1. (SBU) SURGING CHINESE SOCIO-ECONOMIC INFLUENCE: Emboffs
traveling on GOB-organized "Study Visit" to border regions
and central Burma January 23 - 26 witnessed a high degree of
Chinese socio-economic influence across a 325-mile stretch of
Burma's Shan State border with China, especially in the
self-administered autonomous regions of ethnic minority
cease-fire groups. Even in the interior northern towns of
Lashio, Kengtung, and Maymyo (Pwin U Lwin) we saw and heard
clear indications of major Chinese economic inroads. Another
emboff who traveled to the Chinese border regions with UNODC
will report septel on some striking indications of Chinese
dominance of the economy and social fabric in some parts of
Burma's frontier regions.



2. (SBU) THE HIGH DAM: Emboffs visited the Ye Ywa Dam site,
located 39 miles SW of Mandalay. Scheduled for completion in
2007, the 433 foot high dam will create a reservoir filling a
canyon some 45 miles long. When completed the dam's hydro
plant will generate 790 MW of electricity, adding
significantly to the current countrywide total of perhaps
1,500 MW. A Swiss firm, Colenco Power Engineering Co., has
provided the engineering consulting expertise, and the
Export-Import Bank of China provided a $200 million soft loan
to cover two-thirds of the hard-currency costs of the
project. This loan was agreed to during Senior General Than
Shwe's January 2003 visit to the PRC, and is to be used to
purchase Chinese equipment and material for the dam project.
The GOB sees this project providing the energy for industrial
expansion of a large swath of central Burma in coming years.



3. (SBU) CHINESE CONSULTANTS, TIED LOANS: After visiting a
major irrigation scheme near Salin on the Irrawaddy River in
Magway Division (equipped with massive Chinese pumping
equipment) emboffs then toured a nearly complete,
multi-purpose dam 48 miles WNW of Minbu. The Mone Dam is
financed by a soft Chinese loan of $32 million from the China
International Investment & Trust, specifically for the
purchase of Chinese equipment and material. In addition, the
Mone Dam utilizes Chinese engineering consultants. Schedule
to be finished in March 2004, the 200 foot high dam will
provide irrigation water and 75 MW of hydro-electricity.



4. (C) COMMENT: With no guiding political ideology, Burma's
military regime seems to be pursuing the aim of "legitimacy
through infrastructure." Chinese soft loans for Burmese
infrastructure projects provide the capital-poor SPDC with a
lifeline to resources badly needed to meet the regime's
developmental goals.



5. (S) COMMENT CONTINUED: Emboffs were flown on a Burmese
Air Force MI-17 helicopter the 48 miles across the dry, flat
plains of Magway Division from Mone Dam to Minbu on a clear
day with good visibility. If the GOB were attempting to hide
a sensitive weapons or other facility NW of Minbu, it seems
odd that they chose to fly us over that route. At Mone we
witnessed around-the-clock work being done to complete the
dam within the next 60 days, including the installation of
heavy-gauge (inch and a half) iron re-rod in the 210-foot
deep concrete-lined surge tank. Reports (ref) of
suspiciously heavy rebar being off-loaded at Minbu could
conceivably have been based on sightings of materials being
rushed to complete the Mone Dam. End Comment.
Martinez