APRIL 7, 2000 VOL. 26 NO. 13

Deal-Making Time
Chen Shui-bian tries to form a government - and a China policy
BY ALLEN T. CHENG Taipei

Back in the 1980s, Vienna-trained violinist-composer Chen Zau-nan wrote revolutionary marches for the Taiwan independence movement, many of whose advocates eventually formed the Democratic Progressive Party. So it was a surprise when he formally proposed that the DPP, whose Chen Shui-bian is now Taiwan's president-elect, drop its "independence" platform. Now a DPP legislator, Chen is trying to help the party and the incoming president negotiate the best peace deal with China. "We need to give President Chen more elbow room," says the lawmaker. "Besides, Taiwan is already a sovereign, independent country. So there is no need to stress the pursuit of independence."

Problem is, Chen Zau-nan did not first get clearance from the president-elect or DPP chairman Lin I-hsiung. His proposal has sparked a fierce debate within the party about whether or not to ditch its "independence" stance, seen by many pragmatic members as a political burden. Suddenly finding itself in power after 51 years of Kuomintang rule, the DPP is showing signs it isn't quite ready for big-time politics. Public statements by senior members lack cohesion and the differences over the "independence" clause threaten to unleash a divisive struggle. Party leaders agreed to postpone a decision on Chen Zau-nan's proposal until a DPP congress scheduled for June.

Flurry Of Diplomacy Sino-American Ties May Be Tested Tang Jiaxuan had it right when he met President Bill Clinton's national security adviser, Sandy Berger, in Beijing on March 29. "Every time China-U.S. relations reach a critical stage, you play a positive role," China's foreign minister said. "Now our relationship is at a critical juncture." Washington's U.N. envoy Richard Holbrooke was just in town, but Berger is top dog of American foreign policy. By sending his heaviest hitter, Clinton aims to put out any fires early. Sino-American ties mirror cross-strait relations. No surprise then that the U.S. sent unofficial envoy Lee Hamilton to Taipei days after Taiwan's election. The ex-congressman praised president-elect Chen Shui-bian's conciliatory approach to Beijing as "prudent, positive." But prudence in Taipei doesn't mean Taiwan's friends in Washington will follow suit. There is strong support in Congress for weapon sales to Taipei and passage of the Taiwan Security Enhancement Act, which would allow closer U.S.-Taiwan military coordination. Some are out to scuttle Clinton's move to grant China permanent "normal trade relations," part of Washington's deal with Beijing for Chinese entry into the World Trade Organization. Eager to highlight Taiwan's democracy at Beijing's expense, some also want Chen to visit the U.S. before his May inauguration. With America's own presidential polls imminent, the anti-China camp in the U.S. looks likely to put Clinton diplomacy to a severe test. By Alejandro Reyes

There is no doubt that Chen Shui-bian is the man all Taiwan - and Beijing - is watching with a microscope. The big question is how he will handle cross-strait relations. Last week, a top Taiwan affairs official in Beijing, Chen Yunlin, said that the mainland hoped Chen would commit himself to the "one-China" principle in his inauguration speech on May 20. Pursuing independence, however, would lead to "frightening consequences" for Taiwan. Intriguingly, Chen Yunlin added that "one China" did not have to mean the People's Republic of China - long a bone of contention with the government of outgoing Taiwan president Lee Teng-hui. "That opens the way to a new, flexible definition of 'one China,' " says a mainland specialist in Hong Kong. Since his election, Chen Shui-bian has said he would be willing to discuss the "one-China" notion, though it should not be a precondition for talks. U.S. envoys have been visiting both Beijing and Taipei in efforts to gauge each side's emerging position (see story page 32).

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First, however, Chen and the DPP have to form a government. That is clearly a novel task for them, though the president-elect served as Taipei's mayor in 1993-98. Chen's first choice for the crucial post of premier was Lee Yuan-tseh, a Nobel Prize laureate in chemistry. But after Lee balked, Chen named respected Defense Minister Tang Fei, 68, as his PM. The choice was a surprise - and it may have been aimed at easing anxieties within Taiwan's military and in China about Chen's pro-independence proclivities. Like most officers in the island's armed forces, mainland-born Tang, a senior KMT member, is opposed to independence. As premier, he will run the government's day-to-day affairs and deal with a rambunctious legislature, where the KMT has a majority. As the DPP holds only 71 of 224 seats, Tang may face a tough time pushing through legislation, but his KMT status should help.

