Identifier
Created
Classification
Origin
06LAPAZ84
2006-01-13 20:06:00
UNCLASSIFIED
Embassy La Paz
Cable title:  

IDB PREOCCUPIED BY UNCERTAINTY OF U.S. AND GOB

Tags:  EAID ECON EFIN BL 
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VZCZCXYZ0010
PP RUEHWEB

DE RUEHLP #0084/01 0132006
ZNR UUUUU ZZH
P 132006Z JAN 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 7704
INFO RUEHAC/AMEMBASSY ASUNCION 5508
RUEHBO/AMEMBASSY BOGOTA 2772
RUEHBR/AMEMBASSY BRASILIA 6638
RUEHBU/AMEMBASSY BUENOS AIRES 3855
RUEHCV/AMEMBASSY CARACAS 1220
RUEHPE/AMEMBASSY LIMA 1112
RUEHMN/AMEMBASSY MONTEVIDEO 3480
RUEHQT/AMEMBASSY QUITO 3858
RUEHSG/AMEMBASSY SANTIAGO 8373
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 000084 

SIPDIS

SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: EAID ECON EFIN BL
SUBJECT: IDB PREOCCUPIED BY UNCERTAINTY OF U.S. AND GOB
ACTIONS


UNCLAS LA PAZ 000084

SIPDIS

SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: EAID ECON EFIN BL
SUBJECT: IDB PREOCCUPIED BY UNCERTAINTY OF U.S. AND GOB
ACTIONS



1. (SBU) Summary: Inter-American Development Bank (IDB)
Resident Representative, Joel Branski, told the DCM and
Econoffs on January 11 that IDB staff has not met with the
MAS' transition team, but that an IDB delegation plans to
visit Bolivia at the end of January after the Presidential
inauguration. Branski relayed concerns regarding use of
previously approved IDB funds, up to one-third of which need
to be reallocated to new projects, and approval of this
year's estimated USD 200 million of proposed loans, which
could be vetoed by the U.S. government. Branski explained
that the IDB debt relief proposal currently under
consideration would cover five countries, including Bolivia,
and may forgive up to one-half of Bolivia's USD 1.6 billion
IDB debt. As the proposal now stands, he said, debt relief
would come as a package, being granted to all five countries
or to none. End summary.

No Contact With The MAS
--------------

2. (SBU) IDB Resident Representative, Joel Branski, told us
on January 11 that IDB staff has not met with members of the
MAS since two months prior to the December 18 election. He
added that he currently has no counterpart in the still
undefined future GOB and that the MAS transition team has not
requested a meeting. However, Jorge Crespo, Bolivia's
representative to the IDB in Washington, recently met with
leaders of the MAS transition team, including VP-elect Alvaro
Garcia Linera, economic planner Carlos Villegas, and
political adviser Juan Ramon Quintana to explain how the IDB
functions. Branski also mentioned that a technical team from
IDB headquarters would visit Bolivia the last week in January
to meet with the new administration.

Operational Concerns Due To GOB
--------------

3. (SBU) Branski is concerned that the IDB will have
difficulty disbursing the more than USD 400 million of
previously approved funds awaiting distribution, and
receiving approval for and disbursing the approximately USD
200 million of funds in the pipeline for 2006. He explained
that up to one-third of the previously approved funds would
need to be re-oriented to new programs because they had been
allocated to projects that were no longer valid. He further

noted that the reallocation process requires approval of both
the IDB Board and the Bolivian legislature. In addition to
the potential difficulties associated with reallocation,
Branski said, political uncertainties are making
implementation of education, health, and services projects
difficult. In this context, he pointed out that education
and health projects require dealing with departmental and
municipal governments, but that the precise role and
authority of the newly elected regional governors will remain
ill-defined pending the conclusion of the Constituent
Assembly. Projects in the services/utilities area are also
difficult to design, he said, given the MAS' pledge to
eliminate the service sector regulators.

Operational Concerns Due to USG
--------------

4. (SBU) Branski acknowledged that U.S. contributions to the
IDB and U.S. certification of Bolivia's cooperation on
narcotics are vital and noted that he had explained to MAS
members in October that the U.S. has veto power over IDB
proposals. (Note: The U.S. has 54% voting rights in the
IDB's Fund for Special Operations, from which the GOB
receives all its funds.) He told us that when they meet with
the MAS again at the end of January, IDB representatives will
reiterate to the incoming administration the reality of U.S.
influence over the bank's activities, including issuing new
loans, reprogramming old loans, and going forward with debt
relief. We encouraged Branski to push for a press release
after the late January meeting.

IDB Debt Relief
--------------


5. (SBU) Branski stated that up to one-half of Bolivia's USD
1.6 billion debt with the IDB may be forgiven. He explained
that Bolivia, along with Haiti, Nicaragua, Guyana, and
Honduras, have received their past disbursements from a
special concessionary fund for low-income countries, to which
the U.S. contributes 54%. The IDB plans to eliminate this
special fund, and in the future, make all loans from its
regular capital fund. Thus, he added, the debt forgiveness
program is envisioned to come as a package -- covering all
five countries or none.


6. Comment: Whatever may be the perceptions at the IDB in
Washington, locally the IDB believes their program to be at
substantial risk pending U.S. policy decisions. As Branski
mentioned, U.S. influence over IDB project approval, fund
reallocation, and debt relief provides important leverage to
the U.S. in discussions with the incoming GOB. However, if
the final debt relief plan does in fact emerge as an all or
nothing, five-country package, our leeway to use this as a
bargaining chip with Bolivia to encourage the GOB to
maintain/implement sound economic policies will be greatly
limited. End comment.
GREENLEE