VZCZCXRO7562
OO RUEHCN RUEHGH RUEHMR RUEHPA RUEHRN RUEHVC
DE RUEHBJ #4348/01 3401008
ZNY CCCCC ZZH
O 061008Z DEC 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2794
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHDS/AMEMBASSY ADDIS ABABA 0261

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 024348 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF, EAP, EAP/CM 
INR FOR GILLES 
 
E.O. 12958: DECL: 12/06/2026 
TAGS: PREL PGOV AGOA ECON EAID CH
SUBJECT: (C) PRC/AFRICA: ETHIOPIA AND ERITREA AT THE 
CHINA-AFRICA SUMMIT 
 
REF: A. BEIJING 22370 
 
     ¶B. BEIJING 23548 
     ¶C. BEIJING 23695 
 
Classified By: Political External Unit Chief Edgard Kagan.  Reasons 1.4 
 (b/d). 
 
Summary 
------- 
 
¶1. (C) President Hu Jintao met with both Ethiopian Prime 
Minister Meles Zenawi and Eritrean President Isaias Afwerki 
during the Beijing Summit of the Forum for China-Africa 
Cooperation (FOCAC)(Ref A), according to MFA contacts, who 
added that the two African leaders did not meet each other 
while in Beijing.  Hu and Meles discussed bilateral trade, 
with Meles pushing for greater Chinese investment in 
Ethiopia.  Hu pledged to accelerate negotiations on an 
infrastructure loan to Ethiopia worth over USD 1 billion.  Hu 
and Isaias discussed regional security, including Sudan and 
Somalia.  Isaias expressed concerns about the Ethiopian 
military presence in Somalia, an MFA contact said.  PRC 
Foreign Minister Li Zhaoxing may travel to Eritrea in 
January, our contact noted.  End Summary. 
 
¶2. (C) Poloff discussed Ethiopia and Eritrea's participation 
at the FOCAC Beijing Summit separately with MFA African 
Department Deputy Division Director Zhang Bin, MFA African 
Department Official Wang Guofei, Ethiopian Political Minister 
Counsellor Eyassu Dalle (protect) and Ethiopian Commercial 
Officer Melaku Legasse (protect). 
 
Meles, Hu Discuss Trade and Loans 
--------------------------------- 
 
¶3. (C) China and Ethiopia enjoy excellent bilateral 
relations, MFA African Department Deputy Division Director 
Zhang Bin said.  PM Meles held separate, brief bilaterals 
with President Hu Jintao and Premier Wen Jiabao during his 
November 3-5 visit to Beijing in his capacity as co-Chair of 
the recent FOCAC Beijing Summit.  The meetings took place on 
November 4 and each lasted approximately twenty minutes and 
covered the same substantive ground, Zhang said, noting that 
President Hu held approximately 40 bilateral meetings with 
African presidents during and immediately before and after 
the Beijing Summit.  PM Meles was the only non-President to 
receive a bilateral with President Hu, due primarily to his 
role as the Beijing Summit's co-Chair, Zhang added. 
 
¶4. (C) PM Meles and President Hu discussed bilateral trade, 
which grew to nearly USD 400 million through the first three 
quarters of 2006, a 20 percent year-on-year increase, 
according to Zhang.  PM Meles expressed satisfaction with 
zero-tariff treatment for some Ethiopian products (under 
previous FOCAC arrangements) that have doubled Ethiopia's 
exports to China.  In response to Meles' push for more 
Chinese investment, Zhang said that President Hu told the PM 
that the PRC will accelerate the construction of a previously 
agreed agricultural polytechnic in Ethiopia and that Beijing 
will move faster on Addis Ababa's request for an 
infrastructure development loan worth over USD 1 billion. 
Commenting that the PRC Export-Import bank would likely issue 
the loan, Zhang expressed optimism that the loan agreement 
will be concluded in the near future.  Due to the limited 
time, the two sides did not discuss regional security or 
other foreign policy matters, Zhang added. 
 