Many DPP stalwarts are already scrambling for leading government posts. Among the frontrunners are legislator Parris Chang for foreign minister, DPP U.S. representative Chiou I-jen as head of the National Security Council, and lawmaker Chang Chun-hsiung for secretary-general of the President's Office. A number of ministers are likely to be drawn from Taiwan's influential business community. Favorites include Chang Yung-fa, Nita Ing and Stan Shih, who respectively head the Evergreen shipping group, the Taiwan High-Speed Rail Corporation and Acer Corp.

Insiders expect these corporate chiefs, who endorsed Chen early in his campaign, to press him to be as pragmatic as possible in dealing with China. Like much of Taiwan's business community, they have big economic stakes in the mainland. Evergreen, for example, has opened nine offices there, while its EVA Airways has maintained branches in Beijing and Shanghai during the past two years - despite the fact that it can't fly to China yet. "Direct transport links are something people on both sides of the strait want, and the earlier the better," says K.W. Nieh, an EVA Airways senior vice president. "They will help the economies of both sides."

Shih's Acer has several large computer assembly plants in China, as do many of its component suppliers, most of whom manufacture in Dongguan, Guangdong province. A spokeswoman for the Taiwan High-Speed Rail Corp. says that Nita Ing opposes "Taiwan independence." "Otherwise," she asks, "why would we be building a $14-billion build-operate-transfer project here in Taiwan, the largest BOT venture in the world? Just so it can be bombed in a few years' time?"

Another force restraining the independence inclinations of Chen and the DPP is Taiwan's powerful, if traditionally apolitical, military establishment. Despite some military chiefs' protestations of loyalty to the incoming president, Chen's election has jolted the armed forces, nurtured and dominated by the KMT for decades. Officers themselves have noted that their whole training and education has been to safeguard the territorial integrity of the Republic of China - and oppose Taiwan independence. Within the ranks, worries still remain that "pro-independence adventurism" by the new DPP regime would spark an unwanted war.

Still, pro-independence hardliners in the DPP will not be easily deflected. How far the party will back moves by Chen to be conciliatory toward China is an open question. Citing positive public and stock-market responses to his proposal that the DPP drop its "independence" plank, Chen Zau-nan is optimistic he can persuade the party to go along. Others aren't so sure. "I doubt it will happen," says Linda Gail Arrigo, a Taiwan-based activist and ex-wife of former party chairman Shih Ming-teh. "Why open a can of worms? Doing away with the 'independence' platform will further alienate a lot of traditional DPP supporters." Insists party chairman Lin: "We the DPP believe that Taiwan is a sovereign country. To say Taiwan isn't a country with sovereignty - that's not right."

For his part, the president-elect is distancing himself from his own party. Chen has announced that after his inauguration, he will resign from the DPP's leadership ranks and stop participating in the party's activities. "He wants to create a system where party interests don't supersede national interests," explains Hsiao Bi-khim, the DPP's director of international affairs.

Meanwhile, a major overhaul is under way among the defeated Nationalists. Despite his initial resistance, Lee Teng-hui stepped down as party chairman on March 24, nearly two years before term. Blamed by protesting party loyalists as well as many KMT chiefs for the election loss, Lee, 77, in the end had little choice. Vice President - and election loser - Lien Chan took over as acting chairman, vowing to implement extensive reforms. His top priority is to restore morale and unity within an organization fragmented by factional strife and plagued by money politics. Another goal: to make more transparent the management of the party's vast assets, estimated at some $10 billion.

According to Wei Wou, an academic and senior KMT member, Lee relinquished the chairmanship after striking a deal with Lien that the party must be further localized. Specifically, says Wei, it would mean that more native Taiwanese would be brought into the senior ranks and a Taiwanese would always occupy the strategic post of general secretary. Another condition: that Lee nemesis James Soong Chu-yu, a former KMT stalwart who finished a close second in the presidential race as an independent, would not be allowed to reclaim the party leadership. Such a deal would hurt the career prospects of popular Taipei Mayor Ma Ying-jeou, a second-generation mainlander long seen as a KMT rising star (see interview page 37).

Soong himself has emerged as a powerful opposition force, thanks to his strong election showing. He has changed the name of his new party from New Taiwan People's Party to People First Party, which a spokesman says is more reflective of its goals. Already, the grouping has the allegiance of 27 legislators. To offset its potential challenge, a KMT-DPP caucus agreed last week to abolish Taiwan's anachronistic National Assembly, whose main role had been to pick the president. The body is Soong's strongest institutional base of support, as many of its members backed him when he was provincial governor in the mid-1990s. The power plays among the three big parties seem to be starting to unfold in earnest. More than anything, they will shape the political landscape of the new Taiwan.