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RR RUEHCN RUEHGH RUEHHM
DE RUEHIN #1150/01 2652228
ZNR UUUUU ZZH
R 222228Z SEP 09
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 2362
INFO RUEHBJ/AMEMBASSY BEIJING 9393
RUEHHI/AMEMBASSY HANOI 0010
RUEHBK/AMEMBASSY BANGKOK 4712
RUEHGH/AMCONSUL SHANGHAI 2654
RUEHCN/AMCONSUL CHENGDU 3201
RUEHSH/AMCONSUL SHENYANG 7145
RUEHGZ/AMCONSUL GUANGZHOU 0343
RUEHHK/AMCONSUL HONG KONG 0820
RUEHHM/AMCONSUL HO CHI MINH CITY 0649

UNCLAS SECTION 01 OF 02 TAIPEI 001150 
 
SIPDIS 
 
SENSITIVE 
 
BANGKOK FOR OFDA 
 
DEPT FOR AIT/W, EAP/TC, INR/EAP 
 
FROM AIT KAOHSIUNG BRANCH OFFICE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EAID EINV SENV TW
SUBJECT: DIRECTOR MEETS KMT LEADERS IN KAOHSIUNG 
 
SENSITIVE BUT UNCLASSIFIED, PLEASE PROTECT ACCORDINGLY 
 
¶1.  (SBU) Summary:  In separate September 17 meetings in Kaohsiung 
with the Director, two local KMT "heavyweights" underscored the 
KMT's need to accelerate typhoon reconstruction and economic growth 
in southern Taiwan.  Executive Yuan Southern Office CEO Lo 
Shih-hsiung praised U.S. typhoon relief assistance and asked for 
help on acquiring water purification equipment.  City Council 
Speaker Chuang Chi-wong lauded President Ma's cross-Strait policies 
and promoted the city's development of new industries to keep young 
people in Kaohsiung.  Lo and Chuang may find themselves competing to 
be the KMT's nominee in the key 2010 Kaohsiung mayoral race.  At 
this point, both would face long odds beating the DPP's formidable 
lineup of potential opponents, assuming that the city's fractious 
deep and moderate-Green voters can stay united behind the DPP 
nominee until Election Day.  End summary. 
 
¶2.  (SBU) During his September 17-18 visit to Kaohsiung, Director 
Stanton met separately with Executive Yuan (EY) Southern Office CEO 
Lo Shi-hsiung and Kaohsiung City Council Speaker Chuang Chi-wong, 
dined with key local business contacts, toured Kaohsiung Harbor, 
surveyed CSI and Megaports operations at Kaohsiung Port, and 
presided over the grand re-opening of the America Center at National 
Sun Yat-sen University.  CEO Lo, a former KMT LY member who has 
close ties with LY Speaker Wang Jin-pyng and whose family has deep 
roots in Kaohsiung, is the EY's most senior representative in 
southern Taiwan.  Speaker Chuang, who earlier this year publicly 
announced his intention to run for Kaohsiung Mayor, is the 
highest-ranking KMT elected official in Kaohsiung 
 
CEO Lo: KMT Managing Typhoon's Political Fallout 
--------------------------------------------- --- 
 
¶3.  (SBU) In his September 17 meeting with the Director, CEO Lo 
thanked the U.S. for sending heavy-lift helicopters and dispatching 
USAID Disaster Relief experts to facilitate post-Typhoon Morakot 
reconstruction efforts.  Alluding to USAID Disaster Relief Officer 
Ron Libby's visit to southern Taiwan, Lo urged the U.S. to help 
Taiwan acquire water purification equipment for mountainous 
communities vulnerable to typhoons.  He reported that most of the 
roads in flood-ravaged areas were repaired, except for those in 
heavily-damaged Taoyuan Township (in Kaohsiung County) which would 
take another one to two weeks.  Lo expressed hope that many 
displaced persons would be able to return to their villages if those 
areas were deemed safe.  Although aboriginal citizens in particular 
were eager to return, Lo related, it was certain that some of their 
villages were no longer safe. 
 
¶4.  (SBU) Lo asserted that selective media coverage exacerbated 
local citizens' angry reaction to the government's delayed typhoon 
rescue efforts.  Deriding the local media's penchant to 
sensationalize news, Lo suggested that the media tended to report on 
President Ma's visits to typhoon-ravaged areas only when local 
citizens were shouting at him.  For example, Lo pointed out, the 
media gave lavish coverage to Honhai Chairman Terry Guo's visit last 
week to typhoon-affected areas but largely ignored President Ma's 
noncontroversial trip to flood-damaged areas at nearly the same 
time. 
 
