EXPORTERS WORRY ABOUT DETERIORATING BUSINESS

UNCLAS LA PAZ 000138

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: EXPORTERS WORRY ABOUT DETERIORATING BUSINESS
CLIMATE

REF: LA PAZ 103 AND PREVIOUS

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SUMMARY
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1. (SBU) Leading exporters have expressed concern about
Bolivia's increasingly unfavorable image and deteriorating
business climate. The GOB's left-leaning rhetoric, they say,
threatens to turn Bolivia into an international pariah;
combined with general political instability and growing GOB
attacks on business, it not only makes current clients
uneasy, but also spooks potential investors.

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EXPORTERS WORRY ABOUT IMAGE, BUSINESS CLIMATE
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2. (SBU) Leading exporters have expressed concern about
Bolivia's increasingly unfavorable image and deteriorating
business climate. In January 16 and 18 conversations with
Econoff, major wood and jewelry exporters criticized the
GOB's left-leaning rhetoric and much-publicized talk of
"nationalization," saying they believed GOB officials'
comments threatened to turn Bolivia into an international
pariah. Many U.S.-based clients have reportedly begun to
question long-standing relationships with Bolivian companies,
and others have begun to doubt Bolivian firms' reliability,
particularly given the country's general political
instability and occasional eruptions of political violence.


3. (SBU) Bolivia's leading apparel exporter, Marcos
Iberkleid, echoed his counterparts' comments, telling the
Ambassador January 18 that the GOB's rhetoric often provokes
panic among foreign clients; together with events like those
in Cochabamba (reftels) and growing GOB attacks on business,
it not only makes current clients uneasy, but also spooks
potential investors. Iberkleid noted that orders from
U.S.-based clients had dropped significantly: he expects to
produce only 700,000 articles of apparel in February (down
from a monthly average of approximately 1 million articles
last year) and only 550,000 units in April. The businessman
noted that attacks on private enterprise had increased -- the
GOB recently passed a decree requiring all employees to sign
labor agreements, rather than allowing firms to negotiate
with workers' elected representatives -- and suggested that
the GOB would gradually step up efforts to weaken the private
sector, with Santa Cruz (an opposition stronghold) its
principal target.

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COMMENT
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4. (SBU) Bolivia's international image as an unstable country
leaning ever leftward (under the growing influence of
Venezuela's Hugo Chavez) appears to be undermining outsiders'
confidence and damaging exporters' business. While this
unfortunate outcome may have emerged only slowly, it seems
increasingly evident that Bolivia can no longer avoid the
consequences of an administration stubbornly pursuing an
outdated ideological agenda.
GOLDBERG