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Cablegate: China Reluctant to Engage On Eiti

VZCZCXRO3541
OO RUEHAST RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
RUEHVC
DE RUEHBJ #4394/01 3370521
ZNR UUUUU ZZH
O 020521Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1157
RHEHNSC/NSC WASHDC IMMEDIATE
RUEAEPA/HQ EPA WASHDC IMMEDIATE
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHBY/AMEMBASSY CANBERRA 9640
RUEHOT/AMEMBASSY OTTAWA 4070

UNCLAS SECTION 01 OF 02 BEIJING 004394

STATE FOR OES, OES/EGC, OES/ENV, EAP/CM/HABJAN/FLATT,
EEB/ESC/HENGEL, EEB/ESC/IEC/ENR/HENRY/SECOR
TREASURY FOR OASIA/ISA/DOHNER/HOLMER/WRIGHT

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: SENV ECON ENRG EPET EMIN KCOR CH CA AS

SUBJECT: China reluctant to engage on EITI

REF: STATE 115798

Summary
-------
1. (SBU) Begin Summary. Post delivered background paper in
reftel demarche by fax to the Ministry of Foreign Affairs
(MFA) International Affairs Division, the National Energy
Administration (NEA) International Cooperation Division,
and the Ministry of Land and Resources (MOLAR)
International Cooperation Division following several weeks
of attempting to meet in person with the above agencies.
Each of the agencies we have attempted to engage has been
reluctant to discuss the Extractive Industries Transparency
Initiative (EITI) with econoffs. Chinese officials have
informed us that EITI is a sensitive issue for China, as it
addresses not only overseas oil and gas exploration, but
also mining activities. Although MFA has been designated
as our primary point of contact on this issue, multiple
government agencies and state-owned enterprises have
interests in EITI. Given the number of stakeholders and
sensitivities toward EITI, it appears that future
discussions with China on EITI are likely to move ahead at
a slow pace. End Summary.


MFA to be point of contact on EITI
----------------------------------

2. (SBU) Post delivered background paper in reftel demarche
by fax to the Ministry of Foreign Affairs (MFA)
International Affairs Division, the National Energy
Administration (NEA) International Cooperation Division,
and the Ministry of Land and Resources (MOLAR)
International Cooperation Division following several weeks
of attempting to meet in person with the above agencies.
Through our efforts to deliver reftel points and to discuss
a reference to the Extractive Industries Transparency
Initiative (EITI) in the Strategic Economic Dialogue (SED)
outcomes document, post learned that the Chinese government
has now assigned MFA as the primary point of contact for
future EITI discussions.

EITI considered a sensitive issue
---------------------------------

3. (SBU) All three organizations declined to meet with
econoff to discuss reftel points. MFA noted that this is a
sensitive issue and that MFA is only able to discuss EITI
in the multilateral context. An econ contact at the
National Development and Reform Commission (NDRC) told us
that EITI is a particularly complicated issue for China
because it not only addresses oil and gas exploration, but
also overseas mining activities. MOLAR echoed this view,
telling us that they welcome engagement with the U.S. on
other topics, but they are not able to discuss with us
Chinese views on this issue.

4. (SBU) Econoffs met with Australian and Canadian Embassy
counterparts in mid-November to discuss their perceptions
of China's willingness to engage on the EITI. AusAID
Development and Cooperation Counselor told econoff that
Australia's Department of Foreign Affairs and Trade (DFAT)
has not been engaged with China on the EITI, but noted that
Australia supports the EITI and shares U.S. concerns about
promoting transparency in resource rich developing
countries. Australia is particularly concerned about
Chinese extractive industries' overseas activities in the
East Asian and Pacific region, especially in Papua New
Guinea. She pointed out that China has welcomed a variety
of training programs supported by AusAID and other foreign
assistance providers, and suggested that it might be
worthwhile to consider using the EITI trust fund to support
training opportunities that would promote Chinese
understanding of the EITI.

5. (SBU) Canadian Embassy trade officer told econoffs that
China is unlikely to take any actions that could limit its
ability to access mineral and energy resources overseas.

BEIJING 00004394 002 OF 002


In his view, multilateral engagement with China on EITI
will have to be undertaken through a long-term, progressive
approach in order to be effective. Canada has built
relationships with government officials involved in the
extractive sector at the central and local level by
supporting programs to improve enhance extractive
industries' corporate responsibility.

Comment
-------

6. (SBU) Comment: Although MFA has been designated as our
primary point of contact on this issue, many powerful
government entities have dogs in this fight. NEA and
MOLAR play major roles in energy and mining policy making,
and play a role in developing China's official position on
EITI. Large, important state-owned enterprises active
abroad, including oil/gas and mining companies, also
provide significant input on this issue. The Chinese
government has to consider and coordinate all of these
viewpoints when engaging with us on EITI. It appears that
future discussions are likely to move ahead at a slow pace.
Cooperation with like-minded countries and the EITI
Secretariat may be useful in bringing EITI to the
attention of the appropriate Chinese leaders and
encouraging China's support for the EITI in countries
where Chinese extractive industries are active. End
Comment.

RANDT

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