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RUEHBO/AMEMBASSY BOGOTA 4771
RUEHBR/AMEMBASSY BRASILIA 8680
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RUEHMD/AMEMBASSY MADRID 3747
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RUEHLMC/MILLENNIUM CHALLENGE CORP

C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 003236 
 
SIPDIS 
 
SIPDIS 
 
CORRECTED COPY 
 
E.O. 12958: DECL: 11/26/2017 
TAGS: ECON PGOV AGR FAO FAS IFAD IICA BL
SUBJECT: PL-480: WE CAN'T GIVE MONEY AWAY 
 
REF: LA PAZ 002960 
 
Classified By: Ecopol Chief Mike Hammer for reasons 1.4 (b) and (d). 
 
 
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Summary 
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¶1.  (C)  Institutional incompetence, politicking, and 
resistance to cooperation with the United States is hampering 
USDA programs in Bolivia.  At the end of the Title I wheat 
monetization program in 2005, a committee within the PL-480 
Secretariat was set up to administer the approximately US$6 
 
SIPDIS 
million in remaining funds.  To date, the joint U.S./Bolivian 
committee has spent only US$46,154 on projects.  Moreover, 
current government decrees restricting the use of foreign aid 
threaten to further complicate the situation.  The Morales 
Administration shows little willingness to cooperate, even 
with a program that directly benefit their campesino base. 
End Summary. 
 
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PL-480 Advisory Board 
--------------------- 
 
¶2.  (U)  The PL-480 Advisory Board was established in 2005 to 
administer the approximately US$6 million in funds which 
resulted from Title I wheat monetization.  According to the 
bilateral agreement, the Board is comprised of two 
representatives from the Ministry of Agriculture, the 
Regional Agricultural Counselor of the U.S. Embassy (Eugene 
Philhower, out of Lima), and a representative from Post 
(EconOff).  Decisions are based on majority vote and, in the 
event of a deadlock, the decision of the U.S. Agricultural 
Attach is controlling.  The board has generally met every 
three months. 
 
¶3.  (C)  Entering the September meeting, the Board had 
approved seven projects for nearly US$4 million. No action 
had been taken on any of them, and the Minister of 
Agriculture representatives said that two of the projects 
were no longer acceptable:  The first because some of the 
funds were to be given to a private entity and the second, 
although they didn't say it outright, because it was to take 
place in the opposition state of Santa Cruz.  In an attempt 
to continue to maintain cordiality Philhower agreed with the 
decisions.  Moreover, he encouraged the representatives to 
come up with project alternatives. 
 
¶4.  (C)  In a November 29 meeting, no additional funding had 
been spent to support the five outstanding projects.  After 
more that two years, only US$46,154 has been spent.  When 
asked, the PL-480 director general (the PL-480 also handles 
donations from other nations) said that they "have no reason 
why none of the money has been spent." 
 
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Alfalfa, Milk, and Eager Campesinos 
----------------------------------- 
 
¶5.  (C)  During Philhower's September visit, we visited an 
altiplano project to encourage alfalfa production in support 
of dairy farming in the desperately poor altiplano outside of 
La Paz.  The project is managed by Save the Children and 
counts on the cooperation of the National Program of Seeds 
(PNS).  The participating campesinos were enthusiastic, 
well-organized, and ready for the alfalfa planting season 
(late November, early December).  At the board meeting and in 
a separate meeting with Vice Minister of Agriculture Roxana 
Liendo, EconOff was assured that the seeds would soon arrive 
to support the projects.  The seeds had still not been 
purchased as of the November 29 meeting. The Ministry 
representative said that there were problems in the bidding 
process, but could offer no concrete details.  He said that a 
new bidding process will take place on December 14 and the 
 
LA PAZ 00003236  002 OF 003 
 
 
seeds may still reach the campesinos shortly after. 
 
---------------------------------------- 
Trying to Support Food Health and Safety 
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¶6.  (C)  The largest project approved by the Board (US$1 
million) would go to support the activities of Bolivia's 
National Service of Food Health and Safety (SENASAG). 
Currently, the USDA and the InterAmerican Development Bank 
(IDB) have been the primary financiers of SENASAG programs 
(IDB funds run out this year).  In order to ensure the 
quality of work, the USDA has wholly funded an administrative 
unit (UNADE) as a part of SENASAG.  UNADE has two U.S. Animal 
and Plant Health Inspection Service (APHIS) employees and has 
been instrumental in the fight against hoof and mouth disease 
and other plant and animal health issues.  Over the past year 
however, the Ministry of Agriculture has been replacing 
trained scientists and technicians in SENASAG with political 
allies and now may be trying to eliminate UNADE and the 
oversight it provides.  SENASAG was scheduled to present its 
reorganization plans to the Ministry on December 10.  While 
unofficially, Ministry representative have said that the role 
of UNADE will be preserved, many other signs indicate 
otherwise. 
 
