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OO RUEHCN RUEHGH RUEHVC
DE RUEHIN #1999/01 2430436
ZNR UUUUU ZZH
O 310436Z AUG 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6606
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 7191
RUEHUL/AMEMBASSY SEOUL 8864
RUEHKO/AMEMBASSY TOKYO 9030
RUEHNE/AMEMBASSY NEW DELHI 0191
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 04 TAIPEI 001999 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/TC, H 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV PREL CH TW
SUBJECT: U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION 
ENCOUNTERS DIVERGING TAIWAN VIEWS ON CROSS-STRAIT SECURITY 
 
(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  IT SHOULD 
NOT BE DISSEMINATED OUTSIDE U.S. GOVERNMENT CHANNELS OR IN 
ANY PUBLIC FORUM WITHOUT THE WRITTEN CONCURRENCE OF THE 
ORIGINATOR.  IT SHOULD NOT BE POSTED ON THE INTERNET. 
 
¶1.  (SBU) Summary: Vice Premier Chiou I-jen told the 
U.S.-China Economic and Security Review Commission delegation 
that the cross-Strait military balance is increasingly 
favoring China.  President Chen understands that U.S.-Taiwan 
military cooperation is essential to Taiwan's defense, Chiou 
added, and is working to increase military spending to 3 
percent of GDP.  Taiwan cannot stop its manufacturers from 
moving to China, Chiou stated. Instead, Taiwan must preserve 
and increase its advantage in tech- and service-intensive 
industries.  President Chen will spend the last months of his 
presidency promoting "democratization" and "Taiwan identity." 
 Chiou predicted that hosting the Olympics will "seriously 
challenge" Beijing's ability to control domestic dissent. 
National Security Council Secretary-General Mark Chen 
complained that China continues to obstruct Taiwan 
participation in international organizations, and wondered 
"how long" Taiwan could withstand a PRC attack. 
 
¶2. (SBU) DPP advisers to presidential candidate Frank Hsieh 
predicted a DPP victory if voter turnout next March is high, 
and asserted that KMT candidate Ma Ying-jeou is too 
"pro-China" for most Taiwan voters' liking.  Ma told the 
delegation that as president, he would resume dialogue with 
China to seek a peace agreement, expanded economic and 
cultural links, and an accord on Taiwan's international 
"living space."  Ma stated he would not sacrifice U.S.-Taiwan 
military cooperation to appease PRC demands.  Mainland 
Affairs Council Chairman Chen Ming-tong dismissed Ma 
Ying-jeou's proposed peace agreement as a "campaign 
stratagem" that Beijing will not take seriously.  Vice 
Foreign Minister Katherine Chang emphasized the importance of 
close ties between the U.S., Taiwan, and Japan. Defense 
Minister Lee Tian-yu stated Taiwan is committed to 
maintaining its self-defense capability.  The delegation also 
was briefed on Taiwan's defense communications capabilities. 
Taiwan's counterterrorism coordinator told the delegation 
that Taiwan does not perceive a significant domestic 
terrorist threat.  End summary. 
 
Vice Premier Chiou on PRC Military Build-Up, Taiwan Identity 
 
¶3.  (SBU) Vice Premier Chiou I-jen covered a broad range of 
topics in his very congenial meeting with the U.S.-China 
Economic and Security Review Commission (USCC) delegation. 
Pointing to the growing PRC military build-up, he said the 
trend was obviously getting worse.  President Chen, he said, 
fully understands the challenge and is working to increase 
the defense budget to 3 percent of GDP.  Chiou stressed the 
importance of U.S.-Taiwan military-to-military cooperation 
and said that bilateral cooperation had greatly increased and 
Taiwan was learning from the U.S. side in doctrine and 
military reforms.  In response to a question from Vice 
Chairman Blumenthal about whether Taiwan people trust the 
U.S., the Vice Premier replied that in some ways people 
"trust the U.S. too much."  He said that the U.S. was the one 
country that had helped Taiwan develop its democracy, economy 
and security.  Taiwan counts too much on U.S. help, he said, 
and noted that there had been a tremendous impact in Taiwan 
when President Bush "criticized President Chen a little" at 
the end of 2003. 
 
