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RHHMUNA/USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000744 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 04/02/2032 
TAGS: PGOV TW
SUBJECT: KEY LEGISLATIVE AND PRESIDENTIAL ELECTIONS TO 
SHAPE THE POLITICAL AGENDA IN 2007-2008 
 
 
TAIPEI 00000744  001.2 OF 003 
 
 
Classified By: AIT Acting Director Robert S. Wang, 
Reasons: 1.4 (b/d) 
 
¶1.  (C) Summary: Taiwan's top politicians are maneuvering for 
advantage in the run up to key Legislative Yuan (LY) and 
presidential elections in late 2007 and early 2008.  The 
opposition Kuomintang (KMT), which now controls the LY 
through a pan-Blue alliance, is expected to increase its 
percentage of seats in year-end legislative elections and may 
well win an outright majority.  The presidential race will be 
hotly contested by the ruling party, the independence-leaning 
Democratic Progressive Party (DPP), and the KMT, which favors 
improved cross-Strait relations.  The DPP frontrunners, 
Premier Su Tseng-chang and former Premier Frank Hsieh, and 
the sole KMT hopeful, Ma Ying-jeou, are all relatively 
pragmatic.  However, the DPP is expected to play up Taiwan 
identity and independence-related themes in fierce 
campaigning during the battle for the presidency.  End 
Summary. 
 
¶2.  (C) The ruling DPP and opposition KMT have both begun 
their primary seasons; the two parties are scheduled to 
announce their presidential candidates at the end of May. 
The KMT will announce its LY candidates in a series of three 
tranches during May-June, while the DPP is slated to announce 
its LY candidate lineup on June 20. 
 
¶3.  (C) Specific dates for the LY and presidential elections 
will not be set until new Central Election Commission (CEC) 
members take office in June, a CEC official recently told 
AIT.  Most likely, the LY elections will be held in early 
December 2007 and the presidential election in mid-March 
¶2008.  There remains a possibility, however, that the LY and 
presidential elections might be held jointly on January 19, 
¶2008.  Holding the LY and presidential elections at the same 
time would save resources and would increase both voter 
turnout and presidential coattail effects in the LY 
elections; it might also lead to increased vote buying.  Once 
elected, the new LY will convene in February 2008 and the new 
president will take office May 20, 2008. 
 
¶4.  (C) Together, the LY and presidential elections will 
determine the overall balance of political power in Taiwan 
from 2008-2012, with significant implications both for future 
cross-Strait and independence-related developments.  Under a 
divided government for the past eight years, the 
independence-leaning DPP has held the presidency, while the 
KMT has controlled the legislature through a pan-Blue 
alliance.  Although divided government has resulted in 
frequent political gridlock in the LY, most famously over 
arms procurement, it has also enabled the KMT and DPP to 
check each other on the divisive and sensitive 
independence-unification issue. 
 
¶5.  (C) Two outcomes are realistically possible for the pair 
of upcoming LY and presidential elections.  The current 
divided government could continue, with the DPP and KMT 
retaining their respective control of the presidency and LY. 
The alternative is that the KMT could sweep the LY and 
presidential elections, which would create a united 
government and might lead to closer cross-Strait relations. 
Two other outcomes are theoretically possible but highly 
unlikely: a DPP sweep or a DPP LY victory coupled with a KMT 
presidential win. 
 
KMT Favored in Legislative Elections 
------------------------------------ 
 
¶6.  (C) Sitting and would-be legislators are facing a 
life-and-death struggle this year as they compete for just 
half as many seats as in previous elections (113 down from 
225).  Intense intra-party competition for nominations is 
stimulating negative campaigning, most apparent now in the 
DPP where Deep Green extremists are relentless in their 
attacks on party moderates and reformers.  Competition is 
also expected to intensify within the KMT; the primary 
contests in some districts pit Mainlander against Taiwanese 
candidates. 
 
¶7.  (C) Following fundamental changes in the LY election 
 
TAIPEI 00000744  002 OF 003 
 
 
system, districts will now elect single instead of multiple 
representatives, who had often come from different large and 
small parties (septel).  The new system of single 
representative districts is expected to strengthen the trend 
toward a two party system (KMT and DPP) and accelerate the 
ongoing marginalization of the smaller People First Party 
(PFP) and Taiwan Solidarity Union (TSU).  The big beneficiary 
of the LY election changes will very probably be the KMT, 
which may well win a clear majority of the 113 LY seats.  The 
changed election system may also reinforce the geographic 
trend toward a KMT-dominated north Taiwan and a DPP-dominated 
south Taiwan.  The new LY may have fewer radicals than 
before, which over time could help increase professionalism 
and productivity. 
 
The Presidential Battle 
----------------------- 
 
¶8.  (C) Because the KMT seems to have a clear edge on the LY, 
the presidential election, which is expected to be close, 
takes on critical importance for both the KMT and DPP. 
Weakened by its seven year absence from power and access to 
administrative resources, the KMT hopes to use the presidency 
to restore the party's long-term viability.  Party leaders, 
who see the popular Ma Ying-jeou as the KMT's one great hope, 
fear that another loss this election could doom the party to 
long-term opposition status or worse.  KMT officials believe 
Ma could quickly disprove the DPP's "poisonous" arguments 
that the KMT will sell out Taiwan to China and that China is 
Taiwan's enemy.  However, the DPP fears that a united KMT 
government (presidency and legislature) would compromise 
Taiwan's interests in its efforts to move closer to China. 
 