Isaias, Hu Discuss Regional Security 
------------------------------------ 
 
¶5. (C) Zhang told us that Eritrean President Isaias had a 
twenty-minute bilateral meeting with President Hu on November 
6, the day after the conclusion of the Beijing Summit. 
According to Zhang, President Isaias briefly offered his 
views on Sudan, Somalia and Ethiopia.  Isaias insisted the 
Ethiopian military is operating in Somalia and hurting the 
prospects for peace.  Hu responded China follows developments 
in Somalia closely and has helped bring international 
attention to the crisis.  China supports the efforts of the 
international community and the parties involved to find a 
peaceful solution, Hu added, Zhang said.  Regarding the 
Eritrea-Ethiopia border dispute, Zhang said Hu told Isaias 
that China is friends with both countries and stands for 
peaceful resolution in accordance with the Algeria peace 
agreement.  The boundary commission held consultations 
earlier this year and China hopes both sides will find a 
mutually satisfactory solution, Hu said, according to Zhang. 
 
BEIJING 00024348  002 OF 003 
 
 
 
¶6. (C) On Sudan, Isaias stressed Eritrea's "important role" 
in moving the North/South peace process forward and current 
efforts to work with the Government of National Unity (GNU) 
to help find a solution for Darfur, Zhang said.  Isaias 
thanked Hu for China's development assistance to Eritrea and 
talked broadly about globalization and the need for the 
international community to pay attention to Africa, according 
to Zhang.  No bilateral agreements were signed between China 
and Eritrea during the Beijing Summit, Zhang added, noting 
that PRC Foreign Minister Li Zhaoxing may travel to Eritrea 
in January.  FM Li traditionally begins his diplomatic travel 
each year with a trip to Africa, MFA officials have told us. 
 
No Meeting Between Meles and Isaias 
------------------------------------ 
 
¶7. (C) PRC MFA Africa Department Officer Wang Guofei, 
responsible for Ethiopia/Eritrea, and Zhang Bin separately 
stated PM Meles and President Isaias did not meet while in 
Beijing.  Wang noted that both leaders were "happy to come to 
China."  As FOCAC co-Chair, PM Meles was granted "appropriate 
protocol" (implicitly, elevated status), Wang added.  Eyassu 
and Melaku also separately said that Meles and Isaias did not 
meet during the Beijing Summit.  PM Meles arrived November 3 
and departed November 5 shortly after the Beijing Summit 
concluded, both noted. 
 
Ethiopia Not Satisfied 
---------------------- 
 
¶8. (C) Ethiopia was not wholly satisfied with the substantive 
outcomes of the Beijing Summit, according to Ethiopian 
Embassy Political Minister Counselor Eyassu Dalle, who worked 
extensively on the event (which was technically co-hosted by 
Ethiopia).  Providing us with a readout of the Beijing 
Summit, Eyassu said President Hu's eight-point plan to 
enhance Chinese aid and trade with Africa (Ref B) is short on 
specifics and quite small when considered against the needs 
of the 48 African countries with which Beijing has diplomatic 
relations.  Specifically, the value of the PRC pledge to 
double PRC assistance to Africa over the next three years is 
questionable because Beijing has not provided African 
countries with baseline assistance figures for 2006 or shown 
how current assistance is distributed.  Similarly, PRC 
promises to provide USD 3 billion in preferential loans and 
USD 2 billion of preferential buyer's credits to Africa over 
the next three years may not be so generous on closer 
scrutiny, Eyassu said. 
 
¶9. (C) According to Eyassu, Chinese preferential loans are 
granted through the PRC Ex-Im bank and "carry high-interest 
rates," which may run afoul of African governments' 
commitments to other international financial institutions. 
Buyer's credits similarly may largely benefit Chinese 
companies seeking to invest in Africa, rather than African 
companies.  The PRC has not provided any details on President 
Hu's offers but the arrangements will be worked out 
bilaterally, so that a given African country likely will not 
have the advantage of knowing the terms and conditions 
granted to other African countries.  Eyassu noted that prior 
to the Beijing Summit, Ethiopia began courting Beijing for a 
loan facility in excess of USD 1 billion for infrastructure 
development, but the deal has yet to be concluded. 
 
¶10. (C) The Beijing Summit was useful in that it served as an 
opportunity to bring African development concerns and 
challenges to the world stage, Eyassu and Melaku separately 
said.  PM Meles' address at the Opening Ceremonies of the 
Beijing Summit was well-received by other African delegations 
because it reaffirmed African concerns that were not 
otherwise included in the Beijing Summit's operative 
documents or discussions, such as Africa's commitment to 
pursue good governance, Eyassu added.  PM Meles also 
highlighted the need to balance China-Africa trade.  While 
the PRC publicly repeats that it maintains a trade deficit 
with Africa, Eyassu said African countries are not fooled by 
the rhetoric and know that once oil is removed from the 
equation, China enjoys an enormous trade surplus.  Oil 
revenues only benefit a few African countries, Eyassu added. 
 
