MORALES CABINET SHUFFLE REMAINS HARDLINE

C O N F I D E N T I A L SECTION 01 OF 02 LA PAZ 000175 SIPDIS SIPDIS E.O. 12958: DECL: 11/26/2017 TAGS: ECON PGOV PINR PREL BL SUBJECT: MORALES CABINET SHUFFLE REMAINS HARDLINE Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d). -------------- Summary -------------- ¶1. (SBU) President Morales initiated his third year in office by changing four of his sixteen cabinet ministers. Signaling that economic growth is a priority, three of the four positions are economic. Substantive changes are unlikely however, as none of the new ministers holds sufficient clout to influence policy and all of the political and economic hard-liners remain. The new appointments pleased neither the opposition, which wanted the hard-liners out, nor the indigenous social organizations, which wanted more indigenous representatives in the cabinet. End Summary. -------------- The Economy Matters -------------- ¶2. (SBU) By changing the leadership at the Ministries of Economic Development, Production and Microenterprise, and Public Works, President Morales sought to signal economic improvement was a primary goal heading into the upcoming year (the Minister of Health was also changed). Morales hopes to make 2008 the "year of industrialization." Led by microenterprise and increased state involvement in the economy, the natural resources that were nationalized in 2006 are to be "industrialized" in 2008. Meanwhile, rising inflation is the primary concern of most Bolivians but, as the President of the Federation of Private Enterprises Roberto Mustafa points out, the hard-line Minister of Treasury, Luis Arce, remains in place. Arce claims that inflation will be fought through the State's participation in critical areas of production. -------------- The New Ministers -------------- ¶3. (C) The new Minister of Economic Development is Graciela Toro. Over the past year, Toro has worked with the Embassy as the General Coordinator of the Millennium Challenge Account in Bolivia. Her appointment is seen as a reward for her loyal service to the Vice President. She is a sociologist/economist by training and earned her MA in International Political Economy at the Center for Investigation and Teaching in Mexico. For ten years, she worked at the Economic Institute of Latin America in Mexico. She is neither seen as an ideological radical nor as an avid Movement Toward Socialism (MAS) party follower. On the other hand, her influence in the government will likely be limited. In meetings regarding the MCC, it was clear that Toro's contact with the President was minimal. ¶4. (C) Javier Hurtado is the new Minister of Production and Microenterprise. He was Toro's predecessor at the MCC, but quit due to a lack of perceived support for the initiative by the Morales Administration. He is, however, considered a MAS militant and has been active in the leftist Katarista Party. He earned a Ph.D. in Sociology in Germany and runs (with his wife) a successful organic agricultural export business, Irupana. He recently purchased a new quinoa processing plant, developed under a USAID project, and has expressed gratitude to the Mission for their work in agriculture. His company is one of 12 members of the USAID led Quinoa Alliance that will work through 2010 to expand organic quinoa production. ¶5. (U) The new Minister of Public Works is Oscar Coca. Before his appointment, Coca was the Vice President of the City Council in Cochabamba. He is also considered a MAS militant and has worked as an advisor to the coca leaf LA PAZ 00000175 002 OF 002 producers. He holds a MA in Economic Development and will be expected to redirect the national housing plan which Morales condemned as a failure. ¶6. (U) The final new appointment is Walter Selum as the Minister of Health. He is a cardiologist with 26 years of medical practice. He was the subdirector of the Japanese Hospital in Santa Cruz and also worked for the mayor on health issues. He claims to identify with social movements because of his time spent working with the rural poor. -------------- Criticism From All Sides -------------- ¶7. (U) The new appointments were criticized by various grassroots social organizations that support the MAS government. In particular, it appears that Evo has ignored the demands of his indigenous base in the city of El Alto. These groups had pushed for at least four of the sixteen ministers to be of indigenous descent, but with the dismissal of Celinda Sosa the number of indigenous ministers actually shrunk from three to only two. Edgar Patana, leader of the Central Workers Union (COR) in El Alto, said that Evo had once again "left El Alto to the side." Patana announced that further actions by the social organizations would be taken to advance their goals. Evo countered that the social alliances need to allow him to govern, and he reminded them that it was he who decides the composition of his cabinet. ¶8. (U) The opposition is criticizing the appointments as being meaningless. They see a disconnect between Evo's willingness to pursue dialogue and the hard-line cabinet that he has kept in place. As the opposition Senator Roger Pinto put it, "the axis of evil is still in place." -------------- Comment -------------- ¶9. (C) Leading up to the new appointments, rumors swirled that up to ten ministers would be replaced. In the end however, it appears that only Evo's inner circle is privy to key personnel decisions. The perception is that loyalty to the president is the most important trait in a minister. While we hope for greater access to the two new ministers with a history of cooperation with the United States, Morales' decision to stick with his hardliners means no real change of course. GOLDBERG