This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003139 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 10/10/2013 
TAGS: PREL PGOV PINR CH TW
SUBJECT: POLITICAL POSITIONING IMPACTING FOREIGN POLICY 
 
REF: A. TAIPEI 1619 
 
     ¶B. TAIPEI 3002 
     ¶C. TAIPEI 2806 
     ¶D. TAIPEI 1684 
 
Classified By: AIT Director Douglas Paal, Reason: 1.4 (B/D) 
 
¶1. (C) Summary: Internal political maneuvering for the 2008 
presidential nomination is increasingly spilling over into 
the cross-Strait and foreign policy arenas.  Premier Yu 
Shyi-kun's advocacy of a cross-Strait "balance of terror" is 
the latest in a string of unauthorized statements that 
insiders say are aimed at shoring up his position within the 
Democratic Progressive Party (DPP).  President Chen Shui-bian 
has publicly rebuked Yu on more than one occasion, but 
observers say he is unlikely to take firmer action against 
either Yu or Vice President Annette Lu for fear of 
unbalancing the competition among the four contenders for 
future DPP leadership.  Chen's willingness to award key 
foreign policy posts to followers of Yu and Lu, the clear 
underdogs among the would-be candidates, has greatly 
exacerbated this problem.  DPP moderates hope that Chen will 
exert more control after the December legislative election, 
but many inside the party warn that this situation may 
continue until 2007, when the formal party nomination process 
begins.  End Summary. 
 
Lame Duck or Kingmaker? 
----------------------- 
 
¶2. (C) A string of recent unauthorized statements by Premier 
Yu Shyi-kun and Vice President Annette Lu on cross-Strait and 
foreign policy (Reftels) appear to be an outgrowth of 
President Chen Shui-bian's decision to encourage a four-way 
competition between candidates for the DPP's 2008 
presidential nomination.  While Presidential Office and 
National Security Council (NSC) officials fume over this lack 
of discipline, they say that President Chen is unlikely to 
curb either Yu or Vice President Lu for internal political 
reasons.  Presidential advisors tell AIT that Chen fears 
that, if a clear front-runner for future leadership emerges 
too early, he will find himself a lame duck early in his 
second term. 
 
¶3. (C) While most observers believe only Presidential Office 
Secretary General Su Tseng-chang and Kaohsiung Mayor Frank 
 
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Hsieh have a realistic chance of leading the DPP's 2008 
ticket, Chen continues to encourage Yu and Lu to maintain 
aspirations for the presidency.  National Taiwan University 
Professor (and former Mainland Affairs Council Senior Vice 
Chairman) Chen Ming-tong asserted to AIT that "a four-way 
race is less destabilizing than a two-way race."  Chen 
predicted that the president would keep Yu in the running 
until the DPP nominating process opens in 2007.  Presidential 
Office Deputy Secretary General James Huang told AIT that, 
while Yu's ignorance of foreign and cross-Strait policies 
make him clearly unqualified for higher office, his control 
over Executive Yuan (EY) resources will keep him in the 
running indefinitely. 
 
Yu: Puppet with Many Masters 
---------------------------- 
 
¶4. (C) Yu's sudden activism on foreign policy came as a 
surprise to many DPP officials, who have longed dismissed the 
premier as a colorless Chen Shui-bian yes-man.  Some 
presidential advisors assess that Yu has fallen under the 
influence of a cadre of hard-line advisors.  NSC Senior 
Advisor for cross-Strait policy Chen Chung-hsin asserted that 
Yu is being fed his lines by Executive Yuan (EY) Secretary 
General Arthur Iap (Ye Guo-xing) and Government Information 
Office (GIO) Director General Lin Chia-lung.  "Yu is 
completely ignorant about foreign policy," the NSC's Chen 
asserted, "Iap and Lin are simply using him as their 
mouthpiece."  NSC Staffer and Tsai Ing-wen confidante Chang 
Hsieng-hwei offered a similar assessment, adding that the 
weak-willed Yu provided an easy target for his two aggressive 
advisors.  "Iap is acting as Yu's spine" she continued, "and 
Lin as his brain." 
 