¶7.  (C)  While it is normally difficult for Embassy officials 
to communicate with high level members of the government, 
EconOff recently sat next to SENASAG president Rolando Cazzol 
on a flight to southern Bolivia. (Note: Cazzol is a childhood 
friend of Agricultural Minister Susana Rivero and has no 
previous plant and animal health experience. End Note.)  This 
provided an opportunity to try to understand why SENASAG had 
yet to spend any of the approved project money and has also 
been unable to use 22 pick-up trucks donated to the agency by 
the USG in May 2007.  As to the project money, Cazzol said 
that they desperately needed the funds, but were waiting 
until after the reorganization meetings to decide how to use 
it.  He also said that he planned to try to preserve the role 
of UNADE. 
 
¶8.  (C)  As to the donated trucks, which were officially 
handed over by Ambassador Goldberg to help with fruit fly 
inspections, Cazzol said that the law prohibited the 
government from buying "luxurious" vehicles.  However, he 
went on to add that SENASAG really needed the vehicles and he 
was going to pay the dealer the outstanding balance using the 
SENASAG budget (only 20% of the cost has been paid to the 
dealer).  He would then ask the Minister Rivero to reimburse 
SENASAG with the funds donated by the USG. (Note:  Carolyn 
Cohen, regional director of APHIS, said that the bidding 
process for the truck contract was rigidly transparent and 
that after the top bidder was identified, Ministry officials 
requested that the bid go the second place bidder. After 
insisting the contract go to the top bidder, the Ministry 
accepted the decision and paid for 20% of the total value of 
the trucks.  However, the remainder of the bill has not been 
paid and the trucks sit locked in a car lot. The Ministry at 
first claimed "irregularities" in the procurement and 
insisted on auditing the process.  Two internal audits and 
one external audit by Price Waterhouse were conducted and no 
irregularities were found.  Now the government is claiming 
that the trucks are too "luxurious" and cannot be accepted. 
Ironically, Evo recently exhibited four similar trucks in the 
central plaza of La Paz which were donated by the Venezuelan 
government for use by community groups. End Note.) 
 
¶9.  (C)  EconOff shared the news with Dr. Cesar Orozco, the 
veterinary officer at UNADE, and he said Cazzol was simply 
not telling the truth.  First of all, SENASAG does not have 
the resources to pay for the trucks.  Secondly, he had just 
come out of a meeting on December 10 with Minister Rivero and 
Cazzol where Cazzol flatly stated that the trucks would never 
be released because they were to be used in the opposition 
state of Santa Cruz.  Moreover, Liendo said that she would 
not authorize their release because it was the US Ambassador 
 
LA PAZ 00003236  003 OF 003 
 
 
himself who officially donated the trucks.  Orozco believes 
that they forgot that he was present in the meeting. 
Finally, both Orozco and Juan Chavez, Interamerican Institute 
for Agricultural Cooperation (IICA) representative, believe 
that Rivero cannot authorize the Title I funds to be used to 
support agricultural projects because she will be seen as 
cooperating with the U.S. and would thus be in danger of 
losing her job.  A final discouraging sign is that when 
Agricultural Counselor Philhower sent a letter directly to 
Vice Minister Roxana Liendo to explain the possibility of 
funding SENESAG along with UNADE, she answered by sending 
back a copy of the decree outlining new restrictions on 
external donations (Ref A). 
 
--------------------------------------- 
Wheat Refused, Looking for Alternatives 
--------------------------------------- 
 
¶10.  (C)  Government intransigence is also affecting the 
Title II programs administered by USAID.  In order to import 
the commodities necessary to support their programs, USAID 
needs a Ministerial Resolution.  On December 3, a day before 
a ship with some US$6 million dollars worth of commodities 
was set to be loaded, the Ministerial Resolution had yet to 
be signed.  At the last possible moment, the Ministry did 
issue the permission, but with some restrictions.  They would 
allow the importation of some commodities to be distributed, 
but would not allow any wheat flour to be imported for 
monetization or distribution.  This wheat is now in the 
process of being directed to other countries.  (Note:  The 
restriction is particularly odd considering government 
efforts to control inflation, which have included requiring 
military units to bake bread. End Note.)  For the Title II 
program, the loss of the wheat is a heavy blow.  Without 
monetization, cooperating partners stand to lose around US$6 
million.  Currently, USAID is negotiating with Food For Peace 
in Washington to replace the forgone income from monetization 
with cash resources in order to successfully conclude the 
affected Title II program by December 2008. 
 
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Comment 
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¶11.  (C)  Despite the hostile environment, the Embassy 
continues to try to work with its Bolivian counterparts to 
continue joint programs.  However, as the PL-480 situation 
shows, moving forward is difficult when the Morales 
Administration seeks to limit cooperation or ministries 
believe it is not safe to work with us.  More generally, a 
cloud of uncertainty remains over many programs and the 
vaguely written decrees addressing foreign assistance, few of 
which have been defined by implementing regulations.  We are 
not confident that the "rules of the game" on foreign aid 
will be clarified any time soon. The deterioration of SENASAG 
is also of considerable concern.  Funding for the agency runs 
out at the end of the year, which, in combination with the 
increasing politicization of the agency, puts at risk the 
continued effective control over plant and animal health. 
End Comment. 
GOLDBERG