Taiwan president gives way to ease political crisis

TAIPEI, May 31 (Reuters) Taiwan President Chen Shui-bian bowed to pressure and agreed to yield power today to try to ease a deepening political crisis after his son-in-law was detained on suspicion of insider trading.

Chen, whose approval rating has sunk to new lows due to the scandal, caved in to the demands of lawmakers from his Democratic Progressive Party (DPP) and announced at a meeting that he would share power with Premier Su Tseng-chang.

The president promised to ''transfer power ... and completely respect the premier's right to nominate cabinet personnel'', the state-funded Central News Agency reported.

In effect, the move turns Chen into a mere figurehead and a lame duck with two years to go before his second and final four-year term ends in 2008.

The premier will have ''full power to decide and be completely responsible for all cabinet policies in the future'', Chen told the meeting, which was attended by the premier, the vice president, the DPP chairman, the president's chief of staff and the National Security Council secretary-general.

Taiwan's constitution does not spell out clearly the division of power between the president and the premier. The president is elected by popular vote and empowered to nominate the premier, who is accountable to both the president and parliament.

Chen pledged ''not to become involved in any party function in the future and not to take part in election activities''.

His woes worsened last Thursday when Chao Chien-ming, a doctor married to the president's daughter, was detained on suspicion of insider trading -- the first time a member of Taiwan's first family has been held on suspicion of breaking the law.

The scandal has sparked opposition calls for Chen's resignation.

REUTERS CH LR KP2340