Mainland Affairs Council

With the election results released last night, I am sure you would share the feeling of the people here that we are more confident about our democracy, maturity of our people, and the prospect of stability. What I intent to talk about today is to give you a historical overview of how democracy developed here and democracy in action since the establishment of the current Administration last year, as well as our agenda for the future.
 
Historical Overview

You may wonder whether democracy was something rather new or foreign to the people here when the Government of the Republic of China began its ruling in the middle of the last century. Democracy, in a refined manner, of course, was not known to the general public then, but during the period of Japanese-rule, which preceded the Nationalist-rule, elections at the local-level were implemented, despite the fact that Taiwan was at that time, a colony of Japan. It was not an unfamiliar idea for people to vote, to elect their representatives. When the Government of the Republic of China moved here, it continued with the elections at the local level. Unfortunately, the local elections often intertwined with fights between local factions and sometimes involving competition for economic resources at the local-level. In the first thirty-years of Nationalists¡¦ rule, representation of people is limited by the number of seats available to the local electorates at the Legislature, as the Legislature then was composed of legislators representing different regions of China. In other words, the will of the people here was not fully expressed and had to be compromised with interests coming from somewhere else. But in the 1980s, the Government then continued to increase the seats available to the representatives of the local people here, so the level of democracy improved. The development of democracy reached a landmark when direct presidential election was introduced in the 1990s. That was a time when people felt closer to the political process for the selection of their political leaders. My sense of democracy is to have the people¡¦s view directly and timely reflected in the Government¡¦s decision-making process. And this development in the 1990s represents a major step forward.
 
We then moved to a second phase of the modern democratic development, i.e., to develop a system under which different political parties can compete with and balance-out each other. The emergence of the DPP (Democratic Progressive Party) signifies the beginning of a new era, in which the voters on the one hand encouraged the continuing growth of the DPP while at the same time, they gave the ruling KMT the necessary dominance to keep the stability.
 
In the year-2000 election, the voters decided that it was time to make a major change but it seemed that the voters were not well-prepared for the instability this would ensue, something that they did not foresee. The general feeling then was that with the economic prosperity experienced in the last few decades, Taiwan could afford changes that would lead to a more refined democracy where political parties can take turns in governing the place. And through this competition, the quality of democracy improved and the political process that a modern society should possess could be developed.
 
Democracy in Action, from Post-2000 Presidential Election to Now

While the voters were expecting major reforms in areas like social welfare, labor benefits, environmental concerns, social order, as well as government organizations and due process in government administration, they unfortunately, were not aware of the fact that our economy was going to be faced with the structural adjustment problem and the start of the world recession. At the same time, China quietly emerged as our competitor in trade and investment.
 
When the current Administration first took office, it had in mine, the mandate from the voters during the election. Therefore, it placed emphasis on welfare payment, shorter working hours, environmental concerns, including re-assessing the needs for the fourth nuclear plant. This requires the support of the opposition parties, as the ruling DPP did not hold a majority at the Legislature. It had to work with the opposition parties. Unfortunately, the fierce competition amongst the three major presidential candidates of approximately equal weight in the election resulted in a great deal of emotional conflicts. This, together with the frustration of KMT supporters after losing ruling power had made cooperation amongst the political parties particularly difficult. There was no immediately available structure for the political parties to interact in a constructive way, nor there existed a set of rules or conducts. The constitutional issue, in terms of who has the primacy over the organization of the cabinet, has emerged immediately after the election was over. Therefore, with the sense of urgency on the part of the government to implement reforms and to carryout the necessary changes, and the lack of political structure and will to cooperate amongst the political parties, we were destined for a politically chaotic situation.
 
A number of events have taken place thereafter which, in many people¡¦s view, amounted to a series of political crisis. First, the controversy over the suspension of the fourth nuclear plant project; second, the shortening of the labor working hours; third, welfare payments for infants and the elderly; and fourth, short-term measures to stimulate the economy, when it was falling into a structural downturn, as well as a cyclical downturn. The accumulation of these events reached a peak when the opposition launched a campaign on the recall motion to remove President Chen from his presidency. On the side, there have been continuous debates on how cross-strait relations should be dealt with. Luckily, with the help of the international community, as well as the efforts made by the government, the situation has been kept relatively stable; at least not to the extent of complicating domestic politics.
 
I would say, this was a major challenge to our democracy. I would also say, despite the dominance of the alliance of the opposition parties over the legislative agenda, the democracy and the government still functioned, but not with the kind of efficiency that we require to meet the challenges caused by global changes. At the same time, there is undoubtedly, a great deal of emotion, friction, misunderstanding, and mistrust. Situations may seem to be chaotic, but fortunately, not to the extent of complete disorder. In this connection, I wish to make a special tribute to the speaker of the Legislature, who was able to get the legislative agenda moving by maintaining sufficient neutrality and exercising his leadership. This is so, despite the fact that he is a member of the KMT, and his loyalty to his political party is undoubted. The press, the media, and the public helped to maintain balance in the process, and leaders of the political parties, despite their differences, could still hold the lines. Overall, we were able to maintain minimum order and stability, but this is not enough for our process in moving towards a more efficient economy and refined democracy.
 
