WHA DAS MCMULLEN STRESSES VALUE OF BILATERAL

C O N F I D E N T I A L MONTEVIDEO 000649

SIPDIS

FOR WHA DAS CHRIS MCMULLEN
WHA/BSC FOR MARY DASCHBACH

E.O. 12958: DECL: 11/09/2018
TAGS: PGOV PREL ECON SNAR UY
SUBJECT: WHA DAS MCMULLEN STRESSES VALUE OF BILATERAL
RELATIONSHIP IN URUGUAY

REF: MONTEVIDEO 449

Summary
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1. (U) The October 27-30 visit of WHA DAS Christopher
McMullen to Uruguay reaffirmed to the GOU and ordinary
Uruguayans the importance of the U.S.-Uruguay bilateral
relationship. McMullen came to Uruguay accompanying DOD DAS
for Western Hemisphere Affairs Stephen Johnson, who was
following up a July meeting between GOU Minister of Defense
Jose Bayardi and Secretary Gates in Washington. Meetings
with the minister of defense focused on Haiti,
counter-narcotics cooperation; and UNSASUR. McMullen also
met with high-level GOU officials, Uruguayan businesspeople,
analysts, and held several events with the local press.
During a ceremony at the home of internationally renowned
artist Carlos Paez Vilaro, McMullen accepted a painting
commemorating the events of 9/11 on behalf of the Fire
Department of New York, and he announced a 50,000 dollar
donation for English language micro-scholarships to benefit
underprivileged Uruguayan secondary school students. At each
meeting, McMullen and Ambassador Baxter pushed our core
theme: the value of partnership with the U.S. on all levels,
including regional issues. The visit generated significant
positive media coverage. End Summary.

Defense Talks
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2. (SBU) Johnson, McMullen, and Ambassador Baxter met October
28 for several hours with Minister Bayardi, Vice Minister
Jorge Menendez, and a number of the minister's closest aides.
The conversation focused on Haiti, counter-narcotics
cooperation, and UNASUR.


3. (C) Regarding Haiti, MINUSTAH is the principal
peacekeeping deployment for Uruguay, and GOU officials
offered a number of suggestions for improving the mission's
effectiveness and Haiti's overall situation. Bayardi
stressed that Haiti needs more institutional development,
which will require a continuing international commitment. He
said that the U.S. and EU should offer a special package of
trade incentives to Haiti, and that countries offering
assistance should limit themselves to one or two specific
areas (e.g. roads, communications, potable water) so that
projects get done well. Bayardi expressed unhappiness with
USG deportations to Haiti of Haitian citizens who committed
crimes in the U.S., saying that Haiti lacks the capacity to
absorb "even 100 returning prisoners." Johnson congratulated
Uruguay on undertaking a new anti-smuggling/port security
role (Uruguay is taking possession of 16 Boston Whaler patrol
boats),and Vice Minister Menendez noted that Uruguay
understands the risks involved. Bayardi made a
mission-specific request that we establish a means for
Uruguayan forces to liaise with the USCG, which has
responsibility for vessel interdiction outside 12 miles.


4. (SBU) On counter-narcotics cooperation, Johnson mentioned
the possibility of Uruguayan coordination with the USCG in
Florida. Both Bayardi and Menendez emphasized that the only
Uruguayan armed forces involved in counter-narcotics work are
the Prefectura (Coast Guard) and airport police, and any
training assistance should be directed at those bodies.
Bayardi expressed a guarded interest in any information the
U.S. could provide to assist Uruguay's counter-narcotics
efforts. He said that Uruguay's overall strategy is to focus
on tightening border controls to deter any product heading
for the domestic market and also so that Uruguay becomes a
less appealing transit point.


5. (C) About UNASUR, Bayardi said it should develop as a
consultative body for collaboration, not a military
organization, and that it should not be a "NATO for South
America," but rather more like the OAS or UN. Bayardi was
adamant that UNASUR remain a consensus-based body. He also
explained Uruguay's opposition to the nomination of former
Argentine President Nestor Kirchner to head the organization,
citing Argentina's blockade of river crossings into Uruguay
over a pulp mill located in Uruguay and the opacity of the
nominating process. Bayardi also said an ex-president would
bring too high a profile to the role. Bayardi commented that
the Bolivian crisis appeared to be subsiding and should be
left for the Bolivians themselves to resolve.


