Taiwan: The KMT's Fear Factor

March 8th, 2004

By George Wehrfritz and Tim Culpan

The island's election is still anybody's race. But for the once-dominant KMT, the stakes couldn't be higher

March 8 issue - The Kuomintang's message in Taiwan's upcoming presidential election is more cautionary than inspirational. A vote for the once-dominant party, dramatically tossed from power just four years ago, is a vote for economic growth, steady-handed governance and improved relations with China—or so goes the pitch. To illustrate the contrast with the ruling Democratic Progressive Party's passionate "Taiwan first" message (a not-so-veiled plea for permanent independence from the mainland), KMT strategist Ho Szu-yin cites an old adage about stock markets. "They're driven by greed and fear," he says. "In this election the DPP's demand for Taiwan independence is greed, and the KMT's message is fear. We're telling voters: 'If you choose the DPP, you'll know how low this island can sink, so don't do it'."

Fear is more than a KMT campaign tool. It has become the dominant emotion inside the party's "Pan-Blue" alliance just weeks before an election that increasingly looks like a do-or-die race. The KMT is acting as if its very survival is at stake. Pending corruption cases, fading dreams of Chinese unity, the rise of a rebel generation within its rank and file and the virtual collapse of the party's business empire all bode ill should its chairman, 68-year-old Lien Chan, fail to dislodge DPP President Chen Shui-bian when the ballots are counted on March 20. "If they lose the election they'll be in real trouble," says Lo Chih-cheng, executive director of the Institute for National Policy Research in Taipei. "This is the KMT's last stand."

Few observers are counting the KMT out just yet. It holds a narrow lead in most polls and its promise of economic growth resonates on an island recently mired in recession. Up-and-coming KMT leaders, epitomized by Taipei's charismatic mayor, Ma Ying-jeou, bolster the party's claim to be "born again" in a cleaner, more democratic form. And President Chen, a passionate but quirky politician, is a vulnerable incumbent.

But a cloud of impending doom nevertheless hangs over China's oldest political party, which Generalissimo Chiang Kai-shek led into exile on Taiwan in 1949. The party's restive youth would likely abandon it should the KMT lose. Without access to the state machinery, the party—which by some accounts has lost more than $1 billion over the past decade—could quickly become insolvent. The DPP would likely use a second term to wrestle control of both the legislature (which Pan-Blue now dominates) and a vast KMT-sympathetic bureaucracy. If it became truly entrenched, the DPP would ultimately attack the KMT's old "one China" ideology by promoting Taiwanese nationalism in the schools. "Like the ANC in South Africa," says Chu Yun-han, a political scientist at Academica Sinica in Taipei, the DPP "could become the dominant party for a generation."

The KMT knows firsthand what that means. After losing China's bloody civil war —to Mao Zedong's communist rebels, it ruled Taiwan unchallenged during the longest period of martial law in modern history. In the late 1980s it democratized only reluctantly; antigovernment politicians, the core of today's DPP, threatened to foment a people-power uprising unless political reforms were implemented. The KMT relented, winning Taiwan's first direct presidential election in 1996 but losing badly in 2000. This year the DPP seeks to raise the specter of a revitalized KMT's taking power and turning back the clock—a scenario Lien himself refutes in a new book, "No Hope Without Change." "There's no need to dispute that past KMT governments were authoritarian," he writes. "But today's KMT isn't the KMT of the past."

By necessity, the party has undergone a traumatic transformation of late—a process Lien's allies laud as an effort to turn lemons into lemonade. The KMT has splintered three times since the mid-1990s as factions left in frustration. That might have happened again after the 2000 fiasco had Lien not shored up the ranks, pledging to listen to party members and hasten the rise of a fiftysomething cohort of talented KMT leaders who might have rebelled against a strong, assertive chairman.

Perhaps hardest of all, Lien made peace with a breakaway leader who ran against him in the last presidential race. People's First Party founder and former Taiwan governor James Soong is all that Lien isn't: charismatic, driven and downright scary to his opponents. A KMT blue blood, born to a prominent mainlander family, he was expelled from the party in 1999 after he had lost out in a bid to be its presidential candidate, then declared he would run as an independent. The driving motive behind their partnership is simple mathematics: in 2000, Lien and Soong garnered about 60 percent of the popular vote, yet Chen eked out victory in the three-way race.

Today some see Pan-Blue as a fragile alliance of old-guard politicians fighting the last war—and thus vulnerable to a shattering defeat. Both Soong and Lien, with careers rooted in the KMT's authoritarian past, are open to charges of being Johnny-come-latelies to democracy. Further, the party's claim to have cleansed itself of "black gold"—corruption and money politics—rings somewhat hollow, given that Soong was once master of KMT machine politics and Lien, a multimillionaire, has recently been accused of tax evasion by an opposition parliamentarian. Worst for Pan-Blue, former KMT chairman Lee Teng-hui, the island's first directly elected leader, quit the KMT in 2000 and now runs a pro-Taiwan-independence group that supports Chen's "Pan-Green" candidacy.

