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P 262244Z MAR 08
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 6942
INFO RUEHAC/AMEMBASSY ASUNCION 7742
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C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 000670 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/27/2018 
TAGS: ECON PGOV PREL FAS AGR FAO IFAD BL
SUBJECT: EXPORT BAN STRETCHES TO SIX DAYS 
 
REF: A. LA PAZ 589 
     ¶B. LA PAZ 638 
     ¶C. LA PAZ 111 
 
Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d). 
 
 
------- 
Summary 
------- 
 
¶1.  (C)  The devastating ban on Bolivian cooking oil exports 
has now been in effect for six days. The Morales 
Administration, according to the Vice President in a meeting 
with the Ambassador March 26 (Septel), is determined to 
guarantee the supply of cooking oil at affordable prices. 
They are prepared to take whatever actions may be required, 
including military confiscation of trucks that violate the 
export ban, subsidized imports, and even "buying-out" private 
companies. Social movements linked to the Movement Toward 
Socialism (MAS) government are calling for the 
nationalization of the major agricultural firms involved in 
soy processing, which include Archer Daniels Midland (ADM) 
company.  Ironically, so far the ban has worked to unify the 
different social elements involved in the soy production 
chain and give further impetus to the Santa Cruz autonomous 
movement.  The ban is contributing to a growing feeling of 
economic and social upheaval, and related transportation 
strikes are likely to paralyze the country unless the ban is 
lifted in the coming days. 
 
--------------------------------------------- ----------- 
Export Bans Raise Tensions, Potential for Economic Chaos 
--------------------------------------------- ----------- 
 
¶2.  (SBU)  On March 25, all of the actors involved in the 
chain of production for cooking oils met in Santa Cruz to 
decide what actions they could take to have the export bans 
on agricultural products lifted (Note:  The ban on cooking 
oil exports went into affect on March 20, but a ban on 
cattle, beef, chicken, wheat, corn, rice, and wheat flour has 
been in effect since February Ref A and B).  The most 
immediate result of the meeting is the call for a blockade of 
the border custom houses by the transportation sector.  These 
actions will be followed up by a more general blockages of 
major highways on March 27.  However, truckers in La Paz 
decided to postpone any actions.  This decision will allow 
the major border crossings leading to the Pacific ports in 
Chile and Peru to remain open. 
 
¶3.  (C)  Despite no direct impacts of the cooking oil ban in 
La Paz yet, there is a sense that the economic situation is 
getting out of control.  Rising inflation is bringing out all 
manner of protest.  Contributing to problems on the roads, a 
public transport strike is scheduled for April first unless 
the government agrees to raise taxi and bus rates. Meanwhile, 
as headlines such as, "currently approximately 250 butchers 
are marching with dynamite toward the downtown area" cross 
our desks, more chaotic times appear to be quickly 
approaching. 
 
---------------------------------------- 
Strengthening Regional Autonomy Resolve 
---------------------------------------- 
 
¶4.  (C)  Ironically, the cooking oil ban has further unified 
many disparate economic actors in Santa Cruz to the necessity 
of greater autonomy.  Moreover, the ban has put additional 
pressure on the departmental government to take autonomous 
actions even before the May 4 vote.  Following Tuesday's 
meeting, regional leaders called upon Prefect Ruben Costas to 
somehow legalize through regional actions the export of all 
agricultural products.  While the prefect is reluctant to do 
anything that the Morales Administration can pounce upon as 
provocatively illegal, pressure to act independently is 
 
LA PAZ 00000670  002 OF 003 
 
 
growing. 
 
¶5.  (C)  One example of the propensity to handle economic 
affairs locally came after Minister of Agriculture Susana 
Rivero refuted the Department's ability to export 
agricultural goods independent of the national government. 
Rivero said that without authorization from the Plant and 
Animal Food Safety Agency (SENASAG), no agricultural products 
would be accepted in foreign markets. Right on cue, the 
Prefect of Santa Cruz announced that a parallel prefectual 
food safety service, whose creation was announced two months 
ago as a response to the growing politicization (and 
inaction) of SENASAG (Ref C), would begin to operate in Santa 
Cruz. 
 
--------------------------------------------- ---------- 
Government Justifications and Calls for Nationalization 
--------------------------------------------- ---------- 
 
 
¶6.  (SBU)  The Morales Administration is trying to frame the 
export ban as a move to defend poor Bolivians against the 
exploitative practices of Santa Cruz oligarchs.  At first, 
Minister Rivero claimed that these oligarchs had already 
exported as much oil out of the country this year as was 
produced in all of 2007 (Ref A).  These claims were quickly 
shown to be false.  Now she is claiming that cooking oil sold 
in Bolivia is the most expensive in the region and the 
oligarchs are willing to export at cheaper prices than they 
sell in the domestic market.  According to data from the 
Association of Seed Oil and Wheat Producers (ANAPO) this 
claim is also clearly false (Note:  Only Venezuela has lower 
consumer prices for refined soy cooking oil in all of South 
America.  Venezuela is also the largest importer of Bolivian 
cooking oils, importing almost $200 million last year. End 
Note.) 
 
¶7.  (C)  The facts are clearly unimportant to the Morales 
Administration, what is important is that the export bans be 
seen as a defense of lower prices and the Bolivian people. 
Propoganda to this effect is frequent on both the radio and 
television.  It is unclear who the majority of Bolivians 
blame for rising food prices, but judging from television 
interviews people in La Paz and El Alto do not trust Santa 
Cruz farmers and seem willing to place some of the blame at 
their doorstep. 
 
¶8.  (C)  Several social movements closely related to the MAS 
party are calling for the nationalization of cooking oil 
companies as a punishment for having "provoked hunger among 
the Bolivian people."  This message was likely dictated to 
them from within Evo's inner circle and represents another 
threat against the department and it's leading economic 
actors. 
 
----------------------------------------- 
American Company ADM Suffers with the Ban 
----------------------------------------- 
 
¶9.  (C)  Archer Daniel Midland (ADM) represents the largest 
American investment in Bolivia outside of the hydrocarbons 
and mining sectors.  Their total investment in Bolivia stands 
at over $100 million. Carlos Pinto, Chief Financial Officer 
at ADM, estimates that the company will be forced to shut 
down operations in about 20 days if the cooking oil ban stays 
in place.  This is the amount of time it will take to fill 
their warehouses to capacity. At that time, ADM may be forced 
to default on international contracts.  Moreover, Pinto 
explained that the decree has other far reaching negative 
impacts.  For example, Bolivia's risk rating has already been 
raised as a result of the ban.  This affects the cost of new 
capital for both the government and all private companies 
(not just those in agriculture).  Meanwhile, barges and 
trucks sit waiting for cargo (Ref A). 
 
 
LA PAZ 00000670  003 OF 003 
 
 
 
 
 
GOLDBERG