BOLIVIA: SCENESETTER FOR A/S SHANNON

C O N F I D E N T I A L SECTION 01 OF 04 LA PAZ 000096

SIPDIS

SIPDIS

STATE FOR WHA A/S SHANNON
STATE ALSO FOR WHA/AND
NSC FOR DFISK
USCINCSO FOR POLAD

E.O. 12958: DECL: 01/17/2016
TAGS: PGOV PREL ECON EPET ENRG SOCI ELAB SNAR BL
SUBJECT: BOLIVIA: SCENESETTER FOR A/S SHANNON

REF: A. LA PAZ 06

B. LA PAZ 70

Classified By: Ambassador David N. Greenlee for reasons 1.4d and b.


1. (C) Summary: You will arrive in Bolivia at a time of
potentially profound transformation, amid an atmosphere of
pervasive uncertainty and hope. We have engaged with
President-elect Evo Morales (ref),but in a manner indicating
something less than a business-as-usual embrace for his
government. Morales' signals have been mixed, initially
hostile and recently -- did he learn something on his world
tour? -- more moderate. The President-elect's relationship
with Venezuelan President Hugo Chavez and Cuban dictator
Fidel Castro, and the deals he has reportedly struck with
them, are of concern. Unlike its recent predecessors, the
Movement Toward Socialism (MAS) government will exercise
power with a decisive mandate and little opposition from
outside its own ranks. At the same time, it will face the
same structural challenges of poverty, underdevelopment and
exclusion while finding itself besieged by "internal"
demands, large and small, that could quickly prove paralyzing
-- and it will have no excuses for failing to deliver. Chief
among these demands are to nationalize Bolivia's natural
resources, establish a Constituent Assembly, gain the
extradition of former President Gonzalo Sanchez de Lozada
("Goni"),and -- no easy task -- reward the MAS's innumerable
supporters with a limited supply of spoils. In your meeting
with Morales, you may wish to reiterate your public statement
issued in Brazil about our willingness to seek common ground,
while reminding him that our ability to cooperate will depend
on his government's respect for our core interests in
strengthening democracy, fomenting economic growth and
pursuing a credible counter-narcotics strategy. We
understand Morales may raise debt forgiveness and the "Goni"
trial. End Summary.

New Era
--------------

2. (C) You will arrive in Bolivia at a time of potentially
profound transformation, during what some observers are
calling the dawn of a new political order. The era of
"pacted democracy" is finished, and the traditional parties
that dominated that era were virtually erased from the
political map in the December 18 elections (the MNR, Goni's
party, was an exception). In electing the MAS, most
Bolivians voted for change and against those who had failed
to provide it in the past, but few understood precisely what
such change might entail. Now they are waiting to find out.
As a result, the atmosphere here is one of pervasive
uncertainty about what's to come. The absence of a clear
government plan, and the sometimes contradictory public
statements of MAS leaders -- that they will nationalize the
country's gas resources while respecting private investment,
that they will fight narcotics trafficking while allowing
coca to grow freely, that they will respect democratic
principles while pursuing a Constituent Assembly whose
democratic parameters remain undefined -- have accentuated
that uncertainty. At the same time, many Bolivians are
hopeful that the future will be more stable, more secure and
more satisfactory for more people than the immediate past.

No Full Embrace
--------------

3. (C) After a prolonged period of our holding Evo Morales
at arm's length, the Ambassador met with the President-elect
earlier this month (ref). The meeting was useful in that it
broke the ice, established the necessary conditions for a
constructive relationship, and identified the basis for
possible future cooperation. But many key bilateral issues
remain to be addressed, and the initial rapprochement cannot

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be confused with a full-fledged embrace of the future
government. Since that time, to avoid conveying an
impression of excessive eagerness or signaling a
business-as-usual relationship, we have refrained from
reaching out to MAS heavyweights and insiders, including
those whose names are being floated for possible ministerial
positions. In that sense, we would prefer for them to come
to us.

