PRC/SOUTH PACIFIC: INTERNATIONAL ISOLATION OF

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001679

SIPDIS

E.O. 12958: DECL: 06/04/2039
TAGS: PREL EAID ETRD CH FI AS NZ
SUBJECT: PRC/SOUTH PACIFIC: INTERNATIONAL ISOLATION OF
REGIME IN FIJI AN OPPORTUNITY FOR CHINA

REF: A. BEIJING 383

B. SUVA 82

Classified By: Acting Political Chief Ben Moeling. Reasons: 1.4 (b) and
(d).


1. (C) SUMMARY: While Chinese government interlocutors
continued to stress the centrality of "non-interference" to
China's foreign policy, a Fijian EmbOff told us a new package
of Chinese economic assistance to Fiji announced earlier this
year arrived just as western sanctions were proving
problematic, and so had a political effect. Fiji remained
strategically important for China and Beijing was privately
candid about linking development assistance and economic
engagement with "guaranteed" political support on issues of
interest to China, such as Taiwan, even as the MFA downplayed
the importance of checkbook diplomacy given improving
cross-Strait ties. According to MFA contacts, western-led
efforts to push for political reform in Fiji were part of
Fiji's underlying problem. China, as a developing country
and regional leader, had unique insights into Fiji's
political needs. According to a New Zealand EmbOff, the
Chinese understood the political risks of being seen as
undermining western sanctions, and had taken steps at damage
control with Australia and New Zealand. END SUMMARY.

China Sees Strategic and Economic Importance in Fiji
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2. (C) MFA North American and Oceanian Affairs Division
Deputy Director Zhou Jian told PolOff May 27 that Fiji was a
friend and reliable partner as well as a regional leader with
strategic importance in the South Pacific, a region rich in
small-country UN votes. Warm relations between the two
countries were undergirded by the history of Fiji's
relatively early diplomatic recognition of the PRC and
continuing strong ties throughout the series of coups that
beset Fiji in recent decades, including the latest in 2006.
Beijing-based Fijian EmbOff Filipe Alifereti (protect) agreed
in a meeting May 26 that China viewed Fiji as an important
partner, noting that China valued Fiji as a useful transit
point and for its proximity to important shipping lanes.
Still, he argued, China essentially viewed Fiji as it did
resource-rich African nations: a valuable destination for
economic engagement but of marginal and possibly declining
political utility.

Non-Interference Still the Mantra
--------------


3. (C) Zhou insisted that China's traditional position of
non-interference in the internal affairs of other countries
guided China's Fiji policy. He stressed that since the 2006
coup, China had maintained its position emphasizing stability
and economic development while urging the Fijians to work
together to resolve their political problems. He claimed
that the PRC had maintained constant contact with the
military government and had urged them to continue dialogue
with donor countries such as Australia and New Zealand. He
insisted that maintaining social stability and economic
development in the island nation was the common goal of all
parties, including the U.S. and China.

Western-led Pressure Part of the Problem
--------------


4. (C) Framing the international community's efforts to help
resolve the on-going political crisis in Fiji as part of the
problem, Zhou urged the international community to maintain
dialogue with the military government and "listen to its
perspectives." He suggested that western powers were
compromising Fiji's sovereignty by pushing for political
reforms, and stressed the importance of understanding Fijian
culture and its emphasis on consensus-building. He
highlighted China's engaged but low-key approach toward Fiji
in the context of the Pacific Island Forum (PIF). He
insisted that China did not seek to establish a "sphere of
influence" in the South Pacific or undermine third countries'
interests there.

Political Support "Guaranteed" Due to Economic Influence
-------------- --------------


5. (C) Alifereti asserted that there was little need for the
Chinese to push directly for political support from Fiji on
issues of Chinese interest, because such support was
"guaranteed" and China's interests were well-understood by
Suva. He indicated that such political support was a simple
consequence of the enormous economic influence China had on

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the island. In addition to assistance, trade and investment
ties, the Chinese government was providing Fijian government
officials with training on a range of skills in China,
Alifereti reported. This included training military
officials, a practice that began after the 2006 coup, he
added.

