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Cablegate: Gob Shrinks From Threats Against Swiss Mining Firm

VZCZCXYZ0000
RR RUEHWEB

DE RUEHLP #3090/01 3201734
ZNR UUUUU ZZH
R 161734Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1316
INFO RUEHAC/AMEMBASSY ASUNCION 6298
RUEHBO/AMEMBASSY BOGOTA 3619
RUEHBR/AMEMBASSY BRASILIA 7480
RUEHBU/AMEMBASSY BUENOS AIRES 4742
RUEHCV/AMEMBASSY CARACAS 1991
RUEHPE/AMEMBASSY LIMA 2053
RUEHME/AMEMBASSY MEXICO 1899
RUEHMN/AMEMBASSY MONTEVIDEO 4188
RUEHQT/AMEMBASSY QUITO 4630
RUEHSG/AMEMBASSY SANTIAGO 9213
RUEHKO/AMEMBASSY TOKYO 0263
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 003090

SIPDIS

SENSITIVE
SIPDIS

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 SHRINKS FROM THREATS AGAINST SWISS MINING FIRM

REF: LA PAZ 2976

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SUMMARY
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1. (SBU) President Morales announced October 23 that the GOB
would unveil plans for the mines and mills of Swiss mining
powerhouse Glencore International, whose Bolivian subsidiary
controls properties once held by former President Gonzalo
"Goni" Sanchez de Lozada. The GOB later backed away from its
threats, thanks in part to promises of violent protests from
company employees and intervention by the Swiss ambassador,
and the firm's president recently said tension had
diminished. The attack and subsequent retreat represents yet
another GOB false start and may highlight the GOB's
frustration with its inability to secure Goni's extradition.

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ATTACK AND RETREAT
------------------

2. (U) President Morales announced October 23 that the GOB
would unveil plans for the mines and mills of Swiss mining
powerhouse Glencore International, whose wholly owned Sinchi
Wayra subsidiary controls properties once held by Comsur, a
firm owned until 2005 by former President Gonzalo "Goni"
Sanchez de Lozada. Tensions escalated when Minister of
Mining Jose Dalence said October 31 that the GOB would
investigate the sale of Comsur and rose still higher when
Morales threatened November 1 to "recover for the state" the
company's tin smelter. The threats played on the fears of
many in Bolivia's mining industry and led company executives
to wonder if the GOB would target other firms' operations
after making an example of Glencore.

3. (SBU) The GOB later backed away from its threats, thanks
in part to promises of violent protests from Glencore
employees and intervention by the Swiss ambassador. Sinchi
Wayra President Eduardo Capriles told Econoff November 15
that the firm's 4,000 workers responded to rumors of planned
military takeovers of company operations by threatening armed
resistance and "bloody" conflict; while reportedly surprised
by the miners' decision to side with their employer,
President Morales took the threat seriously. Subsequent
intervention by the Swiss ambassador, who reminded GOB
officials that the expropriation of mines or mills would
violate the two countries' reciprocal investment treaty,
reportedly led Morales to back down. Capriles noted that
tension had diminished in the last few weeks, commenting that
GOB officials seemed unsure how to proceed; while royalty and
tax hikes might be inevitable, he said, government
expropriations probably are not.

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COMMENT
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4. (SBU) The attack and subsequent retreat represents yet
another GOB false start - it coincided with a clumsy decision
to delay officials' much-hyped mining plan (reftel) - and may
highlight the GOB's frustration with its inability to secure
Goni's extradition. (Note: Goni has been living in exile in
the United States since October 2003, when he resigned the
presidency and fled the country after deadly clashes between
civilian protesters and the military. End Note.) Having
failed to "get" Goni through extradition, Morales may have
lashed out at the former president, in hopes of boosting the
administration's political standing with an attack on Goni's
former assets. Because such a move risked causing more
trouble with an already turbulent mining sector, however,
Morales appears to have backed off, at least for now.
GOLDBERG

© Scoop Media

 
 
 
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