EVO RETURNS FROM RUSSIA WITH LOVE, PROMISES

C O N F I D E N T I A L LA PAZ 000272

SIPDIS

E.O. 12958: DECL: 02/18/2019
TAGS: PGOV PREL PINR EAIR ECON EINV EMIN EPET SNAR
MCAP, VE, RS, FR, BL
SUBJECT: EVO RETURNS FROM RUSSIA WITH LOVE, PROMISES

REF: A. LA PAZ 271

B. LA PAZ 267

Classified By: A/EcoPol Chief Brian Quigley for reasons 1.4 (b)(d)


1. (C) Summary: Bolivian President Evo Morales returns from
his Moscow/Paris trip February 18 basking in Russian and
French goodwill, but with only promises of deals to come on
counternarcotics, gas exploration, and lithium
industrialization. Although the gas deal is potentially huge
(up to $4.5 billion),it is unclear what exactly Russia's
Gazprom committed to. Morales threat against Gazprom's
partner in Bolivia, France's Total, to "guarantee" adherence
to their contracts with Bolivia further obscured the issue.
Russia's counternarcotics (CN) agreement with Morales
contains a promise to try and make a deal to provide
helicopters at some future date and to provide unspecified CN
training and exchanges. Morales' assertion that the French
would help underwrite a potential helicopter deal with
Eurocopter calls at least the magnitude of the Russian deal
into question. Despite Russian President Dimitri Medvedev's
assertion the Bolivian agreements were not an attack on the
United States, he and Morales never-the-less blasted the U.S.
on Cuba, NATO, and European missile defense. End Summary.

Promises, Promises
--------------


2. (C) Bolivian President Evo Morales and Russian President
Dimitri Medvedev signed a series of cooperative agreements to
fight narcotrafficking and advance Bolivia's exploitation of
natural gas in Moscow February 16. The two presidents also
signed a memorandum of intent to provide assistance for
natural disasters and a declaration emphasizing their
agreement on a variety of global issues, including the right
to peaceful nuclear energy, opposition to the U.S. embargo on
Cuba, plans for a missile shield in Europe, and NATO
expansion. Despite the fanfare (the signing ceremony
received heavy media coverage, including CNN),the CN
agreement and declaration appear more symbolic than
substantive, with few known concrete deliverables.

Agreeing to Try to Agree to a Helicopter Deal
--------------


3. (U) Medvedev announced the agreement "contemplated" joint
counternarcotics operations, development of CN contacts, and
CN training. Although the provision of Russian helicopters
was not explicitly provided for in the counternarcotics
agreement, Medvedev assured that Russia and Bolivia would
conclude an agreement "soon" to provide helicopters.
Although press estimates of the final number of helicopters
in the deal range wildly from two to twenty, Russia's top
arms sales official, Mikhail Dmitriyev, suggested publicly
the number would be fewer than 20 and our contacts have
suggested an initial order under six.

Bolivia to Uncle Sam: Take it Personally
--------------


4. (U) Medvedev said that Russia is "prepared for broad
cooperation with Latin American countries and, of course,
with our Bolivian friends." Medvedev emphasized the
agreements with Bolivia do not signify a "competition with
anyone," apparently attempting to assuage fears that Russia
wants to reignite Cold War rivalries with the United States
in the Western Hemisphere. Despite Medvedev's assurances,
Bolivian state news agency ABI claimed the counternarcotics
deal "establishes the mechanisms of cooperation for the fight
against drugs ... that have been disregarded by the United
States." In the same article, ABI lauded the Morales
administration's eradication of 20,000 hectares between 2006
and 2008 (without crediting USG assistance) and asserted
Bolivia had started discounting U.S. counternarcotics
assistance in late 2008. (Note: Before leaving on his
Russian trip, Morales publicly disparaged NAS CN efforts;
septel. End Note.)

