SPAIN'S MEASURED WELCOME OF EVO MORALES

C O N F I D E N T I A L MADRID 000032 SIPDIS E.O. 12958: DECL: 01/04/2016 TAGS: PGOV PREL SP BO SUBJECT: SPAIN'S MEASURED WELCOME OF EVO MORALES REF: SECSTATE 1353 Classified By: POLOFF Ricardo Zuniga for reasons 1.4 (b) & (d). ¶1. (SBU) SUMMARY. Bolivian President-elect Evo Morales met in Madrid on January 4 with the King, President Zapatero, the Foreign and Industry Ministers, and business leaders. The GOS focused Morales' visit on economic issues, including Spanish energy company Repsol's billion dollar investment in Bolivia and a GOS commitment to cancel a majority of Bolivia's USD 120 million debt to Spain in exchange for increased spending on education. In a meeting with Spain's major business group, Morales said the "White House" had "boycotted him" until just 48 hours before his election, but also noted that he had had a good meeting with the U.S. Ambassador in La Paz. President Zapatero withdrew from a planned joint press conference with Morales. Morales arrived in a Venezuelan plane with Venezuelan bodyguards, but the GOS declined to let the Venezuelans escort Morales to his meetings. END SUMMARY. ¶2. (SBU) Morales had lunch with the Spanish Confederation of Employers' Organizations (CEOE),Spain's main umbrella business group. Among the 30 attendees was the president of Repsol, which controls a third of Bolivia's gas supply. Morales later told the press that Bolivia "needs partners in the foreign private sector, but not landlords or owners of its natural resources." He said that the only companies that need to worry are the ones that don't pay their taxes or act like smugglers. He also repeated his now familiar line that "nationalizing does not mean confiscating or expelling." Morales alluded to the apparent agreement of Brazilian energy company Petrobras to partner with the Bolivian state energy company as an example of the type of cooperation he envisioned with foreign investors. ¶3. (C) Jose Maria Lacasa, CEOE head of international relations, told Econoff that his group was pleased that Morales had come to talk to the group. He said that CEOE sees a positive sign in Morales' openness to dialog. Lacasa noted that Morales offered a "prudent" but "unstructured" talk and seems to have some substantive gaps. During his talk, Morales was harshly critical of the Bolivian business community and government corruption, but acknowledged that he has much to learn and that things are more complicated than they might appear. Morales also told the group that the "White House" had "boycotted him" until just 48 hours before his election, but noted that he had had a good meeting with the U.S. Ambassador in La Paz. ¶4. (SBU) Though he emphasized to Morales that Spanish businesses in Bolivia need to see signs of stability and confidence in order to continue their investments, Industry Minister Jose Montilla acknowledged publicly that the "rules of the game have changed." Foreign Minister Miguel Angel Moratinos also talked business with Morales, noting that Spain is a principal foreign investor in Bolivia and would like to see more investment if possible. An MFA statement released following the Moratinos' meeting with Morales offered Spain's support for the "strengthening of political, economic, and social stability" in Bolivia and noted both Spain's role as a major foreign investor in Bolivia and its substantial aid program there (which will climb from approximately $50 million in 2004 to $70 million in 2006). Separately, the Spanish government announced its decision to forgive the majority of Bolivia's $120 million in official debt to Spain so that the Bolivian government can redirect those funds to education programs. Morales received a courteous welcome to all his meetings with the GOS, but President Zapatero withdrew from a planned joint press conference with Morales and the GOS declined to let Venezuelan bodyguards escort Morales to his meetings. ¶5. (C) COMMENT. The GOS, clearly glad to have a chance to talk to Morales about Repsol and other investments in Bolivia, carefully controlled the visit and avoided any public discussion of Latin American politics. For his part, Morales, at least during the first day of his visit, moderated his message significantly from what he had said during his recent appearances in Caracas and Havana. MANZANARES