Identifier
Created
Classification
Origin
09LAPAZ871
2009-06-15 13:13:00
CONFIDENTIAL
Embassy La Paz
Cable title:  

PL-480: TWO YEARS OF FRUSTRATION

Tags:  ECON PGOV AGR FAO FAS IFAD IICA BL EFIN PINR 
pdf how-to read a cable
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DE RUEHLP #0871/01 1661313
ZNY CCCCC ZZH
P 151313Z JUN 09
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 0996
INFO RUEHAC/AMEMBASSY ASUNCION 9064
RUEHBO/AMEMBASSY BOGOTA 6446
RUEHBR/AMEMBASSY BRASILIA 0420
RUEHBU/AMEMBASSY BUENOS AIRES 7630
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RUEHMN/AMEMBASSY MONTEVIDEO 6323
RUEHQT/AMEMBASSY QUITO 7294
RUEHSG/AMEMBASSY SANTIAGO 2058
RUEKJCS/SECDEF WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHUB/USINT HAVANA 1800
RUEHLMC/MILLENNIUM CHALLENGE CORP
C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 000871 

SIPDIS

STATE PLEASE PASS TO USDA FAS WASHDC

E.O. 12958: DECL: 06/08/2119
TAGS: ECON PGOV AGR FAO FAS IFAD IICA BL EFIN PINR
EAID, KTIA
SUBJECT: PL-480: TWO YEARS OF FRUSTRATION

REF: A. 08 LA PAZ 3236

B. 08 LA PAZ 2601

C. 08 LA PAZ 1175

Classified By: A/EcoPol Counselor Joe Relk for reasons 1.4 (b, d).

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Summary
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C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 000871

SIPDIS

STATE PLEASE PASS TO USDA FAS WASHDC

E.O. 12958: DECL: 06/08/2119
TAGS: ECON PGOV AGR FAO FAS IFAD IICA BL EFIN PINR
EAID, KTIA
SUBJECT: PL-480: TWO YEARS OF FRUSTRATION

REF: A. 08 LA PAZ 3236

B. 08 LA PAZ 2601

C. 08 LA PAZ 1175

Classified By: A/EcoPol Counselor Joe Relk for reasons 1.4 (b, d).

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Summary
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1. (C) As the Bolivian State presses forward with its
desire to more fully control U.S. donations, the attempt to
program and use PL-480 Title I funds provides an insightful
case study. Following the monetization of agricultural
commodities in 2004-05, about $6.7 million was planned to be
jointly programmed for agricultural programs. Despite
agreeing to fund several projects for more than $4 million,
less than $50,000 has been disbursed over the last two years.
Despite our consistent and patient push for resolution, five
characteristics of the current Bolivian state have left the
funds unused: 1) Ever changing ministers and vice-ministers;
2) Turf fights between ministries; 3) An anti-U.S. attitude
in key leadership positions; 4) Attempts to use funds for
political reasons; and 5) Nationalistic bristling over being
treated with "dignity".

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PL-480 Title I in Bolivia: A Brief History
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2. (C) In 2000, a bilateral agreement was signed between
the USDA and the Bolivian Ministry of Agriculture to monetize
wheat donations and use the proceeds to fortify the work of
the Bolivian Plant and Animal Health Service (SENASAG). In
2001, the Vice Ministry of Public Investment and Foreign
Financing (VIPFE) was designated to administer the funds for
the Ministry of Agriculture and SENASAG. The initial $3
million project was for the control of hoof and mouth disease

in the departments (states) of Pando and Beni. In 2003,
VIPFE began to raise concerns about the ability of SENASAG to
administer the approved funds. Following lengthy
negotiations between all the affected parties, in early 2005
an administrative unit (UNADE) was created to administer the
PL-480 funded projects within SENASAG. UNADE was staffed by
two U.S. Animal and Plant Health Inspection Service (APHIS)
employees and four SENASAG employees. Until mid-2007, UNADE
functioned well, successfully disbursing over $2 million in
funding for agricultural projects. Throughout 2007,
resistance to UNADE controls grew as SENASAG became
increasingly politicized. Finally, following the donation
of over a dozen pick-up trucks for a SENASAG fruit fly
program (Ref. A),the administrative head of SENASAG, Oscar
Sandy froze UNADE access to PL-480 funds. The donated trucks
sat unused for the rest of 2007 for fictitious
"irregularities" in the procurement process and, in early
2008, UNADE was disbanded. No money was disbursed in 2008.


