CONSTRUCTIVE GOOD WILL: U/S BURNS' JULY 10-11

C O N F I D E N T I A L MONTEVIDEO 000699

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E.O. 12958: DECL: 07/23/2017
TAGS: PREL PGOV ECON ETRD ASEC OVIP PTER UY
SUBJECT: CONSTRUCTIVE GOOD WILL: U/S BURNS' JULY 10-11
VISIT TO URUGUAY

REF: MONTEVIDEO 00611

Classified By: Ambassador Frank E. Baxter
for reasons 1.4 (B) and (D)


1. (C) Summary: Under Secretary of State for Political
Affairs R. Nicholas Burns, densely-packed visit to Uruguay
substantially advanced our bilateral relations and key U.S.
foreign policy objectives. Trade, the fight against poverty,
UN peacekeeping operations (PKO),MERCOSUR, Venezuela, WTO,
energy and scientific and educational cooperation were some
the main themes discussed. U/S Burns highlighted the July 9,
2007 White House Conference on the Americas as a new
initiative designed to further involve the private sector,
civil society and NGOs in Latin America's development. On
trade and investment, U/S Burns told President Vazquez that
the U.S. remained committed to taking the commercial
relationship as far as the political constraints on both
sides allowed. Only four months after the historic POTUS
visit, and on the eve of U.S. Secretary of Treasury Henry
Paulson's July 11-12 visit to Montevideo (septel),the U/S
Burns visit was widely interpreted as a follow-up to
President Bush,s promise for continued close engagement with
Uruguay. U/S Burns' visit also reinforced the message that
the U.S. favors good relations with moderate governments in
the region that respect democracy, the rule of law and human
rights, regardless of their political label. The atmosphere
during the visit was warm and friendly, as reflected in the
overwhelmingly favorable media reaction that followed.
Several senior GOU officials have told us that the personal
dialogue with our high-level U.S. officials mattered at least
as much to them as did some of the specific issues discussed.
The Ambassador, S/P Member William McIlhenny and Special
Assistant Heide Bronke participated in all meetings, along
with Embassy Poloffs. Below are highlights of the various
meetings. End Summary.

Meeting with the Foreign Minister
--------------

2. (SBU) Shortly after arrival in Montevideo on the evening
of July 10, U/S Burns and his delegation met with Foreign
Minister Reinaldo Gargano at the MFA to discuss bilateral
relations and regional and global issues. The MFA's team
included Deputy Foreign Minister Maria "Belela" Herrera,
Director General for the Secretariat Jose Luis Cancela,
Director General for Political Affairs Alvaro Gallardo,
Director General for Integration and Mercosur Carlos Amorin,
Director of Protocol Francisco Purificatti and Chief of the
Minister's Cabinet Frederico Gomensoro.


3. (C) FM Gargano somewhat contentiously opened the meeting
by saying, "You are the owners of the agenda, it,s your
meeting." U/S Burns responded by saying that he was
traveling in a follow-up to President Bush's visit to region,
had just come from productive meetings in Santiago where
President Bachelet asked if we could do more on the war on
drugs, was headed towards Brazil and that U.S. Secretary of
Treasury Henry Paulson would be arriving in Uruguay the next
day. He said his top priorities included trade, commerce and
market access issues and that he had a good impression of how
the Trade and Investment Framework agreement (TIFA) was
working with Uruguay, and that he had just spoken to USTR
Susan Schwab on the telephone about such issues.


4. (C) U/S Burns then applauded Uruguay's outstanding
commitment to international PKO, particularly in Haiti where
it is fielding 1,140 troops and one policeman, and to the
Democratic Republic of Congo where it also maintains a
sizable contingent in MINOC. He said that Uruguay's
highest-per-capita PKO contribution "was a model for other
countries" to follow and that he hoped to work together in
October to achieve a MINUSTAH mandate renewal, adding that

"the international community needs to maintain a long-term
commitment to Haiti's democratic and economic development."
U/S Burns also appealed to the international community to
contribute more to UNIFIL in Lebanon, the UN/AU hybrid
operation in Darfur and other emerging African PKO needs in
places such as Somalia, which he characterized as undergoing
"extraordinary disintegration." U/S Burns concluded by
saying that he was happy to be in Uruguay and to discuss any
global or regional issue.


