BUSINESS ASSOCIATIONS DIFFER IN RESPONSE TO GOB

UNCLAS LA PAZ 001774

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: BUSINESS ASSOCIATIONS DIFFER IN RESPONSE TO GOB
POLICIES

REF: A. LA PAZ 1660


B. LA PAZ 1537

C. LA PAZ 1466


1. (SBU) Summary: Bolivian business associations share
similar concerns about GOB economic policies but differ in
their response, with some advocating open criticism and
others urging moderation. Neither strategy has been
effective, as association representatives reportedly have
limited access to GOB officials and exert diminishing
influence over policymaking. Despite this, they unanimously
expressed hope that the United States would extend the Andean
Trade Promotion and Drug Eradication Act, arguing that trade
preferences' disappearance would be a "catastrophe" for
Bolivian exporters and pointing out that President Morales
could blame related job losses on U.S. intransigence. End
summary.


2. (SBU) Bolivian business associations share similar
concerns about GOB economic policies, including the recently
released national development plan (ref A). National Chamber
of Industry President Eduardo Peinado told Econoff June 21
that he respected the GOB's desire to generate employment,
reduce poverty, and empower the indigenous but worried that
the Morales administration lacked concrete plans for
achieving its goals. Peinado speculated that the plan, like
other GOB initiatives (including its proposed land
redistribution program),was designed to generate popular
support in the run-up to the July 2 Constituent Assembly
elections. His counterpart, National Chamber of Commerce
General Manager Jose Luis Valencia, echoed his thoughts,
adding that he and others would closely monitor the GOB's
actions for signs of further leftward shifts or stepped-up
attacks on the private sector.


3. (SBU) Business associations differ, however, in their
response to the GOB's policies. While some advocate open
criticism, others urge moderation, arguing that businessmen
can best protect their interests by avoiding heated
confrontation. Private Businessmen's Confederation President
Roberto Mustafa told Econoff June 20 that he considered it
his duty to speak out; he did just that in a declaration
published in leading newspapers May 31 (ref B). Neither
Peinado nor Valencia shared Mustafa's views. Both said they
preferred to minimize public attacks, noting that Mustafa's
harsh criticism had angered Morales and strained the business
community's relationship with the GOB.


4. (SBU) Neither strategy has been effective, as association
representatives reportedly have limited access to GOB
officials and exert diminishing influence over policymaking.
Peinado said government officials were increasingly reluctant
to see him, perhaps in part because of Mustafa's declaration,
and mentioned that the GOB's willingness to listen to private
sector concerns had faded. Peinado told Econoff he perceived
growing suspicion of the business community's motives among
administration officials and had encountered reluctance to
engage in constructive dialogue. Valencia mentioned trouble
arranging meetings and obtaining basic information from the
GOB. According to Valencia, the National Chamber of Commerce
will continue to encourage respect for private property and
rule of law but will probably not seek direct dialogue with
GOB officials.


5. (SBU) Despite this, business representatives unanimously
expressed hope that the United States would extend the Andean
Trade Promotion and Drug Eradication Act (ATPDEA),arguing
that trade preferences' disappearance would be a
"catastrophe" for Bolivian exporters. All three said they
realized Morales' anti-U.S. rhetoric had harmed the bilateral
relationship but suggested the GOB's attitude could be
changing. Peinado called attention to Morales' letter to
President Bush (ref C) and Vice President Garcia Linera's
proposed mid-July trip to the United States, noting that

these could signal new openness to trade. Peinado and his
counterparts speculated that the GOB had begun to take a more
practical approach, noting that GOB officials increasingly
recognized Bolivia's reliance on U.S. markets. Both Peinado
and Valencia argued that it was in the United States'
interest to extend ATPDEA, as President Morales could turn a
U.S. refusal to his political advantage and blame related job
losses on U.S. intransigence.


6. (SBU) Comment: While business association and private
sector representatives view the GOB's economic policies with
increasing anxiety, many simultaneously cling to rose-colored
interpretations of the GOB's actions, unwilling to admit that
things may indeed be as bad as they seem. Some, like
Valencia, not only refuse to criticize, but also express
muted support for certain initiatives, perhaps convinced that
relative silence is the best way to protect their interests.
By remaining silent, however, they make it easier for the GOB
to do exactly what the business community fears most: to
drastically change the rules of the game. End comment.
GREENLEE