VAZQUEZ SAYS HE WANTS A FREE TRADE AGREEMENT

,C O N F I D E N T I A L MONTEVIDEO 000229

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E.O. 12958: DECL: 03/06/2016
TAGS: PREL PGOV ETRD PINR KCRM AORC UY
SUBJECT: VAZQUEZ SAYS HE WANTS A FREE TRADE AGREEMENT


Classified By: Charge D'Affaires James D. Nealon
for reasons 1.4 (B) and (D)


1. (C) Summary: Charge met with President Tabare Vazquez at
the Embassy's request on March 7 to advise the President on
his upcoming meeting with the Secretary on March 11 at the
margins of Michelle Bachelet's inauguration ceremony in
Santiago, Chile. Vazquez explicitly stated that he wanted a
Free Trade Agreement (FTA) with the U.S. and that he would
raise the topic with the Secretary along with the papermill
dispute with Argentina. He recognized that the FTA process
would be difficult, take time and require dialog. He also
said he was not opposed to joining the Free Trade Area of the
Americas (FTAA) if ""conditions were right."" The Charge
pitched Guatemala's bid for a temporary seat on the UN
Security Council (vice Venezuela) and Vazquez said he would
think it over. The Charge raised the need for better GOU
cooperation if fugitive banker Juan Peirano Basso is to be
extradited to Uruguay. Vazquez also spoke about Bolivia and
his relations with Evo Morales. Embassy does not wish to
over sell this leader of a leftist coalition government, but
his performance over the last year (septel) and this recent
meeting confirm our assessment that he is a capable and
moderate statesman to be reckoned with. We believe that he
is sincere in his desire for good relations with the United
States. End Summary.

TRADE RELATIONS
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2. (C) Charge met with President Vazquez in a modest,
darkened room at the ""Suarez Chico"" residence where the
President works, but does not live. No other GOU officials
were present. Political counselor was notetaker. Vazquez
began by saying that he would be honored to meet with
Secretary Rice on March 11, but said that he had received no
official confirmation of the meeting and fretted that his
schedule was nearly full on that day. (Note: He provided a
printout of his schedule and estimated that the meeting would
last no more than half an hour. End Note.) Concerning
substance, Vazquez said, ""We signed a Bilateral Investment
Treaty (BIT) for a reason. We want a Free Trade Agreement
with the U.S. and are not opposed to FTAA if conditions are
right"". He said that he was aware that time would be needed
because Uruguay had its own rhythm and there are still some
people stuck in the past inside the GOU."" When the Charge
pointed out that on the U.S. side there were challenges as
well, he said he understood that there were difficult
technicalities and that the issue of agricultural subsidies
remained, but that Uruguay was willing to sit down and
seriously explore the possibilities of an FTA with us.

PAPER MILLS
--------------


3. (C) Vazquez said he would raise with the Secretary the
paper mill dispute with Argentina and probably request that
she encourage that the World Bank financing move forward. He
said the paper mill dispute was the main purpose of his trip
to Chile and several other countries in the region. Clearly
irritated by the issue, Vazquez said ""if the problem were
only the plants themselves, we could sit down with Argentina
today and solve it."" He said both countries have already
agreed on technical mechanisms to monitor environmental
impact. ""However,"" he said, ""we cannot negotiate while the
bridges are being blocked in contravention to international
law and the Asuncion (Mercosur) treaty. Caramba! What kind
of integration are we talking about? Maybe we will take
Argentina to the World Court in the Hague."" He added that to
give into this kind of pressure would set a bad precedent for
the future as Argentina could resort to the same tactics if
it became displeased on a different issue. Suspending
construction for 90 days is also ""unacceptable"" because
nothing obliges us to and the GOU honors its contracts with
foreign investors."" Never-the-less, Vazquez said that he
noted a recent ""change in attitude"" on behalf of the GOA.
Still, it will be difficult for them to extricate from a mess
that they created, he opined. Vazquez said after a recent
meeting with World Bank representatives, he detected that the
WB might be ""waiting on the projects' financing, because
Argentina is bigger than we are."" He repeated that the GOU
would not ""give into Argentine pressure tactics"" because it
would set a bad precedent for the future.

BOLIVIA
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4. (C) Vazquez said he would travel to La Paz on March 12 as
part of his major effort to gain regional support for
Uruguay's position on the paper mill dispute with Argentina.
He said he had not attended Evo Morales' inauguration last
January because was he was upset (""molesto"") with Morales for
not having visited Uruguay during his pre-inaugural world
tour, but saw fit to pay a call on Nestor Kirchner in Buenos
Aires. Vazquez said he was miffed because Uruguay had
doubled its port facilities in Nueva Palmira for Bolivian
use, but received no acknowledgement. Uruguay also advocated
Bolivia's inclusion in the regional ""energy ring"" of
countries including Brazil, Argentina, Chile, Peru, Uruguay
and Paraguay, despite Chile's objections. At any rate,
Vazquez said he sent a letter to Morales inviting him to
Uruguay. Morales responded affirmatively but had not yet
committed to a date. Vazquez mused that he did not know what
political direction Morales would choose to confront
Bolivia's severe problems and polarized society, but hoped
that he would stay on the democratic path.

UNSC
--------------


5. (C) When the Charge demarched him on our preference for
Guatemala over Venezuela in the upcoming election of
non-permanent members to the UNSC, Vazquez seemed to
hesitate. He said, ""It has been nine months since I last
spoke with (Brazil's President) Lula on these kinds of
issues. When two Latin American nations are competing for
the same position, it can become complicated."" Vazquez
promised to study the issue before he met with the Secretary.

EXTRADITION
--------------


6. (C) Turning to another sensitive topic not related to the
meeting with the Secretary, the Charge raised the issue of
fugitive Uruguayan banker Juan Peirano Basso's presence in
the United States and said that our DOJ needed a responsive
Uruguayan judge to work with on the extradition case or it
would not be worthwhile acting on the pending arrest
warrant. Vazquez responded that while Uruguay observed a
strong separation of powers, he maintained excellent
relations with the justice system. He advised the Charge to
bring the matter to the attention of Secretary to the
Presidency Gonzalo Fernandez.

COMMENT:
--------------


7. (C) The March 7 meeting helped confirm our previous
positive assessments concerning President Vazquez' intellect,
common sense and sincere motives. We are convinced that he
is a leader worth cultivating and useful in spreading a
moderate message in the region. When the Charge reminded him
that he had helped to send him on an International Visitor
trip years ago, when Vazquez was mayor of Montevideo, Vazquez
joked, ""Oh, yes, they sent me to Baltimore, a city with many
problems similar to Montevideo. When I applied some of the
decentralization techniques I learned from Baltimore's
municipal government, I was later accused of setting up
Bolshevik-style 'soviets.' You can see for yourself what
kind of government I've been running."" End Comment.
Nealon