BOLIVIA: WHAT LIES AHEAD IN A SECOND MORALES TERM

C O N F I D E N T I A L LA PAZ 001587

SIPDIS

E.O. 12958: DECL: 2019/12/03
TAGS: PREL PGOV ECON BL
SUBJECT: BOLIVIA: WHAT LIES AHEAD IN A SECOND MORALES TERM

CLASSIFIED BY: William Mozdzierz, Acting DCM, State, Embassy La Paz;
REASON: 1.4(B),(D)


1. (C) Summary: With a sweeping victory increasingly likely for
Bolivian President Evo Morales and his MAS party in December 6
elections, the political focus in Bolivia has already shifted to
how Morales will approach his next five years in office.
Morales's outreach to opposition voters and (relative) restraint
toward the U.S. during the presidential campaign raises hopes that
he could adopt a more moderate course. His long campaign to
"refound" the country on socialist and anti-imperialist principles,
as well as his close ties to Venezuela, argues otherwise, however,
and Morales could well use his greatly enhanced powers to
accelerate further radical political and economic reform. Our
assessment at this point is that Morales, for all his apparent
strength, will remain constrained by the Bolivian public's limited
appetite for more socialism and that he is likely to approach his
second term as a period of consolidation rather than
radicalization. End summary.

Goals Met, Time for Consolidation and Expanding the Base?


2. (C) Evo Morales can claim, with some justification, that he has
succeeded in achieving most of his ambitious political agenda for
his first four years in office. He has won approval for a new
constitution that redefines Bolivia according to his statist,
pro-indigenous vision, nationalized the gas and other industries,
defended the interests of his coca-growing base, out-maneuvered
regional separatist movements, and taken on the U.S. "empire"
through a close alliance with Venezuelan President Hugo Chavez and
by expelling our ambassador and DEA. Now, having won in the past
year a recall vote, a popular referendum on his constitution and --
almost certainly -- re-election by a wide margin over his nearest
opponent, Morales will enter his second term at the height of his
political popularity and power, but with his principal goals mostly
already realized.


3. (C) Throughout this year's electoral campaign, Morales has
shown he recognizes the value of reaching beyond his party's base
of cocaleros, the indigenous, the working class and leftist voters
(admittedly a large, if diverse, group). Insisting that he wants
to be regarded as the president of "all Bolivians," Morales has
reached out to moderate Bolivians, including more centrist and
independent figures on his candidate lists, such as former human
rights ombudsman Ana Maria Romero as his apparent choice for Senate
president. Romero told us how she was "struck" by President
Morales's emphasis in his speeches in indigenous areas on the need
for poor and indigenous persons to work with the middle class. She
said Morales understands he needs the skills possessed by the
middle class to achieve changes in Bolivian society and that he
makes this point to indigenous audiences. Romero stressed that
she would not be running for Senate if she didn't believe Morales
was sincere in his desire to broaden his reach. In Bolivia's major
cities, Morales has participated in dinners with normally
pro-opposition business leaders, making a sustained effort to seek
their support. Despite great skepticism, he appears to be making
some headway with these groups, particularly those who conclude
that, like it or not, Morales and his government are here to stay.



4. (C) In this, Morales is almost certainly motivated in part by a
desire to make inroads into the opposition's electorate and rack up
the numerically greatest victory possible. This approach may also
apply to his long-term thinking, having expressed many times his
determination that the MAS will rule for decades. Morale's forays
into middle-class territory and his campaign efforts in
traditionally hostile areas such as Santa Cruz are aimed at taking
advantage of a demoralized and divided opposition. With polling
consistently showing his support above 50 percent (far ahead of all
rivals) and already close to a two-thirds majority in parliament,
Morales, strictly speaking, doesn't need these extra votes --
except to either run up a historically large margin in this one
contest or lay the foundation for a broader national base.
Morales' post-election course will be determined by whether he is
motivated more by the latter or the former.


5. (C) Although Morales's enthusiasm for attacks on "imperialists"
and "neoliberals" hasn't waned, a certain measure of pragmatism has
also been evident in his pre-electoral foreign policy. Contrary
to the expectations of many, Morales has avoided making relations
with the United States a campaign issue, limiting himself to worn
(however vitriolic) rhetoric. He reacted calmly to September's CN
decertification decision, which could have served as a flashpoint
for an anti-American campaign. Morales -- during the election
campaign -- has also backed those in his government pressing for a
bilateral framework agreement to help get U.S. -Bolivian relations
back on track. Vice Minister of Social Defense Felipe Caceres
commented to Charge that while "certain ministers" feed Morales
disinformation about USG activities to advance their own
ideological and personal interests, he believed Morales would
remove such radical ministers after the election and move in a more
"pragmatic" direction.

Or Will Morales Go (More) Radical?


6. (C) Against these signs of possible moderation, however, there
remain concerns that Morales, once re-elected, will use his
enhanced political power to advance an even more radical agenda,
free of any institutional checks on his authority. We can expect
Venezuelan President Chavez to encourage him to move in this
direction. Ominously, Morales declared recently that his
principal opponent -- opposition candidate Manfred Reyes Villa,
facing longstanding corruption charges -- will likely find himself
in jail following the elections. In the worst case scenario,
Morales would use a two-thirds parliamentary majority to amend the
constitution at will, granting him sweeping powers to oppress the
opposition and civil society, extend his own rule, and further
expand state control of the economy.