Morales' Mixed Signals
--------------

4. (C) Much will depend on the concrete policy decisions and
political alignments of the future government, and Morales'
own signals have been decidedly mixed thus far. After
winning the election, Morales came out swinging -- screeching
"death to Yankees" and calling the U.S. a "terrorist
country." This appeared to reflect a failure to make a quick
transition from syndicalist leader to President-elect and/or
an early strategy to seek new allies and friends and to
sideline us. Morales' rhetoric has since moderated. Many
analysts suggest that the President-elect's whirlwind world
tour may have had a salutary effect, and that the messages he
heard in Europe and South Africa in particular awoke in him
an incipient awareness of how the wider world actually works,
and the real -- vice mythical "imperial" -- role of the U.S.
in it. According to recent press reports, Morales has
welcomed dialogue with the U.S. and "forgiven" Washington
officials for (supposedly) maligning him in the past. Some
observers even suggest that Morales, whose principal frame of
reference had previously been Bolivia's radical cocalero
unions and anachronistic, inward-looking social sectors, has
returned to Bolivia a "changed man." But this, in our view,
is optimistic.

With Friends Like These
--------------

5. (C) For one, Morales' longstanding public relationship
with Venezuelan President Hugo Chavez and Cuban dictator
Fidel Castro could be more than just for show. He
conceivably shares with those regional autocrats a deeper
political vision, and might be planning to assume and
maintain power for the long haul, by whatever means
necessary. That Morales traveled around the world on a
Venezuelan plane accompanied by Venezuelan bodyguards does
little to dispel this impression. In addition, the deal he
reportedly struck with Chavez in his most recent visit to
Venezuela -- for USD 30 million in free-floating budget
support and millions of dollars in diesel donations -- and
with Castro in Cuba -- for thousands of Cuban "doctors" and
"teachers" to be dispatched to Bolivia's rural areas -- are
of serious concern. In a worst-case scenario, they could
spell the loosening of Bolivia from its democratic moorings,
and the slow implantation of a populist autocracy here.

MAS' Unchecked Power
--------------

6. (C) In some ways, the MAS government will have virtually
unchecked power to implement its plan, such as it exists.
The government will control the executive -- unparalleled in
Bolivia's recent past where power-sharing and backroom deals
among different parties with varying agendas prevailed. It
will also have effective control over Congress -- with an
outright majority in the Chamber of Deputies and a likely de
facto working majority in the Senate (should, as many suspect
they will, the UN, MNR and floating Podemos Senators be lured
to the MAS' side by the inducements and prizes of power). It
will also benefit from a bumper crop of so-called
"neo-MASistas" -- the many pragmatic Bolivians who are
already accommodating themselves to the new political
reality, and who have, retroactively, decided they were MAS
supporters all along. According to a mid-January poll, more

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than 65% of Bolivians support the future government, compared
to the less than 54% who actually voted for the MAS
nationwide on December 18.


7. (C) Nor will there be much outside opposition to the MAS
government, at least in the short term. Many analysts see
presidential candidate Jorge "Tuto" Quiroga's Podemos
organization as primarily an electoral vehicle, with little
internal cohesion and even less long-term staying power.
(That "Tuto" spent the several weeks following his defeat
vacationing with his family in Florida underscored an
impression of non-commitment and disarray.) The
disadvantages of being in the opposition (the lack of carrots
and sticks) and Quiroga's own less than deep pockets will
complicate the lives of Podemos legislators, compelling some
to choose self-interest over the principled life of
opposition politics. Moreover, most of the outside groups
that figure as potential national government rivals,
including the Santa Cruz private sector and the six non-MAS
departmental governors, acknowledge that it would be an
exercise in futility to confront the MAS's formidable power
at this stage (ref B).

