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R 060702Z APR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 9548
INFO RUEHBJ/AMEMBASSY BEIJING 5019
RUEHUL/AMEMBASSY SEOUL 7736
RUEHKO/AMEMBASSY TOKYO 7598
RUEHCN/AMCONSUL CHENGDU 1160
RUEHGZ/AMCONSUL GUANGZHOU 9188
RUEHHK/AMCONSUL HONG KONG 6209
RUESLE/AMCONSUL SHANGHAI 8578
RUEHSH/AMCONSUL SHENYANG 5109
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

S E C R E T SECTION 01 OF 04 TAIPEI 001194 
 
SIPDIS 
 
SIPDIS 
 
DEPT PASS TO AIT/W 
 
E.O. 12958: DECL: 03/31/2016 
TAGS: CH MARR MAS PGOV PREL
SUBJECT: DIRECTOR'S INTRODUCTORY CALL ON MINISTER OF DEFENSE 
LEE JYE, MARCH 31, 2006 
 
TAIPEI 00001194  001.2 OF 004 
 
 
Classified By: AIT Director, Stephen M. Young, Reason(s): 1.4(B/D) 
 
¶1.  (S) Summary.   In his initial meeting with AIT Director 
Young, Defense Minister Lee Jye welcomed continued close 
support with AIT on defense subjects.  Minister Lee reported 
that progress had been made on approval of procurement of 
three procurement items (PAC-2 Upgrade, P-3C, Submarine 
design) in the annual budget until being sidetracked by the 
recent National Unification Council controversy.   On 
trilateral US-JP-TW cooperation, Minister Lee noted agreement 
with US request not to have Japanese observers at 2006 Han 
Kuang exercise activities, but signaled his wish for US 
support for such activities in the future, possibly as early 
as 2007.   In response to AIT expression of concern on the 
Luke F-16 training program and the MND plan to reduce the 
aircraft at Luke for the first time, the Minister 
acknowledged the value of replacing the four aircraft that 
are scheduled to return to Taiwan.  However, he tied this to 
their plan to move forward with an additional buy of 40-60 
fighter aircraft that is at least three to four years away 
from providing Taiwan any aircraft.  On counterstrike, 
Minister Lee indicated little flexibility on their plan to 
develop what he termed the Defensive Countermeasure.  He 
underscored that the program was only a minor change to the 
existing Hsiung Feng 2 missile and that it was only in the 
research phase.  However, he emphasized that Taiwan needed 
some measure that it could employ if foreign assistance could 
not be provided to Taiwan in a timely manner.   Overall, the 
meeting reflected a very forthcoming and positive tone.  End 
Summary. 
 
Minister Opens with Special Budget 
--------------------------------------------- -- 
 
¶2.  (C)  Minister Lee opened the discussion by welcoming 
Director Young.   Minister Lee then provided the Director 
with a quick summary of the status of the Special Budget and 
the three procurement items.   Minister Lee noted resolution 
of the three procurement projects, with some changes,  looked 
favorable.  He indicated that PFP Legislator Hu had drafted a 
"case" which had been coordinated with the KMT, with the 
outcome that the P-3C procurement had been agreed to be 
placed in the annual budget, as well as the PAC-2 upgrade and 
that they hoped this would include funds for the initial 
design phase for the submarine program.   He indicated that 
this had all been agreed to prior to situation concerning the 
National Unification Council and that now they would have to 
see what the current situation was. 
 
¶3.  (C) He underscored that President Chen had approved 2.85% 
of the GNP for the defense budget for next year and 3.0% for 
¶2008.  He noted that they had submitted the financial data to 
the EY and that there was good coordination between the MND 
Comptroller and the EY.   He felt that should achieve their 
3.0% goals in 2008.  He further noted that this funding level 
would provide adequate funds for the three procurement 
projects with some residual funds to support other 
programs.   Minister Lee also expressed the Ministry of 
National Defense's desire to split the submarine procurement 
into two phases (A Design / Source Selection Phase followed 
by Procurement Phase) and his desire for AIT support on this 
issue. 
 
Director Desire to Increase Attention to Defense Matters 
--------------------------------------------- ------------ 
 
¶4.  (C)    Director Young responded to the Minister's 
greeting by noting that he had spent a lot of time with 
former Defense Minister Tang, Fei and his staff when he was 
Deputy Director, as he felt it was important to meet with 
Ministry and the Services.   As Director, he would spend more 
time working with the Minister and his colleagues.   He noted 
that nothing was more important than security in the 
relationship and that this was a critical moment in managing 
the security talks.  He noted that on his way here, he had 
had extensive talks with high-level personnel in the DoD and 
had spent two days with PACOM in Hawaii.   He indicated that 
 
TAIPEI 00001194  002 OF 004 
 
 
there was a lot of work to do.   He signaled that this was 
something that he would discuss regularly with political 
leaders in Taiwan.   He pointed out that he had already 
discussed this with President Chen and that he looked forward 
to discussing this subject with Mayor Ma, Ying-Jieou. 
 
