VZCZCXYZ0000
OO RUEHWEB

DE RUEHAC #0661/01 2661837
ZNY SSSSS ZZH
O 221837Z SEP 08
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7270
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 0630
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3204
RUEHCV/AMEMBASSY CARACAS PRIORITY 0380
RUEHLP/AMEMBASSY LA PAZ SEP 3883
RUEHUB/USINT HAVANA PRIORITY 0174
RHEHNCS/NSC WASHDC PRIORITY
RHMFISS/HQ USSOUTHCOM MIAMI FL PRIORITY
RHMFISS/USSOCOM MACDILL AFB FL PRIORITY

S E C R E T ASUNCION 000661 
 
NOFORN 
SIPDIS 
 
WHA/FO CMCMULLEN, WHA/BSC MDRUCKER, BFRIEDMAN, MDASCHBACH 
 
E.O. 12958: DECL: 3.3 (X1,X6) 
TAGS: PGOV SNAR MARR ECON PREL MASS PA BL
SUBJECT: XXXXXXXXXXXX CONCERNED ABOUT REGIONAL POLITICS 
 
Classified By: DCM Michael J. Fitzpatrick; reasons 1.4 (a),(b), (c) and 
 (d). 
 
¶1. (S/NF) SUMMARY: XXXXXXXXXXXX sought an 
unofficial meeting with Emboffs September 13 to discuss the 
Bolivian crisis and regional spillover. XXXXXXXXXXXX said Venezuela 
has a presence in virtually all of Bolivia's military bases, 
and that Venezuela's center of operations is in San Andita. 
The Venezuelans enter Bolivia via Chimore using a PDVSA plane 
which has a special compartment to carry cash and arms to 
Bolivia.  XXXXXXXXXXXX said Bolivian Minister of the Presidency de la 
Quintana manages the Venezuelan (and other) money flowing 
into Bolivia.  XXXXXXXXXXXX told the DCM that both Venezuelans and 
Cubans are engaged in underground operations to organize 
marches and foment social unrest and planned to blame such 
unrest on the political opposition. He provided some 
background on the Bolivian armed forces' annoyance with 
Chavez' interference in Bolivia's internal affairs, and 
described the Bolivian military's drug eradication efforts as 
a farse. The Bolivian defense attach said La Paz instructed 
its ambassador to Paraguay to tell Ambassador Ayalde, during 
her September 12 courtesy call on him, that U.S. Ambassador 
Goldberg was the problem, not the United States. 
 
¶2. (S/NF) SUMMARY CONTINUED: Shifting his focus to Paraguay, 
XXXXXXXXXXXX said a PDVSA plane arrived Asuncion's First Brigade Air 
Base August 14 and departed August 16, and told the DCM about 
a clandestine meeting between Presidents Chavez, Morales and 
Lugo late on August 15 following Lugo's inauguration. XXXXXXXXXXXX
predicted that Lugo would follow the Chavez line, although he 
declined to state why and admitted that it was early to make 
such a prediction.   XXXXXXXXXXXX said the United States has so far 
failed to impact Morales with its policies, and that it 
should come down hard on counternarcotics and bulk up USAID's 
presence in Bolivia. XXXXXXXXXXXX appeared to be a thoughtful 
and credible interlocutor, although he hails from Santa Cruz 
and probably has some regional biases. END SUMMARY. 
 
¶3. (S/NF) Embassy Asuncion officers met with XXXXXXXXXXXX
, at 
his request Saturday September 13 to discuss the Bolivia 
crisis and regional spillover. XXXXXXXXXXXX (strictly protect) 
originally requested a meeting with Embassy DATT and 
Ambassador, who XXXXXXXXXXXX knew had previously served in 
Bolivia.  Instead, DCM and Pol/Econ Chief joined the XXXXXXXXXXXX for 
a late September 13 meeting. XXXXXXXXXXXX, who spent XXXXXXXXXXXX 
at Fort Benning (and was named XXXXXXXXXXXX), and 
whose XXXXXXXXXXXX and several siblings reside in the United 
States, painted himself as an institutionalist worried about 
recent events in Bolivia and the region.  XXXXXXXXXXXX said he 
worries Bolivia is adopting economic systems that ""haven't 
worked anywhere,"" and that Bolivians' freedoms are being 
undermined. He admires the United States, and said he felt 
that someone should share information with us, as Bolivian 
military officials have little ability to speak freely to 
U.S. Embassy officials in La Paz.  XXXXXXXXXXXX, who is first 
in his class, is likely to be promoted to XXXXXXXXXXXX soon, but 
believes he will be given an unimportant onward assignment 
back in La Paz. 
 
