STATE OF THE UNION

UNCLAS LA PAZ 002120 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PREL ECON BL SUBJECT: STATE OF THE UNION ¶1. (SBU) Summary: In a rambling two and a half hour state of the union address kicking off the August 5 Constituent Assembly festivities in Sucre, Bolivia's historic capital, President Morales reviewed his accomplishments to date: delivery of the Constituent Assembly, economic stability and government austerity, nationalization of hydrocarbons, and success fighting corruption and cocaine trafficking. On patriotic grounds, he defended his decision to purge high level military officers who transferred MANPADS to the United States for destruction, and at other points offered a couple of implicit digs at the United States - while paying homage to the Cuban government. He demonstrated impatience with his opponents, offering up a domestic visa scandal as the pretext for further politicization of government ministries, and indicated he would not let institutional impediments block implementation of his policy platform. Confrontation, not consensus, was the unifying theme of the discourse. End summary. -------------- ATMOSPHERICS -------------- ¶2. (SBU) President Morales' August 5th state of the union address kicking-off Constituent Assembly festivities came following a week of criticism in the press for inadequate preparation of the host city, with many members of the assembly reportedly sharing hotel rooms or remaining without accommodations. In an address to his party faithful, many former and present GOB officials, and national leaders, Morales, who broke his nose earlier in the week in a soccer game, seemed somewhat fatigued but spoke for almost two and a half hours, periodically wiping sweat from his brow. -------------- HYDROCARBONS AND THE ECONOMY -------------- ¶3. (SBU) Morales highlighted his accomplishments in office to date. He said that he fulfilled his promise to deliver the Constituent Assembly and a referendum on departmental autonomy. He cited Bolivia's current economic stability and his May 1 hydrocarbons nationalization as key successes, principally for the positive impact the additional hydrocarbons revenues will have on state finances. Apparently straying from prepared remarks, he underscored his own independence in claiming that he nationalized hydrocarbons contrary to Cuban President Castro's advice to postpone action until after the Constituent Assembly. The benefits of this policy were immediately evident, he argued, with a dramatic increase in government revenues offering the prospect of an immediate improvement in the lives of ordinary Bolivians. With this in mind, he underscored that he expected ministries to work hard to spend these increased revenues, and offered a sly dig at his vice president for not focusing sufficiently on the needs of the Bolivian people. ¶4. (SBU) He criticized Bolivia's prefects (including the three belonging to the MAS) for not spending available funds for the people's benefit. He blasted his own cabinet for failures, such a slow progress on the construction of homes and irrigation systems, warning that "heads will roll" if immediate action is not taken. He continued his attacks on the press, the "corrupt" opposition and traditional political parties, and the Catholic Church, arguing that the GOB's new network of 30 radio stations is necessary so that "not only the rich and the church" have access to information. ¶5. (SBU) He reminded listeners that the MAS had long sought nationalization and that opposition parties had opposed modifying the hydrocarbons law in 2005. Morales proudly noted that salary cuts in the government had improved its budget environment; he underscored that he had accomplished these cuts while increasing salaries in the health and education sectors, leading to labor peace in these sectors for the first time in memory. -------------- - ANTI-CORRUPTION, OPPOSITION AND THE GOVERNMENT -------------- - ¶6. (SBU) Morales touted his anti-corruption campaign, which the audience approved with a smattering of applause. He responded by quipping that "those not clapping may be implicated by my efforts." He attacked opposition stronghold Santa Cruz for not fighting corruption, and noted that Brazilians were illegally occupying GOB-owned land along the border, a neuralgic issue in sovereignty-obsessed Bolivia. He also railed against the kidnapping of several GOB ministers in Santa Cruz earlier this year. In an ironic turn of events, he also criticized the people of Santa Cruz for conducting blockades (a tactic that he perfected while seeking political power in recent years). ¶7. (SBU) Morales cited a budding MFA visa-selling scandal as a pretext for further attacks on the professional civil service, incorrectly asserting that because the responsible officials belonged to an institutionalized ministry, they cannot be fired. He promised to introduce new legislation to de-institutionalize GOB ministries, opening the door to further politicization. Finally, he mentioned the transfer of MANPADS to the United States in October 2005, stating that he could not allow the previous military high command to remain in their positions after their involvement in the transfer. He said former President Rodriguez knew the "Embassy was managing [the Armed Forces] with thousands of dollars" and that the GOB could not permit the disarming of its armed forces. -------------- ANTI-DRUG EFFORTS -------------- ¶8. (SBU) Morales also boasted about his efforts to fight illegal cocaine traffic without recourse to coercion. He said when he entered office many thought he would "cocalize Bolivia, cocaine-ize Bolivia." Instead, he said the GOB had confiscated over 8 metric tons of cocaine, and significant quantities of marijuana, while maintaining social peace. Making a veiled reference to the United States, he said the international community should note that campesinos do not have to die in order for Bolivia to avoid decertification. He also said rationalization efforts would soon begin in earnest. (Comment: eradication rates, which Morales calls "rationalization" remain significantly down from last year while cocaine and marijuana seizures have indeed risen significantly. To date, new plantings of coca appears to be outrunning eradication efforts. End comment.) -------------- OUR FRIENDS IN HAVANA - AND CARACAS -------------- ¶9. (SBU) Morales paid lengthy homage to the Cuban government, focusing on Cuban assistance and lauding Cuban solidarity with the Bolivian people. He described many Cuban aid efforts, including Cuba's resident doctors in Bolivia, literacy programs, scholarships for Bolivian medical students, and the construction of several hospitals. According to Morales, Cuban doctors have performed eye operations on over 26,000 Bolivians free of charge. ¶10. (SBU) Beyond recognizing Cuban assistance, Morales thanked many countries for their aid without reference to their relative significance as donors. While he prominently cited Venezuelan aid, he initially omitted mention of the United States. Later in his speech, he briefly and with almost palpable reluctance mentioned U.S. disaster assistance and health programs. Morales dismissed the prospect of a free trade agreement with the United States as "not the solution" to creating economic growth and noted that Bolivia already has trade agreements with Cuba and Venezuela. He said the GOB is looking for new markets in the event ATPDEA is not extended. -------------- COMMENT: PREACHING TO THE CHOIR -------------- ¶11. (SBU) With this speech, President Morales once again showed his gift for focusing on the concerns of his core, economically marginal, constituency. He cleverly blamed the institutions of government for failure while taking personal credit for a lengthy list of governmental accomplishments. Most ominously, Morales repeatedly cited the presence of institutional checks and balances as an explanation for government failings. While many of the achievements he cited were symbolic, additional hydrocarbons revenues will indeed offer him continuing flexibility in the months ahead. It is true that Morales has benefited from a political honeymoon and a large measure of social peace in recent months. Nonetheless, expectations continue to rise, particularly regarding what the Constituent Assembly will accomplish. The pressure to deliver upon these expectations will only grow in the months ahead. End comment. GREENLEE