¶5.  (C) Director Young underscored that we (US) were among 
the biggest supporters of Taiwan democracy and that it was 
Taiwan's best selling point around the world and on the 
mainland.  However, he noted that he shared the views of the 
US leadership that there should be limits on Taiwan political 
competition when Taiwan's security was at stake.  He said 
that he had stressed in his meeting with President Chen and 
with leading KMT figures our hope that they focus less on 
political competition and more on the security of Taiwan. 
 
¶6.  (C)  Director Young  continued by noting that during Ma's 
trip to the US, he (Ma) had heard frank talk on the defense 
budget.  Director noted that he would talk to all concerned 
to encourage setting politics aside in the defense budget 
debate.    He noted that China's growth and economic 
prosperity presents problems for the Minister's staff as well 
as problems for our staffs as was noted in his discussions 
with senior personnel at PACOM.    He further noted that 
improvements such as P-3C's, PAC-2's and Sub were important. 
But there are other "soft" initiatives that our staffs could 
work on such as computer simulations, infrastructure 
hardening, joint operations and training, and communications 
improvements which could combine to provide asymmetrical 
improvements to increase Taiwan's capabilities. 
 
 
Defense is Not Just Budgets 
------------------------------------- 
 
¶7. (C)  Director Young noted that activities such as the Han 
Kuang exercises and the Monterey Talks were important 
milestones in our expanded cooperation.   Director stated 
that he looked forward to visiting the upcoming Han Kuang CPX 
(April 06) and that he was considering going to the Monterey 
Talks this year.   He thanked the Minister for the support 
and access that they have been giving to AIT's two military 
offices - the Technical Section and the Liaison Affairs 
Section.  He noted that cooperation with these offices was 
the glue that holds cooperation together. 
 
¶8.  (C) Minister Lee responded by indicating that in the past 
the MND had talked directly to DoD, but now they talked 
through AIT and he felt that this manner of communicating was 
more beneficial. 
 
F-16 Training Program / Interim Fighter Procurement 
--------------------------------------------- ---------- 
 
¶9.  (C)  Director Young recalled that when he was last in 
Taiwan the last F-16's, which had been approved by President 
Bush senior, were being delivered.   At the time, he visited 
Chai-Yi AB and had talked to both the US and TW pilots.  He 
had come away with a sense of the important role the Luke AFB 
pilot training program played in ensuring that Taiwan's 
pilots were among the best in the world.   Director Young 
said he recognized that the program was expensive and that it 
took the best pilots away from Taiwan for a while.  However, 
he underscored that the key to defense in the straits was 
having the best pilots and the best equipment.   He hoped 
that the Minister would continue to support this important 
program. 
 
¶10. (C)   Minister Lee thanked the Director for his interest 
in this program and noted that this program has always been 
one of MND's most important programs.  He reported that he 
had been discussing with the Air Force what their next 
aircraft should be -- perhaps either F-15 or a newer version 
of the F-16.   He noted that they were awaiting a US decision 
on the release of aircraft.   He reported that four Luke 
aircraft would return to the Taiwan as part of the Han Kuang 
exercise this year.   He indicated that if they (Taiwan) 
 
TAIPEI 00001194  003 OF 004 
 
 
moved forward on procurement of new aircraft, perhaps the 
first four production aircraft could remain in the US at 
Luke.   Minister Lee reported that President Chen had 
promised never to cease this program.  He went on to affirm 
that if they establish the future (fighter) procurement 
program, the first four aircraft would stay at Luke. 
Director Young indicated that that we would look into 
situation and appreciate the Minister's support for the 
program.   Minister Lee closed the subject by noted that the 
IDF cannot be seen as the best aircraft and they would soon 
need to replace it. 
 
¶11.  (C) Note:   Minister Lee was referring to two separate, 
but closely related, issues.  While the Taiwan Air Force 
(TAF) has consistently desired to continue the Luke AFB 
training program at its current / expanded scope, the 
Minister has allocated less funding, scaled back to 
year-to-year approval (instead of multi-year) and directed 
return of four (4) of the fourteen (14) TW aircraft at Luke 
as part of a Han Kuang exercise.   OSD and USAF have 
expressed concern at the reduction in the Luke program, in 
particular, at the return of 4 aircraft.  Concurrently, 
Minister Lee has directed the TAF to develop a request for an 
additional fighter aircraft purchase of between 40-60 
aircraft to replace portions of their F-5, IDF, or Mirage 
fleets.   The formal request has NOT been submitted to the US 
yet, though the Minister's comments suggest that it has.  We 
expect the request for pricing to include a request for the 
F-16 and the F-15, though the Minister's comments indicate 
that he recognizes that F-15 approval is not likely.   The 
offer to put the first four production aircraft in Luke is 
the first indication of a response to US concerns about 
scaling back the Luke program -- however, the first 
production aircraft would not be delivered for at least 2-3 
years after program start.   After the meeting, MND POC's 
called TECH Section to underscore that the MND was moving 
forward on the interim aircraft buy request and would like 
sign the new FMS case next year in 2007.   At this point, it 
is unclear whether funding is actually in the 2007 of 2008 
budget.  Regardless of how quickly the decision moves 
forward, the Minister's proposal would effectively reduce the 
scale of the Luke training for at least several years. 
 