5. (C) FM Gargano agreed and indicated that he had on the
table in front of him a $20 million proposal for a five-year
democracy-building project in Haiti that was submitted to the
U.S. State Department for possible funding. (Note: The Haiti
project proposal was not discussed in any detail at the
meeting. End Note.) He said that although Haiti was still the
poorest country in the hemisphere, he had the impression that
it was a "little bit better off than before." Its main
challenges remained to guarantee peace and revamp its
tattered economy. He qualified that Uruguay's Parliament was
becoming concerned about an "indefinite stay" in Haiti and
the need for grater economic assistance to that country. FM
Gargano termed the situation in Darfur as "genocide" and said
that Uruguay had provided some troops in Somalia.


6. (C) Turning to other issues, the Foreign Minister said
that he was glad that U/S Burns had spoken to Chilean
President Michelle Bachelet, whom he termed "an old friend."
He said half of the 400 million people in South America are
poor, despite having democratically-elected governments and
bountiful natural resources. He then rhetorically asked,
"How can developed countries in the EU, Japan and the U.S.
talk about free trade at the WTO when so many quotas and
subsidies by are in place?" He also stated that "Uruguay had
the best long grain rice in the world, but it is double the
price of U.S. rice." FM Gargano went on to say that that
Uruguay has only a 17 percent import tariff with zero percent
for capital goods. He said, "Until now, we haven't protected
ourselves, but we will do so if necessary," adding that he
was not a "maximalist" who was asking for "seven percent" or
the elimination of quotas, but that steps should be taken so
that Doha will not fail "lest we all lose."


7. (C) U/S Burns agreed on the need to make progress on the
Doha Round of WTO talks, where he criticized Brazil and India
for their lack of flexibility. He cited Estonia, Ireland,
China and India as nations that have made great progress by
employing knowledge-based industries and by investing in
their people. He also highlighted the July 9, 2007 White
House Conference on the Americas as a new U.S. initiative
designed to further involve the private sector, civil society
and NGOs in Latin America's development. FM Gargano then
turned to Bolivia where he said that "decades of humiliation
and indignation" of the indigenous people would require time
to resolve the situation.

Dinner with Senior Officials
--------------

8. (SBU) The MFA meeting was followed by a cocktail and
formal dinner in honor of U/S Burns at the Ambassador's
residence with senior Uruguayan officials attending. The
guests included former (Colorado Party) President Jorge
Batlle, Foreign Minister Reinaldo Gargano, Economy and
Finance Minister Danilo Astori, Industry and Energy Minister
Jorge Lepra, Education Minister (and Frente Amplio President)
Jorge Brovetto, Presidential Chief of Staff Gonzalo
Fernandez, Deputy Foreign Under Secretary Maria "Belela"
Herrera, and National Party (Blanco) Senators Jorge Larranaga
and Sergio Abreu. As U/S Burns surveyed the guests on topics
of most importance to each, the focus quickly moved to TIFA
and the GOU,s eagerness for broader market access. Minister
Astori indicated a need for Uruguay to better access

international markets and highlighted current problems with
MERCOSUR. FM Gargano reiterated the problems to free trade
posed by US agriculture subsidies. Jorge Larranaga inquired
about the likelihood that the FTAs with Peru and Colombia
would be approved. Senator Abreu called for the U.S. to be
more supportive of Uruguay on the pulp mill dispute.
Minister Brovetto commented on the different leadership
styles in the region, and that Uruguay felt closer to Chile,
but that factions within the Frente were attracted a
different vision of the future. During the discussion, U/S
Burns responded specifically to FM Gargano,s earlier
statement that, &half of the 400 million people in South
America are poor,8 indicating that that U.S. economic
development in the region was intended to help bring that
half out of poverty.

Donation Event for English at CODICEN
--------------

9. (U) After a working breakfast the next day (July 11) with
the Ambassador and an abbreviated Country Team, U/S Burns and
A/S Shannon visited the Consejo de Educacion Primaria, an
organization implementing pilot English language programs
with Embassy support. In September 2006, the Embassy signed
a historic agreement with Uruguayan educational authorities
to provide funds to support a pilot English language teaching
program. On behalf of the USG, U/S Burns presented a note
signaling our support for the program with an additional
donation of USD 120,000, which will fund an additional 16
schools through April 2008. This brings the total number of
schools throughout Uruguay participating in the program to
70, serving 20,000 students. A summary of this event and
photos are on the unclassified system at:

