EVO BLAMES CIA FOR YPFB SCANDAL; POLICE'S MILGP BAN

C O N F I D E N T I A L LA PAZ 000294

SIPDIS

E.O. 12958: DECL: 02/26/2019
TAGS: PGOV PREL PTER PINR PROP EAID EPET MARR OFDP
OEXC, KCRM, AR, CI, BR, IZ, BL
SUBJECT: EVO BLAMES CIA FOR YPFB SCANDAL; POLICE'S MILGP BAN

REF: A. LA PAZ 194

B. LA PAZ 176

C. LA PAZ 156

D. LA PAZ 111

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


1. (C) Summary: Despite overtures to the Obama Administration
in general, President Morales and Government Minister Rada
continued the GOB's now familiar barrage of U.S.-blaming and
blasting February 20-21. This time the target was the CIA,
blamed for the corruption and murder scandal involving
Bolivian state petroleum company YPFB. Although President
Morales stated names would be forthcoming, so far only one
name has emerged, Rodrigo Carrasco, a Bolivian national and
former member of an elite, U.S.-supported Bolivian police
force. Morales claimed February 24 that Carrasco had
orchestrated a "network of corruption" at YPFB on behalf of
the CIA and USAID. Meanwhile, Rada shut off all police
participation in training sponsored by the Embassy's Military
Group. These are confusing signs from a government that in
recent months has constantly stated it wants to improve
relations. End Summary.


2. (U) President Morales blamed the CIA for a high-profile
corruption and murder scandal concerning Bolivia's
state-owned petroleum company YPFB (reftels b and c). During
February 20 comments in the coca-growing region and Morales
stronghold of Chapare, the Bolivian President denounced YPFB
infiltration by United States Central Intelligence Agency and
implied the CIA was to blame for the scandal, without
providing any details beyond that the CIA had "bugged" YPFB.
"Lamentably, the CIA was involved in YPFB and some (ruling
party) MAS members have been involved in this infiltration,"
said Morales. "After their (USG) failures, when they tried
to take me out of Government, through recall referendum and
civil coup, now they are attacking (my government) through
YPFB." Ex-President of YPFB and powerful MAS ex-Senator
Santos Ramirez is accused of having illegally contracted $86
million in natural gas development with a dubious company.
Morales added he would announce names of those involved with
the CIA "soon."

Bait and Switch: "Savage Capitalists" Corrupt, not GOB
-------------- --------------


3. (U) President Morales said that "from overseas, from the
United States" legal protection is being provided to the
"corrupt people who were inside YPFB" with lawyers who are
experts "in defending criminals." "This is a group that
represents savage capitalism, that represents the big
transnational corporations. They don't care about poverty,
they don't care about life or humanity, only about how to
bring capital into a few hands," said Morales.

Rada's Case by Association: "Draw Your Own Conclusions"
-------------- --------------


4. (U) The next day Government Minister Alfredo Rada
announced Rodrigo Carrasco Jhansen had infiltrated YPFB as a
CIA operative. Carrasco is a former elite police officer
with the Special Operations Command (Copes) and YPFB
marketing manager. Rada claimed the Copes, disbanded in 2008,
was created and funded by the USG to carry out intelligence
gathering for "the U.S. Embassy." "Carrasco Jhansen was a
member of Copes, a former policeman. You draw your own
conclusions," said Rada. (Note: Carrasco retired from the
police force in 2004 and started working at YPFB in 2007.
End Note.) Carrasco was arrested, questioned, and released
February 19 on charges of concealing and confiscating
computer information relevant to the YPFB corruption/murder
case. According to current YPFB President Carlos Villegas,
"Carrasco was caught red-handed, trying to remove information
from a computer."

Morales Explains CIA/USAID "Network of Corruption"
-------------- --------------


5. (U) Morales piled on February 24 with fresh allegations
that Carrasco had helped the CIA "penetrate YPFB." As proof,
Morales claimed Rodrigo Abraham Carrasco Kreuzer (note
different second last name) had participated in over 15
courses in the United States, including CIA training and
military training at the School of the Americas. (Note:
MILGP confirms a Rodrigo Carrasco attended a 1993
counternarcotics operations course at the School of the
Americas, now called WHINSEC-Western Hemisphere Institution
for Security Cooperation. End Note.) "The School of the
Americas stands out among those centers, and I do not have to
explain its mission to the Bolivian people," said Morales.
Morales further claimed that Carrasco used the facade of a
security expert in the hydrocarbons section to work for the
CIA in Argentina, Brazil, Chile, and Iraq, in addition to
establishing a "network of corruption" in YPFB. Morales
added that he had several times tried to have Carrasco
removed for his close relationship with the Embassy's CIA and
USAID sections, implying a nefarious role for USAID "because
it reports to the State Department." Morales added that
Carrasco, and the CIA by extension, was also to blame for
fuel shortages and that other ex-YPFB officials were also
being investigated.