------------------------------- 
VENEZUELAN PRESENCE IN BOLIVIA 
------------------------------- 
 
¶4. (S/NF) XXXXXXXXXXXX said Venezuela has a presence in 
virtually all of Bolivia's military bases, and that 
Venezuela's center of operations is at the Escuela del los 
Condores (Special Forces School) in San Andita.  San Andita, 
he said, served as the base for the August terrorist attack 
against a public radio in Yacuiba, for which a Bolivian first 
lieutenant was implicated and put in prison. (NOTE: 
XXXXXXXXXXXX said the officer had a carnet to work in the 
presidential palace and was formally assigned to La Paz. END 
NOTE).  The XXXXXXXXXXXX said Venezuela was training Bolivian 
civilians as paramilitaries-- providing them with training on 
political organization doctrine and weapons/military tactics. 
 He also noted a strong Venezuelan presence in the 
MAS-controlled Yapacani, where a Chavez confidant (an 
ex-minister or vice minister) directs Venezuelan operations 
and training.  He reported that 43-48 Venezuelan military 
officers are based in Riberalta purporting to serve as 
military engineers.  In the Beni, he said 18-25 Venezuelan 
military officers claim to be working to prevent flooding; 
approximately 80 Cubans are working in the same area.  He 
said Venezuela continues to provide training for Morales' 
presidential guard regimen, and that exchanges are ongoing. 
XXXXXXXXXXXX said  and that around 200 Bolivian civilians have 
departed San Andita for Caracas this year (most from the 
Altiplano, Achchachi, El Alto and Oruro); while some visited 
Venezuela for 45 days, at least one group stayed in Venezuela 
for three months. 
 
¶5. (S/NF) According to XXXXXXXXXXXX the Venezuelans enter 
Bolivia via Chimore using a PDVSA plane which has a special 
compartment to carry cash (dollars) and arms to Bolivia. 
XXXXXXXXXXXX said Chavez publicly bought Bolivian cooperatives 
with branches in Chimore and La Paz to change the dollars 
into bolivianos. (NOTE: He thought the cooperatives operate 
under the names Prodem, Finsa, or Banco del Sol.  END NOTE). 
The money, he said, is dispersed to lower level military 
commanders for ""projects,"" but continues to flow after the 
projects are completed. He estimated that USD 500,000-600,000 
flows weekly into the Chapare from Venezuela, with each 
military unit commander receiving between USD 10,000-50,000 a 
month, depending on rank and level of command.  XXXXXXXXXXXX
lamented that the military officers are pressured to join the 
scheme, and that the cash payments are undermining the 
Bolivian military as an institution.  He also commented that 
international financier George Soros (Amcit) is funding 
activities in Bolivia. 
 
¶6. (S/NF) XXXXXXXXXXXX said Bolivian Minister of the 
Presidency Juan Ramon de la Quintana manages the Venezuelan 
and other illicit money flowing into Bolivia.  He said 
Bolivian customs recently stopped several containers being 
transported via land through Bolivia to Brazil containing 
over USD 1.5 million in Chinese contraband. XXXXXXXXXXXX said 
Quintana personally ordered Bolivian customs to release the 
trucks.  He also alleged that as minister of the presidency 
and president of Bolivia's state television station, Quintana 
manages several high-end contracts for purchases of goods, 
which he uses to generate off-the-books revenues by 
purchasing items for 3-4 times their value.  XXXXXXXXXXXX also 
reported that Venezuela's ambassador to Bolivia and 
Venezuela's military attach frequently travel back and forth 
between Bolivia and Venezuela. 
 
