By Edward Cody
Washington Post Foreign Service
Tuesday, November 7, 2006

TAIPEI, Taiwan, Nov. 6 -- Chen Shui-bian rode to the presidency of Taiwan in 2000 on what appeared to be the wave of the future. People applauded his pledge to end the corruption that had become entrenched under the long-ruling Nationalist Party. Enthusiasm was high, particularly among the young, for his in-your-face assertion of a Taiwanese national identity.

But the wave has ebbed now, and the promise of a new era has dimmed. Chen's wife has been indicted on charges of embezzling state funds, and Chen himself has been accused of wrongdoing. The scandal has left his Democratic Progressive Party in disarray, undermining its image and its dreams, and the Nationalist Party has already begun planning for a return to the presidency in the next election, in 2008.

For Chen, the main mission is no longer independence or clean government, but survival. "He's much weaker now," said Winston Dang, a lawmaker who heads the Democratic Progressive Party's international department.

The Nationalists introduced an impeachment motion Monday in the Legislative Yuan, or parliament. It was the first step in a recall process likely to roil Taiwanese politics for months. Members of parliament said a vote would probably be held around Nov. 24, and if the motion passes, it would then have to be put to a national referendum.

Although the Nationalists control the legislature, the key to the legislative vote is Chen's own Democratic Progressive Party, which has enough votes to block the recall motion if its parliamentary members back him. Many have expressed disappointment with Chen's actions, however, and party officials acknowledged some could translate that into a vote for impeachment. A dozen defections would be needed to seal the two-thirds majority required for passage.

The combative Chen, a 55-year-old lawyer noted for clever tactics in the political arena as well as the courtroom, has so far signaled no willingness to back away from the fight. In a speech Sunday night, he vowed to stay in office unless a court convicts his wife of the charges leveled against her by the public prosecutor. In practice, that meant Chen refused to resign; trying his wife will probably take longer than the remainder of his second term.

Turmoil and rancor over Chen's fate will overshadow the normal business of government in Taiwan for some time, officials and other analysts predicted, which could affect the island's economy and its struggle to win greater recognition abroad. Reacting to the scandal, the Taipei stock market sank sharply Monday morning, but had largely recovered by the end of trading.

On the profit side of the ledger, the main beneficiary has been mainland China, which insists this self-ruled island is part of the motherland and must one day return to rule from Beijing. The government of President Hu Jintao has always portrayed Chen as an unstable plotter whose gestures to foster independence did not have the support of most Taiwanese. Although that was untrue in the past -- a majority, albeit narrow, elected him in 2000 and again in 2004 -- opinion polls now show that the scandal-tainted Chen has lost the trust of many people here.

Ma Ying-jeou, the Taipei mayor and Nationalist leader who is likely to be the party's presidential candidate in 2008, has set a conciliatory course considerably more appealing to Beijing. As president, Ma said in an interview in March, he would seek to promote better ties with the mainland, leaving the question of Taiwan's ultimate status to an indeterminate future when China will have developed further and perhaps liberalized its authoritarian political system.

As a result, the United States also looks likely to benefit from Chen's troubles.

The United States recognizes Beijing as the government of all China and does not have formal diplomatic relations with Taiwan. But it has pledged to help the island defend itself against any Chinese attack. With Chen likely to be restrained by his troubles from taking provocative steps toward independence, and with Ma's softer policies looming, the Bush administration can breathe more easily about its commitment in the Taiwan Strait.

The role of Chen's wife in the corruption crisis -- the prosecutor alleged that she used fake receipts to obtain about $450,000 from government accounts -- came as no surprise to most Taiwanese. Wu Shu-chen, 54, a diminutive figure frequently at Chen's side in campaign appearances, has been closely involved in his career since the beginning.

But gradually Wu turned from campaign asset to liability. By the time Chen was running for reelection in 2004, Taipei buzzed with rumors of her extravagant spending and stock market investments. The talk of her spendthrift ways, churned up by media friendly to the Nationalists, fit poorly with Chen's reputation for clean government, burnished during a term as Taipei mayor.

Nationalist political figures promoted allegations that she accepted vouchers from a high-end department store in return for using Chen's influence to determine who rose in management ranks. Other stories accused her of accepting money to influence personnel choices in some of Taiwan's large holding companies and banks.

The suggestion of first-family corruption intensified in May, when Chen's son-in-law was indicted on insider trading charges. But the chief prosecutor's office investigated the accusations against Wu and dropped them without filing criminal charges. That changed Friday, when the chief prosecutor's office announced the explosive indictment accusing Wu of using phony receipts to withdraw funds from secret accounts used to finance confidential foreign operations.

In his televised defense, Chen spoke at length about confusing and vague regulations governing such accounts. But he said nothing to explain why his wife would have been involved in handling the money.

"It's certainly very, very upsetting for many of us," said Hsiao Bikhim, a Democratic Progressive Party lawmaker, adding: "He should have known better."