BOLIVIA'S NEW CONSTITUTION: MAS WINS

C O N F I D E N T I A L LA PAZ 002392

SIPDIS

USAID LAC FOR EDWARD LANDAU

E.O. 12958: DECL: 10/30/2018
TAGS: BL ECON ENVR KDEM PGOV PREL PHUM PINR
SUBJECT: BOLIVIA'S NEW CONSTITUTION: MAS WINS

Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d)


1. (C) Summary: On October 21, President Evo Morales
announced that his Movement Toward Socialism (MAS) party and
the opposition had reached a compromise to update the text of
the MAS draft constitution, which will go to a national
referendum on January 25. Some of Evo's hard-core MAS
supporters protested the significant changes to the
constitutional text and Evo's promise not to run for a third
term, while regional opposition leaders accused the national
opposition of giving in too easily. Post has obtained a
credible copy of the new draft constitution and reviewed the
changes. While the opposition did achieve some gains, the
draft constitution empowers the central government at the
expense of the departments (a loss for the regional
opposition). Some vague sections of the text have been
clarified, but the final draft still leaves questions on key
issues, including presidential term limits, land reform, and
foreign investment. Perhaps most importantly, a change to
senatorial election by proportional representation may lead
to a MAS takeover of both houses of congress and ultimately
the ability to modify the constitution at will. End summary.

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Big-Ticket Items
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2. (C) Term limits: While eleventh-hour negotiations between
the MAS and opposition parties apparently led to an agreement
that Evo would stand for only one more term (i.e. through
2014),it should be noted that the relevant part of the
Constitution, Article 168, has not been updated from the
December 2007 draft. Under the "Transitory Provisions" at the
end of the text, new language was added, which states "Terms
in office before this text comes into force will be taken
into account to compute new terms in office." The opposition
feels this addition will limit Evo to one more term.
However, in light of recent comments from Development
Minister Carlos Romero that "Reelection, for now, includes
only one term," as well as the significant potential for a
MAS takeover of both houses of Congress (and with this the
subsequent ability to modify the Constitution more easily),
some doubt that Evo will honor this agreement.


3. (C) Land reform: In what could be one of the biggest gains
for the opposition, Article 399 has been updated to state
that any new limits on the size of agricultural land holdings
would apply only to lots acquired after the new Constitution
enters into force. At first glance, this change would appear
to provide significant legal cover for property owners
seeking to maintain large properties, especially in the
eastern (opposition) part of the country, or "Media Luna."
The opposition also added an assurance in Article 57 that the
government would not expropriate any urban land holdings, and
struck the prior vague allowance for expropriation when
property was "not fulfiling a social function". However, the
issue is not settled. Article 57 also specifies that the
government has the ability to expropriate rural land holdings
for "public need or utility" when necessary, a potentially
large loophole. (Note: Land redistribution has long been a
plank in the MAS platform, and hard-core MAS supporters
complained at the loss of the "social function" clause.
Assuming approval of the constitution in the January
referendum, we may see significant pressure on Evo to seize
land. End note.)


4. (C) Control of Congress (to MAS): A significant change
appears to have been made in the composition of the Senate,
favoring the MAS. Article 148 has been changed to increase
the number of Senators from 27 to 36 and to allow for the
election of Senators via proportional representation. The
expansion of seats and the change from a winner-takes-all
system could well augur a MAS takeover of the Senate and thus
control over both houses of congress (now to be called the
Plurinational Legislative Assembly). The opposition's past
ability to eke out wins in five of the nine departments gave
them control of the Senate and the ability to check, to some
degree, implementation of the MAS agenda. Proportional
representation could lead to a landslide of MAS Senators from
the western half of the country and the election of several
more from the Media Luna, leaving opposition parties out in
the cold. Given that the new draft allows the constitution to
be modified by a two-thirds vote of Assembly members present,
this change could enable the MAS to modify the constitution
at will. (Note: the opposition did manage to modify the text
regarding constitutional amendments--previously a simple
majority in one house of congress was all that was necessary
to amend the constitution, and would have given the MAS the
almost-instant ability to make any changes it wished. With
the change to proportional representation, however, MAS may
achieve a two-thirds majority, making the change moot and the
end result the same. End note.) Note also that Articles 147
and 148 state that not only will there be "equal
participation" between men and women in the Congress, but
that there will be "proportional participation of indigenous
nations and villages."

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State Control of the Economy
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5. (C) Hydrocarbons: MAS negotiators held firm in their goal
to insert the state squarely into the economy and to keep the
executive branch in control of the hydrocarbon sector.
Foreign companies are dissuaded from participating in the
hydrocarbon industry. Left unchanged, Article 366 states that
all foreign companies involved in the hydrocarbon industry
must submit to government sovereignty. The government will
not recognize the authority of foreign tribunals,
arbitrators, or external jurisdictions, and will not allow
companies to make diplomatic claims or requests. Per Article
359, production of hydrocarbons is an "inalienable right of
the central government". All income from commercialization of
hydrocarbons is the property of the state. While the
Constitution does allow partnerships with foreign companies,
the effect of this language will likely deter foreign
investors wary of being caught without any exit strategy or
recourse to international arbitration.