¶4.  (SBU) Vice Chairman Blumenthal asked Chiou what President 
Chen's legacy would be, and what his priorities were in the 
last seven months of his administration.  Chiou said Chen had 
promoted democratization and strengthened the public's sense 
of Taiwan identity.  Defining democratization rather broadly, 
Chiou claimed that free speech in Taiwan was "freer" than in 
the U.S., thanks to legal protections put in place during 
Chen's administration. He also claimed that Chen would leave 
behind a neutral military, wholly disconnected from any 
political party. 
 
¶5.  (SBU) Chiou told the delegation that the rising sense of 
"Taiwanese identity" is one of President Chen's lasting 
contributions to Taiwan society.  According to Chiou, in 2000 
 
TAIPEI 00001999  002 OF 004 
 
 
only 20 percent of those polled identified themselves as 
"Taiwanese," whereas in recent polls, Chiou continued, more 
than 60 percent identify themselves as "Taiwanese," thanks to 
Chen administration initiatives.  Chiou expressed the hope 
that this number will continue to increase, and that someday 
soon 70-80 percent of the public will call themselves 
"Taiwanese."  Chiou acknowledged that the "identity" issue 
has become more complicated.  In the past, if someone 
considered himself to be "Taiwanese," he was almost certainly 
a supporter of Taiwan independence.  This is no longer the 
case, Chiou continued, as identity and independence have 
become de-linked.  Chiou worries that older DPP leaders fail 
to see this trend, and that Chinese and U.S. experts don't 
see it either.  On the other hand, Chiou continued, because 
ethnicity (Mainland-born vs. Taiwan-born) and identity 
(Chinese vs. Taiwanese) are no longer tied so closely 
together, Taiwan's increasing number of immigrants will not 
necessarily deter a rising sense of Taiwan identity, though 
some may have trouble assimilating. 
 
Olympics Will Challenge China's Stability 
 
¶6. (SBU) Chiou predicted that hosting the Olympics will 
"seriously challenge" China's ability to maintain control. 
Dissidents, foreign pressure groups, Tibetan separatists, and 
the Falun Gong, among others, will press Beijing for 
concessions.  If Beijing cracks down before or during the 
games, Chiou continued, international criticism will be 
intense. But, if CCP leaders give in to domestic demands, it 
will be difficult to change direction once the games are 
over.  Chiou noted that the number of protests in China has 
increased in recent years.  Some of the protests have been 
large and violent, but because they had no centralized 
leadership, none of them has posed a serious threat to CCP 
control. If Beijing loosens its grip in advance of the games, 
however, it could provide an opportunity for dissident groups 
to increase both their organization and effectiveness. 
 
NSC's Mark Chen on UN Referendum, China Threat 
 
¶7. (SBU) National Security Council (NSC) Secretary-General 
Mark Chen told the delegation that Taiwan's UN bid had served 
to catapult Taiwan into the international media after years 
of being ignored.  The ruling DPP's proposed referendum to 
join the UN under the name "Taiwan," he explained, was in 
response to Taiwan public opinion polls consistently showing 
72-77 percent of Taiwan people support joining the UN as 
Taiwan.  Even the opposition KMT, he noted, had "surprisingly 
enough" followed the ruling party's lead and proposed its own 
UN referendum in order to attract votes in upcoming 
legislative and presidential elections.  Chen then launched 
into a long complaint over China's efforts to isolate Taiwan 
by preventing its participation in international 
organizations and over China's military build-up, notably its 
increase over the past seven years from some 200 missiles to 
around 1,000 missiles aimed at Taiwan.  In response to a 
query from the delegation, Chen stated the cross-Strait 
military balance has shifted in favor of China, but he 
"honestly did not know how long Taiwan could hold out" in the 
face of a PRC military assault on Taiwan.  Finally, Chen told 
the USCC delegation that China's rise "is not peaceful" and 
that "Taiwan is Taiwan, China is China, and will never 
succumb to PRC pressure to unify with China." 
 
