SUBSTANTIVE ENGAGEMENT: A/S SHANNON JULY 10-11

C O N F I D E N T I A L MONTEVIDEO 000707

SIPDIS

SIPDIS

DEPT ALSO FOR P (WMCILHENNY AND HBRONKE) AND WHA/FO
(SWILLIAMS)
DEPT ALSO FOR WHA/PD (JRUSSO) AND WHA/BSC (KREAD)
TREASURY FOR OASIA FOR DDOUGLAS
COMMERCE FOR ITAITA/MAC/WBASTIAN
NSC FOR DFISK AND GTOMASULO
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 07/23/2017
TAGS: PREL PGOV ECON ETRD ASEC OVIP PTER UY
SUBJECT: SUBSTANTIVE ENGAGEMENT: A/S SHANNON 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. Arriving in Montevideo several hours ahead
of U/S Burns on July 10, A/S Shannon,s pre-visit to Uruguay
was very successful and advanced important U.S. foreign
policy objectives. The pulp mill dispute with Argentina,
Uruguay,s $20 million Haiti proposal, trade, Bolivia,
Venezuela, and UN peacekeeping operations (PKO),were some of
the main issues discussed. In conjunction with the U/S Burns
visit (septel),and immediately prior to the visit of
Secretary of Treasury Henry Paulson (septel),A/S Shannon,s

SIPDIS
visit was widely seen as an important continuation of the
Administration's commitment to developing and maintaining
closer relations with Uruguay. Below are highlights of the
various meetings. End Summary.


2. (C) A/S Shannon lunched at the Ambassador's residence with
Director General of the Secretariat Ambassador Jose Luis
Cancela. (Note: Cancela, the MFA's third highest-ranking
official tends to respond more to President Vazquez than does
the anti-American Foreign Minister. End Note) The
Ambassador, DCM and Pol/Econ Counselor also attended the
lunch. Cancela began by saying that he was soon going to New
York to contend with another round of discussions in the long
running bilateral dispute with Argentina over the
construction of a giant pulp mill on a shared river, adding
that he appreciated U.S. support for the IFC loan for the
project. A/S Shannon lamented the situation but indicated
that it would be unhelpful for the USG to appear to be
interfering in this delicate matter at this time. He then
commented that President Bush's visit was something bigger
than the meeting between the two leaders. He told Cancela
that the U.S. President is still very interested in market
access for Uruguay. Cancela agreed that the POTUS visit was
"a big hit" and said that "Uruguay's international vocation"
goes beyond the region to global affairs, despite its size.
A/S Shannon responded that this was a "double opportunity"
for the two countries to work together.


3. (C) Shannon brought Cancela's attention to the recent
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. He stressed that
this was an effort to complement President Bush's visit last
March and signal a positive agenda that would harness the
dynamic energy of more than just governments. He said that
the region needs a positive agenda and that "its our job to
manage our differences." Cancela said that Latin America
fortunately has not been afflicted by terrorism as have been
other places in the world, but that it suffered a lot during
the periods of military dictatorship when there was no
democracy. He referred to Uruguay's $ 20 million project
proposal for Haiti and offered that if the outcome is
positive then it can have beneficial effects throughout the
Caribbean. A/S Shannon said that the United States did not
want the outcome to be like Cyprus, and that the Haitians
don't want this either. He said that President Aristide
destroyed the country's institutions, but that the
international community has to shift from its stabilizing
role to an enabling one where Haiti is allowed to make its
own mistakes. It also needs to reverse some of its brain
drain and provide incentives for some of the more educated
and successful Haitians to return home.


4. (C) A/S Shannon then asked Cancela for his opinion of the
TIFA, prefacing with the observation that if the U.S.
Congress approves the FTAs for Panama, Peru and Colombia,
there will an unbroken chain of FTAs stretching from Alaska
to Tierra del Fuego. Cancela observed that MERCOSUR has no
trade agreement with the most important economies of the

world and said that President Vazquez is going to the EU in
September to push the stalled talks aimed at a Free Trade
Agreement. He opined that Latin America needs stable partners
and to break down its parochialism. On the TIFA he said it
was working well, but said that intellectual property rights
issues were proving difficult. He said that Uruguay was
still very keen on obtaining market access to the United
States but recognizes that progress was being made on exports
of blueberries and other fruits such as apples and that
Uruguay was inclined to import U.S. turkeys. He added that,
"we have to work out the best ways and want to hear from you
on Doha and TPA."


