VZCZCXRO1157
OO RUEHCN RUEHGH
DE RUEHIN #1408/01 2690724
ZNR UUUUU ZZH
O 250724Z SEP 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0013
INFO RUEHBJ/AMEMBASSY BEIJING 8612
RUEHUL/AMEMBASSY SEOUL 9800
RUEHKO/AMEMBASSY TOKYO 0235
RUEHCN/AMCONSUL CHENGDU 2844
RUEHGZ/AMCONSUL GUANGZHOU 1431
RUEHHK/AMCONSUL HONG KONG 0062
RUEHGH/AMCONSUL SHANGHAI 2251
RUEHSH/AMCONSUL SHENYANG 6802
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 03 TAIPEI 001408 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USCC FOR SCOTT BUNTON 
 
E.O. 12958: N/A 
TAGS: PREL PGOV MCAP MARR CH TW
SUBJECT: USCC DELEGATION DISCUSSES U.S.-TAIWAN AND 
CROSS-STRAIT RELATIONS WITH SENIOR OFFICIALS 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU) Summary: Members of the U.S.-China Economic and 
Security Review Commission (USCC) met August 22 with key 
members of President Ma Ying-jeou's administration and the 
head of the island's main opposition party to review the 
status of U.S. relations with Taiwan and assess the evolving 
cross-Strait relationship.  Members of the Ma adminstration 
took pains to emphasize that, while the President hoped to 
improve Taiwan's ties with the PRC, relations with the United 
States remained paramount.  Ma's National Security Advisor 
and Defense Minister stressed the importance of U.S. military 
hardware in the island's defense strategy.  The Vice Foreign 
Minister emphasized the need for Taiwan's partners like the 
United States to support President Ma's flexible approach to 
securing meaningful participation in UN specialied agencies. 
The leader of the Democratic Progressive Party (DPP) 
cautioned that President Ma's approach to China put Taiwan's 
sovereignty and security in jeopardy.  End summary. 
 
NSC Chief: Status Quo the Only Cross-Strait Option 
--------------------------------------------- ----- 
 
¶2. (SBU) NSC Secretary General Su Chi and the members of the 
USCC delegation led by Vice Chairman Carolyn Bartholomew 
discussed cross-Strait relations, Taiwan's long-term goals 
and defense needs, and U.S.-Taiwan relations during their 
hour-long meeting.  Beijing threatened to use force against 
Taiwan in the mid-1990s and tried to press unification in the 
late 1990s, Su observed, but both efforts failed. 
Subsequently, President Chen Shui-bian's effort to promote 
independence during his tenure also was a disastrous failure. 
 This leaves the cross-Strait status quo, which 80 percent of 
the people in Taiwan support.  Su was confident the status 
quo could be sustained for some time because, he said, PRC 
President Hu Jintao saw a stable cross-Strait relationship as 
his historical legacy.  Hu, who leaves office in 2012, has 
expressed interest in a cross-Strait peace agreement.  Su 
stressed the importance of Taiwan leaders engaging directly 
with Hu, who, if needed, can override opposition from some in 
the PLA and Foreign Ministry to international space and peace 
agreement initiatives. 
 
¶3. (SBU) Not wanting to appear "too greedy" in seeking 
concessions from Beijing, Taiwan will work to build trust 
step-by-step, focusing first on economic ties and then 
addressing international space issues, Su said. 
Understanding the difficulty and time required to deal with 
the growing PRC military threat, Taiwan will delink military 
from other issues and continue to build up its own defense 
capabilities.  Although Beijing regularly lobbies the U.S. 
against arms sales to Taiwan, it rarely raises the issue with 
Taiwan, he noted.  Su stressed Taiwan's wish to move ahead on 
the seven pending U.S. arms sales notifications, noting that 
President Ma Ying-jeou had made this point in discussions 
with U.S. Senators and Representatives during his recent U.S. 
transits.  In addition to these pending sales, Su said, there 
was bipartisan KMT-DPP support for buying F-16C/Ds.  These 
were needed to replace F-5E "flying coffins," and would 
bolster Taiwan's position in dealing with the PRC, Su 
explained. 
 
¶4. (SBU) Ultimately, though, Taiwan cannot compete militarily 
with the PRC, especially in missiles, and therefore needs to 
take a broader approach to security incorporating all 
elements of power.  These include military defense and 
deterrence, "alliance" with the United States and others, 
assurances of moderation to China and soft power, especially 
the power of Taiwan's democracy.  President Ma is working to 
foster internal unity and build bridges to the opposition DPP 
Party, for example, appointing TSU stalwart Lai Shin-yuan as 
chairperson of the Mainland Affairs Council (MAC).  The 
previous DPP approach to China that combined provocation plus 
defense was a recipe for disaster, Su argued.  Under the new 
KMT administration, there has been a paradigm shift in 
Taiwan's approach to China, the U.S., and other countries. 
 
