US embassy cable - 05PRAGUE1023

C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 001023 
 
SIPDIS 
 
E.O. 12958: DECL: 07/07/2015 
TAGS: PREL, EINV, ETRD, CH, EZ, EUN, JP 
SUBJECT: CZECH PM IN CHINA FOCUSES ON BUSINESS, DODGES THE 
DIFFICULT ISSUES 
 
REF: PRAGUE 1007 
 
Classified By: Political Officer Kimberly C. Krhounek for reasons 1.4(b 
) and (d). 
 
 1.  (C) Summary.  On July 7, ADCM met with Ivan Busniak, 
foreign policy advisor to the Prime Minister, to discuss 
Czech PM Jiri Paroubek's recent visit to Japan and China.  In 
Japan, discussions focused on increasing Japanese investment 
and UN Security Council Reform.  In China, the dialogue was 
nearly entirely on trade and investment, with China showing 
"surprisingly immense interest" in the CR.  Paroubek avoided 
sensitive topics like human rights, East Asian security, and 
UN Security Council Reform.  On his return to Prague Paroubek 
declared that Czech-Chinese relations had been elevated to a 
new level and that half his cabinet would visit the country 
in the coming year.  End summary. 
 
2.  (C) Busniak explained that having the Czech PM visit 
China had long been a priority, although it was not initially 
meant to be included in this trip.  Another stop was planned 
as part of a long-scheduled visit to the international EXPO 
in Japan, but this was dropped unexpectedly and China added 
to the itinerary with only four weeks to plan.  The Czech PM 
was happy to have meetings with the "big three" in China -- 
the PM, President, and Speaker of the Chinese Parliament. 
Throughout the visit, the Czechs were impressed with how 
well-prepared and well-informed the Chinese were about the 
Czech Republic, including their efforts to include references 
to famous Czechs, such as composers Antonin Dvorak and 
Bedrich Smetana, into the conversations.  Busniak felt that 
in spite of such knowledge, the Chinese did have lingering 
impressions that the Czech Republic had a less-developed 
economy than its western European neighbors and said that 
Paroubek was at great pains to emphasize the Czech Republic's 
qualities as a highly industrialized country. 
 
------------------------------------- 
JAPAN: INVESTMENT AND UNSC 
------------------------------------- 
 
3.  (C) The PM's visit began in Japan with attendance at the 
international EXPO.  Although Japan was the longer visit and 
included a meeting with PM Koizumi, Busniak had little of 
substance to share with us.  The main agenda item for the 
Koizumi meeting was increasing Japanese investment in the 
Czech Republic.  Specifically, the Czechs hope that the 
recently opened Toyota factory in Kolin will be a catalyst 
for new Czech investment.  Busniak did not indicate if the 
Japanese made any promises.  Paroubek and Koizumi also 
discussed UN Security Council reform.  The Czechs have long 
been open supporters of Japan getting a permanent seat on the 
Council, and in return, the Japanese told them during the 
visit that they could count on Japanese support for the Czech 
bid to hold a non-permanent UNSC seat during the 2008-2009 
session. 
 
------------------------------------- 
CHINA: TRADE AND INVESTMENT 
------------------------------------- 
 
4.  (C) Busniak was clearly pleased with the "surprisingly 
immense interest" that the Chinese demonstrated towards the 
Czech delegation and said that the three meetings there 
focused almost exclusively on investment and trade relations. 
 The visit with the Chinese PM was the most concrete, as 
there was both an hour-long meeting and a dinner together. 
According to Busniak, discussion focused primarily on 4 to 5 
current business projects which are either close to being 
launched or are already.  These projects include: 
Volkswagon's plan to build an assembly plant of Skoda Octavia 
cars in China (note: Volkswagon owns Czech automaker Skoda); 
Czech financial group PPF's (unspecified) plans for a project 
in Szechuan; and the interest of several smaller Czech 
companies in the construction of a power plant.  On their 
side, the Chinese apparently expressed interest in using the 
Czech shipyard in Decin to produce ship propellers and other 
parts as a joint venture project and the possible 
introduction of Chinese color tv screens in the Czech 
Republic.  Busniak said no concrete deals were sealed during 
the visit. 
 
