BOLIVIA: EVO'S 2007 REPORT CARD

C O N F I D E N T I A L LA PAZ 003330

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/26/2017
TAGS: ECON PGOV PREL ENRG EPET EMIN PINR MNUC BL
SUBJECT: BOLIVIA: EVO'S 2007 REPORT CARD

Classified By: EcoPol Chief Mike Hammer for reasons 1.4b, d

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Summary
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1. (C) Bolivian President Evo Morales's second year in
office has been even more contentious than his first. On the
international front, this year has included diplomatic
scuffles with neighbors and increasing attacks against the
United States and our mission in Bolivia. Domestically,
conflict between various segments of society--east and west,
white and indigenous, lowland and highland, rich and poor,
capitalist/neoliberal and socialist--have increased to the
point of violence and even talk of civil conflict.
Allegations of Venezuelan influence have increased, as has
the presence of Venezuelan and Cuban advisors. A major
Movement Toward Socialism (MAS) 'deliverable,' the new
constitution, was eventually pushed through the Constituent
Assembly by various semi-legal and undemocratic means.
Although not yet sinking to a failing grade, Evo's second
year in office merits a cautionary D. End summary.

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As President, Evo Makes a Good Union Boss
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2. (C) Evo's original and enduring power base is the cocalero
(coca-growing) union, of which he was and is still president.
Evo's decision not to resign as head of the cocaleros shows
both his need for a dedicated support-group and his penchant
for representing some, not all, Bolivians. A constant
complaint of groups who are not among Evo's favored is that
Evo does not represent them. Emboffs have heard this
complaint from the opposition as well as less-obvious groups
such as lowland indigenous organizations, disenfranchised
campesino farmers, and cooperativist non-government miners,
all of whom feel left out by Evo's new government.


3. (C) Evo's inability to recognize his responsibility as
president of all Bolivians has had tragic consequences. In
the wake of violence in Sucre which left three dead, Evo
personally marched with El Alto and cocalero protesters to
picket the Senate. In nearly every speech, Evo claims to
represent the altiplano, the indigenous, and the cocaleros,
and attacks those who oppose him as "imperialist, racist
oligarchs." The first president in Bolivia's modern history
to receive a majority of votes has divided his country rather
than uniting.


4. (C) In keeping with his union-boss past, Evo has often
acted as if he were starring in a Bolivian "Sopranos."
Reputable sources tell us that the MAS has threatened
opposition members and their families, constitutional and
supreme-court justices, and MAS members perceived to be 'out
of line' have also received threats from their own party.
Impatient with the democratic process and independent
judiciary, Evo and the MAS have repeatedly sidestepped legal
processes and excluded the opposition. Under Evo's tenure
the Constitutional Tribunal has been gutted, leaving no court
of final appeal on constitutional matters and allowing Evo's
subsequent questionable steps to go unchallenged.


5. (C) The MAS arranged for forcible exclusion of the
opposition in both the Sucre and Oruro meetings of the
Constituent Assembly in order to push through a new draft
constitution. Even now, Evo is supporting substantive
changes to that document, despite it having been made
'final.' So far, Evo and the MAS have managed to cloak their
maneuverings in just enough appearance of possible legitimacy
to minimize international outcry. For part of this
international blind-eye reaction, Evo can thank his own
personal popularity (as a poor, indigenous coca farmer who,
not-incidentally, sticks it to the Americans and the previous
ruling elite.)

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King Coca
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6. (C) Under the new draft (MAS) constitution, coca would be
declared "cultural patrimony," whose "pricing, production,
marketing, and industrialization will be regulated by law."
It is not surprising that the current head of the
coca-growers union (Evo) would shepherd a constitution that
raises his product to iconic status. Coca use is not
traditional in much of Bolivia, however, and some groups are
frustrated by this focus. In a recent meeting, a lowland
indigenous leader told emboffs that he was furious at the MAS
claim that coca is a universal indigenous symbol. He said
his indigenous community never used coca, yet their kids are
suffering from increased drug use, which he suggested was a
result of a permissive government. Thus, the MAS focus on
coca, although not generally decried by the Bolivian public,
has served to highlight differences and strain relations
between some indigenous groups.


7. (C) Oddly enough, coca has become one of the areas in
which the mission and Bolivian officials can cooperate, at
least to an extent. Working-level relations with the
U.S.-supported counter-narcotic police detachments are
excellent, and interdictions have increased (although
production has also increased.) The government and Evo claim
to be interested in the prospect of a bilateral agreement to
achieve a net reduction in coca cultivation, but we have seen
little enthusiasm on this point.

