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Chris Stowers for Asiaweek Pictures.
Taiwan's President Chen Shui-bian.

The 100-Day Itch
Why Chen Shui-bian's honeymoon as president is over, and what he mu st do to restore credibility

'Let's Meet, not Holler': So says the DPP chief about China
Politics of Compromise:
Will Chen break promises?
It's Business as Usual: Taiwan's China investments are growing

In Taiwan, voters can be awfully fickle. Taxi-driver Chen Chan-yuan is a typical example. He plunked for Chen Shui-bian in the March 18 election, but he quickly changed his mind about the new president. "I liked his can-do spirit as mayor of Taipei," says the taximan. "But I now regret voting for him as president. He made too many promises, that he'll give this and give that, and it turns out he'll have to raise taxes to deliver. I'm not going to vote for him next time."

Chen Shui-bian took office just 100 days ago, but his presidential honeymoon is already over. Chen, 49, made history by breaking the Kuomintang's iron grip on the island and propelling his opposition Democratic Progressive Party (DPP) to power. His victory was a triumph of democracy. He pledged political reform and an end to corruption in high places. The public mood was buoyant, with polls once putting his support as high as 79%.

Yet it was always going to be difficult for a Chen administration to function effectively. The DPP has no experience governing at a Taiwan-wide level — many DPP cabinet members now heading ministries have only a city or county background at best — and it still faces a KMT-dominated legislature unlikely to prove cooperative. Chen, who was bold and decisive as Taipei's mayor, is proving hesitant and waffling as Taiwan's president, not least because the post is infinitely more complex. Sooner or later, the new rulers were sure to stumble in a big way.

And they did. In what has come to be known as the Pachang Creek incident, four workers were swept away by raging torrents of river water in late July while rescuers from the army and police argued over who had the proper jurisdiction. The tragedy has become a symbol of Chen's inexperience as president, and his ratings have plummeted. Though it was not his fault or that of his senior officials, the mishap occurred when people were beginning to realize that his administration was still in deep learning mode, without a full grasp on the reins of government. Chen's right-hand man, Vice Premier Yu Shyi-kun, resigned to take the heat for the failure to rescue the stranded workers. "That was just the Pachang incident," says Chin Chin-sheng, deputy secretary-general of the People First Party (PFP), which was founded by rival presidential candidate James Soong Chu-yu after his election defeat. "What if the mainland Communists were to attack all of a sudden?" Add persistent criticism by the KMT and the PFP, internal squabbling within Chen's DPP, a sliding stock market, slowing trade statistics, stiff pressure from mainland China to limit Taiwan's international space, and what you have is a job turning rapidly nightmarish for Chen.

"It has not been an easy transition," says a report by Andy Xie, regional economist at Morgan Stanley Dean Witter. "Only when the new government consolidates its authority over the opposition-dominated legislature, improves policy efficiency and establishes a clearer path in the development of its relationship with China is investor confidence likely to revive." Xie, a mainland-born economist educated in the U.S., says he is not optimistic about cross-strait ties but remains bullish about Taiwan's overall economic competitiveness. "Political dialogue across the strait will not happen. No matter what Chen Shui-bian says, Beijing doesn't trust him. Beijing has given up hope on political dialogue, though they still want to deepen economic linkages."

"Taiwan will go through a period of weakness," says prominent commentator Andrew Yang. "The political structure makes it difficult to create consensus." Running Taiwan is not easy for anyone or any party, but it's proving harder for Chen and the DPP than it did for the KMT. The Nationalists ruled Taiwan for more than 50 years and had a monopoly on the island's top political and adminstrative talent. To make up for the shortfall in the DPP, Chen had to turn to many senior KMT members to form his government. Only one third of his cabinet come from the DPP. The rest are either from the KMT, where they were lieutenants of previous president Lee Teng-hui, or are non-KMT but still close associates of Lee's.

Even Premier Tang Fei, a retired air force general and former defense minister, is drawn from the senior ranks of the KMT. Though he is supposed to be in charge of the daily running of the government, many ministers, especially the DPP ones, are going directly over his head to Chen. The president, in turn, does not always clearly communicate what he wants with his premier. Stuck in the middle, Tang has tendered his resignation twice; both times it was rejected. Tang is also finding it problematic facing his own party as the head of a government run by former oppositionists. "We cannot influence these people," says KMT secretary-general Lin Fong-cheng. "Even Tang Fei must listen to the DPP. That's why it is so chaotic right now." And because the DPP has four factions, each with its own agenda, often Tang finds that he is getting conflicting views. Yet the DPP is reluctant to let Tang go. The party needs him to act as a stabilizing force to calm a military that traditionally has been trained to oppose the DPP and its "independence" notions. So Chen's cabinet has wound up consisting of a hodgepodge of people of different ideologies who find it virtually impossible to build team spirit.

