VZCZCXRO0037
PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHIN #1155/01 0930831
ZNY CCCCC ZZH
P 030831Z APR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 9501
INFO RUEHZU/APEC COLLECTIVE
RHHMUNA/USPACOM HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001155 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR 
STATE FOR EAP/TC, 
USTR FOR ALTBACH AND WINELAND, 
USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON 
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF GOVERNORS, 
AND SAN FRANCISCO FRB/TERESA CURRAN 
 
E.O. 12958: DECL: 03/25/2010 
TAGS: ETRD ECON PREL PGOV TW
SUBJECT: JEFFREY KOO SPEAKS ON TAIWAN'S FUTURE 
 
 
Classified By: AIT DIRECTOR STEPHEN M. YOUNG for reasons 1.5 (b), (d) 
 
¶1.  (C) Summary:  During a March 29, 2006, courtesy call on 
China Trust Holdings Chairman Jeffrey L. Koo, Koo lamented 
the lack of competent political appointees in President 
Chen's government, but did not rule out a DPP victory in the 
2008 presidential election.  He also said that President 
Chen's mainland policies were hurting the economy, though 
Taiwan business would continue to invest in China.  In terms 
of cross-Strait relations, Koo said that most people in 
Taiwan felt they already had independence, but the challenge 
was to maintain it.  While not ruling out a possible future 
political affiliation with China, Koo said that Taiwan would 
not accept being subservient to China.  End summary. 
 
Koo Family Background 
--------------------- 
¶2.  (C) On March 29, 2006, AIT Director Stephen Young paid a 
courtesy call on Jeffrey L. Koo, Chairman and CEO of China 
Trust Holdings, the patriarch of one of Taiwan's most 
powerful families.  Of the three most powerful families in 
Taiwan, the Koo family has the longest history, the most 
power, and has proven most adept at prospering under 
different governments.  The family was already prosperous and 
playing a controversial role in Taiwan history when Jeffrey 
Koo's grandfather Gu Xiannong, opened the gates of Taipei 
city to welcome the Japanese in 1895 (an act some viewed as 
treasonous).  Jeffrey's mother and father both suffered and 
were imprisoned under the KMT "white terror."  Jeffrey is the 
nephew of Koo Chen-fu (who died January 3, 2005) of the 
Koo-Wang cross-Strait talks.  The family supports both Green 
and Blue politicians.  Jeffrey Koo's youngest son, Angelo 
(Chung-ying), is President of China Development Financial 
Holding (CDFH).  His eldest son Jeffrey Koo, Jr. is Chairman 
of Chinatrust Commercial Bank. 
 
Taiwan Politics 
--------------- 
¶3.  (C) Chairman Koo said that President Chen was greatly 
handicapped by the lack of experienced KMT officials from the 
previous administration in his government.  Instead, 
President Chen appointed academics without any previous 
administrative or political experience to his government. 
The academics, who were used to only viewing the 
theoretically correct answer to any problem, ran into trouble 
when theory collided with practical realities in actual 
governance.  Chairman Koo also admitted that the KMT 
contributed to this problem by stopping its members from 
serving in President Chen's government. 
 
¶4.  (C) Koo claimed that government corruption had largely 
stopped by 2000, but hinted it was now rampant again.  He 
also regretted the split between James Soong (a close 
personal friend) and the KMT and said that the impact could 
be long-lasting because old wounds take time to heal.  When 
asked about the presidential election in Taiwan in 2008, Koo 
suggested that the DPP may still hold on to power.  (Note: an 
assessment that is not often heard, in view of KMT Chairman 
Ma Ying-jeou's surging popularity.) 
 
President Chen's Mainland Policies and Business in Taiwan 
--------------------------------------------- ------------ 
¶5.  (C) Chairman Koo said that President Chen's mainland 
policies have had a negative impact on the Taiwan economy. 
In order to keep Taiwan from overly relying on investment in 
China, President Chen's administration has encouraged 
investment in Vietnam and other Southeast Asian countries. 
Chairman Koo said that his company has two offices in Vietnam 
that are both profitable, but smaller in scale compared to 
his other operations.  He indicated that profitability would 
decide the target of overseas investments, and rhetorically 
asked that if one could make $8 in Vietnam and $10 in China, 
why should they quit China.  He also said that many Taiwan 
companies are investing in China through indirect channels in 
order to evade Taiwan restrictions on such investment, but he 
believed that most Taiwan businessmen would prefer to legally 
register their China investments, if Taiwan regulations so 
permitted. 
 
TAIPEI 00001155  002 OF 002 
 
 
 
US-Taiwan Relations 
------------------- 
¶6.  (C) Chairman Koo asked how the attitude of the U.S. 
government toward Taiwan would evolve over the next five 
years.  Would the U.S. still support Taiwan maintaining its 
status as a separate territory, or would the U.S. be more 
concerned with keeping the peace in the region?  While 
acknowledging this to be a complicated subject, Director 
Young said personally he could not imagine the U.S. 
supporting independence because of the potential 
destabilizing impact on the region. 
 
¶7.  (C) Chairman Koo said the people in Taiwan believe that 
they are independent already, but China believes it owns 
Taiwan.  He added that Taiwan will not belong to any 
communist country and that a subservient relationship with 
China would be anathema to Taiwan.  Japan now increasingly 
relies on its own military force to defend itself, but Taiwan 
needs U.S. military assistance to protect itself from 
intimidation by China.  Chairman Koo suggested that 
eventually a political affiliation with China might be 
acceptable to Taiwan, if it were clear that Taiwan does not 
belong to China.  He asked again if the U.S. supports the 
status quo in Taiwan straits, and Director Young responded 
that Taiwan should engage China on mutually beneficial 
issues, but also indicated he was sensitive to President 
Chen's concern that economic trends will lead to China 
politically dominating Taiwan. 
 
¶8.  (C) Koo indicated that he is very concerned about the 
future of Taiwan.  At the same time, he thought that in the 
future, Mainland China would perhaps move away from its rigid 
insistence on a "one China" formula and provide more options 
to Taiwan in its political affiliation with China.  Director 
Young closed the meeting by urging Chairman Koo to continue 
offering sound business advice to Taiwan leaders on both 
sides of the political divide. 
 
¶9.  (C) Comment:  Koo is increasingly feeling pressure from 
his family tradition to serve as a voice of conscience to 
Taiwan's political leaders.  While harboring long-time roots 
to the KMT, he has made adjustments to the more pluralistic 
system democracy has brought to the island.  We are urging 
such senior figures to lend their voice to the current debate 
concerning Taiwan's future.  End Comment. 
YOUNG