MORALES TO FOCUS ON ECONOMIC ISSUES WITH SECRETARY

C O N F I D E N T I A L SECTION 01 OF 04 LA PAZ 000644 SIPDIS SIPDIS STATE FOR WHA A/S SHANNON AND PDAS SHAPIRO STATE ALSO FOR WHA/AND NSC FOR DFISK USCINCSO FOR POLAD E.O. 12958: DECL: 03/09/2015 TAGS: PGOV PREL ECON EPET EINV ELAB PMAR BL SUBJECT: MORALES TO FOCUS ON ECONOMIC ISSUES WITH SECRETARY RICE REF: A. LA PAZ 615 ¶B. LA PAZ 584 Classified By: Ambassador David N. Greenlee for reasons 1.4d and b. ¶1. (C) Summary: In a March 8 meeting, President Evo Morales told the Ambassador he would raise Bolivia's threatened soy markets, the extension of U.S. trade preferences and the Millennium Challenge Account in his discussion with Secretary Rice in Chile. The Ambassador said the Secretary would likely reiterate U.S. priority interests in democracy and counter-narcotics. Morales reaffirmed his commitment to combating narcotics trafficking, but asserted that the emphasis should be placed on interdiction. In response to the Ambassador's query about bilateral friction, Morales raised the military counter-terrorism unit (ref) and said he had interpreted the Embassy's ending support for it as a "decertification" of himself as President. The Ambassador gave a detailed explanation of the CT unit and clarified the concrete reasons for the Embassy's action. He also urged the President to keep confidential matters like this and the visa revocation of the MAS alternate Senator in their proper channels, and speculated that Morales deliberately used such issues with the U.S. to score political points at home. After pointedly asking -- "Do you trust me?" -- Morales petitioned the Ambassador to bring sensitive information directly to him to ensure its appropriate handling, and said he had felt "attacked" by U.S. actions. Separately, VP Alvaro Garcia Linera confirmed that he had cancelled his scheduled visit to Washington. ¶2. (C) Notwithstanding the rancorous public rhetoric, the mood of the meeting was basically cordial and direct. This, Morales' focus on Bolivia's commercial interests and his non-mention of Bolivian efforts to extradite former President Sanchez de Lozada ("Goni") suggest, in the best case, that pragmatism may be gaining on ideology in the President's sense of how to conduct the U.S. relationship. End Summary. ¶3. (SBU) The Ambassador met with President Morales in the late afternoon of March 8 at the National Palace. (In the President's somewhat spare office hung two co-equal portraits made exclusively with coca leaves: one of Che Guevara, the 
other of Morales.) The meeting, which we requested to clarify Morales' plans with respect to his scheduled March 11 meeting with Secretary Rice in Santiago, lasted 90 minutes. Vice-President Alvaro Garcia Linera and poloff (note-taker) also participated. Morales as Economic Minister -------------- ¶4. (C) President Morales expressed thanks for the meeting with Secretary Rice, and said he would use the opportunity to focus on Bolivia's commercial and economic interests. He underscored the democratic gains represented by his election and by the subsequent approval of the Constituent Assembly legislation (ref B),but claimed these would be jeopardized if Bolivia lost its access to key markets. He said he would first raise Bolivia's soy markets, particularly in Colombia, that were threatened by that country's accession to a free trade agreement with the U.S. The possible immediate loss of the Colombian market, Morales averred, had "hit me like a bucket of cold water." Morales said Bolivia's producers needed several years to adjust to the competition, and entreated the Ambassador to help them secure a window of continued protection. The second issue, he said, was the government's desire for an extension of its trade preferences in the U.S. market under the Andean Trade Preferences and Drug Enforcement Act (ATPDEA),emphasizing the vulnerability of Bolivia's key export sectors such as wood, textiles and LA PAZ 00000644 002 OF 004 jewelry. Morales' final issue was the government's intention to pursue a compact with the Millennium Challenge Corporation (MCC). Morales noted the success of the U.S. "Alliance for Progress" policy in the past, particularly in regard to crucial road infrastructure projects, and hoped to pursue an MCA agreement that would have a similar impact. ¶5. (C) The Ambassador said the Secretary would likely reiterate the U.S.'s priority interests in defending Bolivian democracy and in fighting narcotics trafficking, including limiting coca production. In response to Morales' comments, the Ambassador commented