¶5. (C) Yu's recent references to offensive weapons and 
containing PRC expansionism closely track a policy line 
espoused by the Taiwan Think Tank (TTT), a group created by 
the GIO's Lin in 2001 with substantial financial support from 
Chi-mei Electronics Group founder Hsu Wen-lung, a close 
relative of Lin's wife.  Taiwan Institute for Economic 
Research (TIER) Vice President David Hong characterized the 
TTT as the intellectual force behind the hard-core "Taiwan 
first" school of foreign policy that appears to hold sway 
over the premier and his inner circle.  TTT Foreign Policy 
Studies Director Lai I-chung has told AIT that Taipei's 
policy should focus on strengthening cooperation with 
like-minded counterparts in the U.S. executive and 
legislative branches to counter the "pro-China" bias of the 
State Department and AIT.  Closer to home, Lai warned that 
the growing power of NSC SecGen Chiou I-jen and his moderate 
New Tide faction threatens to weaken Taiwan's resolve to face 
the PRC threat.  The EY's Iap has made a similar case in 
conversations with AIT, noting that Taiwan's ultimate goal 
should be to serve as the front-line of a U.S.-Japan-Taiwan 
alliance against PRC expansionism. 
 
Lu: Flakes and Fundamentalists 
------------------------------ 
 
¶6. (C) While Yu has been more outspoken of late, DPP 
moderates also remain wary of Vice President Annette Lu's 
potential to cause mischief by pushing her traditional 
pro-independence fundamentalist ideology.  Many observers see 
the vice president's fingerprints on a range of key foreign 
policy appointments, including MAC Chair Joseph Wu, NSC 
Deputy SecGen Parris Chang, Foreign Minister Mark Chen, MOFA 
Policy Chief Yang-huang Mei-shin, Tokyo Representative Ko 
Se-kai, and Deputy TECRO Washington Rep. Joanna Chang.  NSC 
officials tell AIT that the New Tide faction and the vice 
president clashed sharply over leadership appointments at 
both MAC and the NSC after March 20, with Lu prevailing on 
the former and New Tide on the latter (Ref A).  In recent 
weeks, Lu herself has remained relatively quiet (her allies 
in government much less so).  DPP insiders point out that her 
main strategy of late has been to insist on joining the 
president at nearly all of his public events, reportedly 
upsetting a presidential security detail still jumpy after 
the March 19 shooting incident. 
 
Moderates Muted, For Now 
------------------------ 
 
¶7. (C) Chen's apparent indulgence of Yu and Lu has not 
extended to front-runner Su, according to associates of the 
Presidential Secretary General.  Taipei County Magistrate and 
long-time Su lieutenant Lin Hsi-yao told AIT that Chen 
regularly warns Su to keep a low profile, especially when 
dealing with the premier and vice president.  Lin said Su 
feels under enormous pressure in his new post, in part 
because he often disagrees with Chen's handling of 
cross-Strait policy and constitutional reform.  "Su hates 
that Chen keeps changing his tune (bienlai bienqu) on these 
issues," Lin asserted, "but he knows that if Su's real views 
were to get back to Chen, Su's future would be in jeopardy." 
Lin added that, for this reason, AIT should view anything Su 
says in public or private as reflecting the president's 
thinking, not his own (Note: Before assuming his current 
post, Su was extremely candid with AIT in his assessment of 
controversial Chen initiatives.  However, he has been much 
more discrete over the past five months, even in private. End 
Note.)  New Tide political strategist and Strait Exchange 
Foundation (SEF) Deputy Secretary General Yen Wan-ching told 
AIT that faction leaders recently moved their weekly strategy 
sessions with Su from his office to a more secure location 
for fear that Chen would find out and suspect Su of 
intriguing. 
 
