CHINA'S ENGAGEMENT IN LIBERIA (UPDATE)

C O N F I D E N T I A L SECTION 01 OF 02 MONROVIA 000753

SIPDIS

E.O. 12958: DECL: 09/24/2018
TAGS: PGOV EAGR ECPS EFIN MARR PREL SENV TRGY LI
SUBJECT: CHINA'S ENGAGEMENT IN LIBERIA (UPDATE)

REF: A. MONROVIA 359

B. MONROVIA 738

C. MONROVIA 744

Classified By: Ambassador Thomas-Greenfield for reasons 1.4 B and D.


1. (SBU) SUMMARY. According to the Chinese Embassy, China
has committed $88,347,400 in assistance to Liberia since
2006, contributing to all sectors of Liberia's Poverty
Reduction Strategy (PRS) except Governance and Rule of Law.
We understand that China was uncharacteristically outspoken
during the UNSC debate in August over extension of the UNMIL
mandate in support of the UNSG's drawdown proposal, despite
pressure from other members for further cuts.
Liberian-Chinese relations remained warm through the summer,
with a Liberian Olympic team heading to Beijing with much
fanfare. We expect expressions of continued warm relations
during Chinese National day October 1. President Sirleaf
praised the Chinese for the swiftness of their no-bid
implementation of development projects, but a potential
strain on the relations may have occurred when the Cabinet
decided to re-bid the lucrative Western Cluster deal rather
than allow negotiations with China's Sino Steel. END
SUMMARY.


2. (C) Since our last report on China's engagement in Liberia
in May (ref A),the Chinese have continued both to increase
their influence in Liberia while maintaining good cooperation
with other donors. We have seen no indication in the last
four months of any shift in China's policy of increasing
access to Liberian markets. While the Chinese still see
assistance as infrastructure projects, they are looking more
at capacity building, especially in the agricultural sector,
in which it has indicated an interest in cooperating with the
United States. China remains a strong supporter of UNMIL and
in August was outspoken about its support for the extension
of the UNMIL mandate at the levels recommended by the UN
Secretary General despite opposition from other UNSC members
who pressured for a faster drawdown of UNMIL.

CHINA'S ASSISTANCE TO PRS


3. (SBU) Chinese Ambassador Yuxiao Zhou gave a presentation
on China's assistance in country to the Liberia
Reconstruction and Development Committee (LRDC) August 18.
China has spent $61,971,400 since 2006 on three of the four
pillars of the PRS (all except Governance and Rule of Law).
Of that, $6.17 million went to the Peace and Security Pillar
to cover computers, communications equipment, training for
military and security officers in China, and the renovation
of the Camp Tubman Military Base in Gbarnga; $14.18 million
went to the Economic Revitalization Pillar as direct budget
support and debt cancellation and funded an initial mineral
resources survey of promising mining sites in Liberia. The
vast majority of China's support, $41.618 million, went to
the Infrastructure and Basic Services Pillar to cover
projects like renovating the Ministry of Foreign Affairs and
SKD Stadium, donations of farming tools, office materials,
anti-malarial drugs, and school uniforms, funding a Chinese
medical team at JFK hospital, and construction of other
hospitals and schools (see ref A for discussion of these
projects in detail). The Ambassador indicated that China is
committed to contribute an additional $26 million to the
Infrastructure and Basic Services Pillar thru the rest of

2008.

OTHER AREAS OF ASSISTANCE


4. (U) Although it is not counted as a direct contribution to
the PRS, China sent Chief Justice Johnny Lewis on a cultural
exchange to Beijing, Shanghai, and Shandong provinces for
five days in August to see how Chinese courts work. In the
wake of rising rice prices causing difficulty for poor
Liberians this summer, China cooperated with the Government
of Liberia to lower the export price of Chinese butter rice
to Liberia.