that FTA negotiations with Andean countries -- Peru, Colombia and Ecuador -- had been underway for some time and had concluded with the first two countries. He acknowledged that the substance of these agreements would be difficult to alter, particularly for the sole benefit of a country -- Bolivia -- that had lacked the political consensus to participate in the FTA negotiations. As for the extension of preferential trade access to the U.S. market, he noted that this would depend fundamentally on the U.S. Congress, where anti-free trade agreement pressures were also strong, and on Bolivia's decisions with respect to the important second half of the ATPDEA agreement, specifically anti-drug cooperation. Nevertheless, he promised to relay Morales' intentions to the Secretary. The Ambassador welcomed the President's interest in the MCA, noted that the previous government's proposal was worth pursuing, but acknowledged that some economic conditions were attached to Bolivia's successful accession to an MCC compact. Commitment to Fight Narco-Trafficking -------------- ¶6. (C) Morales reaffirmed his government's priority commitment to fighting narcotics trafficking even while it sought to "de-penalize" the coca leaf. He said he had made progress in talks with Chapare-based cocaleros, would ultimately succeed in limiting production there to 3,200 hectares, and would also begin negotiations to deal with the separate challenge of the Yungas. The Ambassador reiterated that the U.S. was not party to the Chapare "cato" accord, agreed that the Yungas would be difficult and emphasized that, while interdiction cooperation remained good, eradication in the Chapare continued to be worryingly slow. Morales said he and his technical team were prepared to conduct a detailed discussion of the coca issue with Embassy counterparts on his return from Chile. Elements of Bilateral Friction -------------- ¶7. (C) In response to the Ambassador's open-ended query about bilateral friction, Morales raised the ending of U.S. support for the military's special counter-terrorism unit (ref A). He fixed on the term "decertification" contained in the Embassy's letter to armed forces commander General Wilfredo Vargas, and said that because the unit responded directly to the President he had interpreted this to mean the U.S. was "decertifying" him as President. The Ambassador acknowledged Morales' injured feelings, but believed they were the product of a mistaken interpretation of the facts. He then explained the background of the case, clarifying that the term "decertification" related to USG internal criteria and that the Embassy's formal letter was the culmination, not the beginning, of a dialogue that had begun months ago. ¶8. (C) The Ambassador emphasized that we did not seek to insert any individual into any particular government position, but did reserve the right to refrain from working with persons we knew to be untrustworthy, as we had done in this case. He told Morales that the unit commander, LTC "Rory" Rodriguez, had strayed from established CT doctrine by targeting certain political figures ("including yourself") LA PAZ 00000644 003 OF 004 during the campaign period. "This," the Ambassador exclaimed, "particularly concerned us," and represented a dangerous politicization of a unit that was supposed to be narrowly and professionally focused on countering terrorism. ¶9. (C) Commenting on Morales' reported reluctance to return the military equipment donated to the special unit, the Ambassador relayed his discussion with Defense Minister Walker earlier in the day, in which the Ambassador had proposed the elements of a possible solution (septel). He explained that this could entail placing the equipment in an Embassy military group warehouse, possibly distributing it to other Bolivian units in the future, while in the meantime removing it from a unit led by a potentially rogue commander. The Ambassador relayed to Morales the Defmin's view that Bolivian sensitivy over the CT unit issue was connected to the Chinese-manufactured MANPADS matter, and described the Minister's apparent interest in completing the deal begun by the previous government in the latter connection, including receiving the USD 400K cash payment. ¶10. (C) The Ambassador emphasized that the U.S. had not paid any money to anyone in the missile case, and in fact had not received all the material promised by the previous government. He added that we considered the matter closed, but would be open to further discussions if this would help resolve all concerns conclusively for the