¶7. (S/NF) XXXXXXXXXXXX told the DCM that both Venezuelans and 
Cubans are engaged in underground operations to organize 
marches and foment social unrest (possibly including deaths) 
in order to blame such unrest on the political opposition. 
He speculated that the Venezuelans and Cubans might engage in 
tactics such as kidnappings and terrorist acts (possibly 
including against American citizens) in order to set up the 
victims as ""spies.""  He cited a terrorist act to blow up a 
gas duct to Brazil as an example of such an activity. 
 
---------------------------- 
BOLIVIAN MILITARY REACTION 
---------------------------- 
 
¶8. (S/NF) XXXXXXXXXXXX also provided some background on the 
Bolivian armed forces' annoyance with Chavez' interference in 
Bolivia's internal affairs.  He said Bolivian Armed Forces 
Commander Trigo went to President Morales and told him the 
military was unhappy and demanded that he respond to Chavez' 
actions and statements.  Trigo reportedly told Morales that 
his troops insisted on a public statement, and that if Trigo 
didn't issue one, someone else would.  Trigo, along with the 
other armed forces commanders, offered their resignations to 
Morales.  Morales refused their resignations and approved 
issuance of their statement on September 12, but criticized 
Trigo for not being able to control his own people. 
XXXXXXXXXXXX believed Morales will change all of Bolivia's 
service commanders by December, and said Morales realizes 
that doing so now would only add to the appearance of a 
crisis.  He said General Arambulo or General Ramiro de la 
Fuente (Quintana ally) are leading candidates for Army 
commander.  He also noted that the military is increasingly 
worried about its role in the conflict, and that if orders 
are given to shoot, will want them in writing. 

---------------- 
DRUG CONNECTIONS 
---------------- 
 
¶9. (S/NF) XXXXXXXXXXXX asserted the Bolivian military's drug 
eradication efforts are a farse.  He said the units go out 
and move around so it looks like they are eradicating, but 
that they distort eradication numbers. XXXXXXXXXXXX felt sure 
that Bolivian drug money is going to the FARC, which he said 
is active in the Chapare.  He said they had confirmed that 
Colombians are working in the Chapare with Venezuelans and 
campesinos to train them for social protests, and that they 
knew the Colombians were not official.  He also believed 
Chavez is involved in the Bolivian drug trade. 
 
------------------ 
PERSONA NON GRATA 
------------------ 
 
¶10. (S/NF) XXXXXXXXXXXX said he read La Paz's 
instructions to its ambassador in Paraguay, Marco Antonio 
Vidaurre Noriega, which Vidaurre was to deliver to Ambassador 
Ayalde during her September 12 courtesy call on him.  The 
instructions, according to XXXXXXXXXXXX, said U.S. Ambassador 
Goldberg was the problem, not the United States.  (NOTE: 
Ambassador Vidaurre did not strictly comply with his 
instructions in him meeting with the Ambassador, but 
downplayed the escalation of conflict between the U.S. and 
Bolivia and blamed the press for exaggerating it.  END NOTE). 
 XXXXXXXXXXXX discounted the instructions, however, saying 
that President Morales doesn't dislike only Ambassador 
Goldberg, but President Bush and all Republicans in general, 
and believes that Barack Obama is a better option for Bolivia 
as he is not likely to be as hard line.  He said Morales' 
prohibition on U.S.-Bolivian mil-to-mil contact further 
demonstrate that Morales does not actually believe that 
Ambassador Goldberg is the problem.  He said Goldberg's 
insistence that Bolivia meet its international obligations 
was an obstacle for Morales, and that narcos and others want 
to operate freely in Bolivia.  He explained that despite the 
lack of any history of U.S. repression of Bolivians, 
campesinos applaud their leaders for standing up to the 
United States as they believe they have been subject to U.S. 
neoliberal demands and associate the United States with 
robbing Bolivia's natural resources. 
 