DPP: KMT Hobbled by "Pro-China Stance 
 
¶8. (SBU) The USCC delegation met with DPP presidential 
candidate Frank Hsieh's Policy Director Kenneth S. Lin and 
International Affairs Director Bikhim Hsiao on August 22 to 
discuss election strategy and campaign platforms.  Lin told 
the delegation that the DPP is confident that if there is a 
high voter turnout Hsieh will be able to defeat KMT candidate 
Ma Ying-jeou.  The Hsieh campaign will push institutional 
reforms, social welfare, and Taiwan identity issues as major 
election themes.  Lin said the 2008 race would in essence be 
a choice between a pro-Taiwan DPP candidate and a pro-China 
KMT candidate.  Although either candidate as president would 
face the same constraints in dealing with China, Lin 
suggested that the KMT's "pro-China" leanings undermine Ma's 
electoral chances because voters do not trust him and suspect 
 
TAIPEI 00001999  003 OF 004 
 
 
he would be too accommodating to the PRC and "cave under 
pressure." 
 
¶9. (U) Bikhim Hsiao argued that in terms of foreign policy 
the KMT is "moving closer" to positions advocated by the DPP 
because of the election.  For example, she said the KMT has 
shifted away from its traditional "one China" policy and is 
supporting Taiwan's UN bid and the signing of free trade 
agreements with other countries.  Nevertheless, Hsiao 
suggested that the KMT was moving away from supporting a 
"natural" Taiwan-U.S. relationship by questioning the need 
for purchasing advanced weapons systems from the U.S. and 
arguing that if a better relationship is forged with China 
then Taiwan would not have to spend so much on its defense. 
Hsiao suggested that China's interference in the upcoming 
elections could be significant because most media outlets on 
Taiwan are very critical of the DPP administration, have 
financial problems, and are suspected of receiving funding 
from Beijing.  China also has the ability to pressure Taiwan 
businessmen invested in the mainland to withhold public and 
financial support for the DPP, Hsiao added. 
 
KMT'S Ma Ying-jeou: Beijing Will Act Reasonably 
 
¶10. (SBU) KMT presidential candidate Ma Ying-jeou told the 
USCC delegation that, if elected, he will resume dialogue 
with the PRC under the "One China, Different Interpretations" 
framework, in order to secure a long-term peace agreement, to 
expand cross-Strait economic and cultural links, and to 
preserve Taiwan's "international living space."  Under his 
leadership, Ma continued, Taiwan will not pursue de jure 
independence; therefore, Taiwan will no longer be a "flash 
point" for conflict between the U.S. and China.  Ma explained 
that a peace agreement would be conditioned on Beijing's 
removal of all missiles aimed at Taiwan.  A commissioner 
asked Ma whether he would be willing to decrease U.S.-Taiwan 
defense cooperation if the PRC demanded it in exchange for 
removing the missiles, or other concessions.  Peace 
discussions with China would not be allowed to adversely 
affect U.S.-Taiwan defense cooperation.  Taiwan must maintain 
a credible deterrent to PRC aggression, he added, which it 
cannot do without close U.S. support.  How likely is it, one 
of the Commissioners asked, that China might stir up 
nationalist sentiment against Taiwan in order to distract 
attention from a domestic political crisis?  Ma replied that, 
as long as Taiwan is not pursuing de jure independence, 
Beijing would not be able to use Taiwan for that purpose. 
China wants peace across the Strait, he continued, because it 
wants peace with the U.S.  Peace in the region will enable 
Beijing to concentrate on resolving its domestic economic and 
political crises. 
 
Mainland Affairs Council: KMT Peace Treaty a Non-Starter 
 
¶11. (SBU) In response to Commissioners' questions about Ma's 
proposal for a peace treaty with China, MAC Chairman Chen 
Ming-tong dismissed the concept as a campaign stratagem that 
would not be taken seriously by Beijing.  Chen added that the 
relationship between China, Taiwan and the U.S. is really a 
matter of global political balance, and not simply about the 
relationship across the Strait.  Responding to Commission 
Chairman Bartholomew's question about the legacy of Chen 
Shui-bian's presidency, Chen stated that re-unification with 
the mainland was no longer the only political option for 
Taiwan.  Regarding the 2008 presidential election, Chen said 
that if Ma Ying-jeou is elected, Beijing will pressure him to 
accept the "1992 Consensus" ("One China, Different 
Interpretations").  In Chen's view, Beijing interprets the 
1992 Consensus to mean both sides can agree to disagree about 
the future resolution of the relationship between Taiwan and 
China, while China continues to push for acceptance of the 
one China principle.  Chen said he believes Hu Jintao has 
consolidated his power in Beijing, but still must manage the 
hawkish elements within the CCP leadership who might push to 
resolve the cross-Strait question by force. 
 