5.  (C) Busniak said that the Chinese, perhaps recognizing 
the Czech Republic's increased attractiveness as an EU 
member, expressed some interest in concluding bilateral 
agreements on double taxation and investment protection -- 
long-standing Czech goals, which the Chinese had previously 
not made a priority.  In his discussions both with the 
Chinese and with the media, PM Paroubek repeatedly emphasized 
the attractiveness of the Czech Republic as an "business 
entry point into the EU."  Paroubek also stressed Czech 
investments in the northern and northwestern parts of China, 
said to be among the less-developed parts of the country, and 
the interest of Czech contractors in projects relating to the 
2008 Olympics in Beijing. 
 
--------------------------------------- 
STICKY SUBJECTS: HUMAN RIGHTS AND UNSC 
--------------------------------------- 
 
6.  (C) According to Busniak, the Chinese and Czech PMs 
discussed human rights only tangentially, when the Chinese 
requested that the EU lift its arms embargo, saying that it 
was "no longer in line with the EU - China strategic 
partnership."  In response, Paroubek said that to do so, the 
EU would look at a variety of factors, including respect for 
human rights and that he hoped that an outcome to the 
satisfaction of both parties could be reached.  (Note:  Some 
Czech press commentaries criticized Paroubek's apparent 
decision to downplay human rights in Beijing.  When queried, 
MFA staff report that Paroubek stuck precisely to his talking 
points.  Both the MFA and Busniak report the Czechs decided 
that their leverage on human rights would be greatest in the 
context of the EU arms embargo, and that Paroubek did not 
have any sort of mandate to pursue the arms embargo with the 
Chinese, thus explaining the limited focus on human rights.) 
 
7.  (C) Paroubek was apparently equally hesitant to stand 
firm in front of the Chinese on the issue of Security Council 
reform.  Although he had reaffirmed to the Japanese the 
long-standing Czech support for a Japanese Security Council 
seat just a few days prior, he was reportedly less 
forthcoming with his Chinese counterpart who opposes it. 
During his meetings with the Chinese PM, Paroubek said only 
that the G-4 proposal was "under discussion," although the 
MFA had told us before the trip that they supported the G-4 
proposal and the GOCR ultimately made a decision to 
co-sponsor it (reftel). 
 
--------------------------------------------- -- 
COMMENT: TOO MANY HEADS, LITTLE COORDINATION 
--------------------------------------------- -- 
 
8.  (C) Comment.  It was clear from our discussion that the 
Czechs were delighted with their reception and "fruitful" 
meetings with the Chinese leaders.  On his return, PM 
Paroubek announced that "half of his Cabinet" would visit 
China this year and declared Czech-Chinese relations had been 
elevated to a new level.  It was equally clear that PM 
Paroubek, known as a practical negotiator but not necessarily 
a man of principle, is not inclined to deliver strong 
messages on sensitive issues, particularly when business is 
at stake.  While FM Svoboda can, and still does, fill this 
role (as we have seen in EU Cuba discussions), his lack of 
support within the Czech government was made clear by the 
fact that he was not included in the PM's Asia trip at all. 
Following the China trip the MFA insisted that the GOCR's 
view on the China arms embargo remains firm:  no lifting 
without progress on human rights and the establishment of a 
functioning strategic dialogue between the EU, US, Japan and 
others on China.  However, with different parts of the 
government acting and speaking somewhat independently, policy 
messages from the Czech Republic in advance of next year's 
elections are likely to remain somewhat disjointed, and 
depend largely on the speaker.  As the new Czech Ambassador 
to NATO Stefan Fule put it in a recent meeting with the 
Ambassador, "I am happy to give you my country's policy.  Do 
you want the one from the President, the Prime Minister, the 
Foreign Minister or someone else?"  End comment. 
CABANISS