Identifier
Created
Classification
Origin
07LAPAZ1215
2007-05-03 13:09:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
Cable title:
MAY DAY: CHANGES, BUT NO NEW NATIONALIZATIONS
how-toVZCZCXYZ0001 RR RUEHWEB DE RUEHLP #1215/01 1231309 ZNR UUUUU ZZH R 031309Z MAY 07 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC 3433 INFO RUEHAC/AMEMBASSY ASUNCION 6742 RUEHSW/AMEMBASSY BERN 0130 RUEHBO/AMEMBASSY BOGOTA 4072 RUEHBR/AMEMBASSY BRASILIA 7960 RUEHBU/AMEMBASSY BUENOS AIRES 5209 RUEHCV/AMEMBASSY CARACAS 2438 RUEHPE/AMEMBASSY LIMA 2565 RUEHMD/AMEMBASSY MADRID 3446 RUEHMN/AMEMBASSY MONTEVIDEO 4577 RUEHNE/AMEMBASSY NEW DELHI 0128 RUEHQT/AMEMBASSY QUITO 5078 RUEHSG/AMEMBASSY SANTIAGO 9664 RUEHKO/AMEMBASSY TOKYO 0297 RUEHUB/USINT HAVANA 0293 RHMFIUU/HQ USSOUTHCOM MIAMI FL RUMIAAA/USCINCSO MIAMI FL RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHC/DEPT OF LABOR WASHINGTON DC RHEHNSC/NSC WASHINGTON DC
UNCLAS LA PAZ 001215
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: ECON ELAB ETRD EINV PGOV PREL BL
SUBJECT: MAY DAY: CHANGES, BUT NO NEW NATIONALIZATIONS
REF: A. 06 LA PAZ 1157
B. 06 LA PAZ 2943
-------
SUMMARY
-------
UNCLAS LA PAZ 001215
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: ECON ELAB ETRD EINV PGOV PREL BL
SUBJECT: MAY DAY: CHANGES, BUT NO NEW NATIONALIZATIONS
REF: A. 06 LA PAZ 1157
B. 06 LA PAZ 2943
--------------
SUMMARY
--------------
1. (U) In May 1 announcements, President Morales declared
Bolivia's national territory a "state mineral reserve" and
awarded administrative control of mineral resources to
Comibol, the state-owned mining company; introduced a 5
percent increase in the minimum wage; and officially launched
Bolivia's state development bank. Contrary to popular
expectations, Morales did not announce new nationalizations;
instead, he focused on the achievements of last May's
hydrocarbons nationalization (ref A) and struck a more
conciliatory tone, calling for dialogue with foreign firms
and recognizing Bolivia's need for foreign investment. End
summary.
--------------
A NEW ROLE FOR COMIBOL
--------------
2. (U) In a May 1 supreme decree, President Morales declared
Bolivia's national territory a "state mineral reserve,"
reasserting the state's ownership of mineral resources and
awarding Comibol, the state-owned mining company, "power and
authority over the exploitation and administration" of all
minerals. The decree prohibited the granting of new mining
concessions but left untouched concessions previously awarded
to private firms.
--------------
A NEW MINIMUM WAGE
--------------
3. (U) In another decree, the president announced a 5 percent
increase in the national minimum wage, raising it to
approximately $65 per month, and directed private employers
to boost employees' basic salaries by at least the same
amount. The decree left employers and workers to negotiate
acceptable increases. Confederation of Private Businessmen
and Central Workers' Union representatives immediately
rejected the government's move, with the former declaring it
a purely "political measure" and the latter declaring it
"insignificant."
-------------- --
THE STATE DEVELOPMENT BANK: OFFICIALLY LAUNCHED
-------------- --
4. (U) Also on May 1, President Morales launched Bolivia's
state development bank, first announced in June 2006. The
bank is officially a second-tier lending institution expected
to channel loans through existing financial entities to small
producers in the textile, wood, food, leather, and tourism
industries beginning June 1. The loans will have 6 percent
interest rates (well below market rates),be in amounts of up
to $10,000, and offer repayment periods of up to 12 years.
The bank currently has $60 million in capital from the GOB
and the Andean Development Corporation.
