(SBU) GRIM OUTLOOK FOR EXPO PARTICIPATION

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SUBJECT: (SBU) GRIM OUTLOOK FOR EXPO PARTICIPATION

REF: Shanghai 391

From Shanghai CG Camp and Beijing Charge Piccuta


1. (SBU) Summary: Prospects for an American national pavilion
at the Shanghai World Expo 2010 look increasingly grim. The
private sector fundraising team reported on Sept. 29 that the
initial $500,000 of USA Pavilion seed money is exhausted with as
yet no new money raised to pay for the pavilion. Consulate
General Shanghai faces delivering this extremely unwelcome news
to Chinese authorities next week after the Chinese national
holiday period and seeks guidance on how to approach the issue.
We anticipate a strongly negative impact on the U.S. image in
China and in the wider EAP region. End summary.

--Expo background--


2. (U) More than 175 countries have signed participation
agreements for the Shanghai World Expo 2010, viewed by the
Chinese government as a companion piece to the 2008 Beijing
Olympics. Slated to be the largest in history, the Expo is
expected to draw 60 million Chinese visitors and another 10
million international visitors during its May-October run.
Billboards, exhibits, media and massive infrastructure
construction in Shanghai are focused on this event, now less
than 600 days away. A prime location next to a new subway stop
has been reserved for us.


3. (SBU) Post learned Sept. 29 that the private-sector USA
Pavilion leadership team of Nick Winslow and Ellen Eliasoph was
preparing to close down their fundraising effort due to
exhausted cash resources and a resulting inability to fund
essential work required to meet technical deadlines related to
soils testing and construction planning. [Note: Most
international participants are preparing to break ground at
their pavilion sites in January or February 2009, with initial
planning, design, contracting, and soils testing already
underway.] According to Winslow, companies such as Dell,
Disney, Pepsi and Wal-Mart have shown interest in supporting the
pavilion, but their internal review and decision timetables
can't be accelerated to meet the Pavilion team's desperate
cash-flow needs.


4. (SBU) Even quick, positive decisions from Dell and others
currently on the fence would not achieve the $82 million
fundraising goal. The U.S. business community overall is not
enthusiastic about a "national" pavilion that must be 100%
funded by the private sector. Senior consulate officers at an
Amcham Shanghai-sponsored breakfast nearly a year ago were told
that "if you (the USG) really consider this important, then you
should throw in some money, too. Then a lot of us would see
that as a signal of real commitment and come along with you."

--Delivering the message--


5. (SBU) With Chinese government offices now closed for a week
in celebration of the 59th anniversary of the founding of the
PRC, the Consulate intends to wait until the week of Oct. 6 to
notify authorities that the U.S. will not have a national
pavilion at the Shanghai World Expo. The newly arrived Consul
General is scheduled to pay an introductory call on the Shanghai
Expo Bureau and tour the expo site on Oct. 10. Every Chinese
government official she has met so far has stressed the central
importance of a U.S. pavilion. All stated with confidence that,
in the end, the U.S. would be at the Expo, in the prime spot
reserved for us. None can imagine a World Expo without U.S.
participation.


6. (SBU) Pending guidance by Washington we plan to say that the
USA Pavilion fundraising team has "suspended operations", but we
have little to say if and when asked about next steps.

--Possible consequences--


7. (SBU) If we throw in the towel, the consequences are likely
to be extremely widespread:
- The U.S. absence at the largest World Expo in history, in the
biggest country in the world, will be glaring. Our
non-participation will be seen as a sign of declining economic
power and influence in the Asia Pacific and the world.
-In January the U.S. and China will commemorate the 30th

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anniversary of the establishment of full diplomatic relations;
launching a USA pavilion would cap the celebrations; explaining
why we will not participate in the Expo will kill the champagne
bubbles.
- Chinese authorities tout the U.S. pavilion as one of the
biggest draws of the Expo, which is why they have provided a
prime spot. We will miss a golden public diplomacy opportunity
to demonstrate the dynamism of American life to an estimated 70
million visitors.
- Both Chinese leaders and the public will interpret our
absence as motivated by political and economic factors. They
will conclude that we do not consider the Expo important enough
to ensure a presence at the Expo and that our absence is due to
our "failed" economic system. If the overall relationship in
2010 is poor for any reason, state-controlled media may claim
that the U.S. resents China's rising status in the world and
wants to make China lose face.
-China will not accept that we plan to sit on the bench. We and
the next administration will be pressed to continue fundraising
with U.S. companies, to allow Chinese companies to support the
USA pavilion, and to find a way to obtain USG government funding.
-Although not eager to bear the full cost of the U.S. Pavilion
if the USG won't pony up, American businesses are nevertheless
worried about possible repercussions. At a minimum, they
believe large orders could shift to countries that are
participating. Some fear that U.S. businesses could face the
kind of demonstrations and boycotts the French experienced
during and after the Olympics, especially if other adverse
factors come into play.
-As we search for property suitable for a new Consulate,
municipal officials who are considering using land at the Expo
site as a future diplomatic enclave are not likely to put our
needs at the top of their list.


8. (SBU) Comment: World Expos often make headlines only in the
host country's region. This one, however, is being touted as
China's next big role on the world stage after the Olympics. On
the plus side, a U.S. national pavilion offers an outstanding
transformational diplomacy opportunity to project a positive
image of America both to the 70 million visitors to the Expo and
to the wider Chinese public. The scale of this Expo guarantees
it will be noticed around the world. On the down side,
countries in East Asia will interpret the U.S. absence as a
symbol of America giving up status and influence in the region
to a rising China, which is working hard to increase its "soft
power" attractiveness. The damage to the U.S. public image will
be global.
Camp