Cablegate: Gob Postpones Mining Plan Until 2007

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DE RUEHLP #2976 3051734
ZNR UUUUU ZZH
R 011734Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1174
INFO RUEHAC/AMEMBASSY ASUNCION 6243
RUEHBO/AMEMBASSY BOGOTA 3563
RUEHBR/AMEMBASSY BRASILIA 7425
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RUEHSG/AMEMBASSY SANTIAGO 9149
RUEHKO/AMEMBASSY TOKYO 0260
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 002976

SIPDIS

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

E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: GOB POSTPONES MINING PLAN UNTIL 2007

REF: A. LA PAZ 2944

B. LA PAZ 2860

1. (U) Summary: President Morales chose not to unveil his
much-hyped mining plan October 31 (ref A), instead announcing
that the GOB would postpone it until 2007, ostensibly because
of a lack of financing. Morales attempted to divert
attention to a supreme decree authorizing the conversion of
cooperative miners in Huanuni to salaried employees of the
state, as promised in the aftermath of October 5-6 conflicts
(ref B). End summary.

2. (U) President Morales chose not to unveil his much-hyped
mining plan October 31 (ref A), instead announcing that the
GOB would postpone it until 2007, ostensibly because of a
lack of financing. Morales told the press the GOB wanted to
"consolidate" the hydrocarbons nationalization but would
continue working on a plan to reactive the mining sector.

3. (U) Morales attempted to divert attention to a supreme
decree authorizing the conversion of cooperative miners in
Huanuni to salaried employees of the state, as promised in
the aftermath of October 5-6 conflicts between miners'
cooperatives and unions (ref B). The supreme decree directs
Comibol, the state-owned mining company, to assume control of
all activities in Huanuni and convert members of the region's
four cooperatives into regular laborers; the decree does not
dictate salaries or specify the number of miners Comibol may
hire but says conversions and mining activities must meet the
terms of the company's operating plan. The decree also
allocates approximately $9.7 million to the development of
new mineral deposits, the expansion of processing facilities,
and the construction of a tailings dam.

4. (SBU) Comment: The GOB may indeed face a funding
shortfall, but Morales' postponement was more likely a
political maneuver designed to retain for future use a means
of rallying the people and boosting approval ratings. From a
political perspective, it may make sense for Morales to keep
something in his back pocket, but from a business
perspective, it seems less wise, as foreign and domestic
investors alike will have to cope still longer with
uncertainty. Morales may also face opposition from social
sectors, including cooperative miners, who have said they are
seriously opposed to any nationalization. End comment.
URS

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