http://uruguay.usembassy.gov/usaweb/2007/07-3 90EN.shtml


Meeting with President Tabare Vazquez
--------------

10. (C) The Vazquez meeting, held at the Suarez Residence,
focused largely on educational exchange, trade, energy, PKO
and MERCOSUR issues. Vazquez urged the U.S. to "relaunch its
relationship with Latin America without forgetting the past."
He expressed his desire for more scientific and technical
exchanges with the U.S. He also indicated that the "TIFA is
very positive, trade is a big issue, as is
energy." On energy, Vazquez emphasized the virtues of
Uruguay as an ideal location for biofuels production, and
dismissed concerns about the effect of increased production
on price of food commodities. He also expressed support for
increased commercial forest planting, pointing out that
current forest planting levels of 4 percent are much less
that the 10 percent allowed by Uruguayan law. Vazquez then
turned the conversation to nuclear energy, drawing on his
background as a doctor and positive experience working with
radioactive isotopes. He indicated that Uruguay's interest
in nuclear energy was for "peaceful purposes," and that the
world needed nuclear power "because it is environmentally
better than other sources."


11. (C) U/S Burns expressed appreciation for Uruguay's
international peacekeeping efforts, calling Uruguay, "a role
model for the rest of the world." He urged Vazquez to expand
Uruguay's international PKO presence. He underscored the
value of student exchanges and referred to the donation he
made at CODICEN earlier in the morning. He also cited the
benefits of enhanced military cooperation and called for
greater cooperation and joint training, but promised to be
cognizant of Uruguay's internal sensitivities. Vazquez
responded by stating that, "Uruguay will not abandon Haiti,
but my Army commander says that we are at our limit of
providing troops." He added that PKO had a positive
practical side for Uruguay since it provided international

recognition, support for pacific dialogue, and excellent
training opportunities. Vazquez recalled that he had visited
the U.S. years ago and said "that Uruguay is so small you can
hardly find it on the map, but that each country has its own
history of democracy and points of view on the pacific
settlements of disputes and respect for the United Nations."
Vazquez then said Uruguay had found "points of consensus"
with the U.S. and was ready to work with the U.S. Burns
responded that President Bush remained interested in
furthering market access, noting that blueberries, other
fruits, and boneless lamb exports to the U.S. were
increasingly becoming a reality. U/S Burns
indicated that the Administration considered the FTAs a vital
part of its commitment to Latin America for growth, jobs and
trade, but that the FTAs for Peru, Panama and Colombia faced
some opposition in the U.S. Congress. Vazquez responded that
the TIFA was working and that Uruguay was willing to import
turkeys, though its market is small.


12. (C) U/S Burns turned to the issue of MERCOSUR, and asked
Vazquez what he thought about Chavez, in light of the fact
that Vazquez is the new pro-tempore president of MERCOSUR.
Vazquez responded that for a small country like Uruguay, it
would be "unthinkable not be part of a bloc like MERCOSUR,"
citing both trade reasons and historical ties. However, he
stated that Uruguay was not satisfied with MERCOSUR at the
moment, and in fact he wanted a "stronger and better
MERCOSUR" that was more open and which would allow the
smaller members to sign FTAs with the U.S. He acknowledged
the difficulties MERCOSUR had with this issue, quoting
Brazilian FM Amorim who said that a U.S.-Uruguayan FTA would,
"damage the heart of
MERCOSUR." However, Vazquez disputed Amorim's claim,
highlighting that Uruguay signed an FTA three years ago with
Mexico. Vazquez also indicated that as pro-tempore
president, he intended to push for the MERCOSUR/EU FTA talks
to be restarted, as well as the 4 1 talks with the U.S.


13. (C) On Venezuela, Vazquez stated emphatically that
Venezuela must comply with all of the requirements of
MERCOSUR, "including its democratic clause." He continued by
saying that in a bilateral fashion, Chavez is very generous
with petroleum, investing in small businesses and donations
to hospitals. Uruguay in return has transferred technology on
cattle and milk, boosting their milk production per cow from
5 liters/day to 25-30 liters/day. Vazquez indicated that
Uruguay was worried about Chavez's
confrontational approach as Uruguay had a more "measured and
respectful" tradition of dealing with other countries. For
instance, in response to Chavez's activities in Buenos Aires
during POTUS' visit to Uruguay, Vazquez said that, "We told
him at Isla Margarita, 'Not to do it again.'" U/S Burns
reemphasized the commitment of the United States to
"intensive engagement" in the region. He further highlighted
the dangers of Iran's nuclear ambitions and implied that
Uruguay could play a role in dissuading them. Vazquez urged
the U.S. to not forget about Uruguay and to remember that he
only had two and half years left in office. The Presidential
website later noted that the meeting with Vazquez "was a step
of significant importance in strengthening trade ties between
the two countries and promoting concrete expressions of such
ties."

