UNDER SECRETARY BURNS' FEBRUARY 25 MEETING WITH

S E C R E T SECTION 01 OF 02 STATE 022047

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/04/2033
TAGS: BM CH ECON ENRG IR PGOV PREL XD
SUBJECT: UNDER SECRETARY BURNS' FEBRUARY 25 MEETING WITH
ASSISTANT FOREIGN MINISTER HE YAFEI

Classified By: EAP DAS TCHRISTENSEN, REASONS: 1.4 (b) and (d)


1. (S) Summary. Chinese Assistant Foreign Minister (AFM) He
Yafei and Under Secretary Burns met February 25 immediately
prior to the P5 1 Political Directors, meeting on Iran. AFM
He highlighted U.S.-Chinese agreement on the strategic
importance of diplomatic approaches to North Korea and Iran.
In response to AFM He,s concerns over possible U.S.
sanctions on Sinopec for its recent investments in Iran, U/S
Burns said the matter was still under review and urged China
to provide additional information. The conversation also
touched upon the Olympics, Pakistan, India, Burma, and
Kosovo/Serbia. AFM He raised Taiwan, reiterating Chinese
calls for "stronger and clearer" U.S. statements opposing the
referendum on UN membership. End Summary.

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Sinopec
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2. (S) AFM He said that China was concerned about possible
U.S. sanctions on Sinopec. Based on Foreign Minister Yang,s
meeting with the Secretary in Berlin, China believed that the
United States acknowledged Chinese interest in pursuing
economic relations with Iran. He said if Sinopec were
sanctioned, it would be a huge problem for China, and affect
U.S.-China cooperation, not just on Iran. China continued to
seek clear indication, and assurances from the United States
that it would not apply any sanctions on Sinopec. He
furthered that this is an emotional issue that would upset
the people and government of China. He argued that this was
sensitive political period with the National People,s
Congress soon to convene; any actions taken by the United
States during this period would be closely scrutinized.


3. (S) U/S Burns noted that we were still in an
investigative phase and continued to seek more information
from Sinopec and the Chinese government as we reviewed the
deal in the context of the Iran Sanctions Act, which required
the USG to sanction any company whose investment in Iran
exceeded $20 million. However, no decision had been made
yet. AFM He characterized that position as "disappointing"
and argued that China had already given the United States all
of the information it needed. If more was needed, The United
States must be more specific in its information requests.
China needed a quick decision and did not want this to turn
into a political issue.


4. (S) U/S Burns promised to handle this issue in "a way to
accentuate speed" but put the matter in the wider context of
Iran,s pursuit of nuclear capability and how the
international community needed to respond. The United States
did not believe it was consistent for China to invest in Iran
at the same time the UNSC was deliberating on a sanctions
resolution. The United States wonders why Iran was spending
billions to defy the international community. Iran had huge
oil and natural gas reserves; why does it claim to need
nuclear energy? The United States urges China to recalibrate
its investments. The AFM countered that China,s actions in
no way violates the Security Council resolution.

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Olympics and Taiwan
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5. (C) AFM He characterized 2008 as an important year in
bilateral relations, including U.S. elections, Taiwan
elections and UN referendum, the Olympics, and the economic
impact of the worst snowstorms in a generation. He thanked
the United States for its support in coping with this natural
disaster. AFM He characterized our bilateral relationship as
strong, and he expected the Secretary,s visit to be
beneficial. The AFM said that the Olympics will be a great
success; over 100 heads of government would attend. China
looked forward to President Bush,s visit in August and
appreciated the President,s statements supporting the Games.



6. (C) On Taiwan, He said that there was a strong push from
the "Chen Shui-bian authorities" to push for a UN resolution

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on Taiwan membership. China appreciated the strong
statements made by the USG including the Secretary, opposing
such a resolution and noted that it was important to keep the
pressure on. China did not want the "Taiwan authorities" to
make further "reckless" moves that could be disastrous for
both sides. He asked that the United States refrain from
selling advanced weapons to Taiwan. U/S Burns said that we
have made clear statements on Taiwan that the Secretary would
reiterate; there was no confusion whatsoever on our position.

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South Asia: Pakistan, India
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7. (C) On Pakistan, He stressed China and the United States
shared mutual goals for a peaceful, strong, united, and
moderate Pakistan. He wondered how much longer Musharraf
would be in power. U/S Burns agreed that we needed to
consult more closely on this issue. Musharraf is a good
friend of the United States. Whatever government emerged
would need to focus on Al Qaeda and the Taliban, help
Afghanistan succeed, be a stable partner for India, and work
to resolve Kashmir.


8. (C) AFM He said he would go to India after his trip to
the United States to meet with Foreign Secretary Menon. U/S
Burns said that he hoped the U.S.-India Civilian Nuclear
Cooperation agreement would go forward. Senator Biden,
during his recent visit to Delhi, stated that Congress would
support the agreement, but needed India to take the steps
with the IAEA and NSG for the deal to make it to the Senate
by May or June. U/S Burns referenced the resistance of the
leftist parties in the governing coalition to the deal, noted
that these parties were friendly with China, and asked AFM He
to "put in a good word" with them. A surprised AFM He said
that China had already discussed the nuclear agreement with
PM Singh during his recent visit to China.

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Burma
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9. (C) On Burma, AFM He characterized UN Special Envoy
Gambari,s return in March as a positive sign. The
international community needed to be realistic when dealing
with the regime; the seven point road map and constitutional
referendum should be seen as positive steps, and dialogue
with Aung San Suu Kyi (ASSK) was moving ahead. U/S Burns
expressed appreciation for China,s efforts but noted that we
had two key problems in Burma. ASSK remains under house
arrest and has been very negative about her discussions with
Labor Minister noting that it has not been a meaningful
dialogue. It was also hard to believe a dictatorship will
ensure a free and fair election process; ASSK had made
enormous personal sacrifices for her country, yet the regime
will not allow her to run.

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Kosovo and Serbia
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10. (C) In closing, U/S Burns raised the situation in Kosovo
and Serbia. It was deeply troubling that the new Russian
Ambassador to NATO said "brute force" might be needed to deal
with the matter. The United States has strong views on this
issue; the UN already advocated for a supervised Kosovo
independence. AFM He said that China did not support
violence, wanted a negotiated resolution to this situation,
but doubted that independence would be wholly peaceful or
come without problems. The Under Secretary said that radical
Serbs had caused four wars in the 1990s and were causing
problems now. The great powers should use their influence to
help resolve this issue. U/S Burns concluded that China
often asked the United States to use its influence to help
China; we would ask China in return to use its influence to
help the United States on Iran, Burma, and India.
RICE