VZCZCXRO9780
RR RUEHGR
DE RUEHGR #0015/01 0632155
ZNR UUUUU ZZH
R 042155Z MAR 09
FM AMEMBASSY GRENADA
TO RUEHC/SECSTATE WASHDC 0538
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHGR/AMEMBASSY GRENADA 0619

UNCLAS SECTION 01 OF 03 GRENADA 000015 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV GJ CH
SUBJECT: CHINA INVESTS BIG-TIME IN GRENADA 
 
¶1. (SBU) Grenada and the People's Republic of China (PRC) 
celebrated the fourth anniversary of relations on January 20, 
2009 with protestations of warm friendship and continued 
observance of the one China policy.  The PRC continues to pour 
money into the cash-strapped island nation.  Grenada withdrew 
its recognition of Taiwan in 2005 after being promised greater 
assistance by the PRC.  Chinese laborers apparently are not 
required to obtain Labor Ministry certification to work in 
Grenada.  All materials used by the Chinese are brought in under 
diplomatic cover, even when imported for commercial use, but 
Customs officials sought to rectify this situation but after one 
attempt are now afraid to say anything.  Grenada's value to the 
PRC outside of its ongoing battle for recognition with Taiwan is 
not immediately apparent as the country has never been on major 
trade routes nor does it produce oil, gas, or any other raw 
material. 
 
THE PAYOFF 
 
¶2. (U) After years of recognizing Taiwan, the former New 
National Party (NNP) administration could not pass up the US$250 
million dangled in front of it by the PRC in 2005 to adopt the 
one China policy.  The Taiwanese were invited by the GOG to 
leave promptly, with several issues unresolved, including the 
non-payment by the GOG on an outstanding loan.  Taiwan has 
threatened to take the GOG to court, but Grenada's politicians 
have not looked back since the switch.  To post's knowledge, the 
debt has not yet been repaid.  In addition to the initial lump 
sum, the PRC has provided US$10 million each year for "technical 
cooperation", though neither the Chinese nor the Grenadians will 
say exactly what it has been spent on. 
 
¶3. (SBU) During the 2008 election campaign, NNP officials 
complained to Charge d'Affaires (CDA) Karen Jo McIsaac, that the 
PRC gave its main rival, the National Democratic Congress (NDC), 
more cash than it gave the NNP.  The donations were allegedly in 
the form of cash and, to the NDC, campaign items such as 
tee-shirts and posters.  (Note: Grenadian voters often wait to 
see who will give them the most money, goods, or parties before 
they decide which way to vote.  There are no laws prohibiting 
campaign contributions from foreigners or foreign entities. 
The three largest contributors during the 2008 campaign are 
rumored to have been the PRC, Venezuela, and St. Vincent and the 
Grenadines.  The Barbados government was also a source of funds 
and political advice for the NDC.  Only the Grenada United 
Labour Party (GULP) specifically refuses to accept outside 
funding.  Neither the GULP nor the Peoples' Labor Movement 
(PLM), whose political leader told CDA somewhat plaintively that 
he would take outside money if someone would just offer it to 
him, are truly viable political parties.  End note.) 
 
CHINESE LABOR OUTLET 
 
¶4. (U) In 2006, the PRC brought 600 Chinese laborers to Grenada 
to construct a new national cricket stadium, the old one having 
been destroyed by Hurricane Ivan in September 2004.  The workers 
lived on the site, planted a huge garden which supplied most of 
their food, and kept to themselves.  The Chinese did not 
frequent local shops or restaurants and bars.  Gregarious by 
nature, Grenadians complained about the Chinese policy of 
non-fraternization as well as not being able to make money off 
so many visitors.  Lack of English language skills also hampered 
communication, even when the workers ventured out in groups of 
six to ten. 
 
¶5. (SBU) Controversy erupted close to the July 2008 election 
over the use of uncertified Chinese labor by the PRC as well as 
by local contractors to work on roads and building projects, 
replacing local workers.  Both the NNP and the NDC governments 
have tiptoed around the issue of labor certification so as not 
to offend the PRC.  However, according to local construction 
companies, the Chinese workers do not have work permits. 
 
¶6. (SBU) Local private contractors also complain that the PRC is 
allowed to bid on World Bank, Inter-American Development Bank 
(IDB), and United Nations funded projects, undercutting local 
companies that must pay real local labor and equipment/materials 
costs.  The contractors say they do not object when it is a 
wholly Chinese government project such as the stadium.  But when 
the international financial institutions let the PRC bid using 
low costs made possible by a PRC-controlled and funded labor 
force, and a government that brings materials in under 
diplomatic cover, and does not need to pay attention to profit 
margins, they cry foul. 
 
¶7. (SBU) The number of Chinese laborers in Grenada appears to 
have dropped in 2008 from its peak of 600 in 2007.  PRC 
Ambassador Zhang Wanhai told CDA that there are eight diplomats 
accredited to Grenada and that at least 90 laborers remain on 
the island.   The workers are sought out by local and 
international investors because "they work harder" than 
Grenadian employees and of course are paid less than locals. 
 
