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S E C R E T SECTION 01 OF 03 TAIPEI 003522 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/12/2026 
TAGS: PGOV PREL APECO TW
SUBJECT: PRESIDENT CHEN AND DIRECTOR DISCUSS BILATERAL 
ISSUES AND TAIWAN DOMESTIC POLITICS 
 
REF: A. HANOI 2616 
 
     ¶B. STATE 168287 
 
Classified By: AIT Director Stephen M. Young, 
Reasons: 1.4 (b/d) 
 
¶1.  (S) Summary: The Director briefed President Chen 
Shui-bian on October 12 on his recent consultations in 
Washington, underscoring the importance Washington attaches 
to Taiwan's passage this fall of a robust defense budget. 
President Chen stressed his strong determination and his 
expectation that the defense budget will be approved.  The 
Director informed Chen that Vietnam has agreed to send a 
special APEC envoy to Taiwan around the end of next week. 
President Chen pointed out to the Director that he had 
avoided including any reference to the controversial issue of 
constitutional revision in his two national day speeches on 
October 10.  Chen was most enthusiastic when he turned to the 
domestic political trends that he saw turning in his favor, 
expressing confidence he would serve out his full term until 
¶2008.  He argued that Kuomintang (KMT) Chairman and Taipei 
Mayor Ma Ying-jeou's chances of becoming the KMT presidential 
candidate in 2008 have been seriously damaged because of his 
"concessions" to the Shih Ming-te protest movement against 
the President.  Chen told the Director that while he fully 
respected freedom of speech, he intended to take firm action 
against those responsible for illegally disrupting an honor 
guard and vehicle movements at the national day ceremony. 
End Summary. 
 
¶2.  (S) The Director, accompanied by DDIR and notetaker, met 
with President Chen Shui-bian, accompanied by Presidential 
Office Deputy Secretary General Liu Shyh-fang, notetaker, and 
interpreter, at the Presidential Office on October 12 to 
discuss his consultations in Washington, bilateral issues, 
and Taiwan's domestic political situation.  The Director 
expressed appreciation for President Chen's stressing the 
importance of strengthening defense in his October 10 
national day speech.  The Director briefed Chen on his 
consultations with senior officials in Washington, noting 
that he had focused on three subjects: the Taiwan political 
situation, the defense budget, and economic ties. 
 
Vietnam and APEC 
---------------- 
 
¶3.  (S) The Director informed Chen that, under instructions, 
our Embassy in Hanoi has recently made a high-level approach 
to the Vietnamese government, urging it to send a special 
envoy to Taiwan regarding the APEC meeting.  The Vietnamese 
promised our Embassy that they would send an envoy to Taiwan 
around the end of next week (Refs a-b).  While not optimal, 
this was something, and the Vietnamese had said they would 
follow past APEC practice. 
 
Chen to Push Hard on the Defense Budget 
--------------------------------------- 
 
¶4.  (S) President Chen stressed to the Director that he had 
personally added into the draft national day speech the 
section urging the Legislative Yuan (LY) to pass the defense 
budget, which underscored his own determination to see the 
defense budget approved.  He had discussed the issue with LY 
Speaker Wang Jin-pyng (KMT), who was optimistic that the LY 
would pass the supplementary defense budget from last June, 
which has been blocked in the LY Procedure Committee.  Chen 
said he would continue pushing both the supplementary and the 
regular defense budget.  The regular defense budget will be 
voted on at the end of the LY fall session and should pass. 
Ma Ying-jeou and Wang Jin-pyng clearly understand the 
importance of the defense budget being approved this LY 
session.  Although People First Party (PFP) Chairman James 
Soong also clearly understands the need, he has not shown a 
willingness to cooperate.  Chen agreed with the Director that 
 
TAIPEI 00003522  002 OF 003 
 
 
the important point was to achieve results and not give the 
opposition any excuse to oppose the defense budget. 
 
No Constitutional Revision in National Day Speeches 
--------------------------------------------- ------ 
 
¶5.  (S) Chen underscored to the Director that he had made no 
reference to the issue of constitutional revision in either 
his indoor or outdoor national day speeches on October 10. 
 
