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

UNCLAS SECTION 01 OF 02 TAIPEI 000286 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: N/A 
TAGS: PREL PGOV TW
SUBJECT: CONGRESSMAN LANTOS PRESSURES TAIPEI ON DEFENSE 
SPENDING 
 
 
¶1. (SBU) Summary.  House International Relations Committee 
(HIRC) Minority Ranking Member Tom Lantos (D-CA) visited 
Taiwan from January 15-18 to receive a human rights award 
from President Chen Shui-bian and to meet with high-level 
Taiwan officials.  In meetings with President Chen, Vice 
President Annette Lu, Legislative Yuan (LY) Speaker Wang 
Jin-pyng, Congressman Lantos stressed the importance of 
passing the USD 18 billion Special Defense Procurement Budget 
and increasing overall defense spending, which Lantos pointed 
out had fallen to 2.5 percent of GDP.  Lantos also told 
Taiwan officials that Members of Congress and the American 
public would not likely support the deployment of American 
military forces to assist Taiwan if Taipei refuses to do its 
"fair share" to protect itself in the wake of the PRC's 
growing defense budget.  End summary. 
 
President Chen Pledges Defense Upgrades 
--------------------------------------- 
 
¶2. (SBU) Following a January 17 ceremony to honor the 
Congressman's contribution to international human rights, 
Rep. Tom Lantos exchanged views with President Chen Shui-bian 
on U.S.-Taiwan relations and Taiwan's defense modernization 
efforts.  President Chen told Lantos that he and his 
administration remain very concerned about defending the 
peace in the Taiwan Strait.  Chen added that this was 
Taiwan's responsibility and that Taipei is trying to improve 
its defenses to counter the PRC's growing threat.  He told 
Lantos that passing the Special Defense Procurement Budget is 
one of the key goals of his administration.  Chen maintained 
that opposition in the LY has blocked his efforts.  However, 
Chen noted that with the December 11 LY election over, he is 
optimistic that his government and the opposition can 
complete work on the budget within the first half of this 
year.  Chen expressed particular optimism over prospects for 
cooperation from opposition leader James Soong, whose People 
First Party (PFP) had repeatedly blocked action in recent 
months. 
 
Vice Presidential Dinner 
------------------------ 
 
¶3. (SBU) Rep. Lantos, accompanied by Communications Director 
Lynne Weil and HIRC Democratic Deputy Staff Director Peter 
Yeo, expanded on the defense modernization theme during a 
January 16 dinner hosted by Vice President Annette Lu. 
Congressman Lantos noted that a recent article in the 
Economist magazine that showed Taiwan's defense spending had 
fallen to 2.5 percent of GDP during a period when Beijing's 
defense spending had continued to rise.  While Lantos 
asserted this was not news to him, the article would 
undoubtedly cause concern among Members of Congress and the 
American people that Taipei was not doing its fair share on 
defense issues, which would prove to be problematic for 
Taiwan in the future.  Lantos also told Vice President Lu and 
other guests that Taiwan's defense spending was jeopardizing 
Taiwan's national security.  He added that inaction on 
defense preparedness was also damaging Taiwan's positive 
perception among the American people.  The Congressman stated 
that as long as defense spending continued to fall, the 
American people would not support the deployment of American 
military forces to Taiwan, especially since U.S. forces were 
so focused on the global war on terror and Iraq. 
 
¶4. (SBU) Vice President Lu acknowledged the problem and said 
that she and President Chen had worked hard to get the USD 18 
billion Special Defense Procurement Budget passed, but their 
efforts have been blocked by the opposition in the LY. 
National Security Council (NSC) Deputy Secretary General 
Parris Chang, who joined the dinner, added that since the LY 
election is over, the opposition is likely to be more 
cooperative on the budget, but is likely to argue that the 
price of the weapons being offered by Washington is still too 
high.  Chang also seconded Lantos' assessment of Taiwan's 
growing image problem, and said that Taiwan must do more on 
the public diplomacy front.  He argued that the PRC had 
effectively portrayed Taiwan as the main trouble maker on the 
cross-Strait issue.  Chang added that Taiwan wanted to do 
more to counter Beijing and planned to embark on a new 
campaign in the U.S. and elsewhere to counter Taipei's 
sagging reputation abroad. 
 
Meeting with LY Chair Wang Jin-Pyng 
----------------------------------- 
 
¶5. (SBU) In a separate January 17 meeting with KMT LY Speaker 
Wang Jin-pyng, Rep. Lantos warned against playing partisan 
politics with Taiwan's defense requirements.  He said 
Congress and the American people will not be happy about 
Taiwan's falling defense spending from 5 percent to 2.5 
percent of GDP in recent years.  Lantos further added that 
this fact points to a dangerous situation for Taiwan and he 
directly asked Wang why political disputes in the LY are 
preventing Taiwan from devoting an adequate amount to defense 
spending.  Lantos emphasized to Wang that many Americans 
believe the nation's hands are full with the global war on 
terror, Iraq, and Afghanistan so other countries in the 
region must do their fair share with defense spending.  He 
told Wang that the American people are not going to support 
Taiwan if the LY does not rectify this situation soon and 
work together to significantly increase Taiwan defense 
expenditures. 
 
¶6. (SBU) Wang responded that Taiwan is committed to its 
national defense, and asserted that Taiwan will work hard to 
show other nations that Taipei has a strong will to defend 
itself.  However, he lamented that Taiwan is facing many 
other budgetary pressures such as education and social 
welfare spending.  Wang added that Taiwan's defense spending 
as a percentage of GDP is one of the highest in the region. 
He also stated that the defense budget is actually higher 
than 2.5 percent of GDP because of special budgets and other 
defense related programs funded from off-budget accounts. 
Wang said that the opposition is in favor of the Special 
Budget, but only if the systems are offered at a fair price 
by the U.S.  Congressman Lantos countered that the weapons 
offered by the U.S. are the best in the world and that the 
price will be the same as offered to any other country. 
 
¶7. (SBU) Wang noted that, in addition to military threats, 
Beijing is attempting to isolate Taiwan in the international 
trade arena.  Wang asserted that Taiwan desperately needs a 
bilateral Free Trade Agreement (FTA) with Washington to 
protect itself from economic marginalization.  Lantos 
responded that passage of the Special Budget would give 
Congress a more favorable view of Taiwan with other issues, 
including a future FTA. 
 
¶8. (U) Congressman Lantos has approved this message. 
PAAL