OUR MACAU AGENDA: EXPANDING RAPIDLY

C O N F I D E N T I A L SECTION 01 OF 04 HONG KONG 001041 SENSITIVE SIPDIS DEPARTMENT FOR EAP, EAP/CM NSC FOR DENNIS WILDER E.O. 12958: DECL: 06/10/2033 TAGS: PGOV PREL ECON EINV SOCI CH HK MC SUBJECT: OUR MACAU AGENDA: EXPANDING RAPIDLY REF: A. HONG KONG 00645 ¶B. HONG KONG 00894 Classified By: Consul General James Cunningham; Reason 1.4 (d) ¶1. (SBU) Summary: Over the past year, we have greatly expanded our commitment of time and resources to Macau. In November 2006, we established a "Team Macau" as a platform for interagency coordination. All of the 13 USG agencies represented at post participate in this effort, which was driven in part by rapidly expanding and broadening U.S. interests in Macau. In 2007 we developed and expanded an agenda ranging from policy analysis and reporting, to logistics, to law enforcement and outreach, promotion of U.S. business and protection of the rapidly growing American community. We have increased our understanding of and presence in Macau, but even greater engagement is called for, given growing U.S. interests there. We are pursuing interim measures to expand our reach and coverage, but lack the resources to field the full time coverage Macau merits. In a separate message, we address long term U.S. interests in Macau and the need for a full-time USG presence there. End Summary. Team Macau -------------- ¶2. (SBU) Consulate General Hong Kong established "Team Macau" in November 2006 as a platform for interagency coordination, as well as to compensate for a lack of constant presence on the ground by leveraging multiple, limited contacts to get a multi-faceted and coherent understanding of events in Macau as we accelerated our engagement there. Team Macau convenes twice each month: one meeting is dedicated to law enforcement (LE) efforts in Macau, the other to non-LE foreign policy initiatives, including public diplomacy and outreach, protection of American citizen and other consular issues, economic and political engagement, logistics and security, and associated support. At the same time, Post created an experimental virtual mechanism in the form of a weblog to facilitate local and intra-Consulate coordination on operational and substantive matters. Management & Administration -------------- ¶3. (SBU) The Consulate General lies 40 miles, or one hour via high-speed ferry, from Macau. This physical separation presents a logistical challenge for expansion of our presence in Macau. The Consul General has raised our concerns about providing adequate service for the growing number of U.S. citizens resident in (now about 2,000) or visiting Macau with senior PRC Ministry of Foreign Affairs officials and the Chief Executive in Macau (ref B),suggesting establishment of a U.S. consular agent in Macau. While CE Ho was supportive, after consultations with Beijing, the Ministry of Foreign Affairs (MFA) responded that the concept of a "consular agency" was unfamiliar and would require further study (Ref B). Simultaneously, we have initiated measures to improve transportation and communication for Consulate General staff traveling to Macau and also expanded our range of contacts in the MSAR for logistical and substantive matters. Policy Issues - Macau Agenda -------------- ¶4. (C) Our policy engagements in Macau have grown in parallel to the influx of American citizens and investment. Over the past two years, we have broadened and deepened our understanding of developments in Macau across an expanded agenda: protection of Americans; political, economic and social reforms; trafficking in persons; money laundering and financial security; U.S. trade and investment; and, not least, the key figures in Macau who have or will have influence over U.S. interests. Below is a summary of our successes and remaining challenges on each agenda item to date. Political & Economic Reporting -------------- ¶5. (C) Team Macau has expanded dramatically our substantive exchanges with Macau contacts on a broad and growing range of issues, including political reform, relations with the PRC and other countries, press freedom, corruption, money laundering, development of the casino industry, trade, labor, science, environment and health. As a result, the number of substantive reporting cables from Hong Kong regarding Macau increased from ten in 2006 to 26 in 2007 and 14 in the first four months of 2008. (Note: These numbers do not include cables resulting from demarches, visits, or Congressionally-mandated reports. End Note.) One result of HONG KONG 00001041 002 OF 004 this increased level of engagement is that we now enjoy greatly expanded relations with key figures in the government, industry, media, and academia, as well as various local associations and activist groups. Trafficking in Persons -------------- ¶6. (SBU) The State Department's Office to Monitor and Combat Global Trafficking in Persons (TIP) has recognized Macau,s substantial progress toward a comprehensive and effective anti-human trafficking strategy by raising