Broadsides from the KMT and the PFP are predictable, but when they come from within the DPP's own camp, it makes Chen look really bad. Though she is the vice president, outspoken Annette Lu is among the most vocal critics of the administration she is a part of (see INSIDE STORY, page 38). A few days after the Pachang incident, she blasted the administration for not moving fast enough and shifting responsibility. "President Chen can't keep the image of being ill-tempered or blaming other officials," Lu said. "I think that tendency is why recent opinion polls show his popularity rating declining." Shih Ming-teh, a DPP legislator and former party chairman, was so vehement in his recent attack, during a conference in Germany, on the president for not forming a coalition government with the KMT and PFP that he collapsed and had to be rushed to hospital.

KMT secretary-general Lin says his party is not seeking a power-sharing agreement. All it wants is some respect. "He's using so many of our top people," says Lin, "he should at least give us the courtesy of asking us first. If Chen is more courteous to us, we'll gladly cooperate with him in the legislature." Frank Hsieh Chang-ting, the new chairman of the DPP, says he will be working hard in the coming months to find more common ground for cooperation in the legislature. But Hsieh also admits that his primary goal will be to steal the KMT's majority in the general elections at the end of 2001. "We want to have more than 50% of the seats contested," says Hsieh. "I believe the KMT will lose many seats next year." Which doesn't sound much like an olive branch being extended.

It all adds up to a pretty grim picture, but not everyone is pessimistic. Jacky Tian of Yuanta Securities says he is confident of Taiwan's prospects in the long term. "They should get their act together in the coming six months." Tian predicts that by the end of that period, the stock market will rebound to 9,500 (it closed at 8,120 on Aug. 22), especially since Chen has tried to de-escalate cross-strait tensions.

Businessmen like Elton Tan, chairman of Asiatrust Bank and a son of Philippine billionaire Tan Yu, are also hopeful. Tan says that his family is as committed to Taiwan as ever after Chen's election. "Yes, the statistics may seem to point to some unhappiness. But you can see a peaceful transition here. Everybody is going on as they were. Everybody is looking for new business opportunities." The family recently invested $32 million renovating the Asiaworld Department Store next to the group's Asiaworld Hotel complex in central Taipei. In addition, the Tan family is building luxury condominiums all over Taiwan and is importing huge volumes of French wine. "The purchasing power here is very, very strong," says Tan, who adds that he is so confident of Taiwan's future that he has decided to educate all three of his children through the master's degree level in Taiwan, rather than in schools in the U.S. or Europe. "Many people are very proud of Taiwan," he says.

Tan has a point. Despite the falling stock market and worries about the government's inexperience, most people do not feel much of a negative effect on their lives. Fifty-year-old taxi-driver Tai Tai-yu voted for James Soong but he is happy enough with Chen's leadership. "A-bian has been doing a good job. Taiwan will be okay, so long as you don't talk about 'independence' every day and inflame China."

Despite the lack of cohesion within the DPP, the party is making an effort to meet China halfway. On Aug. 18 Taiwan's Mainland Affairs Council even green-lighted Taipei Vice Mayor Pai Hsiu-hsiung to visit the mainland. Beijing, meanwhile, has toned down its rhetoric against Chen. "It's not that the People's Liberation Army doesn't have the ability to attack Taiwan," says Taiwan businessman and retired general Wang Wu-men. "But I feel that China has the will to use peaceful means. We are brothers after all."

DPP legislator Chen Zau-nan, who spearheaded the proposal to remove the party plank that seeks an independent "Republic of Taiwan," says non-official talks are underway with China. Chen Zau-nan says that he recently met senior mainland officials — a general who is a member of the Central Military Commission and an aide to President Jiang Zemin — in a third country he won't name to discuss the DPP's removing that plank in exchange for a vow from China not to use arms against Taiwan. Says Chen Zau-nan: "They gave me three conditions. One, get rid of the plank. Two, don't declare independence. And three, don't involve foreign military forces. I said, No. 1 and No. 2 we can deliver, but not on No. 3. You can interpret 'involving foreign military forces' in many ways. Does this mean if we do business with some corporate entity with military links that you don't like, could this be interpreted as foreign military influence? I said we must reconsider No. 3. They said okay, and we left it at that. We will have developments on this in the future, I assure you."

Another conciliatory signal from President Chen would be if he became chairman of the National Unification Council, a group established by the KMT to set out the path to eventual reunification with China. Chen and the DPP have long derided the council as "a useless appendage," but the president has now not ruled out heading it. Still, during a six-nation tour through the Caribbean, Central America and Africa, he commented that reunification was just one avenue to pursue. "If we make it the only option," he said, "will [Taiwan] still be a democracy?" It was the sort of remark calculated to rile Beijing.

From Chen's standpoint, it is better to deal with China from a position of strength. Otherwise Beijing will simply ignore him and wait him out till Taiwan's next presidential election. So Chen has to boost his political fortunes. He needs to give Tang Fei more autonomy. He needs to personally lobby KMT legislators. He needs to consider forming a coalition government with the KMT and the PFP. After all, even if there is no "one China," there can at least be "one Taiwan."

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