GOB, MINERS SIGN AGREEMENT ENDING STAND-OFF

UNCLAS LA PAZ 002860

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: EMIN ELAB EINV ECON PREL PGOV BL
SUBJECT: GOB, MINERS SIGN AGREEMENT ENDING STAND-OFF

REF: LA PAZ 2798


1. (SBU) Summary: The GOB and miners signed an agreement
October 23 ending the political stand-off that emerged after
October 5-6 clashes between cooperative miners and state
mining employees in Huanuni (reftel). Radio reports indicate
that members of the region's four cooperatives accepted the
GOB's offer to convert independent miners into salaried
employees of Empresa Minera Huanuni, the firm overseeing the
region's tin operations. Despite this, important questions
concerning mine ownership and control remain unresolved. End
summary.

FINALLY AN AGREEMENT
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2. (U) The GOB and miners' groups signed an agreement October
23 ending the political stand-off that emerged after October
5-6 clashes between cooperative miners and state mining
employees in Huanuni, a tin mining center in the western
department of Oruro (reftel). The agreement followed more
than two weeks of dialogue, several threats of nationwide
road blockades, and the National Federation of Cooperative
Miners' decision to withdraw support from the Morales
administration (partly as a result of the GOB's slow response
to the Huanuni conflict and partly in retaliation for GOB
officials' failure to provide concrete proposals for the
reactivation of Bolivia's mining sector).


3. (U) Radio reports indicate that members of Huanuni's four
cooperatives accepted the GOB's October 13 offer to convert
independent miners into salaried employees of Empresa Minera
Huanuni, the firm overseeing the region's tin mining
operations. The GOB agreed to pay newly converted miners
approximately $412 per month, an amount close to miners'
estimated average incomes, and provide related employment
benefits. The GOB also reportedly reaffirmed its commitment
to the "refounding" of Comibol, Bolivia's state-owned mining
company.

IMPORTANT QUESTIONS UNRESOLVED
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4. (SBU) Despite this, important questions concerning mine
ownership and control remain unresolved. Huanuni's four
cooperatives have tried for months to acquire control of
Empresa Minera Huanuni, owned by UK-based RBG Resources but
managed since June by Comibol, which assumed oversight after
RBG declared bankruptcy. Cooperative leaders announced
September 20 that they completed the purchase of RBG's shares
and demanded that they be allowed to take control of Empresa
Minera Huanuni, thereby threatening existing employees' jobs
and their demand that Comibol assume ownership of the firm.
Tensions between the two groups exploded into violence
October 5, a day after Comibol representatives declared that
RBG could not transfer its shares to the cooperatives. The
transaction remains in limbo, with cooperatives asserting
their lawful ownership and salaried miners disputing their
claim.

COMMENT
--------------


5. (SBU) The conversion of cooperative miners into salaried
employees of Empresa Minera Huanuni may temporarily ease the
region's tensions, but confusion remains, as it is unclear
whether former cooperative workers plan to pursue their claim
to ownership of the firm. As long as the power struggle
continues, the potential for violence remains - with possible
repercussions for the Morales administration, which now finds
itself at odds with what was once one of its strongest
sources of support and has opened itself to demands from
other cooperatives for regular salaries and similar
employment benefits.
GOLDBERG