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,C O N F I D E N T I A L MONTEVIDEO 000229 
 
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E.O. 12958: DECL: 03/06/2016 
TAGS: PREL PGOV ETRD PINR KCRM AORC UY
SUBJECT: VAZQUEZ SAYS HE WANTS A FREE TRADE AGREEMENT 
 
 
Classified By: Charge D'Affaires James D. Nealon 
for reasons 1.4 (B) and (D) 
 
¶1. (C) Summary: Charge met with President Tabare Vazquez at 
the Embassy's request on March 7 to advise the President on 
his upcoming meeting with the Secretary on March 11 at the 
margins of Michelle Bachelet's inauguration ceremony in 
Santiago, Chile.  Vazquez explicitly stated that he wanted a 
Free Trade Agreement (FTA) with the U.S. and that he would 
raise the topic with the Secretary along with the papermill 
dispute with Argentina.  He recognized that the FTA process 
would be difficult, take time and require dialog.  He also 
said he was not opposed to joining the Free Trade Area of the 
Americas (FTAA) if ""conditions were right.""  The Charge 
pitched Guatemala's bid for a temporary seat on the UN 
Security Council (vice Venezuela) and Vazquez said he would 
think it over.  The Charge raised the need for better GOU 
cooperation if fugitive banker Juan Peirano Basso is to be 
extradited to Uruguay.  Vazquez also spoke about Bolivia and 
his relations with Evo Morales.  Embassy does not wish to 
over sell this leader of a leftist coalition government, but 
his performance over the last year (septel) and this recent 
meeting confirm our assessment that he is a capable and 
moderate statesman to be reckoned with.  We believe that he 
is sincere in his desire for good relations with the United 
States.  End Summary. 
 
TRADE RELATIONS 
--------------- 

¶2. (C) Charge met with President Vazquez in a modest, 
darkened room at the ""Suarez Chico"" residence where the 
President works, but does not live.  No other GOU officials 
were present.  Political counselor was notetaker.  Vazquez 
began by saying that he would be honored to meet with 
Secretary Rice on March 11, but said that he had received no 
official confirmation of the meeting and fretted that his 
schedule was nearly full on that day.  (Note: He provided a 
printout of his schedule and estimated that the meeting would 
last no more than half an hour. End Note.)  Concerning 
substance, Vazquez said, ""We signed a Bilateral Investment 
Treaty (BIT) for a reason.  We want a Free Trade Agreement 
with the U.S. and are not opposed to FTAA if conditions are 
right"".  He said that he was aware that time would be needed 
because Uruguay had its own rhythm and there are still some 
people stuck in the past inside the GOU.""   When the Charge 
pointed out that on the U.S. side there were challenges as 
well, he said he understood that there were difficult 
technicalities and that the issue of agricultural subsidies 
remained, but that Uruguay was willing to sit down and 
seriously explore the possibilities of an FTA with us. 
 
PAPER MILLS 
------------ 

¶3. (C) Vazquez said he would raise with the Secretary the 
paper mill dispute with Argentina and probably request that 
she encourage that the World Bank financing move forward.  He 
said the paper mill dispute was the main purpose of his trip 
to Chile and several other countries in the region.  Clearly 
irritated by the issue, Vazquez said ""if the problem were 
only the plants themselves, we could sit down with Argentina 
today and solve it.""  He said both countries have already 
agreed on technical mechanisms to monitor environmental 
impact.  ""However,"" he said, ""we cannot negotiate while the 
bridges are being blocked in contravention to international 
law and the Asuncion (Mercosur) treaty.  Caramba! What kind 
of integration are we talking about?  Maybe we will take 
Argentina to the World Court in the Hague.""  He added that to 
give into this kind of pressure would set a bad precedent for 
the future as Argentina could resort to the same tactics if 
it became displeased on a different issue.  Suspending 
construction for 90 days is also ""unacceptable"" because 
nothing obliges us to and the GOU honors its contracts with 
foreign investors.""  Never-the-less, Vazquez said that he 
noted a recent ""change in attitude"" on behalf of the GOA. 
Still, it will be difficult for them to extricate from a mess 
that they created, he opined.  Vazquez said after a recent 
meeting with World Bank representatives, he detected that the 
WB might be ""waiting on the projects' financing, because 
Argentina is bigger than we are.""   He repeated that the GOU 
would not ""give into Argentine pressure tactics"" because it 
would set a bad precedent for the future. 
 
BOLIVIA 
-------- 

¶4. (C) Vazquez said he would travel to La Paz on March 12 as 
part of his major effort to gain regional support for 
Uruguay's position on the paper mill dispute with Argentina. 
He said he had not attended Evo Morales' inauguration last 
January because was he was upset (""molesto"") with Morales for 
not having visited Uruguay during his pre-inaugural world 
tour, but saw fit to pay a call on Nestor Kirchner in Buenos 
Aires.  Vazquez said he was miffed because Uruguay had 
doubled its port facilities in Nueva Palmira for Bolivian 
use, but received no acknowledgement.  Uruguay also advocated 
Bolivia's inclusion in the regional ""energy ring"" of 
countries including Brazil, Argentina, Chile, Peru, Uruguay 
and Paraguay, despite Chile's objections.  At any rate, 
Vazquez said he sent a letter to Morales inviting him to 
Uruguay.  Morales responded affirmatively but had not yet 
committed to a date.  Vazquez mused that he did not know what 
political direction Morales would choose to confront 
Bolivia's severe problems and polarized society, but hoped 
that he would stay on the democratic path. 
 
UNSC 
----- 

¶5. (C) When the Charge demarched him on our preference for 
Guatemala over Venezuela in the upcoming election of 
non-permanent members to the UNSC, Vazquez seemed to 
hesitate. He said, ""It has been nine months since I last 
spoke with (Brazil's President) Lula on these kinds of 
issues.  When two Latin American nations are competing for 
the same position, it can become complicated.""  Vazquez 
promised to study the issue before he met with the Secretary. 
 
EXTRADITION 
----------- 

¶6. (C) Turning to another sensitive topic not related to the 
meeting with the Secretary, the Charge raised the issue of 
fugitive Uruguayan banker Juan Peirano Basso's presence in 
the United States and said that our DOJ needed a responsive 
Uruguayan judge to work with on the extradition case or it 
would not be worthwhile acting on the pending  arrest 
warrant.  Vazquez responded that while Uruguay observed a 
strong separation of powers, he maintained excellent 
relations with the justice system.  He advised the Charge to 
bring the matter to the attention of Secretary to the 
Presidency Gonzalo Fernandez. 
 
COMMENT: 
-------- 

¶7. (C) The March 7 meeting helped confirm our previous 
positive assessments concerning President Vazquez' intellect, 
common sense and sincere motives.  We are convinced that he 
is a leader worth cultivating and useful in spreading a 
moderate message in the region.  When the Charge reminded him 
that he had helped to send him on an International Visitor 
trip years ago, when Vazquez was mayor of Montevideo, Vazquez 
joked, ""Oh, yes, they sent me to Baltimore, a city with many 
problems similar to Montevideo.  When I applied some of the 
decentralization techniques I learned from Baltimore's 
municipal government, I was later accused of setting up 
Bolshevik-style 'soviets.'  You can see for yourself what 
kind of government I've been running.""   End Comment. 
Nealon