Identifier
Created
Classification
Origin
09KABUL782
2009-03-30 11:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kabul
Cable title:  

Are the Chinese Reliable Partners for Afghan

Tags:  EINV EAID ECPS ELTN SENV PHSA ENRG ETRD AF CN 
pdf how-to read a cable
VZCZCXRO3705
PP RUEHDBU RUEHPW
DE RUEHBUL #0782/01 0891142
ZNR UUUUU ZZH
P 301142Z MAR 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8016
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0763
RUEHBJ/AMEMBASSY BEIJING 4993
RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 03 KABUL 000782 

DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A
DEPT PASS FOR AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELIS
DEPT PASS OPIC
DEPT PASS FOR TDA FOR STEIN AND GREENIP
USOECD FOR ENERGY ATTACHE
CENTCOM FOR CSTC-A
NSC FOR JWOOD
TREASURY FOR MHIRSON, ABAUKOL, AWELLER, AND MNUGENT
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

SENSITIVE
SIPDIS

E.O. 12958 N/A
TAGS: EINV EAID ECPS ELTN SENV PHSA ENRG ETRD AF CN
SUBJECT: Are the Chinese Reliable Partners for Afghan
Reconstruction?

REF: BEIJING 722

UNCLAS SECTION 01 OF 03 KABUL 000782

DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A
DEPT PASS FOR AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELIS
DEPT PASS OPIC
DEPT PASS FOR TDA FOR STEIN AND GREENIP
USOECD FOR ENERGY ATTACHE
CENTCOM FOR CSTC-A
NSC FOR JWOOD
TREASURY FOR MHIRSON, ABAUKOL, AWELLER, AND MNUGENT
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

SENSITIVE
SIPDIS

E.O. 12958 N/A
TAGS: EINV EAID ECPS ELTN SENV PHSA ENRG ETRD AF CN
SUBJECT: Are the Chinese Reliable Partners for Afghan
Reconstruction?

REF: BEIJING 722


1. (SBU) Summary and Introduction: In recent discussions with
Emboffs, Afghan and Chinese officials and international partners in
Kabul appear optimistic that the Chinese government and Chinese
state-owned companies working in Afghanistan will fulfill important
Chinese commitments to Afghan reconstruction. Chinese firms
currently have contracts to install a fiber optic cable (USD 69
million project) through the Afghan government; to construct 150
kilometers of the Ring Road in the northwest with Asian Development
Bank funding; to install generators for the Kajaki hydro power plant
(USAID subcontract); and, in the largest foreign investment project
in Afghanistan, to develop infrastructure for and eventually to
exploit the Aynak copper mine (USD 3 billion investment project).
The Chinese government also provides humanitarian and government
capacity building assistance. At present, the Chinese are
proceeding, though slowly, on nearly all of their infrastructure
commitments, with the notable exception of Kajaki. International
partners and Afghan business leaders are concerned about the quality
of Chinese contractors' work. USAID reports extensive damage to
USG-funded portions of the Ring Road by Chinese contract work on the
fiber optic cable. Chinese officials say that China is a committed
partner in Afghan reconstruction, but cite security and supply route
concerns as major impediments to economic development work here. It
remains to be seen if China will follow through on all of its
commitments to Afghanistan given the current security environment.
End Summary.


2. (SBU) In a March 18 meeting, Chinese Economic Counselor Hu

Yuanteng told Econoff that the Chinese government is committed to
Afghan reconstruction and economic development efforts, but
emphasized that security problems are the main reason China is
unable to undertake more reconstruction projects here. Hu noted
that Chinese companies want to expand into the Afghan market and
that, since 2003, the Chinese government has encouraged Chinese
investment in Afghanistan. However, only six Chinese companies
currently work in Afghanistan, and, Hu noted, of those six, two
companies - China Hydro Power Engineering Company and China Railways
- have stated that they will not start new projects due to security
problems. In June 2008, Hu said insurgents kidnapped a Chinese road
construction engineer in Wardak province. Hu said that China
Railways' project to construct part of the Ring Road in Badghis and
Faryab provinces in the northwest has suffered several roadside
bombings and three Afghan subcontractors were kidnapped and one was
shot dead in November 2008. Hu said that the Chinese government
will continue to encourage Afghan reconstruction projects among
Chinese companies; however, the lack of security will remain an
inhibiting factor in furthering Chinese engagement in economic
development. Hu emphasized that the Chinese government has
increased assistance in humanitarian and social sectors and for
government capacity building training to USD 200 million.

****************************
Aynak Copper Mine: Security
Enduring Concern for China
****************************


3. (SBU) State-owned China Metallurgical Group Corporation (CMIC) is
progressing slowly in the USD 3 billion Aynak copper mine project,
the largest foreign investment project in Afghanistan. In a
February 10 meeting, Chinese Deputy Chief of Mission Li Bijian told
Emboffs that China remains committed to fulfilling all aspects of
the Aynak contract, which include community development projects, a
power plant, and a 150 km railroad from the Uzbek border via the
mine to the Torkham border crossing point at the Khyber Pass. Li
said that China welcomes the GIRoA's deployment of 1,200 Afghan
National Police (ANP) guards to secure the project area, but that
China is concerned about future security since MCC plans to bring
5,000 Chinese engineers and workers to Aynak. Li thanked the U.S.
for sending 1,300 troops to Logar province. Li also noted that MCC
has suffered delays and even losses in shipping equipment through
the Khyber Pass. He also said that MCC plans to work closely with
the Czech PRT, which has been very cooperative, to determine
community development needs.

