SURINAME AND CHINA SLOW DANCE--BUT NOT TOO CLOSELY

C O N F I D E N T I A L SECTION 01 OF 02 PARAMARIBO 000460 SIPDIS SIPDIS OES FOR JMIOTKE AND ACOVINGTON, EAP FOR JYAMAMOTO, EEB FOR TSAEGER, WHA/CAR FOR JROSHOLT, INR FOR RCARHART SIPDIS E.O. 12958: DECL: 08/28/2017 TAGS: SENV CH NS SUBJECT: SURINAME AND CHINA SLOW DANCE--BUT NOT TOO CLOSELY REQUEST FOR REPORTING ON FOREIGN ACQUISITION OF NATURAL RESOURCES IN SURINAME BY CHINESE FIRMS REF: (A) 2007 STATE 93848 (B) 2002 PARAMARIBO 1020 (C) 2007 PARAMARIBO 441 Classified By: Poloff for reasons 1.4 (b) and (d) This cable is the sixth in a series on Chinese (most recent, reftel C) activities in Suriname in the spring and summer of ¶2007. ¶1. SUMMARY (C) Despite mutual commitment of Suriname and China to their bilateral relationship, progress in achieving tangible results is slow. China's hopes of tapping into Suriname's riches have been tempered by bureaucratic processes, ill-conceived projects, environmental concerns, and public opinion. Thus, to date, Chinese investment has had no discernible impact on the environment. END SUMMARY ¶1. (C) Per confidential cable (reftel A),post responds to questions posed in paragraph 3. a. Chinese companies have not yet finalized any major plans or purchases related to investment in the forestry and forest products sector, wildlife, energy, or live marine resources in Suriname. However, the potential is great, and Chinese firms and the Chinese Government are showing interest in some opportunities, for example, in bauxite mining, offshore oil exploration and drilling, and palm oil production. To date, these proposals are more theoretical than factual, but the dollar amounts under discussion have been substantial. For example, on August 24 media reported possible Chinese investment in the bauxite and oil industries to the tune of $500 million (septel). A Dutch-Chinese consortium recently showed interest in rehabilitating the port of Paramaribo, upgrading the airport and setting up an automobile assembly plant. Chinese Government and private firms have also financed and built roads and constructed the Surinamese Ministry of Foreign Affairs headquarters, in part to buy good will with the GOS and the public. However, it is difficult to assess the environmental impact, if any, of these projects. The recently announced repaving of the road from Paramaribo to Lake Brokopondo by Chinese road companies would open up the interior of Suriname to increased agriculture and logging. b. There is no current discernible environmental impact, as such purchases or investments have yet to be undertaken. c. There are few domestic environmental codes or regulations that would mitigate potential environmental harm from such investments. However, environmental impact assessments taken for large projects, although not required by law, are taken into consideration by the GOS before a project is approved. Impact assessments are provided and paid for by project developers. d. The capacity of local governments to enforce environmental codes and regulations (if regulations existed) would be questionable since Suriname lacks resources, manpower, equipment, and technical expertise to enforce regulations. e. Applicable requirements of financial institutions related to environmental protection, such as environmental impact assessments required by many multilateral financial institutions, are unknown in Suriname. -------------- STALLED PROJECT -------------- f. Other information: Perhaps the most environmentally-unfriendly Chinese proposal to date is the Patamacca palm oil project in the eastern district of Marowijne (reftel B),which appears to be stalled for the moment. The proposal calls for the clear cutting of 40,000 hectares of rainforest to set up a palm oil plantation and processing plant. The proposed site contains many Surinamese hardwoods, which would be harvested by the Chinese investor in order to finance the palm oil project. There are genuine concerns about the economic viability of the project. Furthermore, there are serious concerns that deforestation generated by the clear-cutting could cause serious flooding. PARAMARIBO 00000460 002.2 OF 002 According to Richard Kalloe, former Minister of Trade and Industry, the area receives approximately 2,500-3,000 millimeters of rain per year, and soil erosion and flash-flooding could affect the low-lying lands around Patamacca. Finally, local Maroon inhabitants, descendants of former slaves, believe many of the 5,000 advertised jobs would go to cheaper Chinese immigrant laborers. COMMENT: The Chinese likely look to resource-rich Suriname as a potential supplier of wood, bauxite, and oil and have invested heavily in developing a strong relationship with the GOS via major construction projects and exchange visits of VIPs. However, the GOC is running into numerous speed bumps that are slowing its progress. The recent influx of Chinese immigrants has generated resentment among many Surinamers that has been exacerbated by Taiwan,s aggressive and highly public efforts to court Suriname. Surinamers are offended by what they view as stern reproaches by the Chinese Ambassador to government officials and private Surinamers regarding contacts with Taiwan. COMMENT CONTINUED: Thus, while the GOC appears to be reeling on the public affairs front, the advantages of announced Chinese development assistance and investment remain illusive, prompting the man on the street to quip, "The Taiwanese give us assistance; the Chinese just talk about giving us assistance." Despite the GOS,s repeated affirmation of its "one-China policy," the government's insistence on environmental and social impact studies of the Patamacca palm oil scheme suggests that the GOS is not willing to sell the jungle to Chinese investors whole-cloth just yet. As is often the case in Suriname, the result of bureaucratic delay may be the preservation of the status quo--and a small slice of the rainforest. END COMMENT GENTON