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Cablegate: Forestry Sector Fearful of Gob Intervention

VZCZCXYZ0041
RR RUEHWEB

DE RUEHLP #1672 1721813
ZNR UUUUU ZZH
R 211813Z JUN 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 9691
INFO RUEHAC/AMEMBASSY ASUNCION 5939
RUEHBO/AMEMBASSY BOGOTA 3256
RUEHBR/AMEMBASSY BRASILIA 7103
RUEHBU/AMEMBASSY BUENOS AIRES 4356
RUEHCV/AMEMBASSY CARACAS 1647
RUEHPE/AMEMBASSY LIMA 1641
RUEHME/AMEMBASSY MEXICO 1730
RUEHMN/AMEMBASSY MONTEVIDEO 3862
RUEHQT/AMEMBASSY QUITO 4281
RUEHSG/AMEMBASSY SANTIAGO 8829
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 001672

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV EAGR ECON SENV BL
SUBJECT: FORESTRY SECTOR FEARFUL OF GOB INTERVENTION

REF: A. LA PAZ 1660

B. 05 LA PAZ 3506
C. LA PAZ 1651

1. (U) Summary: The Bolivian Forestry Chamber has repeatedly
voiced opposition to the GOB's plans to nationalize forestry
resources, arguing that government interference will
undermine a healthy and productive sector. The GOB's
national development plan, released June 16 (ref A), does not
propose nationalization, but rather increased government
intervention in industrialization and exploitation. As in
the hydrocarbons and mining sectors, the prospect of state
interference has deepened uncertainty and threatens future
investments. End summary.

2. (U) The Bolivian Forestry Chamber has repeatedly voiced
opposition to the GOB's plans to nationalize forestry
resources, arguing that government interference will
undermine a healthy and productive sector. Industry
representatives assert that forestry resources, when
responsibly managed, generate employment and boost overall
economic development. They point out that the sector employs
approximately 50,000 people and note that 80 percent of its
exports are value-added products, including furniture, doors,
and flooring. They also note that Bolivia leads the world in
certified natural tropical forests (ref B) and has greatly
expanded exports of certified wood products. Government
interference of any sort, they say, could threaten production
and related jobs.

3. (U) The GOB's national development plan, released June 16
(ref A), does not propose nationalization, but instead
increased government intervention in industrialization and
exploitation. The plan urges greater production of
value-added goods (as opposed to unfinished raw wood),
encourages adherence to sustainable management practices, and
calls for increased emphasis on the rights and contributions
of peasants and indigenous communities. The strategy also
proposes reforming the sector's legal framework to modify
concessionaires' rights and ensure farmers and local
communities participate fully in production. It does not,
however, explain exactly how existing laws and regulations
might be altered.

4. (SBU) Comment: As in the hydrocarbons and mining sectors,
threats of government intervention have deepened uncertainty
and undermind prospects for investment. Forestry Chamber
representatives say exporters (and clients in 50 different
countries) are increasingly concerned and may consider
delaying large projects, particularly if the GOB follows
through on plans to redistribute large landholdings (ref C)
and eliminate the regulatory body overseeing the sector (ref
A). If the GOB does expand its role in the industry,
producers - and their employees - may suffer. End comment.
GREENLEE

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