Prosecutor, Senate, Police Deny Investigation of CIA Ties
-------------- --------------


6. (U) Despite the public claims against Carrasco, the
prosecutor in the case, Cesar Romano, rejected February 25
that Carrasco was being investigated for anything beyond
corruption. "We are only investigating the irregularities
that occurred with Catler-Uniservice (the private company
involved in the YPFB scandal) ... I can't comment on what we
are not investigating," said Romano. The Vice-Minister of
Transparency, Nardi Suxo, added that she plans to investigate
Carrasco for using false credentials as a commercial engineer
to obtain his YPFB position. A member of the Senate
Anti-Corruption Committee and the National Director of
Personnel for the Bolivian National Police likewise denied
any investigation into or knowledge of Carrasco CIA links.

Carrasco/Embassy Speak
--------------


7. (U) Carrasco told the media February 25 that working with
the Copes special police force only proves only that he was a
Bolivian policeman, working for the Bolivian state. "This
seems to me something totally ridiculous, I'm not an
infiltrator, I'm not a member of the CIA, I'm a Bolivian that
loves his country." Carrasco's lawyer has called the
accusations "infantile." The Embassy issued a press release
February 25 that "rejects this new accusation without
foundation or a single proof. We lament this new intent to
use the United States as a domestic political tool."

The Rest of the Story
--------------


8. (C) Ruling Movement Toward Socialism (MAS) Party
Congresswoman Ana Lucia Reis (strictly protect) told PolOff
that during a February 4 meeting of MAS congressmen, Vice
President Alvaro Garcia Linera gave the group marching orders
for dealing with the recent Santos Ramirez/YPFB
corruption/murder scandal: "You are not to say anything
except that the case is being investigated and you support
the investigation." Reis said Garcia Linera told congressmen
that the government was genuinely concerned about combating
corruption and that "the hand of the United States is surely
behind this." Although he didn't push back publicly, she
said Lower House President Edmundo Novillo was questioning
the links with U.S. and trying to get congressmen to keep the
United States out of public comments. Reis thought Novillo
may have been motivated to keep anti-U.S. statement mute due
to his recent meeting with the Charge', which she said
Novillo thought was "very positive" (reftel a).

Security Forces Slip Sliding Away from MILGP Training
-------------- --------------


9. (C) The Ministry of Government also decided February 18
to indefinitely cancel participation in police training
sponsored by the Embassy's Military Group. We found out
about the change from two Bolivian National Police (BNP)
officers scheduled to attend the Strategy and Defense Policy
course in Washington. According to a letter from Minister
Rada to Bolivian Police Commander General Miguel Gemio, "all
trips to the United States by police officials are suspended
until further notice." This constitutes about half of all
remaining MILGP training slots, as the Bolivian military has
already instituted a ban on WHINSEC (Western Hemisphere
Institute for Security Cooperation) courses and other courses
with a strategic or doctrinal focus a year ago. In a
separate case, the Bolivian military pulled a participant in
a counter-terrorism course at CHDS (Center for Hemispheric
Defense Security) courses and confirmed no additional
uniformed Bolivians would be allowed to attend. MILGP is
concerned this is another step to shutting the MILGP down
completely in Bolivia (reftel d). MILGP is still waiting for
the Bolivian Ministry of Defense to fill nine slots for three
pending MILGP funded trainings or conferences in February and
March. Since January the MOD required that training requests
be approved directly by MOD, instead of the previous practice
of approving through the office of the armed forces commander.

Explaining Bilateral Schizophrenia: Love Obama, Hate USG
-------------- --------------


10. (C) Contacts in the MAS and ministries have been telling
us for months how much the government is genuinely optimistic
that relations will improve under the Obama Administration.
We understand both Morales and hard-line Presidency Minister
Juan Ramon Quintana (also a School of the Americas alum)
watched the inauguration live and that Foreign Minister
Choquehuanca is "searching for a safe way to engage,"
according a close MFA contact (see septel on 2/25 Charge'
meeting with Choquehuanca). Yet Morales Administration
officials attack and accuse USG agencies, then blithely add
they hope relations will improve.


11. (C) As Senate Vice President Luis Ortiz (MAS, Chuquisaca;
strictly protect) explained to PolOff February 19, the MAS
mind does not see a contradiction: Obama may be good, but the
tentacles of the USG are still acting at the behest of evil
"neoliberals" and vestige Bush appointees. The MAS dissident
expounded that Morales perceives government careerists and
whole branches of his own government, particularly the
judiciary, as highly politicized and still acting in the
interests of previous administrations. Viewing the world
though the prism of his own narrow domestic experiences,
Ortiz reasons Morales does not equate attacks on the USG with
attacks on Obama and may actually think he's doing President
Obama a favor by exposing "rogue" elements of the USG.

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


12. (C) Blaming us for the YPFB scandal and banning BNP from
MILGP training is a strange way to show us they "want
relations to improve," per the MAS' current mantra of choice.
Ortiz's observation that the MAS view the USG and Obama as
distinctly separate entities is as good an explanation as
we've heard for the Morales bipolar bilateral discourse, but
the MAS' standard olive branch rhetoric may also just be a
throwaway line to appeal to MAS moderates and the
international audience. This particular attack exposes how
desperate the GOB has become to focus blame for the YPFB
scandal elsewhere, as it threatens to accentuate existing MAS
divisions, and may have a shelf life beyond the typical GOB
conspiracy theory. We remain the scapegoat of choice, stated
affinities for President Obama notwithstanding. End Comment.
URS