TREASURY A/S LOWERY AND CHILEAN MINISTER OF PUBLIC WORKS

UNCLAS SECTION 01 OF 02 SANTIAGO 000816

STATE FOR WHA/BSC-LCATO, WHA/EPSC-FCORNEILLE, EEB/IFD/ODF
TREASURY FOR MATT MALLOY

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: OVIP EAID ECON EFIN EINV ECIN PGOV PREL CI

SUBJECT: TREASURY A/S LOWERY AND CHILEAN MINISTER OF PUBLIC WORKS
BITAR AGREE TO JOINT TECHNICAL COOPERATION


1. (SBU) SUMMARY: Treasury A/S Lowery and Minister of Public Works
Sergio Bitar agreed, September 1, to a joint-effort on helping
countries throughout Latin American and the Caribbean build
infrastructure. A/S Lowery proposed an Infrastructure Finance
Expert Corps that would draw from U.S. and Chilean experts to
provide technical cooperation on infrastructure development in the
region. Minister Bitar noted Chile's serious interest in working
with the U.S. in this area, and suggested selecting a test project
for the new effort. A/S Lowery presented a working paper and asked
that the U.S. Treasury and Chilean Ministry of Public Works follow
up at the working level. END SUMMARY.

Proposal For Joint Infrastructure Finance Expert Corps
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2. (U) U.S. Treasury A/S Clay Lowery, Treasury DAS Brian O'Neill,
Ambassador Paul Simons, and Econoff attended a meeting, September 1,
with Chilean Minister of Public Works Sergio Bitar, Coordinator for
Public Infrastructure Projects Gonzalo Cordua, International
Coordinator Rigoberto Garcia, and Legal Advisor Jose Antonio
Ramirez.


3. (SBU) A/S Lowery opened the meeting by thanking Chile for its
work providing technical assistance to its neighbors in Latin
American and the Caribbean. He noted the U.S. also provided such
assistance through resident advisors, currently embedded in the
Central Banks or Finance Ministries of six countries in the region.
In a meeting last year, the U.S. and Chile had discussed the idea of
combining efforts to tap into the GOC's experience with Public
Private Partnerships (PPP's) and U.S. Treasury's experience helping
countries finance infrastructure projects.


4. (SBU) A/S Lowery proposed the U.S. and Chile form an
"Infrastructure Finance Expert Corps," (IFEC) which would consist of
U.S. and Chilean public and private sector specialists. The
specialists would provide technical assistance to central and
municipal governments in the region by evaluating PPP proposals
dealing with infrastructure projects. DAS O'Neill added that the
U.S. Treasury consistently heard pleas from Ministers of Finance in
the region for help (both process-oriented and financial) in
building public infrastructure. The IFEC would allow the U.S. and
Chile to combine forces, bringing technical cooperation, financing,
and human resources in one package to countries throughout Latin
American and the Caribbean.

Agreement To Build Infrastructure Capacity Together
-------------- --------------


5. (SBU) Minister Bitar agreed to the proposal, emphasizing the GOC
wanted "very much" to participate in this joint-effort. He noted
many countries, including Peru, Colombia, and Brazil, had come to
Santiago to solicit expertise on PPP's. The GOC was working on a
conference on this topic, to be held in December, with the UN
Economic Commission for Latin America and the Caribbean
(ECLAC/CEPAL). Bitar wondered if the U.S. Treasury could send an
expert to the conference. He also suggested the new U.S.-Chile
joint effort could begin by picking a test project.


6. (SBU) Bitar said Brazil was keen on the idea of a railway linking
the Brazilian port of Santos with the Chilean port of Antofagasta,
to help build regional cooperation on infrastructure. However, he
noted that because the railway could go through several countries,
it might be easier to start with a simpler proposal, such as a small
to medium size national project. DAS O'Neill noted the initial U.S.
reaction was the same. A/S Lowery presented a working paper to the
Minister, and proposed the Ministry of Public Works follow up with
Treasury at the staff level, and then agree on an initial project.

Requirements for Successful Projects
--------------


7. (SBU) Minister Bitar saw increasing regional interest in
expanding infrastructure, but it required 6 elements: 1) a system
of project design and capacity to negotiate with the private sector,
2) an institutionalized system capable of building infrastructure,
including dispute resolution, 3) a financial system that worked, 4)
big companies willing to invest in a project, 5) a sustained effort
of investing in infrastructure, and 6) engineering knowledge. DAS
O'Neill noted the U.S. shared this point of view. The biggest
bottleneck was developing new projects and bringing them to market.


Possible New Chilean Solar Energy Project
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SANTIAGO 00000816 002 OF 002



8. (SBU) Bitar ended the meeting by noting the GOC was looking at a
new project on renewable energy. His Ministry had requested a
mandate from the Ministry of Energy to use 200 acres of land in the
north for a solar energy project, which would be the first of its
kind in Chile. Ambassador Simons added there had been lots of
interest in solar power generated from the California-Chile project,
but it was critical to attract U.S. companies with the appropriate
technical knowledge to Chile.

SIMONS