6. (C) Bilateral treaties: The portions of the text devoted
to rejection of imperialism and neo-colonialism not only
strike a populist tone, they also contain details that will
further deter foreign investment. Article 320, left untouched
from the initial draft, states that "Bolivian investment will
be prioritized above foreign investment." All foreign
investment will be under Bolivian authority, and the state
will not accept conditions on the part of other states,
banks, or financial institutions. These terms conflict with
agreements such as the U.S. - Bolivia Bilateral Investment
Treaty, which requires equal treatment for both parties.


7. (C) Utilities: Under the new Constitution, access to water
and sewerage would be declared fundamental human rights,
which the government would deliver to all Bolivians (see
Article 20),and which may not be subject to concessions or
privatization. This could lead to significant increases in
infrastructure costs (and potentially lawsuits demanding
access) at a time when dropping hydrocarbon prices may not
support new spending. If handled incorrectly, this element of
the constitution could lead to uprisings and demands from
rural and poorer areas, MAS strongholds.


8. (C) Article 124, which deals with acts of treason,
includes a clause regarding "acts against natural resources".
In the December 2007 draft, a more broadly-worded clause
stated that whoever realized acts that would "dispose of
natural resources belonging to the social ownership of the
Bolivian people in favor of foreign businesses, persons, or
states" would be considered a traitor. This clause has been
modified to apply to those who "violate Constitutional rules
against natural resources," which, while still vague, does
not seem as easily applied to Bolivians doing business with
foreign companies. (Note: One of the MAS's complaints against
ex-President Gonzalo "Goni" Sanchez de Lozada is that he
profited off of sales of mines previously belonging to the
state. The government is working on an extradition petition
for Sanchez de Lozada. End note.)


9. (C) Domestic financial policy: In a subtle but potentially
significant update to Article 327, which deals with the
Central Bank and financial policy, the Executive Branch was
granted more leeway to meddle in monetary policy. It appears
likely the MAS struck the following text "(the Central Bank)
has autonomy in its administrative and technical services" to
increase their sphere of influence in financial policy
matters. The director of the Central Bank is already
appointed by the President, and this change could signal
further state involvement in this sector.

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Autonomy Sections: Heavily Re-written, But For What?
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10. (C) The sections on autonomy were extensively changed
during the final compromise negotiations, but to little
effect. The central government retains control of taxation,
land titling, hydrocarbon production in all aspects, and
distribution of the Direct Hydrocarbon Tax (IDH). The powers
granted to the departments do not match those in the autonomy
statutes passed by Santa Cruz, Beni, Pando, and Tarija. The
departments are not privileged entities and do not have legal
standing above the other autonomous areas, being instead held
equal to indigenous territories and municipalities (Article
276). (Note: The draft constitution also states that any
power not designated specifically reverts to the central
government (Article 297),the reverse of the U.S.
Constitution. End note.) One outcome of this leveling of the
powers of autonomous areas could be a power vacuum into which
the civic committees and similar groups will insert
themselves. Post-compromise protests by the regional
opposition stem from the lack of power granted to the
departments in the final draft.


11. (C) As part of the new draft, departmental, municipal,
and indigenous autonomous areas may create and administrate
taxes, but only if the tax is not analogous to central
government taxes, which does not leave much to tax beyond
tourism and infrastructure. A new Framework Law on Autonomies
and Decentralization (see Article 271) will be written to
regulate and coordinate the different types of autonomies.
This Framework Law is expected to state that any other law
passed by the departments regarding autonomy is void,
reasserting the central government's control.


12. (C) The opposition was successful in nullifying much of
the impact of the new "Regional" autonomy section of the
Constitution. The Regional autonomy area may have been
introduced by the MAS to mollify Chaquenos, many of whom have
agitated for greater recognition for the Chaco region, which
spans several departments. However, the opposition
successfully modified Article 280 to state that a regional
autonomous area cannot span two departments, keeping any
regional autonomous areas subsumed inside the departments.
The regional autonomy area is also limited in the final draft
to playing a vague role of primarily "planning and
facilitation." However, the regional autonomy level may
still offer some benefits to the city of El Alto: in the
final draft, new language confers regional autonomy status on
urban areas with populations above 500,000 people. While the
direct benefits of receiving "regional" status may be
nebulous, it is a way to offer recognition to La Paz's poorer
neighbor.


13. (SBU) In a change to the final draft, the leaders of the
Departments are now to be called "Governors" instead of
Prefects (see Article 279).

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Freedom of the Press
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14. (C) The final draft appears to have addressed some of the
concern raised by media groups regarding suppression of free
speech. Negotiators eliminated language in Articles 106 and
107 that had assured respect for free expression "in
accordance with the principle of responsibility," a vague and
troubling clause given President Morales' proclamation that
the media is his "main enemy." Instead, the Constitution
calls for "auto-regulation," perhaps signaling the
establishment of an industry group. It remains to be seen
whether this will be an effective compromise or an ultimately
damaging inclusion, since state media would presumably be
included and self-censorship may result.