No Consensus On Beijing Action Plan 
----------------------------------- 
 
¶11. (C) Eyassu said the PRC has yet to release publicly the 
Beijing Action Plan, one of the two operative documents of 
the Beijing Summit, because the PRC could not reach consensus 
 
BEIJING 00024348  003 OF 003 
 
 
with the African countries during the Senior Officials 
Meeting and the Ministerial.  The document remains in draft 
and, from African countries' perspectives, is still subject 
to negotiation.  According to Eyassu, areas of African 
concern include the lack of specifics about implementation of 
Beijing's assistance proposals and lack of African 
representation on the FOCAC Follow-Up Committee.  In the 
run-up to the Beijing Summit, many African countries pushed 
unsuccessfully to create a joint follow-up committee.  The 
issue is still under negotiation as far as many African 
countries are concerned.  An African consensus is building 
that African genuine African participation is needed in the 
FOCAC Follow-Up Committee, Eyassu underscored. 
 
African Word-Smithing 
--------------------- 
 
¶12. (C) Though there was agreement on the wording of the 
Beijing Declaration, the other operative document from the 
Beijing Summit, Eyassu expressed frustration that African 
delegations focused excessively on word-smithing the draft 
Beijing Declaration during the November 1-2 Senior Officials 
Meeting (Ref A), wasting time that could have been better 
used to press for greater specificity in the draft Beijing 
Action Plan.  Eyassu said Egypt and South Africa pushed to 
refer to the African Union Act, along with the UN Charter, 
China's Five Principles of Peaceful Coexistence and "other 
generally recognized norms governing international 
relations."  Morocco and others opposed and after almost two 
days of debate the African Union Act was not included and the 
reference to the UN Charter was also deleted.  Likewise, 
Egypt, Nigeria and South Africa argued to include a call for 
"full participation" of African countries in the UN Security 
Council and UN agencies.  The PRC conceded the point, but 
Eyassu noted that "full participation" is still vague. 
African countries are convinced that any Security Council 
reform must lead to a permanent African seat or seats, 
although the Africans are deeply divided over which African 
country or countries should hold that seat or seats, Eyassu 
said. 
 
Few Ethiopian Business Deals 
---------------------------- 
 
¶13. (C) Eyassu and Melaku Legasse separately said Ethiopia 
did not send a large business delegation to participate in 
the High-Level Economic Dialogue and Matching Session (Ref C) 
because Ethiopia's companies are not yet prepared to compete 
in China's market.  Ethiopian businesses signed fewer than 
five business agreements during the Beijing Summit, Eyassu 
said, adding that he only knew of a telecommunications 
agreement.  Melaku said China and Ethiopia signed a joint 
venture agreement to build a cement factory in Eastern 
Ethiopia, worth several million dollars.  Eyassu noted that 
Uganda has entered the retail coffee market in China, but 
Ethiopian companies are simply not prepared for a retail 
sales push. 
 
¶14. (C) Melaku and Eyassu separately said Ethiopia currently 
receives zero-tariff treatment on approximately 14 of the 190 
exports currently eligible for special preferential treatment 
(SPT).  Sesame exports have greatly benefited from SPT.  With 
the PRC now increasing eligibility to more than 440 tax 
categories, all to be negotiated bilaterally, Ethiopia wants 
to expand its access to the Chinese market.  Ethiopia is keen 
to receive SPT for ground coffee, but the PRC has not 
released a list of which African exports will be covered by 
the 440 categories, Eyassu said, adding, "we will expect some 
tough negotiations ahead."  Melaku said Ethiopia hopes the 
new SPT schedule will be announced in January, although Zhang 
Bin told us the schedule may be announced later in 2007. 
 
Bio Note 
-------- 
 
¶15. (C) Eyassu Dalle said he is a former Member of Parliament 
and said he has been in Beijing since 2001 to help Ethiopian 
Ambassador Haile Kiros Gessesse Tedla coordinate Ethiopia's 
six-year stint as FOCAC Co-Chair.  He said he and the 
Ethiopian Ambassador worked closely together and participated 
together in the Senior Officials and Ministerial meetings in 
advance of the Beijing Summit.  Melaku said Eyassu and 
Gessesse previously knew each other from Parliament. 
Randt