EXPORT BAN STRETCHES TO SIX DAYS

C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 000670

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/27/2018
TAGS: ECON PGOV PREL FAS AGR FAO IFAD BL
SUBJECT: EXPORT BAN STRETCHES TO SIX DAYS

REF: A. LA PAZ 589

B. LA PAZ 638

C. LA PAZ 111

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


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Summary
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1. (C) The devastating ban on Bolivian cooking oil exports
has now been in effect for six days. The Morales
Administration, according to the Vice President in a meeting
with the Ambassador March 26 (Septel),is determined to
guarantee the supply of cooking oil at affordable prices.
They are prepared to take whatever actions may be required,
including military confiscation of trucks that violate the
export ban, subsidized imports, and even "buying-out" private
companies. Social movements linked to the Movement Toward
Socialism (MAS) government are calling for the
nationalization of the major agricultural firms involved in
soy processing, which include Archer Daniels Midland (ADM)
company. Ironically, so far the ban has worked to unify the
different social elements involved in the soy production
chain and give further impetus to the Santa Cruz autonomous
movement. The ban is contributing to a growing feeling of
economic and social upheaval, and related transportation
strikes are likely to paralyze the country unless the ban is
lifted in the coming days.

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Export Bans Raise Tensions, Potential for Economic Chaos
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2. (SBU) On March 25, all of the actors involved in the
chain of production for cooking oils met in Santa Cruz to
decide what actions they could take to have the export bans
on agricultural products lifted (Note: The ban on cooking
oil exports went into affect on March 20, but a ban on
cattle, beef, chicken, wheat, corn, rice, and wheat flour has
been in effect since February Ref A and B). The most
immediate result of the meeting is the call for a blockade of
the border custom houses by the transportation sector. These
actions will be followed up by a more general blockages of
major highways on March 27. However, truckers in La Paz
decided to postpone any actions. This decision will allow
the major border crossings leading to the Pacific ports in
Chile and Peru to remain open.


3. (C) Despite no direct impacts of the cooking oil ban in
La Paz yet, there is a sense that the economic situation is
getting out of control. Rising inflation is bringing out all
manner of protest. Contributing to problems on the roads, a
public transport strike is scheduled for April first unless
the government agrees to raise taxi and bus rates. Meanwhile,
as headlines such as, "currently approximately 250 butchers
are marching with dynamite toward the downtown area" cross
our desks, more chaotic times appear to be quickly
approaching.

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Strengthening Regional Autonomy Resolve
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4. (C) Ironically, the cooking oil ban has further unified
many disparate economic actors in Santa Cruz to the necessity
of greater autonomy. Moreover, the ban has put additional
pressure on the departmental government to take autonomous
actions even before the May 4 vote. Following Tuesday's
meeting, regional leaders called upon Prefect Ruben Costas to
somehow legalize through regional actions the export of all
agricultural products. While the prefect is reluctant to do
anything that the Morales Administration can pounce upon as
provocatively illegal, pressure to act independently is

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growing.


5. (C) One example of the propensity to handle economic
affairs locally came after Minister of Agriculture Susana
Rivero refuted the Department's ability to export
agricultural goods independent of the national government.
Rivero said that without authorization from the Plant and
Animal Food Safety Agency (SENASAG),no agricultural products
would be accepted in foreign markets. Right on cue, the
Prefect of Santa Cruz announced that a parallel prefectual
food safety service, whose creation was announced two months
ago as a response to the growing politicization (and
inaction) of SENASAG (Ref C),would begin to operate in Santa
Cruz.

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Government Justifications and Calls for Nationalization
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6. (SBU) The Morales Administration is trying to frame the
export ban as a move to defend poor Bolivians against the
exploitative practices of Santa Cruz oligarchs. At first,
Minister Rivero claimed that these oligarchs had already
exported as much oil out of the country this year as was
produced in all of 2007 (Ref A). These claims were quickly
shown to be false. Now she is claiming that cooking oil sold
in Bolivia is the most expensive in the region and the
oligarchs are willing to export at cheaper prices than they
sell in the domestic market. According to data from the
Association of Seed Oil and Wheat Producers (ANAPO) this
claim is also clearly false (Note: Only Venezuela has lower
consumer prices for refined soy cooking oil in all of South
America. Venezuela is also the largest importer of Bolivian
cooking oils, importing almost $200 million last year. End
Note.)


7. (C) The facts are clearly unimportant to the Morales
Administration, what is important is that the export bans be
seen as a defense of lower prices and the Bolivian people.
Propoganda to this effect is frequent on both the radio and
television. It is unclear who the majority of Bolivians
blame for rising food prices, but judging from television
interviews people in La Paz and El Alto do not trust Santa
Cruz farmers and seem willing to place some of the blame at
their doorstep.


8. (C) Several social movements closely related to the MAS
party are calling for the nationalization of cooking oil
companies as a punishment for having "provoked hunger among
the Bolivian people." This message was likely dictated to
them from within Evo's inner circle and represents another
threat against the department and it's leading economic
actors.

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American Company ADM Suffers with the Ban
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9. (C) Archer Daniel Midland (ADM) represents the largest
American investment in Bolivia outside of the hydrocarbons
and mining sectors. Their total investment in Bolivia stands
at over $100 million. Carlos Pinto, Chief Financial Officer
at ADM, estimates that the company will be forced to shut
down operations in about 20 days if the cooking oil ban stays
in place. This is the amount of time it will take to fill
their warehouses to capacity. At that time, ADM may be forced
to default on international contracts. Moreover, Pinto
explained that the decree has other far reaching negative
impacts. For example, Bolivia's risk rating has already been
raised as a result of the ban. This affects the cost of new
capital for both the government and all private companies
(not just those in agriculture). Meanwhile, barges and
trucks sit waiting for cargo (Ref A).


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