 
National Day Ceremony Disruptions 
--------------------------------- 
 
¶6.  (S) Turning to the protests that had taken place at the 
October 10 national day ceremony, President Chen stressed 
that he and the government fully respected freedom of speech, 
including even the heckling and display of banners by 
pan-Blue legislators and others during the ceremony. 
However, speaking with some passion, Chen asserted the 
government could not tolerate illegal disruption of the 
ceremony itself.  The government would take legal action 
against those who had disrupted the march of the honor guard 
and those who had pounded on vehicles carrying foreign 
dignitaries departing the ceremony.  In addition, Chen said 
he had asked for an immediate report from national security 
officials and the armed forces on the disruptions.  The 
government will take administrative measures against any 
national security or armed forces personnel who were derelict 
in performing their duties at the ceremony, and Chen added 
that he would make personnel changes if necessary. 
 
Anti-Chen Movement a Bust 
------------------------- 
 
¶7.  (S) Chen assured the Director that the "Red Tide" (i.e., 
Shih Ming-te's anti-Chen movement) was not winning much 
support and the second recall vote against him would fail 
again on Friday.  At a state dinner the previous evening, 
Chen noted, Wang Jin-pyng had told the president of Honduras 
that the recall vote would definitely fail, that he expected 
President Chen to serve out his full term until 2008, and 
that he also expected there to be further positive 
accomplishments in this period. 
 
Shih Ming-te Is Dragging Down Ma Ying-jeou 
------------------------------------------ 
 
¶8.  (S) Asked about Shih Ming-te, Chen said simply, "Ignore 
him."  Shih will not be satisfied regardless of the results 
of the prosecutor's report and will continue to protest, Chen 
predicted.  The person most damaged by Shih's movement is Ma 
Ying-jeou, Chen said gleefully.  According to DPP internal 
polls, dissatisfaction with Ma is now over 50 percent, while 
his approval rating has declined from a high of 76 percent 
following his trip to the U.S. to just 41 percent now.  The 
trend line for Ma is clearly heading downward, and it will 
continue to do so as long as Ma makes concessions to Shih. 
In dealing with Shih, Ma is not fulfilling his mayoral duties 
but acting as the KMT chairman, Chen observed.  With just two 
months left in office, Ma is showing his worst side at the 
end of his term, when he should be showing his best.  This 
will hurt his future chances, and pan-Blue divisions will 
take away Ma's opportunity to become president in 2008, Chen 
predicted.  The Democratic Progressive Party (DPP) noticed 
Ma's problems long ago but others had refused to believe this 
until the last month or two.  While Ma has less and less 
chance for 2008, it is too early to say who will be the DPP 
candidate.  Much can happen before the DPP presidential 
primary, and the front-runner now may not necessarily be on 
top in six months, as Ma's example shows. 
 
Kaohsiung and Taipei Mayoral Races 
---------------------------------- 
 
TAIPEI 00003522  003 OF 003 
 
 
 
¶9.  (S) Chen expressed confidence that DPP candidate Chen Chu 
has a chance to win the mayoral election in Kaohsiung, 
because of recent polling trends.  Her numbers are moving up, 
while those of her KMT opponent Huang Chun-ying are moving 
down, and they are now separated by just four percent in the 
polls.  In Taipei, the big question is whether People First 
Party (PFP) Chairman James Soong will enter the race on 
October 17, which would put pressure on KMT candidate Hau 
Long-bin, because his criticism of Ma Ying-jeou and Hau 
Long-bin would be more effective than criticism from the DPP 
side.  While Soong cannot win, he probably believes he has to 
enter the race to help the PFP candidates for the Taipei city 
council.  DPP candidate Frank Hsieh's chances are less than 
those of Chen Chu, but he should not be counted out because 
he is a good campaigner and there are two months left before 
the election.  If the DPP holds on to Kaohsiung, that will 
stabilize the overall political situation for the DPP, Chen 
suggested. 
 
Comment 
------- 
 
¶10.  (S) Chen seemed confident and buoyed by current trends 
in politics, which he portrayed as holding considerable 
promise of turning the negative tide which has engulfed him 
and his party the past year or more.  However, he was much 
clearer in analyzing KMT politics than explaining how the DPP 
can put together a winning ticket in 2008, despite our 
efforts to probe this question.  The implication of his 
description of the DPP process of determining its 
presidential candidate for 2008 seems to be that Chen is not 
yet reconciled to Premier Su Tseng-cheng's claiming that 
prize.  The conventional wisdom would suggest he may still 
hope to push DPP Chairman Yu Shyi-kun as his successor, 
despite poll numbers which indicate Su is the much stronger 
candidate.  Chen also seems much too eager to count Ma 
Ying-jeou, his longtime rival, out of the running for 2008, 
though we agree that Ma has not covered himself with glory 
these past several weeks. 
YOUNG