--------------
NO NEW NATIONALIZATIONS
--------------
5. (U) Contrary to popular expectations, President Morales
did not announce new telecommunications, mining, or
hydrocarbons nationalizations; instead, he focused on the
achievements of last May's hydrocarbons nationalization (ref
A),noting that the move represented an additional $1.3
billion in annual revenues for the state. (Note: According
to our estimations, additional revenue in 2007 attributable
to "nationalization" is minimal. End note.) The 44 new
operating contracts signed with natural gas production
companies in October 2006 officially entered into force May 2
(ref B). In his comments, Morales struck a more conciliatory
tone, calling for dialogue with foreign firms in several
sectors and recognizing Bolivia's need for foreign
investment.
--------------
COMMENT: MUCH ADO ABOUT NOTHING
--------------
6. (SBU) Morales' announcements were less dramatic than many
expected. The president backed away from rumored
nationalizations to concentrate on GOB achievements and
introduce relatively moderate new proposals likely designed
to temporarily placate troublesome constituencies. Whether
Morales will succeed remains to be seen, as miners and
workers will likely demand greater responsiveness to calls
for economic opportunities and higher wages. As it is, the
May 1 decrees may have little concrete effect on either. End
comment.
GOLDBERG
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: ECON ELAB ETRD EINV PGOV PREL BL
SUBJECT: MAY DAY: CHANGES, BUT NO NEW NATIONALIZATIONS
REF: A. 06 LA PAZ 1157
B. 06 LA PAZ 2943
--------------
SUMMARY
--------------
1. (U) In May 1 announcements, President Morales declared
Bolivia's national territory a "state mineral reserve" and
awarded administrative control of mineral resources to
Comibol, the state-owned mining company; introduced a 5
percent increase in the minimum wage; and officially launched
Bolivia's state development bank. Contrary to popular
expectations, Morales did not announce new nationalizations;
instead, he focused on the achievements of last May's
hydrocarbons nationalization (ref A) and struck a more
conciliatory tone, calling for dialogue with foreign firms
and recognizing Bolivia's need for foreign investment. End
summary.
--------------
A NEW ROLE FOR COMIBOL
--------------
2. (U) In a May 1 supreme decree, President Morales declared
Bolivia's national territory a "state mineral reserve,"
reasserting the state's ownership of mineral resources and
awarding Comibol, the state-owned mining company, "power and
authority over the exploitation and administration" of all
minerals. The decree prohibited the granting of new mining
concessions but left untouched concessions previously awarded
to private firms.
--------------
A NEW MINIMUM WAGE
--------------
3. (U) In another decree, the president announced a 5 percent
increase in the national minimum wage, raising it to
approximately $65 per month, and directed private employers
to boost employees' basic salaries by at least the same
amount. The decree left employers and workers to negotiate
acceptable increases. Confederation of Private Businessmen
and Central Workers' Union representatives immediately
rejected the government's move, with the former declaring it
a purely "political measure" and the latter declaring it
"insignificant."
-------------- --
THE STATE DEVELOPMENT BANK: OFFICIALLY LAUNCHED
-------------- --
4. (U) Also on May 1, President Morales launched Bolivia's
state development bank, first announced in June 2006. The
bank is officially a second-tier lending institution expected
to channel loans through existing financial entities to small
producers in the textile, wood, food, leather, and tourism
industries beginning June 1. The loans will have 6 percent
interest rates (well below market rates),be in amounts of up
to $10,000, and offer repayment periods of up to 12 years.
The bank currently has $60 million in capital from the GOB
and the Andean Development Corporation.
--------------
NO NEW NATIONALIZATIONS
--------------
5. (U) Contrary to popular expectations, President Morales
did not announce new telecommunications, mining, or
hydrocarbons nationalizations; instead, he focused on the
achievements of last May's hydrocarbons nationalization (ref
A),noting that the move represented an additional $1.3
billion in annual revenues for the state. (Note: According
to our estimations, additional revenue in 2007 attributable
to "nationalization" is minimal. End note.) The 44 new
operating contracts signed with natural gas production
companies in October 2006 officially entered into force May 2
(ref B). In his comments, Morales struck a more conciliatory
tone, calling for dialogue with foreign firms in several
sectors and recognizing Bolivia's need for foreign
investment.
--------------
COMMENT: MUCH ADO ABOUT NOTHING
--------------
6. (SBU) Morales' announcements were less dramatic than many
expected. The president backed away from rumored
nationalizations to concentrate on GOB achievements and
introduce relatively moderate new proposals likely designed
to temporarily placate troublesome constituencies. Whether
Morales will succeed remains to be seen, as miners and
workers will likely demand greater responsiveness to calls
for economic opportunities and higher wages. As it is, the
May 1 decrees may have little concrete effect on either. End
comment.
GOLDBERG