Cablegate: In Cochabamba, Business As Usual

VZCZCXYZ0001
RR RUEHWEB

DE RUEHLP #3051/01 3172035
ZNR UUUUU ZZH
R 132035Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1262
INFO RUEHAC/AMEMBASSY ASUNCION 6269
RUEHBO/AMEMBASSY BOGOTA 3590
RUEHBR/AMEMBASSY BRASILIA 7451
RUEHBU/AMEMBASSY BUENOS AIRES 4712
RUEHCV/AMEMBASSY CARACAS 1962
RUEHPE/AMEMBASSY LIMA 2023
RUEHME/AMEMBASSY MEXICO 1879
RUEHMN/AMEMBASSY MONTEVIDEO 4160
RUEHQT/AMEMBASSY QUITO 4601
RUEHSG/AMEMBASSY SANTIAGO 9180
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 003051

SIPDIS

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: IN COCHABAMBA, BUSINESS AS USUAL

REF: LA PAZ 2626

-------
SUMMARY
-------

1. (U) Cochabamba business association representatives told
Econoff November 9 that business continues as usual, despite
ongoing political and economic uncertainty. They noted that
while they share a desire for economic stability and judicial
security with their La Paz and Santa Cruz counterparts, they
face unique concerns, among them the growing "exodus" of
Bolivian workers to Spain (reftel). They also called
attention to the harmful impact of the potential expiration
of the Andean Trade Promotion and Drug Eradication Act.

---------------------
BUSINESS AS USUAL ...
---------------------

2. (U) Representatives of Cochabamba's chambers of commerce,
industry, and exporters told Econoff November 9 that business
continues as usual, despite ongoing political and economic
uncertainty. Chamber of Commerce General Manager Richard
Alvarez noted that while not necessarily thriving, businesses
appear to have adapted to the uncertainty of the last few
months; most expect to withstand rising tensions, and few are
seriously considering drastic changes to operations.
Businessmen generally feel they will survive current unrest,
as they survived past political turmoil, and will continue to
urge greater stability and respect for existing rules of the
game; what they most want, Alvarez said, is to be left alone,
free of GOB interference and drastic change.

--------------------------------
... BUT NOT WITHOUT ITS PROBLEMS
--------------------------------

3. (U) Chamber of Industry General Manager Marcelo Vargas
noted that while Cochabamba businessmen share a desire for
economic stability and judicial security with their La Paz
and Santa Cruz counterparts, they face unique concerns, among
them the growing "exodus" of Bolivian workers to Spain
(reftel). Vargas estimated that more than 2,500 skilled and
unskilled laborers leave Bolivia every week; industry
representatives say employees frequently stay just long
enough to learn a trade before seeking better opportunities
and higher wages abroad, where they believe their skills will
be in high demand and jobs relatively easy to find. Firms
recognize that they might retain employees by raising
salaries, but they also worry that higher labor costs will
lower competitiveness, especially given stiff competition
from low-priced imports from China and East Asia. According
to Vargas, firms have few means of coping with the outflow;
they can only hope the stream will gradually diminish,
possibly as rumors of Spain's consideration of tighter entry
requirements for Bolivians prove unfounded.

4. (U) Chamber of Exporters representative Boris Maroff
reiterated Vargas' concerns, noting that many exporters
suffer from a shortage of skilled labor - and foresee
significant drops in exports if the Andean Trade Promotion
and Drug Eradication Act (ATPDEA) expires later this year.
Highlighting a 30 percent increase in Cochabamba exports
since 2000, Maroff pointed out that firms rely heavily on
ATPDEA trade preferences and have responded to the Act's
incentives by exporting a more diversified range of products;
exporters now send over 1,000 different goods abroad, mostly
to the United States, and have increasingly moved beyond raw
materials to processed goods. Maroff argued that many
exporters would find it difficult to compete without
duty-free access to U.S. markets, cautioning that ATPDEA
expiration would put their success at risk and force many
businessmen to modify or close operations and potentially
fire tens of thousands of employees.

-------
COMMENT
-------

5. (SBU) Cochabamba firms appear to have taken rising
tensions in stride, and business continues despite ongoing
uncertainty. Many businessmen are understandably worried
about the loss of skilled labor and the potential expiration
of ATPDEA trade preferences, but most expect to adapt, as
they have adapted in the past. Even while they wish for
clarity, they recognize that the chances of getting it are
slim.
GOLDBERG

© Scoop Media