JET FUEL DEADLINE PASSES, GOB ASKS FOR MORE TIME

UNCLAS LA PAZ 000657

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/TRA JHORWITZ AND WHA/AND LPETRONI
COMMERCE FOR EALFORD AND JANGLIN
STATE PASS TO DOT FOR CCOLDREN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: EAIR PREL BL
SUBJECT: JET FUEL DEADLINE PASSES, GOB ASKS FOR MORE TIME

REF: LA PAZ 440


1. (U) Summary: In a March 8 letter to the Ambassador, the
GOB acknowledged the expiration of the 14-day deadline to
eliminate taxes on jet fuel uplifted by U.S.-registered air
carriers (reftel) but asked for more time, noting that
institutional reorganization had delayed consideration of the
issue. Econoffs told Ministry of Foreign Affairs officials
that they recognized the GOB's difficulties but said USG
agencies had already begun the process of removing Bolivian
air carriers' exemption from U.S. fuel taxes. Econoffs noted
that the process could take several weeks, which gave the GOB
a narrow window for action. Despite the GOB's request for an
extension of the deadline, we recommend that USG agencies
move ahead to remove Bolivian airlines' exemption from U.S.
fuel taxes. End summary.


2. (U) In a March 8 letter to the Ambassador, Vice Minister
of Foreign Relations Mauricio Dorfler acknowledged the
expiration of the 14-day deadline to respond to USG demands
that taxes on jet fuel uplifted by U.S.-registered air
carriers be eliminated (reftel) but asked for more time,
noting the GOB's "strong desire" to resolve the issue. He
said he had established contact with the ministries of the
presidency, hydrocarbons, and public works and asked them to
determine the actions needed to bring policy into line with
existing bilateral agreements. Dorfler noted that the
previous administration's efforts to address the matter via
supreme decree had been interrupted by the transition and
indicated that a draft decree (whose provisions reportedly
call for the equalization of jet fuel prices for foreign and
domestic air carriers rather than the complete elimination of
taxes) had been developed by the Rodriguez government and
sent to the National Council on Economic Policy for review.


3. (SBU) Dorfler asked the Ambassador to "use his good
offices" to extend the 14-day deadline, noting that
institutional reorganization had delayed the GOB's
consideration of the issue. In a March 8 meeting with
Econoffs, Dorfler's counterpart, Vice Minister of Economic
Relations and Foreign Trade Maria Luisa Ramos, said she had
never received a copy of the Ambassador's February 16 letter
notifying the administration of USG intentions. She lamented
the confusion in the vice ministry and proceeded to berate
her staff in front of us for failing to make her aware of "a
very serious issue" that could represent "a conflict" between
the two governments. In response, Econoffs recognized the
GOB's difficulties but said USG agencies had already begun
the process of removing Bolivian air carriers' exemption from
U.S. fuel taxes. Econoffs noted, however, that the process
could take several weeks, which gave the GOB a narrow window
for action.


4. (SBU) Comment: Despite the GOB's request for an extension
of the deadline, we recommend that USG agencies move ahead to
remove Bolivian airlines' exemption from U.S. fuel taxes.
Ministry of Foreign Affairs officials seemed to lack in-depth
understanding of the problem, and comments in a separate
March 6 meeting with Econoffs indicated they were unsure how
to proceed. Officials seemed to lack any real sense of
urgency, and none could provide an estimate of when the GOB
might consider the matter. Even with Ramos' renewed
interest, immediate action to resolve the issue seems as
unlikely now as it did a few months ago, particularly given
other ministries' failure to respond to the Ministry of
Foreign Affairs' request for action. End comment.
ROBINSON