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Show Them the Money
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8. (C) Despite Evo's plans for industrializing coca, the leaf
thus far has had an impact on the Bolivian economy only in
its processed form--the increased influx of narco-money is
considered one of the factors that is driving inflation into
the double digits this year. Bolivia is headed for economic
difficulties. Gas production is under increasing strain,
inflation is headed toward a yearly total of over 12 percent,
and current diesel shortages are hampering the summer
planting season in the East. Many in the opposition consider
that the economy is "Evo's Achilles heel." In fact, the
opposition is counting on economic troubles to erode Morales'
popularity, with percentages still hovering in the fifties.
However, Morales is deflecting responsibility by blaming the
private sector, a message that resonates with Evo's base.


9. (C) If the MAS constitution passes in its current form,
the Bolivian economy is likely facing even worse times. The
draft constitution provides for weak private property
protection and could be read as giving indigenous groups veto
power over exploration, resource development or construction
in almost any part of the country (based on claims of
"traditional use" of the land.) The draft constitution also
explicitly involves the State in much of the economy,
including mining and public utilities, which could affect
U.S. companies. Despite much-hyped promises of investment
from Brazil, Iran and India (as well as a purported new
mining agreement with South Korea),various industry contacts
tell us that investment in Bolivia is already slowing and
could grind to a halt if the new constitution passes--not a
promising present from Evo to the Bolivian people.

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Makes Friends Easily: Venezuela, Cuba, Iran
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10. (C) Evo makes no attempt to hide his close reliance on
Venezuelan advisors nor his admiration of President Hugo
Chavez. In August 2007 with Chavez by his side, Evo publicly
rejected democratic principles, saying that he would not let
the law stand in his government's way and would use
presidential decrees to push through change. Evo said "being
subjected to the law is damaging us; though they may say our
decrees are unconstitutional, that does not matter." (Note:
in fact, claims of unconstitutionality effectively ceased to
matter in December 2007, when Evo finally achieved his goal
of crippling the Constitutional Tribunal, leaving Bolivia
with no court to decide constitutional questions. End note.)


11. (C) The presence of Venezuelan advisors and Venezuelan
plane sightings (with rumored drop-offs of weapons and
soldiers) has become an opposition rallying-cry against Evo.
At a time when Evo's rhetoric is laced with complaints about
"imperialist" (read: U.S.) interference, the "little brother"
role that Evo is taking with Hugo Chavez grates on many
Bolivians' sense of national pride and sovereignty. The
presence of Cuban doctors and Evo's adulation of Fidel Castro
has not drawn as much domestic criticism, probably because
Fidel is a far-away and mythical figure in Latin America,
while Chavez is touted as the big brother next door.


12. (C) Despite earlier, private assurances to the
Ambassador that Bolivia would not open diplomatic ties with
Iran, on September 5th Evo signed commercial agreements with
the Iranian Ambassador and on September 11 Evo's foreign
minister announced diplomatic relations with Iran. While the
choice of the date of the announcement may not have been an
intentional insult to the United States, the context of the
announcement (coupled with an announcement of stricter visa
requirements for U.S. tourists) was a definite jab. Evo and
Foreign Minister Choquehuanca defended Iran's nuclear
program, contrasting Iran's development of "peaceful" nuclear
technology with countries like France, Russia, Israel, and
the United States that use the technology to make "atomic
bombs." On September 27, Evo gave a warm embrace to visiting
Iranian President Ahmadinejad. Expanding Evo's new
"in-crowd", on September 25 Bolivian government officials
also announced a "gradual" establishment of diplomatic
relations with Libya over the next few months.

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Plays Well With Others: Neighbors and Mercosur
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13. (C) After a rough start when Bolivia's nationalization of
hydrocarbons alienated Brazil, whose state company Petrobras
was forced to sign new contracts, Evo has been working for a
rapprochement with his neighbors. The recent visit from
Presidents Bachelet and Lula worked in Evo's favor, both as a
sign of international acceptance of his domestic political
maneuverings and as a distraction from internal conflict.
Mercosur's December 18 statements in support of Bolivia are
another result of Evo's increased interest in decreasing his
isolation. Although some of this tightening of regional ties
is based on shared political interests, Evo has also
leveraged Bolivia's gas reserves to forge relations with
neighbors. With gas production dropping and little
exploration underway, most observers predict that Bolivia
will be unable to fulfill its international contracts in the
next few years. The effect of gas shortages on Evo's new
friendships is not clear.

