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Cablegate: Director Meets Kmt Leaders in Kaohsiung

VZCZCXRO1849
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

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