¶5.  (SBU) Maintaining that local anger had leveled off, Lo expressed 
confidence that the KMT had enough time until December's local 
elections to recover from any typhoon-related political damage. 
With Kaohsiung and Tainan cities each merging with their respective 
surrounding counties, those elections were off the table until 2010, 
he explained, and the KMT hoped to run strongly in DPP-friendly 
Pingtung and Chiayi Counties.  If the KMT lost in KMT-leaning 
Taitung County, he commented, it would be due to internal KMT 
divisions and not the typhoon.  Lo lamented Premier Liu's 
resignation, describing Liu as hard-working but less skilled at 
public relations.  He said that new Premier Wu was more able on both 
fronts, although Wu still had to clear up the brouhaha over his 
recent trip to Hong Kong.  Lo was coy about his own political future 
(media reports suggest that former LY member Lo has Kaohsiung 
Mayoral ambitions), stating that he planned to focus on typhoon 
reconstruction and EY constituent services for now. 
 
 
TAIPEI 00001150  002 OF 002 
 
 
Speaker Chuang: Cross-strait Ties Helping City 
--------------------------------------------- - 
 
¶6.  (SBU) Responding to a question from Director Stanton during 
their September 17 meeting, KMT Kaohsiung City Council Speaker 
Chuang emphasized that Kaohsiung's traditional heavy industries were 
no longer enough to keep young people in Kaohsiung.  He noted that 
even his own children had to move north to Hsinchu to find good 
jobs.  The city needed to cultivate software, medical care and 
biotech industries to complement emerging or already-strong 
petrochemical, shipbuilding, export processing and fisheries 
industries.  If Honhai Industry's big investment in Kaohsiung 
Software Park succeeded, Chuang explained, it would create a 
"cluster effect" prompting similar companies to come to Kaohsiung. 
Furthermore, Kaohsiung's year-round warm, sunny climate could foster 
niche industries such as elderly care and film-making. 
 
¶7.  (SBU) Chuang lauded President Ma's friendly cross-Strait 
economic policies, stating that direct cross-strait shipping links 
had boosted Kaohsiung Port's business.  He called on central 
authorities to help the port take full advantage of direct 
cross-strait shipping links, stressing that the Port could be the 
centerpiece of a free-trade zone which would include logistics and 
assembly businesses.  He also urged city and central authorities to 
adopt investment-friendly policies to encourage Taiwan businesses to 
return from the mainland and Vietnam.  Noting Kaohsiung County's 
position as one of Taiwan's top agricultural producers, Chuang 
expressed hope that the U.S. would import more Taiwan agricultural 
products. 
 
¶8.  (SBU) Chuang voiced deep worry about Kaohsiung City's financial 
state and predicted a big rise in its public debt burden next year. 
Underscoring the city's precarious finances, he decried China 
Steel's efforts to ask the city to pay for big losses racked up by 
Kaohsiung's new metro, a huge BOT project led by China Steel.  It 
was not surprising that Kaohsiung citizens needed time to change 
their commuting habits, he commented, and private investors should 
have planned on absorbing financial losses well into the future. 
Asked whether he still planned to run for Mayor in 2010, Chuang 
replied that the upcoming Kaohsiung City and County merger might 
force him to reconsider his plans, since the larger area brought in 
voters well beyond the borders of his political constituency in the 
city. 
 
Comment 
------- 
 
¶9.  (SBU) Both Lo and Chuang remain interested in running for Mayor 
of greater Kaohsiung in 2010, although neither has a strong 
political base outside of Kaohsiung City.  Local KMT leaders told us 
recently that this key race merits a "heavyweight" KMT nominee who 
can convince voters to look beyond the slow pace of typhoon relief 
efforts and focus on the prospect that Ma's economic approach offers 
the best chance for jumpstarting the local economy.  Nevertheless, 
with a year to go until the election, potential DPP opponents have a 
strong hand.  DPP Mayor Chen Chu reversed her declining poll ratings 
with the city's successful handling of the July 2009 World Games, 
and DPP Kaohsiung County Magistrate Yang Chiu-hsing is slowly 
regaining his customarily strong local standing after stumbling with 
post-typhoon recovery efforts.  What DPP leaders here hope to avoid 
is another polarizing DPP internal struggle, with large numbers of 
deep-Green voters splitting off from a more moderate DPP nominee. 
End comment. 
 
CASTRO 
 
STANTON