current government and other involved parties. Morales said he would meet with the Defense Minister Monday morning (March 13) to discuss both the CT unit and the missiles. (Comment: The body language of both Morales and Garcia Linera during the missile discussion -- the former slouching down low on his chair and skeptically narrowing his eyes, the latter shaking his head outright -- suggested their extreme discomfort with the issue, and the likelihood they will choose not to pursue this kind of solution. End Comment.) ¶11. (C) The Ambassador urged the President that keeping confidential matters in their proper channels would better SIPDIS facilitate their constructive resolution. For example, he said, Morales' public attacks against the Embassy in connection with the visa revocation of MAS alternate Senator Leonilda Zurita had obscured the facts of the individual case, which were confidential but not/not related to her indigenous ethnicity or anti-American views, and had only guaranteed the delay of a possible resolution. He also explained that the revocation had occurred in 2004, well before Morales' ascension as president, and that the Embassy had regrettably not managed to notify Zurita at the time. That said, the Ambassador speculated that Morales deliberately used such sensitive issues connected with the U.S., choosing to "air dirty laundry in public," in order to score political points at home -- but at the risk of undermining bilateral relations. "Do You Trust Me?" -------------- ¶12. (C) In a bizarre, almost soul-baring moment of the conversation, Morales pointedly asked the Ambassador: "Do you trust me?" After receiving a politic "yes," Morales said "I trust you." He then urged the Ambassador to contact him directly with sensitive information, such as that relating to the CT unit. He emphasized that the controversy in this case might have been avoided had he been privy to the information he had just received about it. The Ambassador said that in the future we would bring matters with potential political ramifications directly to the President's attention. ¶13. (C) Morales acknowledged he was still learning on the LA PAZ 00000644 004 OF 004 job and that he had not entirely shed, as some observers had suggested, the mindset of a union leader. He continued that he had felt "attacked" by recent U.S. actions, including the ending of support for the CT unit, the revocation of Zurita's visa and the absence of U.S. official representation at last month's "protocol greeting" ("saludo protocular") for foreign diplomats. He also embarked on a circuitous and complicated defense of Zurita, arguing she was completely innocent of the charges against her and should not be disqualified for a visa. The Ambassador commented that, while understandable, Morales' feelings were rooted in a misinterpretation of the facts, explaining that he had been out of the country on the date of the protocol event and the Charge had not been invited to replace him. VP Cancels U.S. Trip -------------- ¶14. (SBU) At the close of the meeting, the Ambassador asked VP Garcia Linera whether reports that he had cancelled his planned trip to Washington because he had failed to secure a meeting with Vice-President Cheney were true. Garcia indicated this was in fact so, but then backtracked about the reasons for his change of mind, saying he had too many things to do in Bolivia and would welcome a formal invitation from the USG before planning a future trip. The Ambassador lamented the missed opportunity, but said we would look forward to facilitating a visit in the future. Comment: -------------- ¶15. (C) Notwithstanding the rancorous public rhetoric surrounding the CT unit, visa refusals and other bilateral issues, the mood of the meeting was essentially cordial. In this fourth discussion involving the President and the Ambassador, Morales' apparently growing trust facilitated the exchange of unvarnished truths on controversial questions. This, coupled with Morales' exclusive focus on Bolivia's commercial interests as subjects he would raise with the Secretary and his non-mention of Bolivian efforts to force SIPDIS the return for trial of former President Sanchez de Lozada ("Goni") -- the conversation's equivalent to the "dog that didn't bark" -- suggest that pragmatism may be gaining on ideology in the President's mind. It could also mean that the schism between Bolivia's real interests, which are mainly economic, and the government's political need to deploy irresponsible public rhetoric, often targeting the U.S., may grow wider with time. GREENLEE