6. (U) Johnson and McMullen also toured Uruguay's
peacekeeping operations training center. Uruguay is proud of
its peacekeeping record, which includes having the world's

most peacekeepers in the field on a per-capita basis (and
eighth-largest number overall). Uruguay currently has more
than 10 percent of its armed forces, or 2670 individuals,
deployed on twelve peacekeeping missions around the world.
Seventy-five percent of Uruguay's army officers have PKO
experience, as do two-thirds of its NCOs.

MFA and Congressmen on Working Together in the Region
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7. (C) During an October 29 meeting with acting Foreign
Minister Pedro Vaz, McMullen and Ambassador Baxter pointed
out that opportunities abound for fruitful cooperation on
regional issues. On Paraguay, Vaz emphasized that President
Lugo is a leader who President Vazquez and FM Fernandez
really want to help. McMullen explained that the U.S. is
interested in working with Uruguay and Brazil to that end, as
all three countries have an interest in a stable, friendly,
and prosperous Paraguay, and Uruguay and Brazil have a better
understanding of Paraguay's unique circumstances than does
the USG. McMullen also described a USD 10 million aid
package that President Bush announced during his October 27
meeting with Lugo. This new assistance focuses on Lugo's two
top priorities: job creation and public health. Vaz agreed
that it would make sense to collaborate on Paraguay, as
Uruguay and Paraguay have a very close political
relationship. He also noted that the two countries have an
almost non-existent economic/commercial relationship, stating
that meant they are "good friends without interests."


8. (C) On Bolivia, Vaz expressed optimism that both sides
gave a little ground in order to achieve a recent agreement,
and described Uruguay's participation in the follow-up
dialogue and in the ongoing investigation into killings in
Pando Department. Active participation is the best way to
support Bolivia, Vaz stated. Ambassador Baxter praised
President Vazquez's leadership during the first UNASUR summit
in Santiago, and McMullen mentioned some difficulties the USG
has experienced in its dealings with the Morales
administration. Vaz agreed that it was difficult to predict
some of the actions of that administration, and said that
Uruguay is in the same position as the U.S. with regard to
Bolivia: "We're also just observers, and have no interests
there except peace and democracy." Vaz asked about the
status of U.S. aid to Bolivia, and McMullen explained that
circumstances such as the PNGing of Ambassador Goldberg and
Morales' expulsion of the DEA and USAID from certain regions
made it difficult to maintain levels of assistance, but the
U.S. goal is to preserve options regarding Bolivia for the
next U.S. president.


9. (C) McMullen also discussed regional issues with Alberto
Perdomo, President of Uruguay's House of Representatives;
with Jaime Trobo, Chair of Uruguay's House Foreign Affairs
Committee. Perdomo and Trobo focused their discussion on
their pessimism regarding the near-term prospects of
Argentina and Bolivia. They agreed that any lasting
solutions would have to originate within those countries.

Domestic Politics
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10. (SBU) McMullen and the DCM lunched October 29 with a
group of political analysts: Oscar Bottinelli is the director
of one of Uruguay's largest polling companies; Daniel
Gianelli writes editorials for influential weekly Busqueda;
Adolfo Garce is a university professor, and Constanza Moreira
is Dean of the University of the Republic's School of
Political Science. They gave McMullen a detailed summary of
Uruguay's political history, focusing on the 1973-85 military
dictatorship. When the discussion turned to Uruguay's future
political direction, the analysts' consensus view was that
the ruling Frente Amplio would win the next presidential
elections, scheduled for October 2009. The analysts were not
sanguine about the prospects of a U.S.-Uruguay partnership to
deal with regional problems, particularly Bolivia.

Uruguay and the Global Economic Crisis
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11. (U) McMullen and Ambassador Baxter met October 29 with
representatives of the Uruguayan-American Chamber of Commerce
(AmCham). That meeting was hosted by AmCham CEO Daniel
Ferrere and included senior representatives of U.S. companies
3M; Citibank; GE; Harrah's; Uruguay Mineral Exploration; and
various former high-level officials now in private business.
McMullen and the ambassador also met separately with incoming
Central Bank President Mario Bergara, who was vice-minister

of the economy during most of the current administration, and
with Umberto della Mea, the administration's nominee as
Central Bank VP.