In the process, we managed to resolve the nuclear plant issue by requesting the intervention by the judiciary. The Grand Justices issued a very important opinion, setting out the procedures and rules to guide the negotiated political process which eventually led to the resumption of the nuclear plant project, without causing major political impasse. The recall motion was diffused because it was contrary to the expectation of the general public and the politicians had to listen to what their electorates had to say. The labor issue and the social welfare problems, and the short-term economic measures were all included in a major effort to generate consensus, i.e., the EDAC (Economic Development Advisory Conference) held in August this year. These are demonstrative of the fact that the government, the political parties, and the general public do have the will and the maturity to face the difficulties, but they have to learn how to interact with each other. The process of learning is painful, costly, but I hope this learning process has contributed to the further consolidation of our democracy.
 
Results of December 1 Legislative Election and its Implications

I am most encouraged by the results of the election yesterday. The voters have shown their maturity. In particular, it seemed to me that they know what the problems are, who should be blamed and who should not be blamed, and what can be blamed and what cannot be blamed. They also know what is most needed, i.e., a political force that is strong enough to lead the process of consolidating the political structure here. They seemed to favor the DPP in leading the process by increasing the representation of the DPP in the Legislature. The collective decision of the voters does make political sense, as it is most efficient to have the process led by a party that could ensure better coordination between the Legislature and the Administration. But the voters have made sure that DPP¡¦s dominance will not cause abuse of power. This is because the situation we are facing today is unprecedented, we cannot afford any major political mistake or making decisions without the necessary political support; therefore, any policy has to be carefully formulated and fully consulted. The voters also gave the opposition parties sufficient seats to maintain a meaningful balance of power. Of course, at this juncture, we cannot prejudge what the likely composition of the next cabinet would be, but the voters yesterday have actually told the politicians what their wishes are. The politicians have to consider what would be best for maintaining sustainable political stability here. This could mean the formation of a new political alliance or cooperation amongst the political parties on an issue-specific basis. In business and legal terms, we may be talking about mergers and acquisitions, or cooperation on a contractual basis. The next few weeks will be critical, but from the reaction of the major political parties yesterday, the level of rationality and the political will to cooperate, have increased with the results of the election, and I do hope this is a good starting point.
 
Future Agenda

Let me then spend a couple of minutes to give you a list of items on our agenda for moving forward. First, we need to carryout a number of political reforms; second, we need to deepen our internationalization in every aspect of our society; and third, we need to maintain stability in cross-strait relations and explore every possibility to improve the relationship, to make the stability sustainable.
 
For domestic reform, first in the political area, we need to have a government structure and a government process that will ensure that the government¡¦s decisions are timely in meeting the pace of global changes, responsive to the needs of businesses and fair to the society as a whole. In other words, we need a democracy that is fair and efficient, with clearer division of power and responsibility amongst different governmental institutions as well as between central and local governments. Secondly, we need to develop a sounder legal infrastructure to ensure that the dispute settlement is more efficient and less costly, and government decisions are made timely, more predictable and transparent, and most importantly, subject to challenges by the private parties. Thirdly, we would need to reform and improve our government finance and the associated tax systems, to ensure that the government has enough sources of finance to carryout development projects as well as creating sufficient welfare systems. Fourthly, we need to reshape our labor policy to cope with short-term and structural unemployment problems and to make best use of our human resources here; but at the same time, we need to maintain flexibility and reduce rigidity in our labor market. Fifthly, we have to strengthen our industrial policies to move our industries to a more advanced stage where we will be producing higher quality and higher valued products. Sixthly, we need to reform our financial systems, this would involve a re-structuring of the financial institutions to improve their size and competitiveness, dealing with non-performing loans, and improving our regulatory regimes. And, lastly, the most important item on the domestic agenda is to improve the quality of the entire civil service.
 
On the aspect of deepening internationalization, Taiwan is not yet sufficiently internationalized. Following our accession to the WTO, we will be opening-up our market to foreign products and services, and at the same time, we will be encouraging our firms to go international and to become internationally competitive. This is the only way for an economy of our size to survive in the fierce international competition ahead, and to avoid being marginalized in the face of such competition.
 
On cross-strait relations, our policy goal is very clear, i.e., to maintain peace and stability and not to be provocative. On the political side, we need to generate domestic consensus on the cross-strait issues and on the other hand, we need to sit down and talk with the other side to explore the possibility of creating a new framework and/or making better use of the existing framework to make the stability sustainable. As part of our exercise to maintain stability and to direct the relationship towards creating mutual benefits, we have established a rather complete and comprehensive plan for adjusting the trade and economic policies. This would include a process of correcting what has been accumulated in the past, and trying to reverse the trend of hollowing-out, as well as to pursue proactive policies to make use of the market and resources in China.
 
What I would like to add at this juncture is that democracy is not only an essential element for maintaining domestic stability, it is also essential for constructing long-term stability for cross-strait relations. In October 1998 when Mr. C.F. Koo, Chairman of the SEF (Straits Exchange Foundation) led a delegation to China, during his meeting with President Jiang Zemin, he made it very clear that the only path for both sides to move closer is for the Chinese Mainland to expedite their democratization. If the Mainland Chinese Government can introduce democracy into its regimes, the government¡¦s decisions are to be constrained by their governmental systems, as well as laws, and monitored by the people and the press; as a result, the decisions are going to be more rational and the government is going to be one that is more responsible. It would then be more comfortable for Taiwan and for the world at large to engage with China.
 
Conclusion