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Plays Poorly With U.S.
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14. (C) 2007 has been an especially difficult time for
U.S.-Bolivian relations. Evo's past as a coca-grower makes
him paranoid of USG actions and intentions. In meetings with
the Ambassador, Evo has repeatedly referred to isolated
incidents and anecdotes as 'evidence' that the United States
is working against him. At one meeting, Evo spoke
extensively about the 2002 election, which he believes was
unfairly stolen from him by a combination of former U.S.
Ambassador Manuel Rocha, Bolivian political operative Oscar
Eid, and former Defense Minister (under "Goni" Sanchez de
Lozada) Sanchez Berzain. The Ambassador's assurances that we
are prepared to work with him do not seem to satisfy Evo.

15. (C) Although Evo has told us that he will "never break
ties with the United States", his close advisors have also
told us that Bolivia is seeking to distance itself from the
United States. Evo has made anti-USG accusations in
international fora, such as the Ibero-American Summit in
November, where he displayed a picture of the Ambassador
taken at a trade show with a passerby who has since been
identified as an alleged criminal. Evo claimed that the
photo with a "Colombian paramilitary" was evidence of "an
open conspiracy."


16. (C) Evo and his ministers have publicly attacked USAID in
Bolivia, claiming that our assistance programs are not
transparent and support the opposition. Presidency Minister
Quintana's public attack on USAID went so far as to warn
USAID employees not to be "traitors". A supreme decree
issued by Evo contains points that may restrict USAID's
ability to work in Bolivia. Even EU missions, generally more
forgiving of Evo's grandstanding, have become frustrated with
his habit of lauding Venezuelan aid while ignoring
more-transparent and accountable aid from other countries.


17. (C) Evo's spurious attacks against the USG have been
almost-constant throughout 2007, but he summarized many of
them in a December 7 interview with Venezuelan TV network
Telesur: "...here the conspiracy against the government is
headed by the Embassy of the United States and
oligarchies...last year, here in La Paz a U.S. citizen
appeared with bombs, killing people...Second, an American who
worked with the U.S. embassy in Bolivia in the past months
entered with 500 bullets...she was stopped, and according to
the U.S. Ambassador in Bolivia, (the bullets) were for
hunting in Bolivia...I don't know if it was to hunt Evo
Morales..." (Note: The bomb-placing Amcit was seemingly
mentally-disturbed and not attached to the Mission. The case
of the bullets involved a friend of a country team member who
had been asked to bring in bullets for target practice. End
note.) Evo went on to rehash the story of an alleged
criminal photographed with the Ambassador and added a new
twist, referring to the incident where a mob in Beni attacked
a Venezuelan plane and saying that he would have preferred to
see the group attacking "the North American
helicopters...used for attacking or provoking against social
movements."


18. (C) In a throwback to his coca-growing days, Evo also
routinely ends speeches to his followers with cries of, "long
live coca, death to the Yankees," although he claims he does
not want to break relations. To that end, Evo announced on
December 20 that "...we are from a culture of dialogue.
Despite these aggressions and conspiracies on the part of the
Ambassador of the United States, we are not going to break
dialogue, we will maintain diplomatic relations...How nice it
would be if the U.S. government would recommend to its
Ambassador not to come here to conspire, not to come to
Bolivia to make politics but rather to do diplomacy..."

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Comment
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19. (C) In 2007, Evo has earned a near-failing "D" grade:
from a position of unparalleled popularity and with a chance
to unify Bolivia and improve the lot of her people, Evo
instead incited divisions, provoked violence, and weakened
Bolivia's already-tenuous democratic institutions while also
damaging the fragile economy. Evo strained relations with
some neighbors while cozying up to dangerous friends.
Finally, based on his own paranoia and in (often-successful)
attempts to distract attention away from his own illegal
acts, Evo has repeatedly attacked the Embassy and the USG,
weakening a long and positive bilateral relationship.


20. (C) Unfortunately the outlook for 2008 is not hopeful.
Evo appears determined to continue to try to consolidate his
power. A faltering economy coupled with intransigence by
both the government and opposition will likely result in
continued tension and, possibly, violence. We can also
expect more anti-U.S. rhetoric and actions, including the
possible expulsion of some mission elements, if Evo feels
threatened or thinks he can rally support with such actions.
End comment.
GOLDBERG