CHINA POPULAR WITH MINISTRIES: LOANS IN ONE DAY

C O N F I D E N T I A L PARAMARIBO 000698

SIPDIS

SIPDIS

WHA/CAR FOR LAURA LUFTIG

E.O. 12958: DECL: 10/30/2016
TAGS: PREL PROG NS CH CONS EAID SMIG
SUBJECT: CHINA POPULAR WITH MINISTRIES: LOANS IN ONE DAY

REF: PARAMARIBO 683

Classified By: Ambassador Schreiber Hughes for reasons 1.4 (b) and (d)


1. (C) SUMMARY: According to Minister of Planning and
Development Cooperation Ricardo van Ravenswaay, Chinese
development assistance is increasingly popular with certain
Ministries because loans to companies for development
projects are available "in one day." Van Ravenswaay
contrasted this with the process of working with Western
development entities, which he said requires more time and
coordination and yields less money. END SUMMARY

--------------
CHINA POSITIVES: SPEED AND EASE
--------------


2. (C) During the October 2006 courtesy call by Ambassador
Schreiber Hughes at the Ministry of Planning and Development
Cooperation, Minister Ricardo van Ravenswaay compared and
contrasted development assistance available in the form of
Chinese loans and Western grants. Van Ravenswaay said that
the Chinese are "much easier" to deal with. Van Ravenswaay
said the Chinese "will give you 100 million in a day," and
that coordination needs are minimal: he said his office would
need only one person as a liaison with the Chinese.

--------------
CHINA NEGATIVES: WHOSE INTERESTS?
--------------


3. (C) Van Ravenswaay said however that his Ministry
prefers not to use the Chinese, because "you,re financing
labor for them." Chinese laborers are assigned to Chinese
projects. In addition, according to Inter-American
Development Bank representative Ancile Brewster, these
workers often don,t return to China (see also reftel). Van
Ravenswaay further said that using Chinese loans is
deleterious in the long run because there is no oversight or
control: "few rules, quick loans." Van Ravenswaay also said
that the Chinese prefer direct links with some of the other
Ministries (he sighted in particular the Foreign Ministry and
Ministry of Public Works),rather than coming through the
Planning Ministry. Van Ravenswaay said that in this way "a
bypass is being used" to avoid a government law limiting debt
obligations (debts may not exceed 65% of GDP): in essence,
companies undertake work the State is responsible for without
obtaining official state guarantees. Van Ravenswaay said
that through these informal mechanisms, some government
figures are profiting from partnerships with the private
sector, which amounts to corruption.

--------------
WESTERN NEGATIVES: SLOW AND COMPLICATED
--------------


4. (C) Van Ravenswaay said there is antipathy toward the
UN, the Inter-American Development Bank, and the European
Union as sources of development funding because of numerous
pre-conditions, up to two-year waits, and the necessity for
many consultants to arrange financing. Van Ravenswaay: "we
have constantly ten people working with the EC, for 15
million." Furthermore, "they treat us as if we don,t know
how to build a road." Finally, Van Ravenswaay said that with
a two-year time horizon before grants come through, the
sitting government doesn,t get any credit from the
Surinamese people for projects it undertakes with Western
donors, since politicians normally have left office by the
time projects are completed. According to Van Ravenswaay, the
GOS is honest but "if you have good intentions it,s a very
big obstacle."


5. (C) COMMENT: Although he didn,t directly say so, Van
Ravenswaay appears frustrated that his Ministry has little
say in the development planning process and often isn,t kept
abreast of matters (e.g., he said he was "trying to find out"
how Chinese loans are being arranged). His party, the
upper-middle class, traditionally "progressive" Democratic
Alternative ,91, is the smallest party in the coalition,
holding just one parliamentary seat and one Ministry.
Meanwhile, the Creole-based National Party of Suriname (NPS),
the largest coalition party, controls the Presidency and the
Ministry of Foreign Affairs. It is not uncommon to hear
rumors in Paramaribo that the NPS tries to strengthen the
Chinese presence in order to offset its intra-coalition
rival, the Hindustani-based United Reform Party (VHP);
Hindustanis have traditionally dominated the business and
trade sectors in Suriname. END COMMENT
SCHREIBER HUGHES