FONMIN FOXLEY TO A/S SHANNON: CHILE TAKES THE

C O N F I D E N T I A L SANTIAGO 000698 SIPDIS SIPDIS ASUNCION PLEASE PASS TO A/S SHANNON E.O. 12958: DECL: 04/25/2017 TAGS: PGOV PREL CI SUBJECT: FONMIN FOXLEY TO A/S SHANNON: CHILE TAKES THE CHAVEZ THREAT SERIOUSLY, WILL CONTINUE TO WORK ITS POSITIVE AGENDA IN RESPONSE Classified By: Ambassador Craig Kelly for reasons 1.4 (b and d). -------------- Summary -------------- ¶1. (C) Foreign Minister Foxley told visiting A/S Shannon April 26 that Chavez must not be underestimated as he pursues an aggressive agenda. President Bachelet had met opposition leaders while in Venezuela, who had urged her to keep asserting Chilean principles and values but to steer clear of taking sides in Venezuelan politics. Foxley said that Chile would continue to work a "positive agenda" in the hemisphere, to show how the "Chilean way" can work, and would sek to improve relations with Peru. Chilean relations with Colombia are solid and Chile will reach out to Ecuador despite the difficulties of working with Correa. Foxley noted that Bachelet had contacted U.S. congressional leaders to advocate for approval of FTAs with Colombia, Peru and Panama. Foxley also expressed appreciation for his recent meeting with the Secretary and her enthusiatic response to his initiative to SIPDIS bolster Chilean-U.S educational ties. End summary. ¶2. (U) Chilean Foreign Minister Alejandro Foxley held a restricted meeting on April 26, at the MFA, with visiting WHA A/S Thomas Shannon. MFA Director General Carlos Portales and Ambassador Kelly were the only other participants. -------------- Taking on Chavez - Quietly -------------- ¶3. (C) Foxley said he wanted to speak "off the record" about his impressions of Chavez in the wake of President Bachelet,s recent visit to Venezuela. "Chavez must be taken seriously," said Foxley repeatedly. "We must not underestimate him." He noted that Chavez was working the room aggressively during the energy meetings, cornering Lula, Correa and other leaders to make his pitch on Banco del Sur and other initiatives. "He,s a big time seducer." We do not want to pick fights, said Foxley, and we oppose the Banco del Sur, but we will stick to a positive agenda. Foxley reviewed the initiatives he mentioned to the Secretary: Coordination with the IDB in Central America; a project with the Andean Development Corporation to finance travel to Asia by Andean business leaders; social programs with CARICOM. He noted (with little enthusiasm) that Chilean oil company ENAP would contract to do some oil exploration in the Orinoco, and that the GOC would press the GOV to facilitate market access for Chilean exporters. But, he repeated, we must not underestimate what Chavez is doing to divide the region. ¶4. (C) On RCTV and the Chilean Senate declaration, Bachelet reminded Chavez about Chile,s strong tradition of separation of powers. Chavez promised not to meddle. Foxley said that Bachelet met with Rosales and other opposition leaders in Caracas. Rosales thanked Bachelet for the meeting and told her it was very important. He urged Chile to keep asserting its principles and values, but without taking sides in internal Venezuelan politics, which could only hurt the opposition. Foxley said that Petkoff appeared very worried about the increasing militarization of Venezuelan society, something the Bachelet delegation also noticed as its motorcade passed through the streets. Foxley commented that he found the opposition representatives tentative and uncertain about what path to take. Shannon agreed that Rosales appears hesitant and even fearful. Meanwhile, Chavez will try to destroy Rosales,s base in Zulia. It will be a mistake for Rosales to try to out-populist Chavez. -------------- -- Moving Forward - The Chilean Way -------------- -- ¶5. (C) A/S Shannon reviewed the President,s commitment to a positive agenda in the hemisphere, noting that we have listened carefully and understood the need to link democracy with development in our messages. We believe our policies are correct, but we can do more to make clear that our agenda addresses the social and economic problems that are of wide concern in the region. He applauded Chile,s increasing leadership among like-minded countries in the hemisphere. ¶6. (C) Foxley said Chile would continue to emphasize the positive, and to show others how the "Chilean way" can work. For instance, Chile is making a major effort to improve relations with Peru. Unfortunately, the maritime border issue was another example of "Latin America,s infinite capacity to invent crises." Chile has told Peru to go ahead and take the maritime border dispute to The Hague ("they probably will"),but not to mix in the land border issue. He said the U.S. could help by discouraging Peru to invoke U.S. arbitration on the land border. Foxley emphasized, however, the Chile will advance its overall agenda with Peru. Shannon