Meeting with Economy Minister Astori
--------------

14. (C) Immediately following the meeting with Vazquez, U/S
Burns met with Minister Astori at the Ministry of Economy and
Finance, to discuss trade and investment issues. Astori was
also eager to discuss international politics, including
Venezuela and Argentina. The Minister began in English,
saying that he would soon see Brazilian FM Amorim to discuss
Doha round issues and that he looked forward to the visit by


U.S. Secretary of Treasury Henry Paulson. Soon after, Astori
switched to Spanish, "in order to be
precise." He began by citing a litany of "big problems with
MERCOSUR," including disrespect of the Common External Tariff
(CET),unfair trade policies, and "asymmetries" for smaller
countries non-tariff restrictions. He indicated that Uruguay
would ask for more flexibility from MERCOSUR for it to enter
into Free Trade Agreements, both multilaterally and
bilaterally, as it was important for Uruguay to advance in
both. He said that the TIFA was providing good results and
that he looked forward to working toward greater access to
U.S. markets, and hopefully eventually leading to conclude an
FTA and achieve true market access. He said that Uruguay
wanted to see progress on the Doha round of WTO negotiations.
He characterized trade prospects with India as promising and
agreed with the Ambassador that Indian firms such as TATA
were a good example of India outsourcing to countries such as
Uruguay. Astori said that Uruguay needed to diversify its
supply of energy. He agreed with U/S Burns that energy was
perhaps the number one issue in the world today, citing a
variety of global challenges that impact on the worldwide
availability of energy sources, including climate change, WMD
issues and international conflicts in oil producing areas.


15. (C) On Argentina, Astori said that Uruguay was "in one of
the worse moments in our history with it," referring to the
serious pulp mill dispute. He said that the Argentines have
"a complicated government and President." U/S Burns
indicated that the U.S. was pleased to support the IFC loan
vote for the pulp mills, but acknowledged that the U.S. would
maintain a low profile in the dispute. Astori said that
regionally there are two visions of economic development:
those of Venezuela, Ecuador and Bolivia, "that we do not
share;" and those of Chile and Brazil, "which we do share,"
which included good relations with the U.S. He described
Uruguay,s type of "left" as seeking to support social
stability and fight poverty. On Venezuela, Astori said that
Uruguay does not agree with Chavez's confrontational
attitude, as he "seems to represent a failed past," and is
generating more regional isolation. (Note: A few days later
Astori was quoted in the press for his criticism of Venezuela
in another forum, resulting in a sharp rebuke from FM
Gargano.) When the meeting concluded, U/S Burns said he hoped
to see Astori when he was in Washington.

Press Conference
--------------

16. (C) The morning meetings were followed by a full press
conference at the Sheraton Hotel with coverage provided by
both national and international media correspondents who
engaged U/S Burns on variety of regional and global topics.
Transcripts and photographs of this press conference can be
found on the unclassified system at:

http://uruguay.usembassy.gov/usaweb/2007/07-3 89EN.shtml

AMCHAM event
--------------

17. (U) The press conference was followed by a public event
at the same location, hosted by the Montevideo Chamber of
Commerce and attended by acting AmCham President Horacio
Hughes. During the lunch, U/S Burns made a brief speech
about U.S. foreign policy toward Uruguay and across Latin
America, and then took questions from the audience.
Uruguay's major daily "El Pais" later reported that although
U.S. and Uruguayan Government officials in attendance at the
Chamber of Commerce Uruguay-U.S. luncheon "lavished each
other with gestures of affection and friendship, Burns sent
his messages between smiles: his country wants to tighten
political and economic ties with Uruguay and the region in
general, but strongly maintains its cold attitude and frank
rejection of the 'extremes' of Venezuela and Cuba."

Following the luncheon, Economy Minister Astori confirmed
that Uruguay's strategy is to work "within Mercosur," with
the hope that its demands for "flexibility" will be taken
into consideration now that it holds the Mercosur pro-tempore
presidency. Astori also expressed hopes for progress at the
multilateral level at the Doha Round as well as at the
bilateral level, seeking to improve trade relations and
investments by using foreign policy as a "essential tool."


18. (U) This message was cleared by U/S Burns. Additional
information and photographs of the U/S Burns visit can be
found on Embassy Montevideo's unclassified intranet site at:

http://uruguay.usembassy.gov
Baxter