Innumerable Demands and No Excuses for Failure
-------------- -

8. (C) But the MAS' overwhelming mandate is also a
double-edged sword. The government will face both the full
gamut of Bolivia's problems -- massive poverty, unemployment,
racial exclusion, poor physical infrastructure and often
non-existent basic services etc. -- and the expectation of
Bolivia's impoverished majority that things should quickly
improve because it is "our turn now." In confronting these
challenges, it will have the same paltry tools as its
predecessors in the public sector, i.e., the same borderline
dysfunctional state apparatus. And most important of all, it
will have no outside excuse for failing to deliver. This
puts the future government in a paradoxically unenviable,
even impossible, position -- because the deep-seated nature
of the country's problems do not lend themselves to immediate
solutions. (For this reason, we should not be surprised if
the government resorts to an outside bogeyman, including U.S.
"imperialism" or supposed hostility, to explain its
inevitable shortcomings.)


9. (C) The three top demands of the MAS' hard core social
sector supporters -- the immediate nationalization of
Bolivia's hydrocarbons and other natural resources, the quick
establishment of a Constituent Assembly, and the extradition
of former President Gonzalo "Goni" Sanchez de Lozada -- offer
no grounds for optimism in this respect. For starters, it is
difficult to see how any or all of these demands, even if
met, would resolve the real problems in question.
Dispassionate observers believe that something more like the
opposite might even be true, given the failure of state-led
socialism to resolve the problems of wealth and poverty
elsewhere in the world, and given the proven inability to
"legislate" solutions to structural social and economic
problems whenever and wherever that method has been tried.


10. (C) Nor is it clear that the demands will be met. The
message Morales has heard in Spain, France, Belgium, Brazil
and (soon) Argentina regarding transnational investments in
Bolivia's hydrocarbons sector might well cause the government
to backtrack on (and re-spin) its commitment to
nationalization. The government's ability to secure the
extradition of Goni will depend on us, and sending the former
president to a foreordained conviction in a political show
trial goes manifestly against our interests in seeing justice
served. For its part, the Constituent Assembly may not seem
so appealing as it did before the election, when few foresaw
the MAS' dominance in Congress; therefore the government's

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push for it could ease. That said, the government's failure
to fulfill these demands would cause rumblings among its
hard-core social sector bases, and generate the makings of a
potentially powerful opposition from the street.

Proliferation of Micro-Demands
--------------

11. (C) Tensions and divisions will likely be exacerbated by
the micro-demands of innumerable MAS' partisans, who are
expecting concrete gains in exchange for their electoral
support. These start with the expectation for Cabinet and
other positions in the future administration. Campesino
leader and former MAS Senator Roman Loayza has been quoted in
press reports as demanding at least four ministries for his
social sector organization, the CSTUCB. According to
indigenous contacts, many other groups who (believe they)
played a role in the MAS' ascension to power are applying
similar pressures. One former indigenous congressman told us
that tensions "internal" to the MAS would eventually paralyze
the future government, and even bring it down. Other
observers emphasize that the MAS is less a party than a
conglomeration of syndicalist and social sector entities, and
therefore has a plethora of different people with distinct
agendas to pay off. Moreover, they continue, being in the
government may bring access to great spoils, but this being
Bolivia, the supply of spoils is less extensive than it would
be in, say, Venezuela. This means that the government will
be seriously constrained in its actions from the start.

Your Meeting with Morales
--------------

12. (C) In your prospective meeting with Morales,
tentatively scheduled for the afternoon of January 21, you
may wish to reiterate our willingness to seek common ground.
(Your comments from Brazil earlier this month regarding the
U.S.' openness to dialogue with the future Bolivian
government played well in the media here. They also undercut
the credibility of Venezuelan President Hugo Chavez's
accusations that the Embassy was plotting to overthrow
Morales.) At the same time, you can remind the
President-elect that our ability to cooperate depends on his
government's actions on issues relating to our core interests
in strengthening the institutions and practices of democracy,
fomenting economic growth for the benefit of all and pursuing
a credible counter-narcotics strategy. You will want to
elicit more clarity on Morales' view of the role of
eradication in that strategy. According to VP-elect Alvaro
Garcia Linera, Morales may also raise debt forgiveness for
Bolivia, the "Goni" trial and other trade and aid-related
questions with you.
GREENLEE