ALL CHINA, ALL THE TIME - AT LEAST THIS WEEK

C O N F I D E N T I A L SECTION 01 OF 03 HAVANA 000880 SIPDIS DEPT FOR WHA/CCA E.O. 12958: DECL: 11/20/2018 TAGS: ETRD ECON PGOV PINR PREL CU SUBJECT: ALL CHINA, ALL THE TIME - AT LEAST THIS WEEK REF: HAVANA 863 Classified By: COM Jonathan Farrar for reasons 1.4 (b) and (d) -------------- SUMMARY -------------- ¶1. (C) For four straight days, Chinese President Hu Jintao's 36 hour visit has dominated the Cuban press. China and Cuba signed 12 agreements, including renewed contracts for Cuban exports and much needed restructuring of Cuba's debt. Hu arrived in Cuba in between visits by Brazilian President Lula and Russian President Medvedev. While visits by foreign leaders are not uncommon, the frequency, timing, and publicity provided these visits give the impression of a full court diplomatic press aimed primarily at diversifying Cuba's economic ties and securing much needed assistance. The Government of Cuba (GOC) has also confirmed that Raul Castro will reciprocate with visits to all three countries (Brazil in December, Russia and China in 2009). Perhaps a bit jealous, Venezuelan President Hugo Chavez announced November 18 that Raul Castro would make his first foreign trip as president to Venezuela in the next few days, a statement that seems to have taken Raul by surprise. End Summary. -------------- SIGNING AGREEMENTS AND INCREASING TRADE -------------- ¶2. (U) Chinese President Hu Jintao brought a large delegation to Havana November 17 following the G-20 summit in Washington, D.C. and a visit to Costa Rica. This was his second visit to Cuba as president (2004) and third visit overall (1997 as a member of the Chinese Communist Party.) After departing Cuba on November 19, Hu was scheduled to attend the Asia-Pacific Economic Cooperation Summit in Peru and then stop in Greece on his way back to China. ¶3. (SBU) Hu was greeted and accompanied by President Raul Castro for much of his visit. Hu reportedly brought 4.5 tons of humanitarian assistance in response to the three hurricanes that hit Cuba in the past three months. On November 17, Castro and Hu attended a ceremony where, according to the official (state) press, the following agreements were signed: an economic and technical cooperation agreement calling for an USD 8 million donation by the Chinese government; a five year deferment on payment of a USD 7 million credit granted in March 1998; the deferment of payment until 2018 for the trade imbalance (not quantified) accrued between 1994-1995; the release of a USD 70 million credit to rebuild and repair hospitals from a USD 350 million credit facility established on Hu's last visit in 2004; and an agreement of mutual recognition of higher education diplomas. These are in addition to the following agreements signed this same week at the 21st session of the China-Cuba Inter-governmental Commission for Economic Commercial relations: renewed contracts for the purchase of Cuban nickel and sugar; the Chinese supply of galvanized roofing material for Guantanamo province; continuing rehabilitation of Cuban ports; further cooperation in biotechnology; renovating Cuba's seismology network; and the building of a third Cuban eye hospital in China. ¶4. (SBU) While not quantified, the agreements to continue exporting Cuban nickel and sugar are likely to further increase bilateral trade in goods, which grew by 35 percent in 2007 to USD 2.457 billion. All of the growth in 2007, however, was due to China's increased purchase of nickel (more than 10,000 tons at record high prices). Chinese exports to Cuba (transportation vehicles, electric home appliances, computers, telecom equipment, and energy equipment) remained flat at USD 1.5 billion. Cuba was already committed to send 400,000 tons of sugar to China each HAVANA 00000880 002 OF 003 year, and can hardly spare more. Total production in 2008 is up from 2007 and likely between 1.4 and 1.5 million tons. However, sugar production in 2009 may fall back to pre-2008 levels due to extensive hurricane damage. Cuba had to import sugar in 2006 to meet domestic demand estimated at 700,000 tons per year. Nevertheless, we expect China will maintain its spot in 2008 as Cuba's number two overall trade partner after Venezuela. Venezuelan trade in 2007 was USD 2.7 billion in goods and several billion dollars more in services. ¶5. (SBU) In addition to overseeing these agreements, Castro and Hu visited some of the 2,000 Chinese students in Cuba studying Spanish, medicine, nursing, tourism, psychology, and the humanities. According to the official press, the leaders discussed in a bilateral meeting their economic, social, and political experiences, specifically in regard to strengthening socialism, and the continued development of ties between the nations. They also emphasized the importance of defending Cuban sovereignty and the "beginning" of a unified China. -------------- THE CHINA MODEL AND MEETING FIDEL -------------- ¶6. (SBU) The morning of Hu's arrival, the Cuban communist party newspaper Granma ran an article titled "China Continues Demonstrating the Validity of Socialism." While highlighting how socialist China is a shining example for all of the Third World, the article referenced Fidel Castro's remarks from Hu's last visit to Cuba in November 2004 that seemed to indicate that the China model is not for Cuba. Fidel said that while "socialism remains the only real hope for peace and better living for our species...each people must adapt their strategy and revolutionary objectives to the concrete conditions of their own country, and two identical socialist revolutionary processes do not exist." The article goes on to say that although China has developed and modernized rapidly, several ills have appeared due to the speed of their transition. These ills include an unequal distribution of income, marked differences between the city and country, and erosion of the environment. The article said that China recognizes and is addressing these problems, and that socialism will persevere with China's "peculiarities" such as foreign investment, development of state and private property, and what is know as the one country, two systems policy. ¶7. (SBU) On November 18, 2008, Fidel Castro met with Chinese President Hu Jintao and some of the members of his delegation for 98 minutes. Video and photos in official press showed one still image of Hu and Castro standing together. The two leaders discussed the "complex international situation" and Cuba-China relations. The following day, an article attributed to Fidel Castro touted China's remarkable economic growth, even during an international economic crisis. Fidel also wrote that he "summed up for him (Hu) some of our country's assessments on the habits of our neighbors to the north (the United States),which tries to impose its ideas, its mindset, and its interests with its full fleet of nuclear weapons and fighter planes." Castro also offered his views on Venezuela's solidarity with Cuba, President Chavez's admiration for China, and Chavez's defense of socialism as the only system capable of bringing justice to the people of Latin America. -------------- COMMENT -------------- ¶8. (C) While neither the visit itself nor the number of agreements signed were particularly remarkable (China signed 16 agreements with Cuba on Hu's last visit in 2004),the publicity afforded the event - including a rare photo with HAVANA 00000880 003 OF 003 Fidel Castro - was extensive. We expect a similar media blitz when Russian President Medvedev comes calling next week. It's possible that the regime is turning to the BRICS (Brazil, Russia, India, China, and South Africa) as an alternative to Venezuela. Not to be outdone, Chavez was quoted this week as promising Raul Castro would make his first foreign trip as president to Venezuela in the next few days, and certainly before Castro's already announced trip to Brazil for the Latin American and Caribbean Summit December 16-17. One day later, Raul Castro appeared surprised when asked about the trip and responded with "Chavez said it. When did he say it? When am I going to Venezuela? I don't know anything, but if my nephew (Chavez) said it then I'm going." (Note: Chavez often refers to Raul's brother Fidel Castro as his father. End Note.) FARRAR