miércoles, 8 de diciembre de 2010

DEPSEC'S UPCOMING MEETING WITH BOLIVIAN VP

Reference ID Created Released Classification Origin
07LAPAZ2385 2007-08-29 21:09 2010-12-03 21:09 CONFIDENTIAL Embassy La Paz
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C O N F I D E N T I A L LA PAZ 002385   SIPDIS   SIPDIS   FOR D   E.O. 12958: DECL: 08/27/2017  TAGS: PGOV PREL PHUM ECON EINV EMIN SNAR BL SUBJECT: DEPSEC'S UPCOMING MEETING WITH BOLIVIAN VP   REF: A. LA PAZ 2357   B. LA PAZ 2312   Classified By: A/DCM Mike Hammer, reasons 1.4 b and d.   - - - -  Summary  - - - -   1. (C) Although the Morales government states it wants good  relations with the United States, officials often use  anti-U.S. rhetoric to distract from domestic problems, as  when the Bolivian government recently groundlessly accused  the United States of financing opposition groups. The key  areas of concern in Bolivia currently are democracy,  narcotics, and protection for U.S. investments. While Garcia  Linera is generally seen as one of the more reasonable  members of the Bolivian government, and often acts as  moderator for radical elements of the ruling Movement Toward  Socialism (MAS) party, he has been aggressive in questioning  the role and purpose of U.S. aid and U.S. anti-narcotics  policies. The VP will likely push for ATPDEA extension and  seek Millennium Challenge Account funding. End summary.   - - - - - - - - - - - - - - - - - - - - - - - -  Politically-Motivated Anti-American Accusations  - - - - - - - - - - - - - - - - - - - - - - - -   2. (C) It has become the norm for the Morales government to  launch verbal attacks against "American imperialism" in times  of domestic difficulties in order to deflect public  attention. On multiple occasions, President Morales has also  accused the U.S. government of attempted "terrorism",  suggesting that an Amcit who bombed a Bolivian hostel in 2006  was acting on USG orders. President Morales cited this  supposed act of terrorism as an excuse for proposing visa  requirements for U.S. visitors, expected to enter into force  in December. Concerned about a recent increase in vitriolic  rhetoric, Ambassador Goldberg reviewed the U.S.- Bolivia  bilateral relationship with Vice President Garcia Linera  August 20 and noted recent pronouncements and actions on the  part of the Bolivian government that strain bilateral ties.  The Vice President promised to look into the issues of  concern and asked that the Ambassador not allow the forces  that seek to distance Bolivia from the U.S. to prevail,  emphasizing that the Bolivian government is committed to  improving relations (ref b). However, not even a week later,  Garcia Linera came out publicly accusing the U.S. government  of funding opposition groups in Bolivia. We called on Vice  Minister of Foreign Affairs Hugo Fernandez on August 28 to  protest these baseless accusations. Despite our protest, the  Bolivian government a day later (August 29) stepped up their  anti-U.S. aid rhetoric.   3. (C) With no warning, Minister of the Presidency Quintana  gave a lengthy presentation on state-run television accusing  USAID of supporting the opposition and providing what he  described as evidence in support of Morales's and Garcia  Linera's previous accusations. Using USAID's democracy  program as an example, Quintana claimed that only 30 percent  of the funding could be accounted for and said that the other  70 percent is programmed unilaterally. Quintana listed  grants and subcontracts which have been given to Bolivian  organizations, highlighting organization managers who worked  in previous governments as an example of the USG funding  supporters of the "old way" and those against the MAS program  of change. Quintana praised foreign aid from other  countries, stating that other countries follow Bolivian laws.  In a particularly ugly insinuation, Quintana called on  USAID's Bolivian employees to "remain loyal" and "not be  traitors." We would find it useful if the Deputy Secretary  could repeat to Garcia Linera our concerns about the  potential damage to the bilateral relationship if such  baseless anti-U.S. attacks persist.   - - - - - - - - - -  Democracy in Danger  - - - - - - - - - -   4. (C) Strengthening and supporting democracy in Bolivia is  our mission's primary concern. Although the ruling MAS party  and President Evo Morales were elected with a clear majority  in fair and open elections, their actions since assuming  power have often displayed anti-democratic tendencies.  