"My time to leave (Taiwan) has come," Paal said yesterday morning at a New Year's reception hosted by Kuomintang Chairman Ma Ying-jeou (馬英九) for all foreign envoys posted in Taiwan.
When asked by reporters if he was resigning because he failed to get the arms procurement bill through the Legislature, Paal replied: "Nonsense!"
The U.S.' top representative in Taiwan, Paal announced on Tuesday he will leave Taipei on January 25 after three and a half years as head of the de facto U.S. embassy.
But he did not give a reason for his departure, which quickly aroused speculation that Paal was resigning because of the arms procurement bill, which consists of six Patriot PAC-III anti-missile batteries, eight diesel-electric submarines, and 12 P3-C Orion anti-submarine aircraft.
Taiwan's opposition-controlled Legislature has refused to put the bills needed to fund the purchase on the body's main agenda for review.
Holding a slim majority in the Legislature, the pan-blue opposition composed of the Kuomintang and People First Party contends that the US$15 billion package will hurt the country's economy and start a costly arms race with China.
The government believes the weapons are necessary to defend the island.
During yesterday's event, Paal said Taiwan's procurement of weaponry systems from the United States is a decision in line with efforts to protect its own interests and national security.
For his part, Ma told Paal that the Kuomintang is scheduled to submit a position paper on the procurement of defensive weaponry systems from the United States in March, which he later said Paal described as "good news."
Ma stated that the Kuomintang was a reasonable and reliable party and would not try to blur the focus of the subject at hand.
AIT Taipei Office Deputy Director David Keegan will be the acting director until a replacement for Paal arrives.
AIT is the quasi-official U.S. organization that handles relations with Taiwan in the absence of formal diplomatic ties after the U.S. closed its embassy.
Diplomatic sources said Stephen Young, who has previously served as deputy head of the AIT Taipei office, has been tipped to succeed Paal when he leaves.
They disclosed that the U.S. government unofficially decided last year to appoint Young as the next AIT chief, and suggested that Washington could not find a better candidate than Young."
Young has served in the U.S. Department of State for 25 years and is currently the U.S. ambassador to Kyrgyzstan.