5. (C) The two officials also discussed Bolivia where Cancela
said the country was going through its own special process
with its first-ever indigenous government. He said that
President Vazquez was going to visit Ecuador, opining that
"we can not leave Correa alone with Chavez." Regarding
Venezuela's President, he commented that "Chavez tends to
make mistakes when Castro gets sick," but qualified that the
Venezuelan opposition made a serious mistake by trying to
throw Chavez out.


6. (U) Meeting at Congress: Following the luncheon with DGS
Cancela, A/S Shannon traveled across the city to the
Legislative Palace where he met with both the Senate and
House Foreign Relations Committees. The legislators and brief
highlights of main issues included: Senate President Sergio
Abreu (Former Foreign Minister; member of the Alianza
Nacional faction of the National "Blanco" Party) who greeted
him and observed that both the United States and Uruguay
share an "appreciation of democracy." He also said that he
was concerned about the number of international conflicts,
agricultural subsidies, and the stubbornly high levels of
poverty in the region; Senator Carlos Baraibar (Assamblea
Uruguay; Frente Amplio) who congratulated Ambassador Baxter
and DCM Nealon for improving bilateral relations with the
Frente Amplio GOU. He added that the POTUS visit last March
was extremely positive. He brandished a folder that was full
of articles about A/S Shannon; Senator Alberto Couriel
(MPP-Frente Amplio) who said he welcomed the representative
of the "hegemonic power"; House President Daniel Pena
Fernandez (Alianza Nacional, National Party) who
congratulated the United States for its trade overtures
toward Uruguay; Congressman Rafael Michelini (Nuevo Espacio;
Frente Amplio) who said that the U.S. naval base in
Guantanamo and the non-combatant prisoners held there were a
"sore point" in our relationship.


7. (U) A/S Shannon praised Uruguay for its contributions to
international PKO in Haiti, DROC and elsewhere. He urged the
legislators to note the new commitment ("compromiso") made at
the July 9, 2007 White House Conference on the Americas as an
initiative designed to further involve the private sector,
civil society and NGOs in Latin America's development. He
said he was optimistic about the U.S. Congress approving the
three FTAs for Peru, Colombia and Panama but that it would be
a tough job. After concluding the session, A/S Shannon paid a
brief courtesy call on Uruguayan vice-president Rudolfo Nin
Novoa, who also serves as President of the National Assembly
(both houses of Congress.) A complete transcript of his
meeting with the Senate and House Foreign Relations
Committees and photos of the event can be found (in Spanish)
on the unclassified system at:

http://uruguay.usembassy.gov/usaweb/2007/07-3 91EN.shtml


8. (U) Youth Ambassadors: In the afternoon A/S Shannon met
with a group of Uruguayan Youth Ambassadors at the residence
who had traveled to the U.S. January 24-27 and had previously
met with A/S Shannon during that trip. The Uruguayan
ambassadors discussed the impact of their trip and the

positive impression of the U.S. that the program left on
them.


9. (U) One-on-One Press Interview: WHA A/S Shannon gave an
in-depth exclusive press interview to a reporter from
Uruguay's highest circulation daily "El Pais". The article
is entitled from a quote of Mr. Shannon ("We see in Uruguay a
Partner and a Friend") and appeared in the Sunday, July 15
edition of "El Pais". It can be found on the unclassified
system at:

http://www.elpais.com.uy/07/07/15/pnacio 292180.asp


10. Comment. A/S Shannon is well known in Uruguay and seen
as a key architect behind the resurgence of relations between
the United States and Uruguay, focusing USG efforts on a
broad, positive engagement with the region. His visit to
Uruguay provided an opportunity for the USG to engage an
important partner in Latin America, and demonstrates that we
are eager to work positively with all moderate governments in
the region that respect democracy. End Comment.


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

http://uruguay.usembassy.gov
Nealon