Trilateral Cooperation with Japan 
------------------------------------- 
 
¶12.  (C) Director Young expressed appreciation for MND's 
decision not to invite Japanese observers to the upcoming Han 
Kuang exercise.  He reported that Japan was a firm US ally 
who looked at security challenges in the area with a common 
perspective, but that visible trilateral discussions and 
cooperation are not advisable and unnecessarily heightened 
tensions across the strait.  Director Young noted that this 
was not in Tokyo's, the US's or Taipei's interest.   He 
thanked the Minister for his wisdom in this area, but he also 
stated that this does not mean that Japan is not looking 
positively at cooperation with Taiwan.   Minister Lee 
responded that the Taiwan initiative to work with Japan had 
arisen as a result of Han Kuang18 or 19 (2002/2003) and 
discussions with PACFLT (Translated as PACFLT - more likely 
PACOM) and that PACFLT (PACOM) had recommended that Taiwan 
establish cooperation with Japan.  Minister Lee reported that 
as of last week, Japan had been planning to send 9 people to 
observe the HK exercises.  Seven of these personnel were to 
be retired general or flag officers.   The Minister also 
indicated that he would be seeking US support to include 
Japanese participation in the Han Kuang exercise next year. 
Director Young reiterated that the perception of trilateral 
cooperation needs to be kept off the table. 
 
 
Counterstrike - Thanks For Your Concern - But No Thanks 
--------------------------------------------- ------------ 
 
¶13.  (S)  Director Young raised U.S. concern with the 
research, development, deployment and doctrinal development 
of a counterstrike capability against the mainland.   He 
 
TAIPEI 00001194  004 OF 004 
 
 
noted that although it may not be deployed now, there was 
grave concern about the program in the American political and 
military leadership in Washington and in Hawaii. 
 
¶14.  (S)   Minister Lee responded by indicating that for some 
time now, there have been complaints from the US side 
questioning Taiwan's commitment to defend  itself.    He 
stated that they had initiated this program in a low key 
manner.  He stated that the Defensive Countermeasure program 
is a modification of an existing Hsiung Feng 2 missile which 
adjusts the seeker head and extends the range of the missile 
to the Mainland.  He stated that this program is only in the 
research phase.   He underscored that from a defensive point 
of view, if there is a situation where foreign assistance is 
needed to defend Taiwan, but unable to get to Taiwan in a 
timely manner, then Taiwan must have measures that it can 
use.  The first premise is to prevent war in the Taiwan 
Straits.  He underscored that the Mainland has been targeting 
Taiwan with systems for some time, but Taiwan has not been 
targeting the Mainland.   He then noted that a war must be 
stopped before it starts and that Taiwan would only use its 
Defensive Countermeasure if there was no other choice.  He 
firmly stated that they would not use it against civilian 
targets - not as a "counter-value" system.   He stated that 
they would only use it against military targets.   Further, 
he stated that they would notify AIT and the USG before the 
use of the Defensive Countermeasure system.    He continued 
by indicating that they are developing regulations for the 
use of the Defensive Countermeasure.   He reiterated that it 
is only a modification of the Hsiung Feng 2 seeker head and 
that it was only in the research phase.    He continued that 
the program had remained in a low profile until a legislator 
raised the issue in the LY on the need to attack.  He closed 
by noting that media reports would need to be taken into 
consideration by the Mainland. 
 
¶15. (S) Director Young responded by indicating that he 
thought greater transparency and, at some point, a discussion 
of doctrine, might be valuable.    Minister Lee responded 
that  would certainly be feasible.   He closed by indicating 
that if the US would be willing to release critical 
components for the program, it would be most helpful. 
 
Three Pillars 
----------------- 
 
¶16.  (C)  In closing, Director Young noted that he wanted to 
emphasize three areas and that the need to support 
democratization is the base starting point for his three 
areas of emphasis. 
 
--  First, he noted that he wanted to work with Minister to 
establish a 21st century defensive capability that could 
accurately and prudently address the threat across the 
strait. 
 
--  Second, he wanted to cooperate in every way to ensure 
that the economy would remain a competitive 21st economy and 
competitive in the region. 
 
--  Third, he wanted to carefully work with both sides and 
with an increasingly prosperous China to push it in more 
productive and peaceful directions. 
 
Director closed by noting that if we look at these 
priorities, it is easy to say that time is on Taiwan's side. 
Taiwan can protect its freedoms while waiting for China to 
evolve into a more open society which is easier to deal with. 
 
¶17. (C)  Minister Lee indicated his understanding and 
agreement with the Director's comments.  He noted that if the 
Director had special requests with regard to Han Kuang, e.g. 
the desire to visit units or troops, he would be glad arrange 
things.    He closed by indicating that he thought that they 
would continue to talk frequently. 
YOUNG