GRENADA 00000015  002 OF 003 
 
 
Chinese workers live on site and grow their own food in vacant 
areas of the work sites.  Although the Chinese claim the Chinese 
laborers are "independent contractors", the embassy retains 
control of their passports and other documentation.  No one CDA 
has spoken with knows -- or perhaps will say -- how the workers' 
wages are handled, whether the workers receive direct 
reimbursement or the PRC embassy is the recipient. 
 
PROMISED ASSISTANCE 
 
¶8. (SBU) Once the stadium was completed in early 2007, the 
Chinese workers fanned out across the country to undertake other 
projects, public and private.  The PRC promised to build four 
agricultural stations, 2000 homes, and to provide scholarships 
for Grenadian students to study at Chinese universities.  The 
scholarships have been instituted and twenty-three Grenadians 
are currently studying at various universities around China. 
However, the other items have not yet materialized.  Instead, 
the PRC built a hotel and two restaurants with materials brought 
into Grenada under diplomatic cover marked as being material and 
equipment to build the stadium.  Customs officials attempted in 
early 2008 to hold the PRC accountable for these items, but the 
issue was quickly swept under the rug by the GOG where it 
remains.  The antacid-pink-colored hotel and its restaurant 
remain in limbo as the government tries to decide if it wants to 
pursue the issue.  The other restaurant, which opened in early 
2007, has been closed down since the collapse of Capital Bank 
International in late 2007. 
 
¶9. (SBU) The promised 2000 homes were part of China's promised 
Hurricane Ivan assistance, but unlike the U.S. Government, the 
PRC refused to rebuild existing homes.  Instead, they demanded 
that the government provide vacant land on which they could 
build large groups of houses.  Negotiations were stalled for 
over three years over this issue.  Given Grenada's topography, 
finding large, flat, empty areas is difficult.  One can build on 
hillsides - and Grenadians build just about everywhere using 
rickety 14-inch wide stilts that can rise as high as three 
stories - but there are inherent dangers from landslides caused 
by heavy rains, earthquake tremors, or simply too much weight on 
unstable topsoil.  (Comment: Venezuela, which promised 400 
houses using the same principle of building multiple homes on an 
empty plot of land, has only completed 200.  These were so 
poorly built that they remain uninhabitable two years after 
completion.  Many Grenadians whose homes remain incompletely 
rebuilt after Ivan refuse to move, either because they own the 
land they are on or because they do not own their land.  In both 
cases they are afraid they will be moved to less desirable 
locations.  End comment.) 
 
¶10. (SBU) Other PRC assistance to Grenada includes kitchen 
appliances, office equipment, and vehicles for the police.  In 
addition, a two-man martial arts expert team from the Chinese 
army is stationed at the Royal Grenada Police Force (RGPF) 
Special Services Unit (SSU) camp to train local officers.  There 
is a Chinese teacher at the T.A. Marryshow Community College 
(TAMCC), and seven doctors connected to the Ministry of Health 
and Grenada General Hospital.  With the exception of the Chinese 
teacher at TAMCC, none of the others speak English.  Grenadian 
doctors complain privately that their Chinese colleagues cannot 
perform any useful function because of the language gap.  One 
surgeon told CDA that two PRC physicians are assigned to the 
x-ray department but sit there all day because no one 
understands them if they speak.  Doctors dare not complain too 
loudly for fear of censure or of having their right to work at 
the hospital revoked by the GOG.  The Chinese have also promised 
to build a port in Sauteurs at the northern end of the island of 
Grenada.  The area is environmentally delicate and includes hot 
springs and is the site of turtle egg laying.  There is no sign 
that an environmental impact assessment is planned. 
 
COMMENT 
 
¶11. (SBU) The PRC's timing was impeccable for seeking 
recognition by Grenada.  The country was buffeted by Hurricanes 
Ivan in 2004 and Emily in 2005 with near total destruction of 
its primary foreign exchange earning export of nutmeg (and the 
more valuable mace).  Promised international assistance was not 
sufficient to rebuild leaving the country to choose between 
going into debt and not rebuilding.  The United States provided 
$46 million in assistance after Ivan: 50 percent of the total 
promised by all donors.  The U.S. remains the only country to 
completely expend its assistance package and finish what it 
promised to do. 
 
¶12. (SBU) Chinese assistance appears geared to pull Grenada into 
its political orbit, without creating long-term, sustainable 
development.  China's Ambassador brags that Grenada votes the 
"way we want them to" in international organizations.  Grenada's 
laborers, who definitely could benefit from additional training, 
instead have lost jobs to the imported laborers.  Neither the 
previous nor the current governments has publicly accounted for 
 
GRENADA 00000015  003 OF 003 
 
 
the Chinese funds.  Going into the global economic slowdown, the 
country is struggling to stay afloat.  Grenada's debt remains 
insupportably high at 107 percent to gross domestic product 
(GDP) which would seem to indicate that however the monies are 
spent, they are not being used to assist in lowering the 
deficit. 
MCISAAC