BURMESE PM GOES TO CHINA WITH A LONG SHOPPING LIST

C O N F I D E N T I A L RANGOON 000206 SIPDIS SIPDIS BEIJING, SEOUL AND TOKYO -- PLEASE PASS TO EAP/MLS DEPUTY DIRECTOR ROBERT RAPSON AND DELEGATION, STATE FOR EAP/MLS E.O. 12958: DECL: 12/08/2015 TAGS: PREL ECON CH BM SUBJECT: BURMESE PM GOES TO CHINA WITH A LONG SHOPPING LIST REF: RANGOON 179 Classified By: Econoff TLManlowe for Reason 1.4 (b,d). ¶1. (C) Summary: When he makes his first bilateral visit to China on February 14-18, Burmese Prime Minster Soe Win will seek an agreement on closer cooperation on drug trafficking, a donation of 100 used train cars, and Chinese views on the GOB's draft industrial zone law. These agenda items are in addition to a $8.7 million grant and PRC funding for construction projects reported in reftel. End summary. ¶2. (C) According to internal documents we obtained today from a GOB contact (PROTECT),PM General Soe Win will sign an agreement pledging further cooperation between the PRC and the GOB to fight drug trafficking. As recent joint investigations show, the GOB and China are collaborating more closely in the past year to fight the flow of illegal narcotics from Burma into China; the new agreement will help spell that out. ¶3. (C) The GOB documents also reveal that the Deputy Minster of Rail Transportation is seeking a Chinese gift of 100 railway carriages formerly used on the line between Kunming, China, and Hekou, Vietnam. With that line shifting to a different (standard) gauge track, the GOB sees an opportunity to get 100 trains cars at bargain prices. If the Chinese government will not gift the trains to Burma, the Deputy Minster suggests that the PM seek a soft loan to cover the PRC's purchase price of US$3.6 million, and a Chinese assurance that it will still manufacture and sell spare parts for Burma's old - (meter) gauge system. The PM will also ask the PRC to build a new railroad from of the city of Lashio in Shan State to Muse, a major Burmese trading town on the Chinese border. ¶4. (C) Soe Win will also share a draft of the Thilawa Industrial Zone Law based on a Chinese model that allows foreign investors to participate actively in the development and operation of this trade zone, located at a port about 45 minutes southwest of Rangoon. The zone accommodates a wide range of manufacturing and trade activities with shares held by both the GOB and foreign governments, as well as business enterprises and financial groups. The draft law promises tax breaks and allows foreign financial institutions to operate in the zone using foreign currencies. Currently, only three large state-run banks in Burma are allowed to handle foreign currency transactions. ¶5. (C) Comment: The Prime Minister is going to China with a long shopping list of projects that need more funding. He cannot offer much in return. The Chinese Government will be able to set their terms. The most effective message China could deliver would be one encouraging reforms in Burma, but until they do, the GOB will continue to hold out its begging bowl and hoping for more useful donations. End comment. STOLTZ