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Cablegate: Hydrocarbons Minister Resigns

VZCZCXYZ9501
PP RUEHWEB

DE RUEHLP #2519 2611827
ZNR UUUUU ZZH
P 181827Z SEP 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 0599
INFO RUEHAC/AMEMBASSY ASUNCION 6101
RUEHBO/AMEMBASSY BOGOTA 3418
RUEHBR/AMEMBASSY BRASILIA 7278
RUEHBU/AMEMBASSY BUENOS AIRES 4533
RUEHCV/AMEMBASSY CARACAS 1798
RUEHPE/AMEMBASSY LIMA 1836
RUEHMN/AMEMBASSY MONTEVIDEO 4012
RUEHQT/AMEMBASSY QUITO 4433
RUEHSG/AMEMBASSY SANTIAGO 9002
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS LA PAZ 002519

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: HYDROCARBONS MINISTER RESIGNS

REF: LA PAZ 2511

1. (SBU) Hydrocarbons Minister Andres Soliz Rada, along with
the Vice Minister and two Directors of Hydrocarbons, resigned
on the evening of September 15 following Vice President
Alvaro Garcia Linera's freeze of a ministerial resolution
that would have shifted hydrocarbons companies' revenues to
the state oil company YPFB (reftel). Garcia Linera froze the
resolution after it provoked a strong reaction from Brazilian
President Lula da Silva due to the negative impact that it
would have had on the Brazilian firm Petrobras. Former
Development Planning Minister Carlos Villegas was named
Hydrocarbons Minister on September 16. Villegas, in line
with President Morales' statements, affirmed that the GOB's
nationalization plan would go forward, but in a "broader
spirit" of "more open" negotiation with private companies.
The Vice Minister of Public Investment and External Finance,
Hernando Larrazabal, was named Development Planning Minister.

2. (SBU) Private investors in the sector viewed Soliz Rada,
the main proponent of the GOB's hydrocarbons nationalization
strategy, as a hard-liner with whom negotiations were
difficult. Company representatives are hopeful that Villegas
will be a more agreeable interlocutor as GOB-company
negotiations begin anew on September 18.

3. (SBU) Comment: Political analysts in La Paz have had a
field day interpreting first Garcia Linera's decision to
freeze Soliz' resolution, then the Minister's rapid
resignation. Some expressed the view that the Vice
President's decision reflects a softening by the GOB of its
hard-line approach on nationalization or at least a
repudiation of failed tactics. The government does seem to
be taking a more conciliatory tone, although it maintains
that its nationalization goals have not changed. The
Brazilian Charge told us September 18 that he expects
Villegas to adopt a less confrontational approach than Soliz.
He added, however, that the GOB's main objectives remain the
same. The Charge forecast a difficult month ahead for
Brazilian/Bolivian relations. End comment.
URS

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