CHINESE EMBASSY GIVES HEROIC SEND OFF TO LIBERIAN OLYMPIANS


5. (U) The Chinese Ambassador hosted a dinner on July 19 for
members of the Liberian Olympic delegation before they left
for Beijing. Three Liberian athletes (all based in the
United States) represented Liberia in track and field at the
Beijing Olympic Games. None of them qualified for a medal,
but history was made because it was the first time that
Liberians qualified in their own right by coming in under the
Olypmic's maximum qualifying time, instead of the country
sending only a national representative team.

MUTUAL PRAISE AT DEVELOPMENT MINISTERS MEETING


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6. (SBU) President Sirleaf had warm words for China
throughout the September 5-6 Development Ministers
Conference, pointing out that its no-bid approach to the
implementation of development projects brings results more
quickly to the Liberian people (ref B). After lambasting the
visiting Ministers about slow project implementation at the
World Bank and UNDP, she said "The Chinese don't like bidding
but they start on time." She gave the example of how China
offered to rehabilitate Liberia's hydroelectric facility
years ago, but "other donors" (i.e. the USG) called for a
bidding process for the $380 million rehabilitation project.
President Sirleaf said the need for electricity is so urgent
that Liberia will award it to any donor that can complete the
project, without bidding.


7. (SBU) The Chinese Ambassador also praised President
Sirleaf during the meeting saying that her queries into
project delays are extremely helpful. He relays her concerns
to Beijing, and those responsible for the delays are fired.
He said China is committed to deliver what it has promised
but noted that GOL officials need to "push, not just pull"
the development process. He called for greater GOL focus on
planning, and proposed every ministry have a booklet for
donors highlighting priority projects in need of assistance,
as Chinese ministries do.

WESTERN CLUSTER IRON ORE CONCESSION


8. (C) The GOL's decision September 12 to abruptly cancel the
award of the Western Cluster iron ore concession (ref C) was
a setback to China's efforts to secure a major iron ore
mining operation in Liberia, and may have ruffled
China-Liberian relations. An Inter-Ministerial Concession
Committee (IMCC) rejected a top-ranked South African bidder
following a negative due diligence report and recommended the
GOL enter negotiations with second-ranked Sino Steel of
China. Although the IMCC had acknowledged some concerns
regarding Sino's financial standing and lack of mining
experience, they suggested that the GOL could negotiate
sufficient backing from the Chinese Government or other
partners. Instead, the Cabinet declined to initiate
negotiations, cancelled the entire tender process and ordered
a re-bid from scratch.


9. (C) In her explanation of the decision to donors
(including the Chinese Ambassador) on September 17, the
President took great pains to assure the group that the
decision was an unavoidable effort to safeguard Liberia's
"public perception" following allegations (none against Sino)
that the bid process had been compromised. The re-bid
imposes significant additional costs on Sino and leaves the
field open for other competitors. A realistic timeline for
re-bidding is 8-12 months. In the meantime, Chinese firms
are among those shortlisted for the Bong Mines iron ore
concession for which a winner is expected to be announced
before year-end. China has also expressed interest in
developing unproven reserves in the Wologisi Range.

COMMENT


10. (C) The Chinese Ambassador is clearly making overtures to
the GOL to differentiate China's "successful South-South
cooperation" with Liberia over the perceived conditional and
intrusive assistance from the West. In his recent speeches,
he offered China's recent rapid development experience as an
example that Liberia could follow, implying that he brought
expertise to the table the Western countries did not have.
He also differentiated China from other donors by pointing
out that "China attaches no political strings out of respect
for the recipient" and uses as many local laborers as
possible. His approach is working in that President Sirleaf
used China's fast approach here as a comparative criticism
over the bureaucratic process of other donors at the
Development Ministers Conference. That said, China's
expectation of "cooperation" is not a misnomer. Commercial
losses from China's point of view -- like the cancellation of
the Sino concession deal -- will not go unnoticed. Perhaps
it is most correct to say, that while China claims there are
no "political strings attached" to its aid, the implied
economic ones are non-negotiable.
THOMAS-GREENFIELD