12. (U) Discussion of the effects on Uruguay of the global
economic crisis dominated both meetings. All of McMullen's
interlocutors agreed that Uruguay is much better positioned
to face current headwinds than it was prior to the regional
financial crisis of 2001-2002. They cited Uruguay's
relatively solid banking system and diversification in export
destinations (e.g. Brazil and Argentina now absorb around
one-third of Uruguay's exports, compared to two-thirds in
2001) as the principal reasons for optimism in the face of
the crisis. Bergara also stressed improvements in Uruguay's
debt structure in recent years, noting that Uruguay has
satisfied its financing needs until 2010. On the other hand,
declining prices for Uruguayan export commodities such as
beef, rice, wheat and soybeans, and domestic inflation of
over seven percent year-to-date, moderate that optimism.
Still, many of McMullen's interlocutors saw opportunity for
Uruguay in the current crisis, noting that if Uruguay is able
to come through relatively unscathed, its longtime campaign
to differentiate itself from its neighbors and market itself
as a haven of safety and stability in the region will be
bolstered.


13. (U) Amcham members pressed McMullen on moving forward
with a bilateral free trade agreement (FTA),with a number of
participants lamenting the GOU's reluctance to fully embrace
the idea in 2006, when this issue was last in the forefront
of the bilateral relationship. Amcham members also stressed
polling figures indicating that a high proportion of the
Uruguayan population ("close to 70 percent) favors the idea
of an FTA with the U.S. McMullen agreed that there would be
considerable utility in an FTA, but he also reminded
listeners that we are only able to move forward at a pace
acceptable to both governments. McMullen also briefed the
group on the "Pathways to Prosperity in the Americas"
initiative, which he noted was designed to generate greater
synergies among countries that have FTAs with the U.S., and
is also aimed at ensuring that the benefits of increased
trade are shared by all sectors of society. McMullen added
that the USG hopes that Brazil and Uruguay would be able to
participate in the December 10 Pathways ministerial meeting
in Panama.

A Public Diplomacy Success
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14. (U) McMullen's visit generated significant positive media
coverage. An interview with Busqueda resulted in a full-page
story with a helpful headline stressing the U.S.'s
willingness to work with Uruguay to assist Paraguayan
President Lugo's government and to fight poverty in the
region. McMullen also offered assurances that our policy
toward Uruguay will not change with an incoming
administration, and stressed that the USG is prepared to work
with whomever wins Uruguay's next presidential elections in
October 2009. Asked about the region, McMullen explained
that the U.S. seeks to play a constructive role as Bolivia
works through its problems, and characterized relations with
Argentina as solid.


15. (U) McMullen and Ambassador Baxter traveled outside of
Montevideo to the home of internationally acclaimed Uruguayan
artist Carlos Paez Vilaro. Following the terrorist attacks
of September 11, 2001, Vilaro had painted a large canvas
honoring the actions of New York's firefighters that day, and
he had expressed a desire to donate the work to the FDNY. In
a ceremony covered by a number of national television, radio,
and print journalists, McMullen -- surrounded by Uruguayan
firefighters in full uniform -- accepted the painting on
behalf of the FDNY, spoke for several minutes about the
importance of the bilateral relationship, and announced USD
50,000 in micro-scholarships for English-language instruction
for underprivileged Uruguayan secondary school students.


16. (U) McMullen and the ambassador next spoke with the press
in short television interviews granted before taking a tour
of economically underdeveloped areas in the Uruguayan
Department of Maldonado. During those interviews, both the
ambassador and McMullen stressed the USG's interest in
understanding and combating the root causes of the social
ills too often experienced in such areas.

Comment
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17. (SBU) One of the quickest ways to the hearts of Uruguayan
policymakers and ordinary citizens alike is a little
high-level attention, and the Johnson/McMullen visit hit the
spot. The very act of stressing the importance to the U.S of
this bilateral relationship deepens the relationship.
Baxter