it to Tier 2 status in the 2008 TIP Report released June 4; Macau had spent two consecutive years on the "Tier 2 Watch List." That promotion reflected significant actions taken by the MSARG, including establishment of an interagency task force to combat trafficking in persons. As a result, in 2008 Macau initiated its first international TIP prosecution, and also drafted and submitted to the legislature a comprehensive anti-TIP bill that addresses current deficiencies in prevention, protection and prosecution of trafficking crimes. This development is a direct result of our consistent, intensive efforts to engage the highest levels of the government, including multiple TIP-related meetings between the Consul General and Macau Chief Executive, Edmund Ho. We also worked extensively with Macau government social welfare and law enforcement officers, NGO's and individual activists. ¶7. (SBU) Post officers, working with the Department, obtained a Women's Issues Fund grant for a local NGO in Macau -- the Good Shepherd Sisters Women's Shelter -- to host two anti-TIP awareness seminars, the first of which was conducted on June ¶5. The event served to raise awareness among various stakeholders in Macau and strengthen public-private partnerships to end human trafficking there. Post will report separately on the seminar and plans for the second event, scheduled in October 2008. Money Laundering & Financial Security -------------- ¶8. (C) The Consulate General continues to expand engagement with the Macau government to combat all forms of transnational crime. We cooperate with numerous Macau law enforcement entities to build their capacity and promote their greater participation in bilateral and multilateral operations, including against terrorism. The six U.S. law enforcement agencies at the U.S. Consulate General in Hong Kong actively engage their Macau counterparts to achieve these goals. ¶9. (SBU) Macau's explosive growth in tourists, many of whom carry large amounts of cash for gaming, provides an opportunity for criminals to smuggle currency, drugs or other illicit products. All agencies at the U.S. Consulate General in Hong Kong are working to improve relations with Macau policymakers, law enforcement agencies, and casino security personnel through regular visits to discuss current trends in smuggling and money laundering and to better understand Macau's law enforcement challenges. ¶10. (SBU) We had success in encouraging Macau authorities to make needed changes to its anti-money laundering (AML) regime. Following U.S. Treasury,s designation of Macau,s Banco Delta Asia as a primary money laundering concern, the Macau government in 2006 passed a new AML law that we helped shape, which significantly improved Macau's ability to combat money laundering and financial crimes. The Asia Pacific Group's (APG) mutual evaluation of Macau's AML practices in 2007, while generally positive, highlighted several additional regulatory revisions that would bolster Macau's AML regime. Following the evaluation, we took the initiative to create a matrix of improvements Macau should make, putting the MSARG on notice we would monitor its progress. Through frequent meetings with regulators, law enforcement officials, and financial sector professionals in Macau, we have advocated policy and regulatory changes that would be consistent with the APG recommendations. This would include strengthening Macau's ability to combat money laundering through improved customer due diligence requirements, regular information sharing, and implementation of cash courier declaration requirements. Law Enforcement -------------- ¶11. (SBU) In that regard, several USG agencies at post have organized training programs for Macau law enforcement officials. In 2006, IRS officials conducted a Financial Investigations Training Course in Macau. In 2007, U.S. Drug HONG KONG 00001041 003 OF 004 Enforcement Administration (DEA) officers conducted two seminars on Financial Investigations and Customs Intelligence and Investigations. In December 2007, the INS participated in an AML/CTF workshop for Macau casinos sponsored by the Australian government and the International Monetary Fund. Throughout 2007, Macanese law enforcement officials participated in 16 International Law Enforcement Academy training sessions in Bangkok, covering subjects including computer crime investigations, intellectual property rights, anti-terrorism protocols, narcotics control, and crime analysis. This activity has continued in 2008. ¶12. (SBU) In response to a request from the Macau Judicial Police and Customs Authority for assistance with increasing numbers of West African-related drug seizures, the DEA plans to conduct a workshop on West African drug trafficking trends in 2008. The U.S. Federal Bureau of Investigation (FBI) is identifying a suitable Macanese law enforcement candidate for the FBI National Training Academy, and the U.S. Internal Revenue Service has received funding from State/INL to conduct training on Financial Investigative