Identifier
Created
Classification
Origin
08LILONGWE253
2008-05-02 10:16:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lilongwe
Cable title:  

MALAWI - CHINA'S ENGAGEMENT IN AFRICA

Tags:  PGOV PREL CH MI 
pdf how-to read a cable
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R 021016Z MAY 08
FM AMEMBASSY LILONGWE
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INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
UNCLAS SECTION 01 OF 02 LILONGWE 000253 

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E.O. 12958: N/A
TAGS: PGOV PREL CH MI
SUBJECT: MALAWI - CHINA'S ENGAGEMENT IN AFRICA

UNCLAS SECTION 01 OF 02 LILONGWE 000253

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E.O. 12958: N/A
TAGS: PGOV PREL CH MI
SUBJECT: MALAWI - CHINA'S ENGAGEMENT IN AFRICA


1. (SBU) Summary: Per reftel request, the following information is
provided for preparation of U.S.-China policy dialogues. China and
Malawi established formal diplomatic relations a mere four months
ago and engagement between the U.S. and Chinese Missions has so far
been limited. China has already taken over many commitments
previously funded by Taiwan through an announced $259 million USD
aid package, composed of a mixture of grant and "soft credits."
Among the focus areas are the construction of the Karonga-Chitipa
road and a new parliament building, funding for defense cooperation,
and school construction. Potential areas of Sino-U.S.cooperation and
coordination in Malawi are defense equipment and training, health
care system strengthening, agriculture, and infrastructure
development. End Summary.

Focus Areas of Chinese Engagement
--------------


2. (U) China and Malawi signed a memorandum of understanding
establishing formal diplomatic relations on December 28, 2007. The
signing ended 42 years of Malawian relations with Taiwan. As part
of the agreement, China agreed to take over funding many, but not
all, of the activities that Taiwan previously supported. In March
2008, President Mutharika made a state visit to China and officially
opened Malawi's embassy in Beijing. Upon his return, he detailed a
$259 million USD aid agreement that was signed during his trip.


3. (U) The $259 million USD addresses four main focus areas:

- $80 million USD for construction of the Karonga to Chitipa road in
northern Malawi and completion of construction of the Parliament
building in Malawi.

- $3 million USD for defense and security cooperation.

- $1.4 million USD for construction of two rural schools under the
Africa/China Forum program.

- $175 million USD for concessionary loans over a five-year period
for other priority projects.

Additionally, China has offered 12 scholarships to Malawian students
to study at Chinese universities.


4. (U) The Karonga-Chitipa road and Parliament building construction
were projects originally funded by the Taiwanese. Taiwan was
previously the largest bilateral donor for equipment support to the
Malawi Defense Force. Taiwan was also a major contributor to health

care and agriculture projects, most notably the funding, staffing,
and operations of Mzuzu Central Hospital, the main referral hospital
for the Northern Region of Malawi, projects that have so far not
been picked up by the Chinese.


5. (SBU) There is no indication yet of what projects will be
supported by the "soft" loans that make up the bulk of the announced
aid package, but public discourse here refers to a new stadium, a
conference center, a "five star hotel," the proposed "University of
Southern Malawi" (in the President's home area),and other such
traditional Chinese buildings in Africa. So far, the two firm
projects, the road and the Parliament building, have not moved
forward. Paladin Mining, which is working at full speed on the
Kayalekera uranium mine on the road between Karonga and Chitipa,
reports that they have not seen any sign of activity on the road
since the Taiwanese left in January and that they have begun their
own works to "straighten out some of the kinks" to enable the large
number of heavy trucks supporting the mine to travel on it.


6. (SBU) Last week, the government of Malawi gave notice of
termination to the Malawian consortium which was building the
National Assembly structure, but the Malawian group has not
surrendered the site, though they have laid off the 600 Malawians
who were working there. They do not know whether any of these
workers will be re-employed when the Chinese take over the project.
The contractors have told the government that they will only hand
over the site when they are paid the very substantial sum (in the
millions of dollars, still being calculated) that is due under the
liquidated damages clause of the contract, as in their view the
cancellation was for the government's convenience. No one in
government seems to have noticed the liquidated damages clause when
the project's support moved from Taiwan to China.

Current Cooperation between US and China Missions
-------------- --------------


7. (SBU) The Chinese are the newest embassy to open in Lilongwe, and
until recently have been operating out of a hotel. China's primary
focus has been to open up their temporary embassy and other offices
while they find and secure a location to build a permanent embassy.
China sent a senior officer (former Ambassador to Uganda) as CDA to
open the mission, but he has since returned to China, leaving the
mission under the control of a more junior officer. The mission is
still operating out of temporary quarters and awaiting its
ambassador. As such, there has been little engagement or

LILONGWE 00000253 002 OF 002


cooperation between the missions. The multi-lateral Heads of
Mission group, which we chair at the moment and which consists of
all Heads of Missions of foreign aid donors in Malawi, has invited
the Chinese to join the group, but there has been no response to our
letter.

Potential Areas of Bilateral Cooperation
--------------


8. (SBU) Defense, health care, agriculture, and infrastructure are
the most likely areas of bilateral cooperation with the Chinese in
Malawi. The Mission previously worked with Taiwan on defense issues
and coordinated training and equipment support for the MDF's planned
deployment to Darfur. The Ministry of National Defence asserts that
the announced contribution to defense cooperation is expected to be
used for equipment purchases associated with the Darfur deployment.



9. (SBU) The U.S. Centers for Disease Control (CDC) also previously
coordinated with Taiwan on health care system strengthening and
HIV/AIDS treatment issues. There is hope that China will be
interested in taking over the lead role Taiwan previously played in
the North. Additionally, Malawi has engaged both the U.S. and China
CDCs about assistance in creating a National Public Health
Institutes which would be modelled on the CDC. The former Malawian
Minister of Health made a trip to China to study how the Chinese CDC
operated.


10. (SBU) The Chinese have already shown an interest in purchasing
agricultural commodities from Malawi and could be engaged on
agricultural projects concerning crop diversification, irrigation,
and introduction of environmentally-friendly technology. Given what
seems to be a focus on infrastructure, we expect that will be the
emphasis in the first several years of China's program.

EASTHAM