3. (C) Also in 2008, the PL-480 Secretariat was renamed
Insumos Bolivianos and in September, Sandy was appointed as
its director general. While the international agreement for
the Secretariat states that the USG should be consulted
before a new director general is named, no such protocol was
followed. When the point was brought up, Sandy sent us a
terse letter saying that the USG had no such right.
Additionally, per a 2005 agreement, projects for Title I
funds are to be agreed upon by an advisory board composed of
two members of the Bolivian Ministry of Agriculture, the U.S.
Regional Agricultural Counselor (based in Lima),and a
representative from the Embassy. In the absence of a
majority decision, the vote of the U.S. Agricultural Attach
is controlling. At a June, 2009 meeting, Sandy announced
that a Bolivian Supreme Decree had changed the composition of
the advisory board and the USG would now have only one,
non-controlling vote out of five. For now, we have said that

LA PAZ 00000871 002 OF 003


an international agreement cannot be unilaterally changed.
We are encouraging the Ministry of Agriculture to propose
projects for the remaining, unprogramed $4 million in
funding; however, Insumos may well be able to block these
programs and chose to propose and approve whatever it sees
fit. (Note: VIPFE has also frozen about $2 million in
additional approved project funding designated for SENASAG.
VIPFE claims that both that the audit performed at UNADE's
closing was inadequate and that SENASAG does not have the
administrative capacity to administer additional funds. End
note.) Since the PL-480 became Insumos in 2008, we have
received no official notice of exactly what funding remains
in each of the accounts. Both Insumos and VIPFE have told us
that the break down is approximately $4 million under Insumos
control and $2 million with VIPFE, but, despite requests,
nothing has been provided in writing.

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Ever Changing Authorities and an Anti-U.S. Bias
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4. (C) One of the largest problems for most donors trying to
work with the Bolivian government is the frequent turnover in
leadership positions. Over the past two years of trying to
work out a way to move PL-480 projects forward, we have dealt
with three ministers of agriculture, four vice ministers, and
five SENASAG directors. Each has had their own agenda and
level of politization. With the more hard-line authorities,
we made no progress and, in fact, could never secure
meetings. Others seemed to promise progress, but
advancements were ultimately vetoed by more political figures
higher up, or the more pragmatic figures were removed before
we could advance mutually agreed upon plans (Ref. B,C). The
most hostile figure was former Minister of Agriculture Susana
Rivero, who went on to be Minister of Production. While at
Production, Insumos Bolivianos was created and may be her
lasting attempt to control foreign aid designated for
agricultural projects. (Note: Rivero is also the minister
who rejected USG wheat donations in 2008 out of "sovereignty
concerns". End note.)

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Turf Battles
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5. (C) As the Morales Administration issues decrees aimed
at increasing Bolivian government control over foreign aid, a
battle rages within the administration for which ministries
will control the different aspects of the aid. The primary
players are the Ministry of Production and the Ministry of
Planning. However, the actual ministries seem less important
than the personalities which have rotated through many of the
leadership positions. Currently, for the PL-480 monies, we
are having to deal with VIPFE, which is located under
Planning, and with Insumos, which is located under
Production. However, as the programs are designed to be
administered by SENASAG, which is a part of the Ministry of
Agriculture, any agreements must also be amenable to the
leadership there as well. Moreover, despite the Morales
Administration attempts to centralize control over foreign
aid, in a June meeting, Vice Minister of Agriculture Tereza
Morales complained about all of the different donor
requirements made upon her office. It appears that no one
inside or outside of the government really knows yet who has
the lead when it comes to foreign agricultural aid.

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A Lack of Transparency and Political Use of Funds
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6. (C) For the PL-480 funds, the biggest worry is the
administrative capacity and highly politicized environment of
SENASAG. Unfortunately, despite a $10 million program from
the Inter-American Bank and our institutional strengthening

LA PAZ 00000871 003 OF 003


programs, SENASAG has still not found solid, institutional
footing. As the director of the Inter-American Institute for
Agricultural Cooperation (IICA) put it, "SENASAG is still
more of a program than an institution." SENASAG leaders are
often more political than technical, and projects in the
countryside are often used to advance the Movement toward
Socialism (MAS) agenda. As a result, we have been insistent
that some sort of administrative controls be in place
following the closure of UNADE. Unfortunately, our efforts
to help profesionalize SENASAG have not had much effect (Ref.
C).

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The Quest for "Dignidad"
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7. (C) "Dignidad" has become a catch phrase for the Morales
Administration. In the PL-480 context, we were told by an
advisor to the Ministry of Planning that the composition for
the Advisory Board had to be changed because it was
"undignified" that the U.S. Agricultural Attach had an
effective veto over any proposed programs. He said that in
today's Bolivia, this is simply not acceptable. Working to
establish an acceptable level of "dignidad" for the
recipients of our aid will be a necessary part of any future
donations. Vice Minister Morales urged us to be patient with
the "Change Process" and that in the end, it would be better
for all parties.

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Comment
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8. (C) The USDA Food for Progress Program is a small player
in the donor field in Bolivia, but its experience in trying
to work with the ministries of agriculture, planning, and
production is not unique; frustration throughout the donor
community is commonplace. One the other hand, two additional
Title I programs in Bolivia that directly fund the work of
two NGOs have enjoyed great success and strong community
acceptance and praise in the countryside. Furthermore, USAID
funds programs directly with NGO implementors and coordinates
with the GOB as necessary and feasible. This model ensures
results and funding control. The real difficulties arise in
dealing with the Bolivian state directly. The Morales
Administration may wish to administer all foreign aid through
the state apparatus, but the structure and capability of the
government is many years away from realizing that goal.

URS