noted that we shared Chile,s positive approach to Peru, adding the Deputy Secretary Negroponte would travel there soon. ¶7. (C) Foxley also emphasized the terrific meeting Bachelet had with President Uribe in Bogota - "they were completely in tune." Likewise, her relationship with President Calderon is excellent. All of this reinforces Chile,s commitment to reinforcing ties among FTA counties in the region - "a sort of FTAA of the willing." This is the best deterrent against populism. ¶8. (C) Chile is also reaching out to its historically close partner, Ecuador. It is not easy - Correa has Chavez-like designs without the money. But Chile is focusing on specific areas like maritime borders, trade, and assistance for modernization of Ecuadorian institutions. Chile will continue to court Brazil as well. (Lula met with Bachelet April 26 in Santiago.) Lula likes to feel appreciated, and Chile is happy to cooperate, in view of longstanding Chilean desire for more Brazilian leadership in the hemisphere. Foxley praised U.S. engagement with Brazil. "We need that in the region," he said. -------------- Chile's Education Initiative -------------- ¶9. (SBU) A/S Shannon expressed satisfaction over the excellent April 13 meeting between Foxley and the Secretary, and assured Foxley that we were already following up on his educational initiatives. Foxley said he was very pleased with the meeting with the Secretary, and was particularly encouraged by her response to his proposal for a mechanism to strengthen ties between Chile and U.S. universities, "which are the best in the world." Chile plans to involve CONICYT (Chilean National Science Foundation equivalent) in the effort. He said he had already talked to President Bachelet about visiting a U.S. university to sign some kind of agreement. -------------- Chile to Advocate for FTAs -------------- ¶10. (C) Foxley said that President Bachelet had just called speaker Pelosi to press for ratification of the FTA,s with Colombia, Peru and Panama. She was following up with a letter (delivered later that day). Shannon applauded Chile,s initiative, in view of the widely known success of the U.S.-Chile FTA. He reviewed prospects for ratification on the Hill, and said the President is strongly committed to passage. -------------- Posada Carriles -------------- ¶11. (C) A/S Shannon reviewed the Posada Carriles issue with Foxley, who took the points on board. -------------- -------------- Argentina on Sideline, Uruguay Wants to Play -------------- -------------- ¶12. (C) A/S Shannon continued the conversation with the FonMin at a dinner hosted that evening by the Ambassador for Foxley and several ranking MFA officials. Foxley said that Argentina, under Kirchner, would continue to look inward and could not be counted on to play an active role in regional affairs. The Argentine president "is not comfortable" dealing with foreign relations issues. Kirchner would certainly pose no challenge to Chavez. Foxley argued that Uruguay was seeking to move out of the shadow of both Argentina and Brazil and was looking to Chile as a possible avenue, including entering into an FTA with Chile. But, Foxley said, "we are very small" and if Uruguay is to succeed in opening its economy to the world, it will need to broaden its partnerships, including with the U.S. Perhaps Chile and the U.S. could work together to encourage Uruguayan aspirations. Shannon briefed on U.S.-Brazilian relations in the aftermath of the President,s visit to Brazil and then asked if Lula was ready to take a more active leadership role in the region. MFA Director General Portales replied "He has no choice but to." -------------- -------------- Bringing the "Like Minded" Together -------------- -------------- ¶13. (C) Shannon raised Treasury Secretary Paulson,s effort to bring together a small group of &like-minded8 finance ministers, including Chile,s, to discuss regional issues and initiatives. Foxley was familiar with the matter and said Minister of Hacienda Andres Velasco had planned to attend a meeting of the group in Washington the week before but had to cancel at the last minute to attend to an important domestic policy issue. Foxley offered to urge Velasco to participate in the group,s next gathering. Foxley also noted that he and Velasco would travel together to Paris May 19 for the OECD meetings at which Chile is to be formally offered membership. The object was to signal to Chileans the importance of Chile,s joining the OECD, a group that required adherence to "elevated" economic standards. Foxley suggested that the "two-plus-two" model, whereby the ministers of Finance and Foreign Affairs worked closely together on key issues, might also be of use in treating bilateral matters. He offered to come to Washington with Velasco, to meet with Secretaries Rice and Paulson, if Washington found it useful. ¶14. (U) A/S Shannon has cleared this message. KELLY