Kenyan Ambassador on Growing China

UNCLAS SECTION 01 OF 02 BEIJING 001050 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EINV ETRD PREL SENV CH KE SUBJECT: Kenyan Ambassador on Growing China Relationship REF: Beijing 00288 This cable is Sensitive But Unclassified (SBU) and for official use only. Not for transmission outside USG channels. 1.(SBU) Summary: China continues to make greater inroads into Africa, with Kenya aggressively lobbying for closer ties with China and seeking a larger share of China!/s substantial investment in the continent, according to Kenya!/s Ambassador to China Julius Sunkuli. Democracy in Africa is there to stay, and the Kenyan government and its vocal civil society ensure Kenya can avoid any potential negative effects on the environment or Kenyan jobs that Chinese investment might create. Ambassador Sunkuli opined the United States risks losing its still pre-eminent influence on the continent if it continues to make unreasonable demands on African governments. He stressed that the indictment of Sudanese President Bashir would be counter- productive. End Summary. Looking for Future Investment -------------- ¶2. (SBU) Over lunch with Emboffs, Kenyan Ambassador Julius Sunkuli described Kenya!/s relationship with China as !0friendly, of growing importance and consisting of mutual interests.!1 He said Kenya is greatly interested in the China-Africa Development Fund (CADF),which has USD 1 billion (eventually expected to reach 5 billion) with which to support Chinese companies investing in Africa as equity partners (REF). Kenya did not receive funding for the initial tranche of projects supported by CADF, and is now lobbying more aggressively for a piece of the pie. In 2006, China!/s investment in Kenya was only USD 30 million and consisted of smaller-scale development projects such as hospital enhancements and the development of a sports center. China!/s investment portfolio in Kenya now includes a variety of industries ranging from natural resources to home appliances manufacturing. Kenya and the China National Offshore Oil Company (CNOOC) formalized an oil exploration agreement in 2006. In 2007, the state-owned metal manufacturing group Jinchuan became the first Chinese company to enter Kenya's mining sector with the purchase of a 20 percent stake in Tiomin Kenya, Ltd. China recently granted the Kenyan government a concessional loan for a USD 120 million road construction project. Tourism and Trade Promotion -------------- 3.(SBU) Kenya imports Chinese-made household electric appliances, industrial and agricultural tools, textile goods and building materials, and hopes to increase its exports of items such as black tea, coffee and leather goods, said Sunkuli. (Note: Kenyan exports to China grew 55 percent from 2006 to 2008.) Sunkuli said Kenya also hopes to capitalize on stronger trade relations to increase the number of Chinese tourists who visit Kenya. Currently, approximately 20,000 Chinese tourists visit Kenya each year. Sunkuli noted that Kenya Airways!/ newly launched nonstop flight from Nairobi to Guangzhou would promote both tourism and trade. [Note: Kenya Airways is the first Sub-Saharan Africa airline to offer a non-stop flight to mainland China.] A New Partnership, but with Issues of Concern -------------- -------------- ¶4. (SBU) Sunkuli noted that Kenya!/s partnership with China has raised concerns about Chinese companies' environmental impact and labor practices. However, he stressed that Kenya's government and vocal civil society would prevent any serious harm to Kenya's environment and workers. He cited as an example the refusal of Kenya!/s National Environment Management Authority (NEMA) to permit a Chinese-owned cement company from building a proposed factory in an environmentally sensitive area, noting that environmental NGOs would have raised a furor if BEIJING 00001050 002 OF 002 permission had been granted. Similarly, Kenya!/s labor activists criticize Chinese companies tendency to hire Chinese nationals and avoid employing local labor. In response, the Kenyan government limits the number of work visas issued to Chinese workers, said Sunkuli. U.S. Risks Losing Influence in Africa -------------- ¶5. (SBU) Commenting on U.S. foreign policy in Africa, Sunkuli said the United States risks losing its still pre-eminent influence on the continent if it continues to make unreasonable demands on African governments. He criticized the International Criminal Court (ICC) indictment of Sudanese President Bashir, arguing that the United States should have prevented this "counter-productive" move. PICCUTA