Techniques for Corruption and Money Laundering, tentatively scheduled for early in FY-09. U.S. Business Expansion in Macau -------------- ¶13. (SBU) Macau's gross domestic product (GDP) grew by 17.0 percent in 2006 and 27.8 percent in 2007. Since liberalization of the gaming industry began in 2002, Macau has benefited from at least US$ 2.2 billion in investment (the majority of which came from the U.S.),drawing ever-increasing numbers of visitors and sharply boosting consumption demand. Other growth areas over the past few years include finance, insurance, construction and real estate. Manufacturing has lagged, however, with much of Macau's production moving to factories in mainland China. Macau's primary exports remain textiles, garments, toys, electronics, and footwear, and its main export market is the U.S. Most of Macau,s imports come from mainland China and Hong Kong. ¶14. (SBU) In 2006, the U.S. overtook the PRC as the second largest investor (after Hong Kong) in Macau, accounting for 18.5 percent of foreign direct investment. In conjunction with increased investment, U.S. exports to Macau have grown significantly in recent years. The increasing U.S. business presence in Macau prompted, with our support, the formation of a separate American Chamber of Commerce in Macau in 2007. (The American Chamber Of Commerce in Hong Kong previously encompassed Macau.) The Consulate General continues to support the new Chamber's social and business promotion programs, and to encourage it to promote a positive public image of American contributions to the Macau community. The Consulate General meets regularly with the AmCham Macau Board of Governors to discuss issues of concern in Macau, and has begun a regular series of open briefings for AmCham Macau members. Social Network Analysis -------------- ¶15. (C) To support our broader engagement in Macau, over the past year we have greatly expanded our research and analysis of influential present and future leaders. As part of that effort, we reviewed large amounts of information from various sources to produce current assessments and map the influence networks of leaders in Macau,s government and political, economic, and cultural circles. We specifically focused on potential successors to current CE Edmund Ho, as well as other key figures. Security & American Citizen Services -------------- ¶16. (SBU) In addition to exploring establishment of a consular agency (see para 4 above),we are undertaking the first comprehensive effort to prepare for future emergencies involving American citizens in Macau. In December 2007 and January 2008, Consular officers and LES, over several trips visited the two major hospitals, the international airport, ferry terminal, and the largest hotel complexes in Macau. They met with hospital managers, airport emergency planners and security and planning officials in the Macau government. The visits expanded our relationships with the Macau emergency personnel who will work with us to get information on, and assistance to, American citizens in the event of a future mass-casualty incident. We have added this new comprehensive contact information into our Emergency Action Plan (EAP). In addition to updating the EAP, we expanded our roster of Macau wardens and brokered support from the Macau HONG KONG 00001041 004 OF 004 AmCham to post a link to the Consulate General's website for warden information on the AmCham web page. Public Affairs & Outreach -------------- ¶17. (SBU) Post's Public Affairs Section organized outreach programs throughout the year, especially targeting youth, government, academic, women, healthcare professionals and environmental audiences. In particular, a series of speaking events conducted by Consulate General staff on "Studying in the U.S." reached more than 1,500 middle school to college-age students, including at some of Macau's most prominent universities (University of Macau, Macau Polytechnic, and Macau University of Science and Technology). The American Corner, located at the University of Macau, was a key venue for outreach and programming to English-speaking audiences. We have arranged visiting speakers, such as Professor David Lampton of Johns Hopkins University, to speak on topics of interest in Macau, and Consulate General officers also have discussed a wide range of topics at conferences or other venues. ¶18. (SBU) Our public affairs section is working with the Hong Kong America Center and representatives from all four of Macau's colleges and universities to set up an NGO consortium of the four universities to promote U.S.-Macau academic exchange on the model of the Hong Kong America Center. The proposed Association of Macau-U.S. Academic Exchange (AMUSAE) is currently in the process of a lengthy bureaucratic and political review by university, MSARG, and the PRC Commissioner's Office. Should it be established, AMUSAE would be able to solicit funds for new academic grants and receive USG grants for administering Fulbright and other exchange programs in Macau. Cunningham