************************************
Kajaki Hydro Power Plant: Security

KABUL 00000782 002 OF 003


Concerns Stalled Chinese Involvement
************************************


4. (SBU) In November 2008, Chinese subcontractor to the Louis Berger
Group (LBG),China Machine-Building International Corporation
(CMIC),left Afghanistan after receiving kidnapping threats. CMIC
is to repair an existing turbine/generator and install a new one at
Kajaki. Although LBG disputes the credibility of the threats,
Chinese officials were insistent in meetings with Emboffs that the
threats were credible. On February 10, Chinese DCM Li was evasive,
describing Kajaki as a commercial dispute in which the Chinese
government cannot intervene. To date, CMIC engineers have not
returned to Afghanistan, and CMIC has not given LBG an estimated
return date.

****************************************
Allegations of Destruction, Poor
Chinese Workmanship in Roads and Telecom
****************************************


5. (SBU) International partners, USAID, and Afghan business leaders
criticize Chinese contractors for poor workmanship or slow progress,
and in the case of the installation of the fiber optic cable (FOC),
for destruction of existing road infrastructure. In a March 17
meeting with Econoff, Afghanistan Chamber of Commerce and Industry
(ACCI) transport and freighting business leaders said that
Chinese-constructed roads are among the lowest quality of all roads
constructed in Afghanistan since reconstruction began in 2001
(septel). USAID estimates that since 2007, Chinese contractor ZTE
has damaged 250 km of USAID-funded portions of the Ring Road (RR)
while installing the fiber optic cable (FOC) for the Afghan
government in southern Afghanistan. USAID estimates it will cost
USD 2.4 million to repair the damage. In meetings with Emboffs,
Chinese officials have denied knowledge of this damage, noting that
ZTE uses an Afghan subcontractor because of security problems and
that if there are damages, it is the fault of the Afghan
subcontractor.


6. (SBU) Some international partners complain quietly that the
Chinese use security concerns as a pretext to account for slow
progress in some infrastructure projects and to shift blame to
Afghan subcontractors. Asian Development Bank (ADB) officials told
Econoff on February 28 that, independent of the security problems in
Badghis, the ADB is dissatisfied with their Chinese contractor's
management of the project. ADB officials noted that only 20 percent
of the road has been constructed, though the project was supposed to
end in December 2008. ADB also complained that China Railways
bribes local officials for assurances of security (unsuccessfully)
and makes no effort to incorporate community development into the
project.


7. (SBU) In a March 23 meeting with Econoff, Deputy Minister of
Interior Mangal noted that Badghis province is a high-risk region
for the Afghan National Police (ANP). Mangal reinforced the idea
that China Railways should do more to provide community development
in order to gain the local community's support for road projects.
Mangal noted that community development has been successful in other
places where insurgents have tried to disrupt infrastructure
projects by intimidating local villagers. However, Chinese Economic
Counselor Hu told Econoff that ultimately the GIRoA must do more to
ensure security in Badghis.


8. (SBU) Afghan government officials appear optimistic about Chinese
commitments and are careful not to strongly criticize Chinese
companies for poor workmanship. In a March 17 meeting with Econoff,
Deputy Minister of Public Works Rasooli noted that security problems
have crippled Chinese work in Badghis and at Kajaki. He
acknowledged that China Railways progressed too slowly in the
Badghis RR project, partly because the Ministry of Interior has not
done enough to provide security. In a February 25 meeting, Afghan
Telecom's FOC project manager Sanjeeva Saxena argued that the USAID
contractor and subcontractors have inflated damage estimates to the
RR and noted that the FOC contractor has only worked along about 240
km of RR in the south and not all of this is damaged.


9. (SBU) COMMENT: China's record in Afghan reconstruction is mixed,
with security and logistical concerns, not unknown among other

KABUL 00000782 003 OF 003


foreigners here, underlining performance problems. Chinese
officials emphasize that China has generously donated to
humanitarian causes in Afghanistan and that the Chinese government
does not promote any one sector over another. However, most Chinese
resources and commitments focus on natural resource extraction
related to Chinese domestic industrial development and
infrastructure projects related to that extraction or that primarily
benefit Chinese commercial interests in Afghanistan. Chinese road
and rail projects are situated near major supply routes and Chinese
investments, and will ultimately facilitate the import of
construction materials from China and exports of natural resources
to China. At Aynak, it remains to be seen how much of the
investment MCC will actually deliver (township development, power
station, railway) and how vigorously they will pursue environmental
protection (a condition of the project). The large number of
Chinese laborers to be brought in suggests less Afghan job creation
than would ideally be the case. Afghanistan, China and others in
the international community have a shared interest in improving
security conditions to enable Chinese reconstruction-related
investment to proceed and ensuring that such investment achieves a
balance between investor- and host-country interests. We remain
optimistic that the Chinese will continue to support reconstruction
as security, hopefully, improves, but we are wary that timelines for
Kajaki and Aynak will be stretched if security remains a pressing
concern. End Comment.

WOOD