CHINESE ENGAGEMENT IN MAURITANIA

UNCLAS NOUAKCHOTT 000097 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EAID PREL MR CN SUBJECT: CHINESE ENGAGEMENT IN MAURITANIA REF: STATE 10152 ¶1. (U) China maintains a prominent and active presence in Mauritania. China is the largest destination for Mauritanian exports. As of 2009, nearly 40% of Mauritanian exports were destined for China. After France, China is the second largest importer of products into the Mauritanian market. In addition to Chinese activities in the Mauritanian commercial realm, China is actively engaged in a number of infrastructure investment projects in Mauritania. At the moment the Chinese are financing a USD 300 million expansion of the Autonomous Port of Nouakchott, a railway line linking Mauritania's third largest city of Kaedi with Nouakchott, the construction of a new Ministry of Foreign Affairs and offices for the Prime Minister. These are large and high profile projects in Mauritania. A majority of the Chinese projects are financed through a combination of long-term, low-interest loans provided through the Export-Import bank of China, grants from the Chinese government and private Chinese investment. Many of the projects, such as the railway line and port, will facilitate transportation of Mauritania's natural resources, many of which are exported to the Chinese market. ¶2. (U) The railway link between Kaedi and Mauritania is an example of the creative financing of Chinese infrastructure investments in Mauritania. About 70% of the total cost of the railway line (USD 970 million) will be financed by low-interest loans from the Chinese Export-Import bank, with the remainder 30% being financed by a parastatal Mauritanian mining partner. China also has large amounts of private investment in Mauritania. The Mauritanian government recently granted a private Chinese company a USD 200 million contract to equip a number of Nouakchott's neighborhoods with their first sewage systems, while China Minmetals Corporation announced that they are in the process of purchasing an iron ore mine in Mauritania. Another private Chinese company is working on the construction of a road linking the southern city of Selibaby to Kaedi. There is currently no roadway linking these cities, making it a challenge for the agricultural products of Selibaby to be transported to markets in Nouakchott and abroad. ¶3. (SBU) China has become a particularly important trade partner for Mauritania. In meetings at the largest Mauritanian parastatal company, SNIM, which exports nearly 9 million metric tonnes of iron ore per year, the director of operations noted that because of the financial crisis, all orders of iron ore from European trade partners had been canceled, but China not only continued their purchases, but stepped in to purchase the exports that normally would be destined for Europe, making China almost the exclusive buyer of Mauritanian iron ore. Not all Chinese-Mauritanian trade endeavors have been successful. After commencing oil exploration in 2006, the China National Petroleum Corporation ceased further oil exploration activities in 2009 citing rising costs and a lack of substantive reserves. ¶4. (U) China conducts most of their assistance programs in the form of infrastructure development, but they do have small teams of scientific researchers working with the Ministry of Fisheries and the Food Security Commission to strengthen Mauritania's capacity to produce food. China also has medical teams working throughout Mauritania in a number of humanitarian health programs. Similar to the U.S. African Growth and Opportunity Act (AGOA),since 2004 China has maintained an agreement with Mauritania that permits duty and customs free entry of certain Mauritanian exports into the Chinese market. ¶5. (U) The American and Chinese Embassies in Nouakchott enjoy good relations, but at the moment there are no joint U.S.-Chinese projects. The Chinese Embassy is open to the idea of collaborative U.S.-Chinese projects. The Chinese are mostly active in infrastructure building and have expressed interest in learning more about how the USG conducts developmental assistance, particularly how we collaborate with local NGO partners. BOULWARE