¶8. (C) DPP moderates hope that the current situation will 
improve after the December election.  Taipei County's Lin 
asserted that the president has clearly tired of Yu's 
constant verbal missteps.  He estimated the chances that Yu 
would be replaced in favor of Su in February at over 80 
percent.  The SEF's Yen also predicted a shake-up, but he 
said it was too early to say whether it will be Su, or 
Kaohsiung Mayor Frank Hsieh, who will get Yu's job.  Like Su, 
Hsieh has kept a low-profile since the election.  However, 
Presidential Office Deputy SecGen Huang was less confident 
about an early turnover in power.  "It will be hard for the 
president to replace Yu if the DPP does well in the December 
election," he assessed, adding that such a move would end 
Yu's hopes for future office.  Chunghwa Institute for 
Economic Research (CIER) Vice President Chang Jung-feng, a 
long-time Lee Teng-hui confidante and ex-Chen NSC Deputy 
Secretary General, told AIT that it looked like the four-way 
 
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race would dominate DPP politics for the next four years. 
Chang said that former President Lee told him on September 27 
that recent events have made him increasingly depressed over 
Taiwan's future.  "All the Pan-Blue thinks about is March 20, 
2004 and all the DPP thinks about is March 22, 2008," Chang 
quoted Lee as saying, "no one is worrying about the real 
challenges facing Taiwan." 
 
Healthy Competition or Balance of Terror? 
----------------------------------------- 
 
¶9. (C) NTU's Chen Ming-tong urged AIT not to worry about the 
emergence of a hard-line faction around the premier or 
fundamentalists like Lu and FM Chen, because their positions 
will be balanced by moderates at the NSC and Presidential 
Office.  "Just like in the U.S., policy is the result of a 
consultative process among a diverse set of interests," Chen 
added.  However, Hakka Affairs Council (HAC) Minister (and 
long-time CSB "boy scout") Luo Wen-chia warned AIT that if 
the president does not exert leadership quickly, the 
hard-line and fundamentalist groups, despite their mutual 
dislike for one another, may push policy towards the 
promotion of a hard-edge "Taiwanese nationalism" that might 
sooner or later run head-on with the growing trend towards 
Chinese nationalism on the Mainland.  "If Chinese and 
Taiwanese nationalism clash," he added, "we lose."  Luo said 
President Chen still has time to head this off, but to do so, 
Luo added, he will need to exert leadership now, not simply 
remain above the fray. 
 
Comment: Chaos or Calculation? 
------------------------------ 
 
¶10. (C) While the March 20 election has forced almost 
everyone in the Pan-Blue to acknowledge that leadership 
change is inevitable, President Chen is trying hard to 
manipulate and delay the onset of serious debate within the 
Pan-Green about his successor. He has strong domestic 
political reasons to delay a DPP consensus about his heir 
apparent, and that has apparently made him eager to encourage 
the aspirations of the two weaker competitors for the 2008 
nomination - Yu and Lu - and to tolerate their repeated 
diversions from the policy course he laid out in his 
inaugural address. 
 
¶11. (C) Chen, however, has acknowledged that he understands 
the costs of these diversions to his cross-Strait and U.S. 
policies, and he and the DPP have shown in the past that they 
know how to close ranks and enforce discipline when they 
choose. This leaves us with only two possible explanations 
for why Chen has been willing to tolerate this rhetorical 
chaos. The first, and perhaps more charitable, is that he 
cares only about winning the December legislative elections, 
and he is convinced once again that he can somehow fix the 
international side-effects after December.  In short, he is 
willing to risk Taiwan's security to win greater domestic 
political power.  The second, and more troubling, is that he 
understands and endorses what Yu Shyi-kun, Mark Chen and 
Annette Lu are saying and that he has decided that the best 
way to advance those proposals is to allow them to stretch 
the international envelope.  This enables him to maintain 
deniability in order to avoid an immediate confrontation with 
China or with us.  Given Chen's mastery of indirection, we 
are not certain which is his real intent. 
PAAL