Pundits have a phrase for Lien's greatest campaign asset: malichiang, meaning "strong horsepower." It refers to three rising KMT stars: Mayor Ma in Taipei, Taoyuang County Magistrate Chu Lilun and Taichong Mayor Hu Chi-chiang. Educated respectively at Harvard, New York University and Oxford, they're urbane and telegenic. Each speaks frankly about KMT history—a topic their elders sugarcoat—but manages to inspire confidence in the party's future nonetheless. "We still pay a heavy price for the historical stereotype people have about the KMT," says Hu. "But most of the [younger leaders] are trained in the West. We know democracy, and we are clean, very clean."

The trio are the glue that holds the KMT together today. The party's revival, says Hu, began on the night of Lien's 2000 election defeat. "[Lien] was watching television, and he turned to me and he said, 'What happened?' " That "excruciating defeat," Hu adds, convinced Lien that without reform "there would be no future, for him or for the party." Over the next three years, the trio supported Lien—but only on the condition that he make peace with Soong and embrace their blueprint for reform. As Election Day approaches, Hu is urging campaign workers "to let the voters know that we will initiate a political-generation change during [Lien's] term."

Malichiang stayed in the KMT fold because, popular as they are, their future advancement still depends on Lien as a transitional leader atop a functioning party machine they hope to inherit. If Lien crashes and the machine breaks down, however, they might seek futures outside the KMT. So far Lien appears to have upheld his end of the bargain, backing reforms that have led to more openness regarding the KMT's war chest.

Still, sunlight has revealed that party coffers are not bottomless. Long touted as the world's richest political organization, the party, by its own account, has lost a cool $1.4 billion over the past decade—fully half its net worth. Like a debt-laden corporation, it has downsized dramatically: reducing paid staff by 1,800; selling huge real-estate holdings, a bank and much of its stock portfolio, and returning to the government 165 properties obtained free of charge during the martial-law era. "The biggest reason we failed in 2000," says Chang Che-shen, head of a committee that oversees KMT finances, "was corruption within the party."

The KMT lays blame for its past misdeeds at the feet of departed chairman Lee and former party financial czar Liu Taiying. The line is: "Yes, but it wasn't us," says Lo, the INPR scholar. Liu, who headed the party's Business Assets Management Committee from 1993 to 2000, was arrested last year on charges of embezzlement, breach of trust, securities fraud, corruption and forgery. Free on bail, he says he's been made a scapegoat. Lien and Soong, party officials insist, were out of the financial loop. But if the party loses, its opponents will not look the other way. The DPP could pass sunshine laws and go after what they see as ill-gotten KMT wealth—be it land confiscated from Taiwan's Japanese occupiers after World War II, assets sold to the party on sweetheart terms or profits from public contracts.

Even if the KMT can skirt future financial scandals, voters may still be left wondering: what does the party stand for today? The Lien-Soong campaign lacks a coherent position on the major ideological issue of the day, Taiwan's status vis-a-vis China. Last Saturday more than a million DPP supporters linked hands in a human chain stretching north to south along the island's west coast, then symbolically turned their backs on China. Held to commemorate a 1947 massacre of thousands of Taiwanese by Chiang's Nationalist troops, the protest also signaled anger toward communist leaders in Beijing, who still consider Taiwan a "renegade province" and vow to reclaim it by force, if necessary. The huge turnout may be a good omen for Chen and a sign that the KMT's weak position on the island's political identity could be a major chink in its armor.

To highlight the issue, Chen has scheduled a referendum on Beijing's missile buildup across the strait to coincide with the March 20 election. During a debate last month, Lien called Chen's scheme "illegal" and said he would not cast a ballot. But days later the KMT informed campaign workers that voters should feel free to participate in the referendum if they so choose. Party leaders hailed the decision, finalized after a debate among campaign strategists, as an example of internal democracy. Perhaps so, but the KMT's unwillingness to take a stand betrays its most visceral fear during this year's race: sounding pro-China.

For decades a central KMT tenet, unification is a concept that risks alienating voters, especially native Taiwanese, who fear ending up under Beijing's thumb like Hong Kong. The KMT favors trade with China—promising to establish direct air and sea links after Lien's Inauguration—but now says it neither supports nor opposes Taiwan independence, provided that the issue is left for future generations to decide. "Our ideology," says Su Chi, a senior party strategist, "is no ideology."

The KMT's new approach may work. The Pan-Blues, despite a legacy of corruption and ongoing internal disputes, maintain a solid pro-business reputation, whereas Chen is blamed, justly or otherwise, for failing to improve ties with Beijing during his term in office. Should Lien triumph on March 20, his backers stand ready to push hard for sweeping new contacts with the mainland, sealed, perhaps, by a "peace mission" to Beijing, which Lien says he is prepared to make. Should he lose again, however, Taiwan itself will likely embark on a historic journey—into a future without the KMT.