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Cablegate: Bolivia Calm for Productive Brazil/Chile Summit

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INFO RUEHAC/AMEMBASSY ASUNCION 7446
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RUEHBR/AMEMBASSY BRASILIA 8724
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C O N F I D E N T I A L LA PAZ 003270

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/18/2017
TAGS: BL ECON PBTS PGOV PREL CI VE BR
SUBJECT: BOLIVIA CALM FOR PRODUCTIVE BRAZIL/CHILE SUMMIT


Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d)

1. (C) Summary. Bolivian President Evo Morales joined his
Brazilian and Chilean counterparts December 16 to sign a $900
million road project to link South America's Pacific and
Atlantic coasts via Bolivia. He also received a $750 million
commitment for natural gas investments from Brazil the next
day. The opposition, meanwhile, suspects the lack of a crack
down for autonomy measures passed December 14 and 15 in four
opposition-controlled states has much to do with Evo wanting
to bask in the international spotlight. Indeed, Morales and
the official government news agency heralded the agreements
as victories demonstrating Morales' international legitimacy,
in contrast to an unreasonable and violent opposition. Lula
seemed eager to play the role of international cheerleader,
calling Morales the "face of Bolivia" and the harbinger of
"historic change" to the continent. End Summary.

The Road Less Traveled By No More
---------------------------------

2. (U) Bolivian President Evo Morales, Brazilian President
Luiz Inacio Da Silva, and Chilean President Michelle Bachelet
signed $900 million Declaration of La Paz December 16 to
complete 4,700 kilometers of highway linking South America
from Atlantic to Pacific. New highways added to existing
motorways will link La Paz with the Chilean ports of Arica
and Iquique to the west and with the Brazilian metropolis of
Sao Paulo on the east. Once completed in about two years,
the highway will transport an estimated 2,000 million metric
tones of largely agricultural and mineral products. Bachelet
stressed the highway's significance to integrating South
America with the Asian-Pacific rim while Lula underscored the
interconnectedness of all South American countries. Morales
said the highway is symbolic of power of compromise and, in
an apparent barb at the opposition, said "we are betting that
transformations between Bolivians and between South Americans
will be peaceful."

Chilly Chilean Relations Warming
--------------------------------

3. (U) Bachelet and Morales met for 45 minutes after the
signing. Although neither advisors nor the media was allowed
into the one-on-one meeting, it was widely speculated the two
leaders talked about the polemic issue of Bolivian access to
the Pacific. Although few Chilean heads of state have
visited Bolivia since Bolivia lost its coastal territories to
Chile in 1884, Bachelet has traveled to La Paz three times
during Morales' two years in office. While relations have
warmed, resulting in the July 2007 13-points agenda, which
includes Bolivian demands for ocean access, Bolivian
resentment continues to run high and the countries have not
formally re-established diplomatic ties broken in 1978.
Bachelet expressed confidence that "the prejudices that no
one can justify can disappear, because often the insecurities
and such prejudices have been limited by the relations among
counties that are calling for integration."

Lula Fills YPFB Stocking with Cash
-----------------------------------

4. (U) Lula and Morales also signed an energy cooperation
agreement December 17. The Brazilian state energy company
Petrobras will invest an estimated $750 million in natural
gas exploration and production with Bolivian's state energy
company YPFB. Lula estimated the project would increase
production by about 8 million cubic meters per day within
four or five years. The joint-venture will look for new
fields in Tarija, Santa Cruz, and Chuquisaca. Petrobras also
agreed to pay $180 million a year for liquid components
(propane and butane) in the 30 million cubic meters of
Bolivian natural gas currently piped to Brazil each day.
Petrobras remains the largest investor in Bolivian natural
gas. Lula stressed future expansion of bilateral relations
beyond the hydrocarbon sector into agricultural, education,
health, counternarcotics, and industrial cooperation.

Saccharin Praise for the "Face of Bolivia"
------------------------------------------

5. (U) Lula said the gas deal was possible because the
Bolivians were willing to provide "rules of the game" for
investment. He said the agreement signaled the end of tense
relations following the May 2006 "nationalization" of the
hydrocarbon industry, after which Petrobras froze investment.
"I would like to think we have overcome this (bilateral
problems) and that we have initiated a new step in our
relations with more positive, more constructive (relations)
based on dialogue," said Lula. He added that Morales
"represented an historic change" for the region and that
"Bolivia has a president with the face of its people,"
referring to Morales' indigenous roots. Lula also gave
Morales some advice in "these times of conflict" on December
17, telling Evo to have "patience, patience, patience,
because, certainly, the people will ultimately pick the
(right) direction for democracy." State media agency ABI
characterized the Lula and Bachelet visits as a sign of
"support for the democratic government of Evo Morales" and of
rejection for the Bolivian opposition, which is meanwhile
"trying to divide the country."

Evo Backs Off to Bask in Brazil/Chile Summit
--------------------------------------------

6. (C) Opposition leaders in Santa Cruz told PolOff the
Lula/Bachelet trip ensured Evo would not crack down on
opposition-led departments (states) for passing autonomy
measures December 14 and 15. According to opposition
leaders, the government feared violent clashes would steal
the international spotlight from the summit and force a more
critical look at the Morales administration worked to
restrain Morales from any provocative actions. They
predicted a lull in the government-opposition standoff until
after the holidays.

Comment
-------

7. (C) Evo got what he wanted: with no bloody conflicts to
distract the international spotlight, Evo came away from the
summit with substantive international agreements and many
photo ops. Lula appeared to be only too willing to offer
cash and praise for the Morales administration. The
long-anticipated deal with Petrobras was intended to show Evo
that Lula and Brazil can be a superior partner to Venezuelan
President Hugo Chavez. Politically, Lula is trying to move
Bolivia back into its political orbit. In interviews,
Brazilian officials have downplayed Bolivia's domestic
turmoil and focused on gas deals for its ever increasing
energy demands. Relations with Chile indeed seem to be
improving, but they are rebounding from a very low starting
point and, as one of our Foreign Ministry contacts told us,
"any agreement on the lost territories is years away." End
Comment.
GOLDBERG

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