong Taiwan is Lesser of Two Evils
--------------


7. (C) Kuan asserted that China will not press Taiwan to
forego future U.S. arms purchases because Beijing understands
that a strong Taiwan actually increases cross-Strait
stability, and only maintains the status quo. Beijing also
understands that it is politically necessary for a KMT
government to maintain a strong defense, lest it be accused
of "selling out" Taiwan. In the final analysis, said Kuan,
Beijing will tolerate future U.S. arms purchases by Taiwan
because, compared to the possibility of another DPP
government, it is clearly the lesser of two evils. Publicly,
however, Beijing will of course "protest," he said.

Hope on International Living Space
--------------


8. (C) PRC efforts to steal away Taiwan's diplomatic partners
may continue for the near term, conceded Kuan, and could
result in Taiwan's loss of a few more allies. However, Kuan
continued, recent personnel changes in the PRC's "Taiwan
leading group" suggest the emphasis has shifted from security
to economics. The "hardliners" tend to be in the military
and foreign policy apparatus, he noted, and Commerce Minister
Chen Deming has just been inserted into the Taiwan group.
The hope is that PRC President Hu Jintao will soon issue new
orders to the Foreign Ministry to halt efforts to curtail
Taiwan's international "living space." Kuan insisted that
progress would not be possible without continued U.S.
pressure on China to allow increased Taiwan participation in
international organizations.


9. (C) Kuan told the Deputy that he has not been offered a
position in the Ma government, and will most likely continue
to serve as the KMT vice chairman in charge of formulating
KMT foreign and defense policy, party-NGO relations, and
international organizations. Kuan added that, at 68 years of
age, and after eight years of working to restore the KMT to
power, he was looking forward to retiring from politics.

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Other senior KMT leaders, however, including vice chairman
P.K. Chiang (Pin-kung),will migrate to Ma's administration
after the inauguration. Chiang, who has been named to head
the Straits Exchange Foundation (SEF),will continue to serve
as the KMT vice chairman in charge of cross-Strait policy,
but this would not have to take up much of his time, said
Kuan.
YOUNG