Economic Ties Grow, Driven by High-level Interest
-------------- --------------


6. (C) Zhou told PolOff that China had signed at least four
economic agreements with Fiji during Vice-president Xi's
controversial February transit stop in Fiji on his way to
Latin America (reftels),but insisted that the MFA had few
details of the deals. Repeating claims that the transit stop
was "nothing special" and arranged out of mere convenience,
he reported that one of agreements was a 10 million RMB grant
but the details of its use were still under discussion. Zhou
insisted that China was providing "project assistance," and
not simply cash. He noted that during Premier Wen Jiabao's
2006 visit to Fiji China announced deals worth almost 400
million RMB to Fiji as a part of a larger package of aid to
the South Pacific, but the execution of these funds had been
bogged down by political turmoil in Suva. He denied media
reports that China had doubled its assistance to Fiji in the
three years since the coup, insisting that Chinese aid had
remained level or declined since 2006. He expressed Chinese
frustration with the inability of the Fijians to move forward
with the grants, noting that MOFCOM was awaiting a list of
projects the regime would like to see implemented before
initiating a feasibility study.

China Economic Activity Just in Time to Counter Sanctions
-------------- --------------


7. (C) Alifereti acknowledged that China's economic
engagement was growing at a time when Fiji needed the
support. While skirting the issue of Australian and New
Zealand-led efforts to isolate the regime in Suva, he did
point to a planned UK investment in the sugar sector that was
recently dropped due to the political situation in Fiji as
evidence of economic sanctions causing concern for his
government. In light of those concerns, Alifereti applauded
the "good timing" of the soft loans announced during Xi's
stop-over. In addition, he contrasted the styles of western
and Chinese investors in Fiji: Australians and New
Zealanders normally sought to raise capital from within the
island, which in his view increased the financial risk of
projects, while the Chinese brought cash to the island from
the outside and clearly "wanted to spend."


8. (C) Alifereti explained that Chinese cash was flowing in
just as traditional sources of income were drying up. A
recent drop in remittances from Fijian troops serving in UN
peace-keeping operations occurred at the same time that
Chinese tourism to the island was growing quickly due in part
to a new China-Fiji air service agreement and a relaxation of
Fijian visa regulations for Chinese visitors. Alifereti
also noted that Chinese goods, which used to come through
Australia and New Zealand at a heavy premium, had been
flowing directly to Fiji thanks to direct shipping routes
opened in February 2008.

Admiration for the China Growth Model
--------------


9. (C) Through this range of development assistance and soft
power programs, Alifereti suggested that the message to Fiji
was clear )- the Chinese development model had brought huge
success to China without any need to institute political
reform. He asserted that Fijian culture resembled China's in
the sense that both maintained that political problems should
be solved "internally" and that Fiji was "not fit" for
competitive politics. Zhou from the MFA agreed, stressing
the "consensus-building" nature of Fijian culture and China's
unique ability to understand this.

MFA: China Not Undermining Western Efforts
--------------


10. (C) MFA's Zhou denied that China sought to take advantage
of western efforts to isolate the regime in Fiji,
underscoring China's desire to cooperate with the United
States, Australia, New Zealand, and others on development
assistance to Fiji and other less developed countries (LDCs).
He stressed that Chinese assistance to Fiji had been in
place since the establishment of China-Fiji relations and
that no new projects had been begun since the 2006 coup.
Zhou denied that this aid hiatus was due to the coup, but

BEIJING 00001679 003 OF 003


rather reflected the difficulties of working with the Fijians
on the ground. While some Chinese projects in Fiji
continued, Zhou insisted they were projects that were
contracted before the 2006 coup. He admitted that China
remained inexperienced as a donor nation, and offered that
the MFA could cooperate on the ground with the United States
and other donors. Zhou noted, however, the MFA's relatively
low-profile role in providing assistance, compared to MOFCOM,
which had the lead on foreign assistance.

Looking Past Taiwan?
--------------


11. (C) Zhou asserted that, with the recent thaw in
cross-Strait relations, China's policy in the South Pacific
was looking past its traditional focus on checkbook diplomacy
to buy UN votes to shore up its claim to Taiwan, and the
Taiwan issue had become "less of a priority" in Chinese
foreign policy with the South Pacific.

PRC Knows It Went Too Far?
--------------


12. (C) Embassy of New Zealand PolOff Tara Morton observed
that, since interventions by Australian and New Zealand
officials, including at the Prime Minister-level, the Chinese
appeared to have been "shamed" by the Xi Jinping transit.
She add that their MFA contacts assured them that such lack
of coordination on regional issues would not happen again.
She stressed that the value of the deals signed in the
transit was "massive" and potentially very destructive given
the poor capacity of small South Pacific nations to repay
large loans, and the value of the new assistance had
obviously been underplayed by Beijing. She added that the
PRC had been candid with New Zealander interlocutors in
linking Fijian support on the Taiwan issue to China's
development assistance there.
PICCUTA