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Identifier
Created
Classification
Origin
06LAPAZ1172
2006-05-02 19:53:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
Cable title:  

BOLIVIA JOINS ALBA, SIGNS PEOPLES' TRADE AGREEMENT

Tags:   ETRD  EINV  ECON  PREL  PGOV  EPET  USTR  BL 
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RR RUEHWEB

DE RUEHLP #1172/01 1221953
ZNR UUUUU ZZH
R 021953Z MAY 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 9039
INFO RUEHAC/AMEMBASSY ASUNCION 5801
RUEHBO/AMEMBASSY BOGOTA 3098
RUEHBR/AMEMBASSY BRASILIA 6959
RUEHBU/AMEMBASSY BUENOS AIRES 4203
RUEHCV/AMEMBASSY CARACAS 1499
RUEHPE/AMEMBASSY LIMA 1467
RUEHME/AMEMBASSY MEXICO 1692
RUEHMN/AMEMBASSY MONTEVIDEO 3750
RUEHQT/AMEMBASSY QUITO 4139
RUEHSG/AMEMBASSY SANTIAGO 8682
RUEHUB/USINT HAVANA 0032
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
						UNCLAS LA PAZ 001172 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
STATE PASS TO USTR FOR BHARMAN
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL PGOV EPET USTR BL
SUBJECT: BOLIVIA JOINS ALBA, SIGNS PEOPLES' TRADE AGREEMENT



1. (SBU) Summary: On April 29, Bolivia formally joined the
Bolivarian Alternative to the Americas (ALBA) and signed a
Peoples' Trade Agreement with Venezuela and Cuba, becoming
party to agreements meant to advance regional economic,
political, and cultural integration. The three countries
promised to work together to create employment, boost
economic growth, and broaden cooperation on a range of
issues, but the pact offered few specifics. With this and
the May 1 announcement of the nationalization of the
hydrocarbons industry (septels), Bolivia appears to have
abandoned traditional approaches to trade in favor of an
ideologically colored leftward shift more likely to undermine
than to advance the interests of Bolivia's millions of poor.
End summary.



2. (U) In April 28 and 29 meetings in Havana, Cuba, President
Evo Morales formally joined the Venezuela-Cuba bilateral pact
known as the Bolivarian Alternative to the Americas (ALBA)
and signed a Peoples' Trade Agreement with his Venezuelan and
Cuban counterparts, making Bolivia party to agreements meant
to advance regional economic, political, and cultural
integration. While Venezuelan President Hugo Chavez has
attempted to portray ALBA as an alternative to the Free Trade
Area of the Americas, the proposal met with little regional
support until Bolivia's accession; it is now reportedly the
foundation on which a series of Peoples' Trade Agreements
will be built.



3. (U) In the first of these peoples' agreements, Bolivia,
Venezuela, and Cuba promised to work together to create
employment, boost economic growth, and broaden cooperation on
a range of issues. The three countries agreed to develop a
"strategic plan" to generate jobs; execute mutually
beneficial public investments (ensuring the host country
possesses at least 51 percent of any new enterprise whenever
possible); arrange for reciprocal credits among banking
institutions; consider unspecified state "compensation"
mechanisms to facilitate trade; exchange science and
technology information; and cooperate on health, education,
and communication matters.



4. (U) The pact offered few specifics for creating employment
or generating growth, but both Venezuela and Cuba recognized
Bolivia's "special needs" and offered to help the country
overcome the harmful effects of "centuries of colonial and
neocolonial dominance." Venezuela promised to help
strengthen Bolivia's Ministries of Hydrocarbons and Mining
and to assist in the restructuring of state-owned oil and
mining companies; to provide 5,000 scholarships to Bolivian
students seeking to study at Venezuelan universities; to
create a special $100 million fund to finance infrastructure

and other projects; to donate $30 million to the GOB for use
in addressing the "social and productive" needs of the
Bolivian people; to increase its imports of Bolivian products
(especially soy); to offer financial incentives to Bolivian
businesses operating in Venezuela; and to make available
Venezuela's air and maritime transportation facilities for
Bolivia's economic development.



5. (U) Cuba, meanwhile, promised to provide free eye
treatments to all Bolivians lacking necessary financial
resources; to assist Bolivian and other doctors in providing
such treatments; to provide 5,000 scholarships to train
Bolivian medical personnel; to continue to support the 600
Cuban doctors working in Bolivia since the widespread January
flooding; and to continue working (with Venezuela) to raise
Bolivian literacy rates. Together with Venezuela, Cuba also
promised to eliminate tariff and non-tariff barriers to
Bolivian exports and to guarantee the purchase of all soy and
some agricultural goods, which may lose Andean markets as a
result of recently signed Colombian and Peruvian free trade
agreements with the United States.




6. (U) In return, Bolivia need only export its mineral,
agricultural, and industrial goods; implement reciprocal tax
exemptions for Venezuelan and Cuban firms and for any joint
enterprises formed under the Peoples' Trade Agreement; and
contribute to the countries' energy security by continuing
its gas exports (although it is unclear how Bolivian natural
gas will help Venezuela and Cuba). Together, the pact
declares, the three countries will "fight for the unity and
integration of the peoples of Latin America and the
Caribbean."



7. (SBU) Comment: With this and the May 1 announcement of the
nationalization of the hydrocarbons industry (septels),
Bolivia appears to have abandoned traditional approaches to
trade and investment in favor of an ideologically colored
leftward shift more likely to undermine than to advance the
interests of Bolivia's millions of poor. The Peoples' Trade
Agreement is a pact absent of significant economic value,
particularly when considering that the grand total of
Bolivian exports to Cuba was only $5,291 last year; the
agreement seems instead an empty political gesture designed
to demonstrate the GOB's commitment to improving the lives of
the masses. In his opposition to accepted models of
international trade and recent moves toward nationalization,
Morales has complicated any chance of negotiating a free
trade agreement with the United States - and undermined
opportunities to generate the economic growth Bolivia so
desperately needs. End comment.
GREENLEE