SPAIN: RESPONSE TO BOLIVIA HYDROCARBON LEGISLATION

C O N F I D E N T I A L MADRID 001761

SIPDIS

DEPARTMENT PASS TO EUR/WE

E.O. 12958: DECL: 05/09/2015
TAGS: ECON EPET ENRG PREL BL SP
SUBJECT: SPAIN: RESPONSE TO BOLIVIA HYDROCARBON LEGISLATION

REF: STATE 83302

Classified By: Political Counselor Kathy Fitzpatrick for reasons 1.4(B)
and (D)

1.(C) On May 9, Poloff delivered reftel points on Bolivia's
hydrocarbons legislation to Juan Carlos Sanchez, Subdirector
General of the Andean Community at the Spanish MFA. Sanchez
expressed his government's concern about the situation in
Bolivia and stated that the GOS has been actively involved in
finding a resolution to the problems there, to include
dispatching a special envoy. However, Sanchez said that the
GOS would not issue a public statement in regard to the
hydrocarbon legislation, as they didn't want to be seen as
interfering in Bolivia's internal politics. Spain is
promoting a joint EU declaration and hoped to gain consensus
among the member states for a statement calling on the GOB to
observe the rule of law. Sanchez cautioned that Spain is
balancing its economic interests with its interest in
maintaining a stable Bolivian government that respects
democracy and human rights. According to Sanchez, the GOS
believes that the best option is convincing the Bolivian
public that the legislation is bad for the country and
allowing the Bolivian legislature to repeal the law. In
Spain's view, this would be preferable to Mesa being seen as
capitulating to foreign pressure.

2.(C) According to Sanchez, FM Moratinos spoke to President
Mesa about this legislation during a telephone conversation
on May 8. During the conversation, Mesa reportedly stated
that he was politically unable to veto the legislation
because he didn't have enough Congressional support to
prevent the legislature from overriding his veto. Mesa
reportedly said that he doesn't want to appear weak
politically, as several opposition groups have banded
together and were trying to remove him from office. Sanchez
said that keeping Mesa in office and ensuring continued
respect for the Bolivian democratic institutions was a
priority for Spain.

3.(C) Sanchez conveyed to Poloff that Spain's main economic
interest in Bolivia, the petroleum company Repsol, has vowed
to pull out of the country should the legislation take
effect. Sanchez quoted Repsol President Antonio Brufau Niubo
as stating bluntly that "Bolivia is getting 18 percent now.
If they want 50 percent, it will be 50 percent of nothing".

COMMENTS
3.(C) The GOS is very concerned about this issue, enough so
that they dispatched former Deputy Foreign Minister, Juan
Costa, as a special envoy. Spain believes that Repsol's
potential withdrawal would be a blow to the Bolivian economy
and that the threat may provide Spain with a valuable
bargaining chip in negotiations with the government. Spain is
concerned about the economic effects of this legislation, but
appears to be more concerned about political stability. As a
result, the GOS is not likely to take a strong public stand
on this issue but will likely continue to diligently work
behind the scenes in negotiations with Bolivia and within the
EU.
MANZANARES