CHILE MEDIA REPORT - MAY 14

UNCLAS SANTIAGO 000456 SIPDIS STATE FOR R/MR, I/PP, WHA/BSC, WHA/PDA, INR/IAA E.O. 12958: N/A TAGS: KMDR KPAO PGOV ECON PREL SNAR EFIN CI SUBJECT: CHILE MEDIA REPORT - MAY 14 Leading Stories -------------- ¶1. The Central Bank projects an economic recession for 2009, with an estimated growth rate that ranges between -0.75 to 0.25%. Dailies also reported that all undersecretaries and 600 other high-ranking government offices will be drug tested regularly for use of illegal substances. Those who test positive will be referred to rehabilitation programs, but will not be sanctioned. U.S.-Related News -------------- ¶2. President Bachelet confirmed she will travel to Washington, D.C., on June 23 for a bilateral with President Obama. Bachelet also commented on Arturo Valenzuela's nomination as Assistant Secretary of State for Western Hemisphere Affairs: "It's an excellent nomination in line with President Obama's goodwill to continue developing a close, positive, and constructive relationship with Latin America, and certainly with Chile." She added that Valenzuela's appointment is "a gesture" to the region (La Tercera, conservative, independent, circ. 101,000, 5/14). ¶3. Alvaro Vargas Llosa column: Obama's reasons to nominate Arturo Valenzuela have to do with the new Assistant Secretary's experience with the Clinton administration; his wide political connections, his Hispanic background, and his close ties to OAS Secretary General Jose Miguel Insulza. Valenzuela's academic profile was also important, since Obama has brought the academic world back into government again. Valenzuela will undoubtedly attempt to strengthen the tense ties between the United States and the OAS, given his relationship with the entity's Secretary General (La Tercera, 5/14). ¶4. Former Mexican chancellor Jorge Castaneda said that Arturo Valenzuela "understands" what Obama wants for the region, and he is familiar with the historical context and the issues of each country, which enables him to design "a different policy." Castaneda expects a policy "of small steps and gestures" toward Cuba, but within OAS lines of action. In his opinion, Cuba's true leader -- Fidel Castro -- will undermine any U.S. attempt for rapprochement. Castaneda believes the United States will continue with its non-confrontational policy with regard to Venezuela, but will also be "careful in accepting Chavez' unpredictable temperament" (El Mercurio, conservative, influential newspaper-of-record, circ. 129,000, 5/14). ¶5. Analysts agree that while Valenzuela's nomination is an important sign for the region, it doesn't mean that Latin America will become a priority. Valenzuela's nomination "reflects a different way of trying to reach the region," said analyst Joaquin Fermandois. "Valenzuela's contribution will be to hand President Obama an accurate picture of what is truly going on in Latin America," said Walter Sanchez (La Nacion, government-owned, editorially independent, circ. 4,200, 5/14). ¶6. Those who have met Valenzuela agree that he is highly qualified because of his thorough knowledge of the region and his connections across the political spectrum. RN Andres Allamand highlighted "the mix" of Valenzuela's academic knowledge with his experience in office. Former Foreign Affairs Minister Ignacio Walker and Ricardo Solari (PS) said Valenzuela's appointment is consistent with President Obama's "new era of dialogue with Latin America." Walker noted Valenzuela's strong commitment to democracy and human rights, plus the fact that he is "a political realist" (La Segunda, conservative, afternoon, circ. 33,000, 5/13). Military Acquisitions -------------- ¶7. Foreign Affairs Minister Mariano Fernandez said Chile's eventual acquisition of F16s from Holland is part of the government's "technological renovation process," which includes the armed forces too. As an example, he said Chile's new frigates use half the fuel of that consumed by older versions and that the same is true of newer military aircraft (La Nacion, 5/14). SIMONS