7. (C) Such fears underestimate the real limits to Morales's
power, however, even as he stands to dominate the political
landscape of Bolivia as never before. The new constitution can be
amended with a two-thirds majority, but amendments must also be
approved by popular referenda, meaning that measures such as ending
term limits might pass, but more authoritarian revisions would face
greater opposition from the public. Moreover, Morales cannot
necessarily count on all members of his parliamentary delegations
to back him on extreme measures, especially with significant
numbers of more centrist members in the next congress.


8. (C) There is cause to be skeptical that Morales will pursue
radical policies in the economic arena, as well. The Morales
government's programs and nationalizations to date have proved
popular, but huge numbers of Morales's indigenous base are
small-time entrepreneurs, traders, and business owners, whose
enthusiasm for socialism is limited. Moreover, Morales appears to
recognize that his grandiose plans to industrialize Bolivia will
require a healthy banking sector, access to international credit
and at least some foreign investment, and that he cannot undertake
radical economic measures without causing Bolivia's economic
isolation. Entrepreneur Fernando Campero told us that while he
still found the MAS to be authoritarian, intolerant, and
excessively centered on Morales, he believed the next
administration would follow a pragmatic course. He noted that
Morales recently sought a meeting with him for the first time in
four years to discuss economic policy and institution building.
Alone with Campero, Morales took extensive notes and seemed more
interested in reaching out than in radical change. A complex
regional economic climate -- as well as entrenched popular fears of
instability rooted in Bolivia's hyper-inflationary past -- will
also act as a constraint on Morales's economic plans.

Securing Gains Top Priority for Second Term


9. (C) The most likely scenario for the next Morales government is
that it will be marked by consolidation rather than radicalization.
Having accomplished most of what he set out to achieve in his first
term, Morales has offered the message that this year's election is
about securing the gains of the past few years. In a recent
interview, Vice President Garcia Linera (a hard-line leftist
ideologue) maintained that the days of "high conflict" with the
opposition are over, pledging that the government will use its next
term to consolidate its "historic" achievements. The MAS party's
campaign platform proposes scores of new investments in
infrastructure, education, health and other government services, a
"great leap forward" ("gran salto") in industrialization (including
development of lithium reserves and a Chinese-launched satellite),
but mostly more of the same. Radical MAS Senator Antonio Peredo
affirmed this direction, saying the first MAS government had

created the agenda that the next government would follow, one
focused on infrastructure, education, and health to promote
economic development and stifle "destructive regionalism."


10. (C) We can expect additional nationalizations, in the
electricity sector and perhaps in telecommunications as well, but
these will likely be limited to rolling back the capitalization
program of the first Sanchez de Lozada government. Public works
and social programs will be expanded (provided sufficient state gas
revenue) and land reform/redistribution may accelerate, but
otherwise the next Morales government is likely to operate within
the existing policy framework. Former Morales Production Minister
and MAS Senate candidate Javier Hurtado dismissed GOB plans to
operate productive businesses, predicting these would be quickly
forgotten after the elections. Caceres said many MAS rank-and-file
recognize the need for more private, including foreign,
investment, and are skeptical about further "socialist" measures in
respect to the economy.


11. (C) On counter-narcotics, international pressure and engagement
will continue to be critical to sustaining GOB interdiction and
eradication and to reversing the recent growth in coca production.
Caceres has told us that the GOB understands that it must begin to
reduce coca cultivation, including through forced eradication, but,
left on its own, Bolivia's complicated coca politics would make
this unlikely to happen. Still, we expect that the next Morales
government will move to raise the legal limits on production, but
probably well below current actual levels. In addition to
concerns about Bolivia being labeled a narco-state and the impact
of narcotics trafficking on public safety, Morales has to contend
with a Bolivian public worried -- according to recent polls --
about ineffective GOB management of the legal coca trade.


12. (C) Morales will certainly continue to pursue a foreign policy
that emphasizes solidarity with Chavez and other ALBA allies and
the Bolivian president's world view -- in which the U.S. poses a
constant economic and even military threat to Latin America -- is
unlikely to change. We expect any improvements in U.S.-Bolivian
relations to be incremental (hopefully advanced by conclusion of a
bilateral accord following the elections),but we also see no
obvious reason that relations should get worse, barring a dramatic
worsening of the human rights situation here. Morales's approach
in the second half of this year suggests that he remains deeply
suspicious of us, but recognizes the value of at least correct
relations with the United States. Brazil, Argentina and Chile will
continue to urge Morales to seek better relations with the U.S.,
especially if more conservative leaders are elected in those
countries over the next two years. There are also evident limits
to the domestic political value of anti-American rhetoric, to the
point where Bolivian officials have suggested that improved
bilateral relations are seen as a net plus (both with centrist
voters and others who believe the attacks have gone too far).

Consolidation, Rather than Radicalization


13. (C) Morales remains unpredictable, but for the most part he has
adhered to a defined and transparent political agenda. Looking
ahead to his second term, we believe radicalization (dramatic
expansion of powers, crackdown on civil society and accelerated,
sweeping nationalization) is possible but not likely. Rather, we
expect that Morales will attempt to demonstrate that he is serious
about broadening his support to include the middle class, at least
in the short term, and that he will not undertake radical domestic
policies that could provoke Bolivia's international isolation.
Creamer