LA PAZ BUSINESS ASSOCIATIONS REMAIN RELUCTANT TO

UNCLAS LA PAZ 002564 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/AND LPETRONI COMMERCE FOR JANGLIN TREASURY FOR SGOOCH E.O. 12958: N/A TAGS: EINV ETRD ECON PREL PGOV BL SUBJECT: LA PAZ BUSINESS ASSOCIATIONS REMAIN RELUCTANT TO CRITICIZE ¶1. (U) Summary: In September 20 meetings, representatives of La Paz business associations voiced concerns about the nature of Bolivia's economy, the direction of GOB economic policies, and the outcome of the Constituent Assembly. Despite their worries, representatives remain reluctant to criticize the Morales administration; their low profile approach hampers their ability to effectively lobby policymakers. End summary. ¶2. (U) In September 20 meetings, National Chamber of Commerce Vice President Oscar Medina expressed concern about the nature of Bolivia's economy, telling Econoff he believed the economy was viable - as evidenced by the export successes of furniture manufacturers, textile and apparel firms, jewelry makers, and soy and quinoa producers - but relied too heavily on natural resources exports. Medina argued that the economy lacks stability, pointing out that populist rhetoric, threatened nationalizations, and political and economic uncertainty raise business costs and discourage investment from Bolivians and foreigners alike. ¶3. (U) Members of the National Chamber of Industries noted that the Bolivian economy lacks not only stability, but also judicial security and respect for the rule of law. Many businessmen expressed concern about the direction of GOB economic policies, worrying that the Morales administration would seek to increase the state's economic weight and bring gas, energy, mining, forests, and other "strategic" resources under state control. Chamber representatives expressed fears that poorly managed economic policies would hinder long-term growth and delay much-needed economic development. ¶4. (U) Representatives of both associations, along with members of the National Chamber of Exporters, also expressed concern about the outcome of the Constituent Assembly, noting that sharp departures from existing economic policies could undermine rather than strengthen economic growth, particularly if delegates abandoned free market policies, pursued nationalizations, and disrupted exporters' access to foreign markets. Exports, many said, are key to generating sustained employment and long-term economic growth, but GOB moves to limit trade could threaten success. ¶5. (U) Despite their worries, business association representatives remain reluctant to criticize the Morales administration, preferring instead to avoid calling attention to the private sector. Their low profile approach hampers their ability to effectively lobby policymakers, and many lack access to influential GOB officials. In the absence of coherent communications or lobbying strategies, business associations make only slow progress, if any, in conveying their concerns and shaping GOB policy. ¶6. (U) Comment: La Paz business associations may be concerned about Bolivia's economic future, but they seem unwilling to pressure the GOB to maintain investor-friendly policies. Some not only refuse to criticize, but subtly align themselves with the Morales administration, perhaps convinced that relative silence and muted support are the best means of protecting their interests. By keeping a low profile, however, they make it easier for the GOB to do exactly what they fear most: radically change the rules of the game. End comment. URS