Vice Foreign Minister Chang: China Won't Ease Pressure 
 
¶12. (SBU) VFM Chang emphasized to the US-China Commission 
delegation that China continues to try to squeeze Taiwan's 
 
TAIPEI 00001999  004 OF 004 
 
 
international "space" and to block Taiwan's participation in 
international organizations, such as the World Health 
Organization.  In response, Vice Chairman Blumenthal inquired 
about Taiwan's preparations to deal with a major health 
crisis, such as avian influenza or SARS.  VFM Chang explained 
that Taiwan maintains working-level contacts with disease 
control agencies in other countries in the region, but 
because of China's objection is denied access to WHO 
technical meetings.  Regarding Taiwan's security, 
Commissioner Feidler inquired whether China's anti-satellite 
missile test affects Taiwan.  Chang urged the USG to play 
close attention to the threat of potential disruption of 
communication channels between the US and Taiwan.  She also 
emphasized the close ties between Taiwan and Japan, as well 
as Taiwan's active cultivation of relationships with its 
Central American allies. 
 
Minister of National Defense: Taiwan Only Seeking Space to 
Survive 
 
¶13. (SBU)  Minister of Defense Lee Tian-yu highlighted the 
transparency of Taiwan in dealing with the US on defense 
matters, and said he hoped the US can separate politics from 
military issues in the US-Taiwan defense dialogue.  Lee 
emphasized that the threat from China lies not only in its 
military expansion but also in its economic growth.  Whereas 
China has a strategic plan for the Asia Pacific region, 
Taiwan is only seeking space for survival.  He noted that in 
previous war games scenarios, Taiwan estimated it could cause 
attrition of 18 percent of China's military forces.  Lee 
expressed his concern that China not underestimate Taiwan's 
resolve, as any military conflict would be costly to China in 
terms of number of casualties.  He noted that China's opening 
to the rest of the world is considered by some conservative 
members of the Chinese leadership to create unwelcome popular 
demand for political change.  Lee encouraged the US to allow 
more students and visitors from China to travel to the US to 
see for themselves what a democratic society is like and thus 
increase the demand for political reform in China. 
 
¶14. (SBU)  The delegation visited the Joint Operations 
Command Center (JOCC) and were briefed by JOCC commander MG 
Chao and saw a demonstration of the Po Sheng command and 
control system purchased from the US.  The delegation also 
toured the operations and intelligence staff sections of the 
JOCC.  The Commissioners asked about the interoperability of 
US and Taiwan forces in the event the US should take military 
action in defense of Taiwan, and were told that due to 
equipment non-compatibility and lack of US cryptologic 
material, US and Taiwan forces do not have interoperability. 
This is a matter of US policy and not lack of desire by the 
Taiwan military to obtain the necessary equipment. 
 
Counter-Terrorism Director Kuo: No Significant Terrorist 
Threat 
 
¶15. (SBU) The Chief Coordinator of the Counterterrorism 
Office within the Executive Yuan, Dr. Kuo Lin-wu told the 
delegation that Taiwan does not perceive a significant 
terrorist threat domestically, although its ability to share 
intelligence is limited.  Taiwan's ability to respond to a 
terrorist attack is untested, as it has never experienced a 
real attack, but the primary concerns are about possible 
attacks by China on infrastructure and computer and 
information systems.  Taiwan's focus has been on detection of 
materials that could be used in a terrorist attack, and has 
cooperated closely with the US and Japan on this as well as 
on export control systems.  Money laundering continues to be 
an issue Taiwan is working to address.  Unlike the US 
approach to homeland security, Taiwan is not consolidating 
agencies, but focusing on enhancing coordination between 
agencies.  Dr. Kuo stated that Taiwan needs assistance in 
information capacity building. 
 
¶16. (U) This cable was cleared by USCC Chairman Bartholomew. 
WANG