CHILE MEDIA REPORT - FEBRUARY 23

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SUBJECT: CHILE MEDIA REPORT - FEBRUARY 23

Leading Stories
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1. Volcanologists warn that the Chaiten volcano in southern Chile
could collapse, burying the town of Chaiten under ashes, volcanic
material, and mud slides. The Minister of Interior underscores that
that it is not possible at this stage to rebuild Chaiten and local
government authorities started the relocation of their facilities in
the area of El Amarillo.

U.S.-Related News
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2. Change is the word that characterizes the new U.S.
administration. It's also what the world is expecting, and Latin
America is no exception. Many are waiting to see a sign that a new
era has begun. But the pressure of the economic crisis and the
situation of U.S troops in Iraq and Afghanistan have not given Obama
time to look at Latin America or appoint the officials in the White
House and the Department of State who are responsible for relations
with the region. However, there is one individual who seems to have
the best chances of heading the office of Western Hemispheric
Affairs in the Department of State: Chilean Arturo Valenzuela,
Director of the Center for Latin American Studies in Georgetown
University and Clinton advisor since 1992 (El Mercurio,
conservative, influential newspaper-of-record, circ. 129,000,
2/22).


3. Although Latin America was not a priority during Obama's
campaign, there were signs that the lack of interest shown by the
previous administration could change. In June, Obama said, "There
is a natural connection between the United State and Latin America,"
and even offered Chile and Argentina assistance in nuclear
development. But nothing has yet happened and there seems to be no
plan for the short-term. The best example of this is that Assistant
Secretary for Westerns Hemispheric Affairs Thomas Shannon, appointed
by Bush in 2005, has been asked to stay until the summit of the
Americas in April. No one knows what will happen after that. One
expert said that although Shannon's work has been highly rated and
he is a respected diplomat, he is nevertheless a symbol of the
previous administration's policy, which could hurt the beginning of
relations between Latin America and the Obama administration (El
Mercurio, 2/22).


4. Alvaro Vargas Llosa: "Vacuum" is the word that best describes
the policy of the new U.S. administration toward Latin America,
because there is no policy and no one to execute it. The U.S.
government is fully absorbed by domestic affairs and in other
regions of the world, such as the Middle East and Asia. Obama has
had no time to come up with a plan or make the appropriate
appointments and has asked Thomas Shannon, the respected diplomat
who now heads the office of affairs with Latin America, to remain in
place until April. The same has been asked of Hector Morales, U.S.
representative to the OAS. In the context of these requests and
Obama's campaign announcement of a change in policy toward the
region, the Department of State can only be prudent in its action.
According to an "Andean diplomat" some Washington allies in the
region are concerned that this power vacuum is perceived as a U.S.
weakness, and therefore encouraging activities that are contrary to
U.S. interests, such as the recent visits of numerous heads of state
to Cuba to meet with Fidel Castro (La Tercera, conservative,
independent, circ. 101,000, 2/22).


5. Two years ago the United States Trade Representative (USTR)
placed Chile on its Priority Watch List for IPR. Today, local
experts believe Chile has made significant progress to be taken off
the list: Congress has ratified the Patent Cooperation Treaty,
Customs and the police have tightened significantly their control of
piracy, the Investigations Police (PDI) created the special
Intellectual Property Crimes Brigade in 2008 (Diario Financiero,
business and financial, circ. 30,000, 2/23).


6. Editorial: "Obama Shows his Foreign Policy Cards"
"Although Obama is focusing on domestic problems ... he has not
neglected the external front, and he fulfilled the U.S. presidential
tradition of making his first official trip abroad to Canada....
Although the economy is today a priority in the United States and in
the world, the wars in Iraq and Afghanistan occupy an important
place in Obama's agenda.... Meanwhile, eyes are set on what foreign
leaders Obama will meet first and this will be the Japanese Prime
Minister... which is considered as a special gesture toward a
'fundamental' ally that George W. Bush had put somewhat aside ....
If the intention was to send the message that the White House wants
to improve its image abroad, it seems this was has been
accomplished. The new strategy seems to use more 'soft power,'
rather than force or military might (El Mercurio, conservative,
influential newspaper-of-record, circ. 129,000, 2/23).


7. Editorial: "Obama's Tough Economic Beginning"
"The rescue plans have lacked clarity and the macroeconomic scenario
is discouraging, which has prevented markets from regaining
confidence. But the new administration has not just sat and waited.
On February 10, the administration announced a financial
stabilization plan.... It was criticized because the plan did not
address the one element that is causing more uncertainty, which is
what to do with the 'toxic' assets that have U.S. banks paralyzed.
Three day later... Congress approved a US$787 billion stimulus
plan... and this week Obama announced a million dollar financial aid
plan for those who have mortgaged their homes.... In spite of the
magnitude of these plans, markets have not yet picked up. This
would show that regardless of the spectacular sums involved, the
true problem has not yet been resolved. In the short term,
Washington will have to take a clear stance on how to eliminate the
toxic assets.... Without this, Wall Street will have a difficult
time recovering" (El Mercurio, conservative, influential
newspaper-of-record, circ. 129,000, 2/23).


8. Editorial: "President Obama's Stimulus Plan"
"Last Monday, President passed the law that activates his economic
stimulus plan... accentuating the fall of the U.S. stock market....
A reason for this uncertainty is the loss of capital in the
financial system.... The only plausible strategy to grow again is
to recapitalize this sector, which calls for adequate resources and
the right approach.... But the damage that the financial sector has
suffered, the questions on the reactivating effects of fiscal
expenses, and the fear over the long term impact of the aggressive
monetary and fiscal policies applied today will maintain a high
degree of tension and uncertainty" (La Tercera, conservative,
independent, circ. 101,000, 2/22).

Chile -- other countries
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9. A delegation of Chilean ministers of state will visit Ecuador in
August to meet with their counterparts and ratify border treaties.
This visit occurs as Peru is preparing to file a claim with the
International Court of Justice at The Hague in March, questioning
the tri-border treaties signed with Chile in 1952 and 1954. Ecuador
is closely watching that process, because those treaties also
established its borders with Peru (La Tercera, 2/23).

Cuba
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10. The controversy created by Fidel Castro's column on President
Bachelet's trip to Cuba, and especially his endorsement of Bolivia's
maritime claim, yielded good results for Foreign Minister Alejandro
Foxley. The minister objected to the trip from the beginning, but
Bachelet was not willing to refuse the invitation to visit Cuba and
chose to ignore the minister to the point of excluding him from the
preparation of the trip. This made Foxley lose leverage. But after
the impasse, Foxley is in a better position with Bachelet, who would
be more willing to let him handle foreign policy issues (El
Mercurio, 2/21).


11. Cuban Ambassador to Chile, Ileana Diaz Arguelles, will arrive
in Santiago on Thursday and present her letters credentials on March

3. Her mission is to improve cooperation on agriculture, health,
biotechnology and culture and strengthen the Chile-Cuba Friendship
Group in the parliament (Government-owned, editorially independent
La Nacion, 2/23).

SIMONS