MFA Insider: Morales Walking into Russian "Mousetrap"
-------------- --------------


5. (C) A senior aide to Foreign Minister David Choquehuanca
told PolOff that the Russian agreement is a "mouse trap for
Bolivia." He contended the Russians were already using
counternarcotics as a pretext to sell Bolivia military
hardware and "bring in the Russian mafia," already well
established in Bolivia's gambling industry, to "help control"
Bolivian narcotrafficking. He said by the time Morales and
Choquehuanca, who "want to believe in this fantasy (that
other countries can replace USG CN efforts)," realize they
have been bamboozled, "it will be too late."
Russia Meets Morales the Victim
--------------


6. (U) Morales heralded his visit, the first ever by a
Bolivian head of state to Moscow, as an "unprecedented
event." Shifting to humility, Morales said he was heartened
the Russian hospitality: "When I arrived, I thought an Indian
doesn't deserve this kind of reception ... Never in my life
had I thought that a world power such as Russia would receive
the Bolivian President, one who is sometimes accused of
terrorism, of narcotrafficking, discriminated (against)."

Back to Junior High: Flirting with Russia to Attract Obama
-------------- --------------


7. (U) Morales said he hoped his "historic" visit to Moscow
would change the equilibrium of force in the United States,
leading President Obama to revisit the politics of President
Bush. He added that Moscow's decision to spend "a little of
its time with a small country like Bolivia" might serve as an
example for the United States. Morales postulated that
because Russians were "standing beside" Latin American
countries, "relations with the United States are starting to
change." "I still have not lost hope that President Obama
will change politically, especially (regarding) international
relations."

Gas Agreement: Millions, Billions, or Hot Air?
-------------- -


8. (SBU) Concrete obligations in the gas agreement have been
difficult to come by. Medvedev described the gas agreement
as the establishment of a long-term "strategic project," but
did not disclose figures. Bolivian state news agency ABI
contended Morales "explored a program of petroleum investment
of $4.5 million dollars." Then Bolivian Energy Minister Saul
Avalos said in December the Russians were considering signing
a $4 million gas study in Bolivia and setting up a
cooperative oil and gas research institute


9. (C) In September 2008, Gazprom, Total, and Petroandina
(joint venture of Venezuela's PDVSA and Bolivia's YPFB)
signed a memorandum of understanding that some industry
analysts estimated could mean a $4.5 billion investment in
Bolivia. According to the UK Financial Times, the Bolivian
government estimated the February 16 Gazprom agreement, which
includes a joint project with France's Total, could be worth
$3 billion, with Venezuelan and Bolivian state petroleum
companies investing an addition $240 million. (Note: Santa
Cruz business leaders told us a significant Gazprom deal was
unlikely. Reftel a. End Note.)

Evo in Paris: Disputing Total's Investment Total
-------------- ---


10. (SBU) Morales did little to illuminate exactly what was
and was not included in the Gazprom gas agreement during
comments he made following a February 17 meeting with Total
in Paris. "If they (Total) do not guarantee investment based
on the contracts, the Bolivian government has every right to
make decisions," Morales told reporters. It was not clear if
Morales was referring to the September memorandum of
understanding, but media speculated Morales was invoking
nationalization to coerce increased investment. The UK's
Financial Times, in an article titled "Bolivia Pays a High
Price for Nationalization," characterized Morales'
Moscow/Paris trip as proof that Bolivia had to "go so far
abroad" because it has "driven away technically-able
international companies" after nationalizing its energy
industry in 2006." Morales met with Bollore while in Paris,
to sell the French industrial conglomerate on Bolivia's
lithium reserves for use in electric car batteries (reftel
b). Morales also met with Eurocopter, a subsidiary of Airbus
parent company EADS, to discuss buying helicopters. He added
that French President Nicolas Sarkozy promised to help
finance any Eurocopter purchase.


Comment
--------------


11. (C) The Russian option is, at the moment, still just a
promise to work out a deal. The Mi-17s in question also
offer no high-altitude flight advantage to the UH-1H, would
require a new training and maintenance regime, and the
Russians do not appear to be interested in charity, but
rather financing, albeit under generous previsions. Although
the warm and fuzzy pronouncements of February 16 may
eventually result a big purchase, for now Morales' CN efforts
will have to rely on our UH-1Hs. End Comment.
URS