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Judicial Reform
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15. (C) The final round of negotiations reversed some of the
changes that the December 2007 draft would have been made to
the judicial system, especially with regard to the impact of
"social groups" in nominating members of the new Justice
Council and the Constitutional Tribunal. The Justice Council,
which will have oversight responsibility of the judicial
system, was to be populated by members nominated by undefined
"social groups," which potentially could have included groups
such as the Coca Growers Union or others sympathetic to the
MAS cause. Instead, Article 193 was changed, presumably by
the opposition, to ensure that the National Assembly will
nominate the Justice Council members. Article 197 was
amended to change indigenous represenation in the
Constitutional Tribunal from "parity representation" to
simply an undefined "representation". Also, the requirements
to be on the Constitutional Tribunal, in Article 199, were
toughened. Previously an indigenous representative would not
need any specific experience to be on the Consitutional
Tribunal; now all members must have eight years of experience
in either constitutional law, human rights law, or
administrative law. Previously "social groups" were
responsible for nominating the members of the Constitutional
Tribunal; the final text was modified to state social groups
"can suggest" candidates (Article 199, II).


16. (C) The draft also creates an new wing of the judiciary,
the Agro-Environmental Tribunal (Article 186). While likely
intended to shift the balance of power in agricultural law
from the Media Luna (where there is much more large-scale
farming) to the national level where the MAS can have more
control, it will also create more bureaucracy and friction
within an already understaffed and fragmented judiciary
system.

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Indigenous Rights
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17. (C) Several new elements regarding indigenous legal
rights and indigenous justice emerged in the final draft.
First, new text effectively sanctions non-democratic
"elections" in indigenous areas, which are to be monitored by
the newly-created "Electoral Body." Article 191 was edited
heavily and now clarifies that indigenous "community justice"
applies to all members of the indigenous nation in question
or to acts in the indigenous area. Article 15 makes clear
that indigenous justice must adhere to the constitution,
which specifically prohibits the death penalty, so that
lynchings should not be confused with "community justice"
norms. Last, any unanswered questions regarding indigenous
rights are to be addressed in the forthcoming Law of
Jurisdictional Demarcation, newly proposed in the

Constitution (see Article 192),which will "determine the
mechanisms of coordination and cooperation" between the
indigenous, civil, and agro-environmental jurisdictions.


18. (C) Economically, indigenous groups are granted several
exclusive rights not granted to the departments, including
the right to administer "renewable natural resources." While
this would not include mining or hydrocarbons, it would
include revenue from fishing and logging (Article 304).
(Note: In allowing both traditional or "non-democratic"
elections within indigenous areas and the "renewable natural
resource" revenue streams mentioned directly above, the
Constitution does grant indigenous groups more and different
rights than other Bolivians. However, the opposition appears
to have eliminated many of the other "special rights"
mentioned in the earlier draft of the Constitution. End
note.) New text protects prior investments by non-indigenous
agents in indigenous autonomous areas (Article 30, #17),and
also guarantees private property rights for landowners whose
lots are located in new indigenous autonomous areas (Article
394).


19. (C) The final draft kept the requirement to speak at
least two of the 37 official languages in order to work in a
government position. An attempt to provide a five-year
transition period for this requirement was defeated,
according to a version of the Constitution with proposed
changes tracked. Almost none of our contacts in the Ministry
of Foreign Affairs speak an indigenous language, and it is
unclear whether immediate enforcement of this new rule will
displace much of the government's bureaucratic backbone.

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No Foreign Bases
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20. (U) Article 10 remains untouched, including a prohibition
on the installation of foreign military bases in Bolivian
territory.

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Human Rights
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21. (C) A new clause to Article 13 (likely added by the
opposition) states that any international human rights
treaties ratified by the National Assembly will prevail, even
during periods of martial law, over conflicting passages in
the constitution. Given the recent establishment of martial
law in Pando, the opposition may have hoped to preserve a
wider range of human rights protection in any future events.

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Comment
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22. (C) The compromise reached in Congress on the new
Constitution is a huge win for President Morales. Even if
under the spectre of thousands of armed Evo supporters, the
lack of violence provided the democratic cover needed to
avoid international scorn. Furthermore, Morales has
delivered on his promise of a new Constitution while leaving
the door wide open for his possible continued rule through
2014 and possibly beyond. The Constitution is almost assured
passage, as the opposition that helped broker the compromise
language is not in a position to mount a serious campaign
against it, and may actually want to be seen as for its
passage in order to gain its own "pro-change" credentials.
The regionally-based opposition remains opposed to the
proposed text, but it is weak and lacks the resources to
mount a serious "No" campaign, while Evo already is engaged
in promoting the "Si" vote.
URS