VAZQUEZ SAYS HE WANTS A FREE TRADE AGREEMENT

,C O N F I D E N T I A L MONTEVIDEO 000229 SIPDIS SIPDIS DEPT FOR WHA/AS TSHANNON DEPT ALSO FOR WHA/BSC FOR DBARNES, CCROFT AND SMURRAY DEPT ALSO FOR EB/AS AWAYNE DEPT PLEASE PASS USTR NSC FOR DFISK AND SCRONIN SOUTHCOM FOR POLAD 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 -------------- ¶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 -------------- ¶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