TAIPEI 00001408  002 OF 003 
 
 
Su believed the signals from Washington have been positive, 
though he acknowledged it would take time to rebuild 
understanding and trust after eight years of DPP rule. 
 
VFM: Taiwan Needs Voice in International Organizations 
--------------------------------------------- --------- 
 
¶5. (SBU) Echoing points made by President Ma Ying-Jeou 
earlier in the day (reported septel), Vice Foreign Minister 
David Lin stress the need for Taiwan to have a voice in key 
international organizations.  That said, the Ma 
administration hoped to avoid the confrontational - and 
ineffective - approach of the previous government.  Thus, a 
proposal to the UN recently submitted by Taiwan's diplomatic 
allies sought meaningful participation in international 
organizations and not membership.  While Taiwan did not 
expect the proposal submitted by its diplomatic allies on 
August 14 to be voted on at the UNGA, Lin said, it was 
essential that the United States and others support it 
publicly.  Taiwan's eventual target was to obtain WHA 
observer status in May 2009. 
 
Defense Minister: U.S. Arms Decision Urgent 
------------------------------------------- 
 
¶6. (SBU) MND,s top priorities were enhancing combat 
capabilities, moving to an all-volunteer force by 2013 and 
finalizing the procurement of U.S. arms currently under USG 
consideration,  Defense Minister Chen Chao-min told visiting 
members of the USCC.  Taiwan under President Ma was committed 
to its own defense, Chen said, not least by maintaining its 
defense budget at no less than 3% of GDP.  He repeatedly 
emphasized the need to move forward with a pending sale of a 
package of U.S. arms to enhance Taiwan's self-defense 
capabilities in the face of a rapidly expanding PRC military 
threat.  Without quick U.S. action, Chen said, his Ministry 
would be forced to return procurement funds to Taiwan,s 
treasury.  More seriously, failure to complete the deal could 
lead some on Taiwan to doubt the U.S. commitment to Taiwan,s 
defense.  While there was a history of good cooperation 
between MND and DoD, Chen said, he recognized the need for 
Taiwan to work to rebuild mutual trust damaged due to actions 
by the previous (Chen Shui-bian) administration.  He noted 
that the USCC annual report and DOD,s annual report on 
China,s Military Power contributed greatly to Taiwan,s 
understanding of China. 
 
¶7. (SBU) Chen said President Ma hoped to improve cross-Strait 
relations but also recognized the need to negotiate from a 
position of strength.  Thus, although cross-Strait relations 
were progressing in a positive direction, Taiwan would not 
relax its military readiness.  Chen cited a recent statement 
by one of China's Central Military Commission Vice Chairmen 
that China would not renounce the use of force against 
Taiwan.  Responding to questions from the Commissioners, Chen 
also highlighted concerns over PRC defense spending, missile 
build-up, and cyber attacks.  Asked whether Taiwan and China 
had a military hotline, Chen responded that they did not. 
 
Opposition Chair Pans Cross-Strait Rapprochement 
--------------------------------------------- --- 
 
¶8.  (SBU) After briefly acknowledging her own party's 
"political troubles" stemming from former President Chen 
Shui-bian,s alleged involvement in a campaign finance and 
money laundering scandal, opposition DPP Chairperson Tsai 
Ing-wen quickly turned to what she called the Ma 
administration's misguided cross-Strait policy.  Despite some 
obvious tensions, cross-Strait relations were relatively 
stable when the DPP was in power, Tsai maintained.  On the 
other hand, Ma's approach increases Taiwan's dependence on 
China and raises the potential for crisis.  Ma was raising 
expectations, she said, ceding the initiative to China and 
permitting Chinese "intrusion" into questions of sovereignty. 
 Closer ties also would have high social and economic costs, 
she warned, citing China's "ambush" investment tactics in the 
 
TAIPEI 00001408  003 OF 003 
 
 
real estate industry.  Chinese investors would move in, push 
up prices to earn quick profits, and exit just as quickly, 
leaving behind property prices too expensive for young 
graduates.  Instead of relying on China to improve Taiwan's 
economy, Tsai suggested Taiwan accelerate industrial 
restructuring and increase its competitiveness in the 
science, technology, and education sectors. 
 
¶9.  (SBU) She attributed the DPP,s loss in March 2008 
Presidential election to economic issues (job losses, wage 
rate problem, commodity prices, and import inflation). 
Nevertheless, she predicted, cross-Strait relations, not the 
economy, would continue to be a major focus of future 
political campaigns.  Tsai labeled the Ma administration as 
"too soft" on sovereignty issues, saying Ma was blurring the 
lines between China and Taiwan.  When asked about DPP's 
current policy on Taiwan's status, Tsai said the party 
preferred Taiwan be accepted as a country with 23 million 
people.  She added that Taiwan is "at least an entity with 
international personality" and has the right to make its own 
decisions, including on what kind of relationship to have 
with China. 
 
¶10.  (U) The delegation has cleared this cable. 
YOUNG