----------------------------------- 
VENEZUELAN ACTIVITIES IN PARAGUAY 
----------------------------------- 
 
¶11. (S/NF) Shifting his focus to Paraguay, XXXXXXXXXXXX said a 
PDVSA plane (Falcon aircraft) arrived Asuncion's First 
Brigade Air Base August 14, the day before Lugo's 
inauguration, and departed August 16 (with no checks or 
inspections), and told the DCM about a clandestine August 15 
meeting between Presidents Chavez, Morales and Lugo. (XXXXXXXXXXXX 
accompanied President Morales to the meeting 
but waited outside).  The three presidents traveled in and 
out of three different locations (using back exits and 
changing cars) before arriving at the Venezuelan ambassador's 
residence.  Once there, they met for 2 hours and then moved 
to the Hotel Excelsior, where Chavez and Morales met for four 
more hours (until 2 a.m.); Lugo departed the hotel earlier, 
around 12:30 a.m. 
 
¶12. (S/NF) XXXXXXXXXXXX predicted that Lugo would follow the 
Chavez line, although he declined to state why and admitted 
that it was early to make such a prediction.  He said Lugo 
had promised to get Chavez into Mercosur (NOTE: Paraguay's 
congress will decide that issue) and worried about increasing 
contact between Lugo and the leftist social movement Tekojoja 
(part of Lugo's political alliance) and Bolivian social 
movements.  He said Tekojoja and the P-MAS are clearly 
Chavez' contacts in Paraguay, and that a new radical group 
called Nanduti (the Guarani word for spider web) has been 
receiving funding and meeting at the Bolivian embassy in 
Asuncion.  He said Tekojoja claims to ""represent Lugo"" and 
that September 11 Tekojoja representatives flew to Bolivia 
via a private plane to work with social groups there.  He 
also said Lugo has traveled to Bolivia three times in past 
months -- once before the April 20 election and twice after. 
On the first occasion, when Lugo traveled with then-President 
Duarte, Chavez made clear that he had picked Lugo over 
Duarte, which created an evident strain between Duarte and 
his successor. 
 
----------------------------- 
ADVICE FOR THE UNITED STATES 
----------------------------- 
 
¶13. (S/NF) XXXXXXXXXXXX said the United States has so far 
failed to impact Morales by throwing out Bolivia's ambassador 
to the United States (this meeting occurred days before the 
USG decertified Bolivia).  He asserted that cutting off 
ATPDEA assistance would have no impact, as Chavez promised to 
compensate Morales for the loss of U.S. assistance.  He 
pointedly asked us ""what it will take for the United States 
to respond?"" XXXXXXXXXXXX said the Bolivian military wanted to 
""make"" Morales and the opposition talk to each other, but 
that they needed international support.  However, he was 
pessimistic about the ability of the OAS (which he said was 
biased), European Union, United States, Mercosur, or the 
Catholic Church to play that role.  XXXXXXXXXXXX said that even 
if both sides enter into a dialogue, the strife will continue. 
 
¶15. (S/NF) XXXXXXXXXXXX said the United States should 
come down hard on counternarcotics (or else Chavez and 
narcotraffickers will flourish) and bulk up USAID's presence 
in Bolivia.  If we end our assistance, he said, the Bolivian 
people will become so brainwashed that the country will have 
no chance of recuperating in the next 20 years.  He said we 
should continue to work visibly where people want USAID to 
work, and to focus on national leaders and 
training/education.  He encouraged the U.S. Embassy in La Paz 
to look for opportunities for humanitarian assistance 
projects that could be used to maintain ties with the 
Bolivian military.  He also said the Embassy should work with 
student leaders, as well as some ""rational"" indigenous actors 
such as Rufo Calle, Isaac Avalos and (the CA delegate who 
fell and hurt his head).  He warned that Ministers de la 
Quintana, Rada and San Miguel are ""the most radical"" of 
Morales' cabinet, and said he thinks things will get worse 
for Bolivia, and possibly Paraguay as well. 
 
-------- 
COMMENT 
-------- 
 
¶16. (S/NF) XXXXXXXXXXXX appeared to be a thoughtful and 
credible interlocutor, although he hails from XXXXXXXXXXXX and 
probably has some regional biases.  He also may be 
exaggerating the Venzuelan angle in Bolivia in order to get 
gain attention from the United States.  On Paraguay, his 
views of Lugo are pessimistic, although certainly not out of 
line with concerns that some other opposition politicians 
share about Lugo aligning himself with Chavez.  
 
Please visit us at     http://www.state.sgov.gov/p/wha/asuncion 
 
AYALDE