President Morales is currently attempting to discredit and  weaken the judicial branch of government. Specifically, the  MAS-controlled lower house of Congress has sent an  impeachment case against four of the five judges of the  Constitutional Tribunal (the court which considers questions  of constitutionality, separate from the Supreme Court, which  is the court of final appeal.) The vote on the impeachment  case was a striking example of how the MAS has begun to  manipulate regulations in order to push the MAS agenda: after  fighting broke out in the Congress, the MAS head of the lower  house convened only the MAS congressmen in the offices of the  Vice President, where they voted by "majority of those  present" (that is, only the MAS) to impeach the four judges.  The MAS's aggressive actions in the Constituent Assembly,  which is currently attempting to draft Bolivia's new  constitution, also provide an example of the MAS's growing  disregard for the democratic process.   5. (C) During a recent visit by Venezuelan President Hugo  Chavez, President Evo Morales went so far as to declare his  intention to rule by decree if laws got in his way. In a  number of areas, Evo seems to be following in Chavez's  footsteps (for example, the recently-published draft  constitution, written by the MAS and Evo's Spanish and  Venezuelan advisors, would allow indefinite reelection for  the President and Vice President.) Venezuelan funding is  pouring into the country with no transparency or  accountability, further damaging the democratic process. In  fact, La Razon (Bolivia's paper-of-record), recently called  into question Venezuelan assistance.   - - - - - - - - - - - - - - - - - - - - -  Narcotics: Room for Further Cooperation?  - - - - - - - - - - - - - - - - - - - - -   6. (C) Counter-narcotics programs represent a chance for the  Bolivian and U.S. governments to work together, but again  Bolivian government rhetoric has made the task more  difficult. President Evo Morales, who is the head of  Bolivia's 'cocalero' coca-growing union, is a staunch  supporter of coca leaf cultivation, and he publicly  emphasizes a distinction between coca leaf and cocaine. In  reality, the line between the two is far from clear:  interdiction has increased under Evo's tenure, but so have  coca production and cocaine exports. The Bolivian  government's policies regarding coca are often incoherent,  with one ministry challenging or annulling the actions of  another ministry. Ambassador Goldberg was called to a  meeting with Vice Foreign Minister Hugo Fernandez on August  22 to discuss his public comments voicing U.S. concerns over  the rise of coca cultivation and drug trafficking. The  Ambassador explained that his comments reflected concerns  shared by Bolivian and U.S. drug enforcement authorities,  supported by the latest United Nations figures. Evo's  administration's reaction to the Ambassador's statements  suggests that the comments struck a raw nerve. Evo is having  difficulties making the case that coca cultivation is  separate from cocaine production and does not want to be seen  as tolerating an increase in drug trafficking.   7. (C) The Bolivian government, however, may be starting to  realize that drugs represent a growing problem domestically  and therefore may become more open to greater  counternarcotics cooperation with the United States.  Following a persistent effort by the Ambassador to push for a  net reduction in coca cultivation, the Bolivian government  announced August 28 that it is working on an "Action Plan" to  implement the government's strategy to reduce coca  cultivation to 20,000 hectares, down from the estimated  27,500 hectares currently being cultivated (according to  UNODC's 2006 estimate). The government has plans to go even  further and bring down coca cultivation to 16,000 hectares  (by an unspecified date). While we reject the government's  ongoing effort to bring "legal' cultivation to 20,000  hectares and would clearly want the government to produce a  more substantial net reduction, 20,000 hectares would  represent the average of what has been grown annually in  Bolivia over the past decade, including during the past  administrations. There may be an opportunity here for us to  start a process which will achieve net reduction. The Vice  President has discussed with the Ambassador the possibility  of working out a bilateral agreement to achieve net coca  reduction; it would be useful if the Deputy Secretary could  refer to this idea and urge Garcia Linera to follow-up.   - - - - - - - - - - - - - -  U.S. Investments Threatened  - - - - - - - - - - - - - -   8. (C) The MAS's draft constitution made public on August 14  includes an article that specifies that international  investors would only enjoy the benefits of Bolivian law and  could not invoke external agreements or, by implication,  international arbitration. A number of Evo's recent actions  and statements have been seen as anti-investment by the  industries affected: to give only a few examples, the forced  renegotiation of petroleum contracts, the nationalization of  Glencore's Vinto smelter, Evo's stated intention to create a  state energy and electricity company, the Bolivian  government's desire to repatriate a controlling share in  Entel the Italian-owned telephone company, and Morales's  claims that the Bolivian government now controls twenty  percent of Bolivia's economy and should be involved in more.   9. (C) One U.S. investment which is vulnerable is San  Cristobal mine, which is 65 percent owned by Apex Silver.  San Cristobal would be particularly hard-hit by a bill  currently in Congress, which would increase mining taxes.  Although the Bolivian government claims to want a fifty-fifty  split of profits, the proposed tax increases actually result  in, on average, a 60 percent government take of profits.  Because Apex hedged on metal prices in order to obtain  financing, in aggregate proposed tax increases pose a serious  threat to San Cristobal mine. When hedge costs are factored  in to the overall cost structure, Apex estimates that the  proposed tax regime will yield the GOB a 93 percent effective  tax rate. If refunds on import taxes are eliminated for  mines that produce concentrate instead of metal, as has been  proposed by the Ministry of Finance, the government's take  would be more than 100 percent of San Cristobal's profits.  In his August 20 meeting with Vice President Garcia Linera,  the Ambassador noted that given the USD 900 million  investment in San Cristobal mine, he hoped that the Vice  President would grant Apex Silver the opportunity to present  its concerns about the government's planned tax increase  directly to him. Vice President Garcia Linera agreed to look  into the matter and promised to hear out Apex Silver's  concerns once he had a potential way forward.   - - - - - - - - - - - - - - - - - -  Still Interested in ATPDEA and MCA  - - - - - - - - - - - - - - - - - -   10. (C) Vice President Linera will likely push for extension  of ATPDEA during your meeting. ATPDEA is crucial to a  certain segment of the Bolivian economy, particularly  specialty textile goods (note: USAID has provided support to  a number of small companies which, without ATPDEA, would  likely go bankrupt.) President Morales has made numerous  statements that ATPDEA should not be extended by increments  but should be formalized to give Bolivia permanent beneficial  trade access to the United States. Morales has also stated  that ATPDEA is not a U.S. "handout" but instead is Bolivia's  due for its help in counternarcotics efforts.   11. (C) Vice President Garcia Linera is likely to push for  extension of ATPDEA or mention a potential long-term  bilateral "trade agreement" that Bolivian officials have yet  to define. We also understand that Garcia Linera will visit  with the Millennium Challenge Corporation to try to  accelerate efforts to negotiate a compact.   - - - - - - - - - - - - - - - - - - - - - - - - - -  Being Firm while Keeping the Relationship on Track  - - - - - - - - - - - - - - - - - - - - - - - - - -   12. (C) Ambassador Goldberg has made clear our desire for  good relations with Bolivia. In return, Vice President  Garcia Linera has stressed that the Bolivian government also  wants better relations with the United States and has pleaded  with us not to "surrender to the forces that want to distance  our countries" and to continue to work to try to find areas  of cooperation but has done little to tone down his  president's or even his own anti-U.S. rhetoric.   13. (C) Garcia Linera needs to hear our concerns about  Bolivian democracy, the eroding investment climate, as well  as our desire to continue and even expand counter-drug  efforts. We also have to continue to urge the Morales  government to temper its rhetoric if it is indeed interested  in improved bilateral ties. That said, we are not optimistic  that the United States will be able to improve its  relationship with Bolivia in the short term, given Morales's  paranoia and Chavez's continuing influence here.  URS

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