¶9.  (C) Acknowledging criticisms that it has achieved little 
in seven years, the DPP says it needs more time to carry out 
its reform and pro-independence agendas, including programs 
to promote the growth of Taiwanese identity.  Over the long 
term, the DPP hopes to attain majority status by converting 
ethnic Taiwanese supporters of the KMT into DPP supporters. 
With a strengthened popular base, the DPP would hope 
eventually to win control of the legislature, which would 
make it much easier for a DPP government to implement its 
programs. 
 
Presidential Hopefuls 
--------------------- 
 
¶10.  (C) Premier Su Tseng-chang and former Premier Frank 
Hsieh are frontrunners for the DPP presidential nomination, 
while the KMT nod seems almost certain to go to former party 
Chairman Ma Ying-jeou, unless he is seriously weakened by his 
corruption trial, which begins April 3.  (Note: Ma stated 
publicly over this past weekend that he will run even if 
convicted in the first trial.)   Should Ma falter, LY Speaker 
Wang Jin-pyng will hope to become the KMT presidential 
candidate. 
 
¶11.  (C) After a year of difficulties stemming from 
corruption charges against President Chen's family and 
advisors, DPP morale has rebounded following its relatively 
strong performances in the December 2006 Taipei and Kaohsiung 
municipal elections.  Ma Ying-jeou's problems, including his 
corruption indictment, Mainlander orientation, competition 
with LY Speaker Wang Jin-pyng, and perceived weak leadership 
have boosted the DPP's confidence that it can beat Ma and the 
KMT in the 2008 presidential election.  Nonetheless, Ma 
continues to enjoy considerable popular support, the KMT has 
a strong grassroots organization, and projections based on 
2005-2006 local elections show a KMT advantage over the DPP. 
For these reasons, the outcome of the 2008 presidential 
election is by no means a given.  Although media public 
opinion polls show Ma well ahead of Su, Hsieh and other DPP 
candidates, such polls considerably underestimate pan-Green 
strength.  Internal polling commissioned by the Hsieh camp 
shows a very close gap between either Su or Hsieh and Ma.  Of 
course, no polling at this very early stage can hope to show 
the situation on election day. 
 
¶12.  (C) The high stakes for both parties in the presidential 
election will lead to fierce campaigning, which is bound to 
 
TAIPEI 00000744  003 OF 003 
 
 
intensify in the later stages of the race.  In its effort to 
keep the KMT on the defensive, the DPP is already playing up 
Taiwan identity issues by promoting a series of campaigns on 
de-Sinification, de-legitimization of Chiang Kai-shek, 
drawing up a new constitution, changing the names of 
government-controlled entities, issuing postage stamps under 
the name Taiwan, and using the name Taiwan to apply to join 
the UN.  The DPP made effective use of a large-scale 
demonstration and a referendum to whip up support in 2004, 
and it may well use similar tactics for the 2008 election. 
The DPP hopes to schedule a referendum on reclaiming 
"ill-gotten" KMT party assets together with the presidential 
election, and it is proposing another referendum on joining 
the UN under the name Taiwan.  The more staid KMT 
traditionally has difficulty campaigning against the DPP, 
though it won heavily in the 2005 local elections when it ran 
on an anti-corruption platform.  For the upcoming election, 
the KMT may highlight good governance and economic 
performance issues, including cross-Strait economic 
relations, trying to paint the DPP as incompetent and 
corrupt. 
 
¶13.  (C) In addition to the presidential candidates 
themselves, President Chen is an important factor in this 
election.  Chen has a personal interest in the outcome of 
this election since he has been informed that he might be 
prosecuted for corruption after he leaves the office that 
provides him presidential immunity.  Chen will have better 
options, including a possible presidential pardon for himself 
or his wife, if the DPP remains in power.  Currently, Chen is 
leading the DPP's efforts to select the candidate with the 
strongest prospect of winning the 2008 presidential election. 
 While public and media attention will tend to focus on the 
candidate once nominated, most observers expect President 
Chen to continue playing a quite active role during the 
campaign, especially with Deep Green supporters and in 
southern Taiwan. 
 
¶14.  (C) Su, Hsieh, and Ma are all relatively pragmatic and 
cautious and, if elected president, should be able to avoid 
actions that might provoke cross-Strait tensions or cause 
domestic turmoil over the independence-unification issue. 
The KMT promises to improve cross-Strait relations if it 
returns to power in 2008, and cross-Strait friction would 
probably decrease compared to the situation under the 
pro-independence DPP government.  If the KMT wins the 
presidency, the DPP will have significantly less leverage 
than the KMT has now in opposition because it will not have 
control of the legislature.  To counter the KMT, the DPP 
might resort to sometimes disruptive protest activities, 
including in the LY.  If the DPP wins the presidency, the two 
parties will continue to check each other as they do now, 
which reduces government efficiency, but also inhibits a DPP 
president's ability to pursue a pro-independence agenda. 
Because President Chen's strategy of trying to lead from a 
minority position in the LY has failed disastrously, a DPP 
successor might try to form some type of alliance with 
non-DPP legislators to achieve an LY majority. 
WANG