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
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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
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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
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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