VZCZCXYZ0001
RR RUEHWEB

DE RUEHDJ #0181/01 0421544
ZNR UUUUU ZZH
R 111544Z FEB 10
FM AMEMBASSY DJIBOUTI
TO RUEHC/SECSTATE WASHDC 1383
INFO RUEHBJ/AMEMBASSY BEIJING 0001
RUEHDJ/AMEMBASSY DJIBOUTI

UNCLAS DJIBOUTI 000181 
 
SENSITIVE 
SIPDIS 
DEPARTMENT FOR AF/E AND AF/RSA 
 
E.O. 12958: N/A 
TAGS: PREL EAID ECON DJ CH
SUBJECT: CHINA IN DJIBOUTI 
 
REF: 10 STATE 10152; 08 DJIBOUTI 430 
 
¶1. (SBU) SUMMARY. China cemented diplomatic ties with Djibouti one 
year after independence in 1977, and for thirty years has provided 
bilateral gift aid and loans, mostly in the form of popular 
standalone infrastructure and building projects.  In 2009, China's 
involvement in Djibouti continued to deepen--both through 
additional aid projects, and through growing interest from Chinese 
companies in the transport, construction, and energy sectors. 
While there is likely some room for coordination between USAID's 
health programming and Chinese investments in health 
infrastructure, there is generally little overlap between bilateral 
U.S. assistance (largely in health, education, and democracy and 
governance, with a focus on capacity building) and China's focus on 
one-off construction projects in Djibouti.  END SUMMARY. 
 
 
 
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CHINA IN DJIBOUTI: PUBLIC BUILDINGS, 
 
PARTNERSHIPS ON INFRASTRUCTRURE AND ENERGY 
 
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¶2. (SBU) Many of Djibouti's best-known public buildings were 
financed through Chinese loans or gifts, including the "People's 
Palace" conference center (USD 10 million, constructed 1983), 
Djibouti's main sports stadium (USD 11 million, constructed 1991), 
a new wing of the main public hospital, the Ministry of Foreign 
Affairs, and several middle schools, including in Holl-Holl and 
Yoboki.  Non-construction-based aid from China includes student 
exchanges, as well as a Chinese medical team operating in the 
Chinese-built hospital wing.  Chinese businesses are also active in 
Djibouti, notably in the construction sector.  President Guelleh 
visited China with a group of government officials and business 
people in 2001.  Djibouti Telecom, the state-run telecommunications 
monopoly, has invested heavily in Chinese technologies, partnering 
with the Chinese companies ZTE and Huawei. 
 
 
 
¶3. (SBU) China's most recent bilateral aid to Djibouti includes a 
May 2009 donation of construction equipment to the Ministry of 
Transport.  In addition, China agreed in August 2009 to finance USD 
4.3 million in renovations of the Chinese-built "People's Palace" 
conference center.  The building had been damaged in a July 2009 
electrical failure, possibly due to shoddy wiring.  In June 2009, 
Djiboutian President Guelleh inaugurated construction work on a new 
Chinese-funded regional hospital in the town of Arta.  The USD 8.2 
million project will include four buildings, seven annexes, an 
emergency room, and a total of 104 beds.  The GODJ inked several 
high-profile agreements with Chinese companies in 2009, notably a 
July 2009 deal between Chinese firm CGCG and the Ministry of Energy 
on geothermal/mining exploration and construction of a fuel 
terminal and 150 megawatt gas generator.  China Railway 
International also signed an agreement in April 2009 with the 
Ministry of Transport on construction of a 12 km spur linking 
Djibouti's new container terminal to an existing rail line. 
 
 
 
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COORDINATION OPPORTUNITIES 
 
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¶4. (SBU) Djibouti's small diplomatic community affords many 
opportunities for informal coordination.  However, there are no 
current examples of USG-China partnership on development 
initiatives, and areas of interest are generally fairly divergent. 
With China's significant investment in a new regional hospital and 
USAID's ongoing health programming, there may be increased 
opportunities for cooperation in the health sector. 
 
 
 
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COMMENT 
 
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¶5.  (SBU) The GODJ's signature diplomatic style is to maintain 
friendly relations with a dizzying range of partners.  Djiboutians 
appreciate Chinese investment in critical infrastructure 
priorities, as well as China's general tendency to give "things" 
rather than providing capacity-building.  However, China's reliance 
on Chinese workers and companies to build its projects is less 
esteemed.  Although Chinese products may be cheaper, Djiboutians 
often consider them less reliable and of lower quality than French 
or American goods.  While the GODJ lauded China's quick support to 
renovate a building that showcases Sino-Djiboutian cooperation, 
they also perhaps grumbled in private that faulty Chinese 
electrical wiring likely caused the destructive fire in the first 
place.  END COMMENT. 
SWAN