JAPANESE AND CHINESE AMBASSADORS ON BOLIVIA

C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 001706

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/23/2016
TAGS: ECON PGOV PREL OTRA SNAR ETRD LA XK CH JA
KS, BL
SUBJECT: JAPANESE AND CHINESE AMBASSADORS ON BOLIVIA

REF: SECSTATE 70035

Classified By: Amb. David N. Greenlee for reasons 1.4 (b) and (d).


1. (C) Summary: Acting Ecopol Chief met the Chinese and
Japanese ambassadors in Bolivia June 20 and 21. The
ambassadors shared concerns about the GOB's economic
policies, which they said are having a chilling effect on
foreign investment. Both ambassadors indicated that their
governments are taking a "wait and see" approach to Bolivia,
and both expressed concern regarding Venezuelan influence.
End summary.

CHINESE AMBASSADOR LOOKS FOR CLARITY IN GOB ECONOMIC POLICY
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2. (C) Acting Ecopol Chief met Chinese Ambassador Zhao Wuyi
June 20. Zhao said the GOB wants broad relations with China
and indicated that President Morales wants to study China's
transition from a poor nation to a developing power. Zhao
described a variety of Chinese interests in Bolivia and said
the bilateral relationship "requires patience."


3. (C) Regarding economic matters, Zhao said China wants to
see a "clear policy" from the GOB. He described the recently
announced GOB economic plan as vague, declaring it "just
words." Zhao said many Chinese investors are interested in
Bolivia and noted that his Embassy stands ready to provide
information and assistance; due to the unstable economic
environment, however, Chinese companies have had "little
success." In addition to economic instability, Chinese
investors are concerned by Bolivia's lack of infrastructure,
particularly roads. Zhao said Chinese firms have small
investments in Cochabamba in the wood and soy sectors and
affirmed China's interest in purchasing raw materials and
energy. According to Zhao, the Chinese are closely observing
Morales' actions in the hydrocarbons sector, although he
called the recent nationalization "largely symbolic."


4. (C) Ambassador Zhao cited bilateral exchanges as the focus
of the mil-to-mil relationship between China and Bolivia.
The exchanges normally involve representatives from several
Latin American countries, cover diplomatic relations,
economics, and politics in addition to military relations,
and include a tour of China. Zhao said China's missile sales
to Bolivia are a thing of the past -- China now supports the
GOB with trucks and supplies instead of arms to "avoid
problems." When pressed, Zhao said China's global policy is
to sell defensive, not offensive weapons. He also mentioned
that Venezuelan President Chavez wants to buy Chinese planes,
but China has not agreed to provide them.


5. (C) On the subject of Venezuela and Cuba, Zhao commented
that Morales' leftist tendencies make it natural for the GOB
to form close friendships with Cuba and Venezuela. Zhao
said, however, that permitting such strong Venezuelan
influence is "not the way" for Bolivia and suggested the GOB
work with its own people and rely less on charity. Zhao did
not see Bolivia as having a "real alliance" with Venezuela
and Cuba, instead citing "a few agreements" as the basis of
the relationship. He views the three countries as having
more "differences" than "coincidences." Zhao distinguished
Cuba from Bolivia based on Cuba's armed struggle and
discounted Cuba as an economic model for Bolivia. Likewise,
he noted that Chavez's Bolivarian aspirations are distinct
from Morales' largely indigenous platform.


6. (C) Zhao recognized counternarcotics as one of the United
States' principal goals in Bolivia but said China views
counternarcotics as an internal problem driven by
consumption. He noted that while some cocaine has moved from
Venezuela to China via Hong Kong, Bolivian cocaine is not
destined for Asia. Zhao said China is not interested in
purchasing coca leaf for teas or other industrial uses. Zhao
proudly highlighted China's alternative development program
(to combat opium growth) and its strong legal framework,

LA PAZ 00001706 002 OF 003


which includes the death penalty for drug trafficking. He
said the Chinese would be happy to share their narcotics
experiences with the GOB but did not have a formal dialogue,
calling the issue "too sensitive."

JAPAN ENCOURAGES UNITED STATES TO BE PATIENT
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7. (C) Poloffs met Japanese Ambassador Mitsunori Shirakawa
June 21. He said Japan is waiting for the Morales
government's plan to unfold and is carefully monitoring the
May 1 hydrocarbons nationalization, adding that Japan's
initial impression is this is a "softer" nationalization than
the severe state control of the past.


8. (C) According to the ambassador, Japan wants to see
democracy prevail in the Constituent Assembly. Shirakawa
said he thinks the MAS's goal of changing Bolivia and
rectifying past wrongs is sound but commented that the
Morales government's "ends do not justify their means." He
expressed concern about the consolidation of power in the
central government but said Japan has no plans to change its
policies toward Bolivia; to do so now, he said, "would be
premature." Shirakawa said Japan's extensive aid to Bolivia,
which the Japanese central government approves project by
project according to their "criteria," will continue. The
Japanese ambassador complimented U.S. policy toward Bolivia
and encouraged us to be patient.


9. (C) Shirakawa expressed surprise at Morales' public
comments about the United States, including his "death to the
Yankees" rallying cry and his more recent statements about
Bolivia arming, along with Cuba and Venezuela, against a U.S.
invasion. He said Morales' "emotional" nature and lack of
formal education contribute to such conduct. Shirakawa also
lamented the GOB's violations of confidentiality. When
Japan's special envoy was in Bolivia for Morales'
inauguration, the ambassador said, the two countries agreed
that Japan would consider the possibility of importing
certain Bolivian products. Japan made no commitment. The
following day, Morales announced that Japan would import
Bolivian goods. Shirakawa said the Japanese were embarrassed
by Morales' declaration, but after struggling with the
decision, decided not to publicly correct Morales' misstep.


10. (C) Shirakawa told poloffs Japan has no investment in
Bolivia. Japanese firms recently pulled out of the mining
sector, and while some are interested in returning, the
unstable economic environment has prevented them from moving
ahead. Shirakawa mentioned Japan's negotiations for a free
trade agreement with Chile, which Japan hopes to conclude by
the end of the year. He said that due to "manpower"
constraints, Japan negotiates with one country at a time.
When asked if Japan is considering a trade agreement with
Bolivia, he laughed, saying that "nobody is talking about
that."


11. (C) According to Shirakawa, the most important item on
Japan's bilateral agenda is land reform. He referred to two
Japanese "colonies" in the Santa Cruz department that are
worried about the redistribution of their fairly large
landholdings. Shirakawa said the GOJ has communicated its
concerns to the GOB and hopes that since the lands are
productive, the colonies will be left alone.


12. (C) The Japanese ambassador was curious about U.S. policy
towards Venezuela and Bolivia and was relieved to hear that
the United States distinguishes between the two countries.
He said Japan is closely observing Venezuelan influence in
Bolivia and speculated about how long Venezuelan financial
support will last. Shirakawa commented that it is natural
for Morales to accept Chavez's aid but noted that the GOB
will be "indebted" to the GOV.

COMMENT
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13. (C) Both ambassadors were pleased to exchange views with
the Embassy and expressed interest in continued dialogue.
Neither, however, appears to exert significant influence over
the Morales government.
GREENLEE