Taiwan's embattled president to address nation

TAIPEI, Nov 5 (Reuters) Taiwan President Chen Shui-bian was due to speak publicly today for the first time since a government prosecutor said there was enough evidence to indict him for corruption, pitching Chen into his worst crisis yet.

The independence-minded president's wife was indicted on Friday for embezzlement and forging documents, breathing new life into attempts by the main opposition Nationalist Party to oust Chen over scandals involving his family members and close aides.

Several thousand people demonstrated against the president in the island's second-largest city, Kaohsiung, yesterday and today the opposition organised a protest in the capital, Taipei.

Analysts say that Chen, who has weathered months of street protests and attempts in parliament to force his exit, may still survive but pressure on him to quit has risen dramatically.

''The corruption scandal ... crossed a critical threshold,'' said the Eurasia Group, a global political risk consultancy.

''Although Chen's presidential immunity will prevent his own prosecution until after he leaves office, the indictments (of his wife and aides) will likely force him to resign or face a legislative recall, possibly before the December mayoral elections,'' it said in a commentary.

Taiwan's stock market and currency are expected to come under pressure this week due to the political uncertainty.

''Right now we see only a short-term negative effect on the stock market, but if this incident causes Chen to step down, then it could weigh on the market for a longer period,'' said Uni-President Asset Management Vice President David Dong.

The central bank said it was standing by waiting to see what happens when foreign exchange markets reopen.

THREAT OF RECALL MOTION Chen was due to speak later in the day, although an exact time had not yet been set, said presidential spokesman David Lee.

The High Court prosecutor said Chen was suspected of corruption and faking of documents in a larger case involving the misuse of more than T.8 million (448,000 dollar) from a special government fund.

But the prosecutor added Chen was immune from prosecution as long as he was in office. Chen, who has twice won elections campaigning for formal independence from China, is not due to leave office until 2008.

The Nationalists, or the Kuomintang, said on Friday they would go ahead with a parliamentary ''recall'' motion if Chen did not resign within 48 hours. If a motion is passed, it would lead to a referendum on whether to oust Chen.

The opposition parties, which have a slim majority in parliament, have failed to garner a two-thirds majority in two previous attempts to oust the president in June and October.

Analysts say that if there is a split within the ruling Democratic Progressive Party (DPP), there could be enough votes in parliament to pass the motion.

The DPP has called on Chen to provide an explanation. Party spokesman Tsai Huang-lang said the DPP had held ''crisis'' meetings over the weekend to decide what to do, but it would not make a statement until after the president's speech.

REUTERS PB RAI1307