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C O N F I D E N T I A L LA PAZ 002392 
 
SIPDIS 
 
USAID LAC FOR EDWARD LANDAU 
 
E.O. 12958: DECL: 10/30/2018 
TAGS: BL ECON ENVR KDEM PGOV PREL PHUM PINR
SUBJECT: BOLIVIA'S NEW CONSTITUTION: MAS WINS 
 
Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d) 
 
¶1. (C) Summary: On October 21, President Evo Morales 
announced that his Movement Toward Socialism (MAS) party and 
the opposition had reached a compromise to update the text of 
the MAS draft constitution, which will go to a national 
referendum on January 25. Some of Evo's hard-core MAS 
supporters protested the significant changes to the 
constitutional text and Evo's promise not to run for a third 
term, while regional opposition leaders accused the national 
opposition of giving in too easily.  Post has obtained a 
credible copy of the new draft constitution and reviewed the 
changes. While the opposition did achieve some gains, the 
draft constitution empowers the central government at the 
expense of the departments (a loss for the regional 
opposition). Some vague sections of the text have been 
clarified, but the final draft still leaves questions on key 
issues, including presidential term limits, land reform, and 
foreign investment. Perhaps most importantly, a change to 
senatorial election by proportional representation may lead 
to a MAS takeover of both houses of congress and ultimately 
the ability to modify the constitution at will. End summary. 
 
- - - - - - - - - 
Big-Ticket Items 
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¶2. (C) Term limits: While eleventh-hour negotiations between 
the MAS and opposition parties apparently led to an agreement 
that Evo would stand for only one more term (i.e. through 
2014), it should be noted that the relevant part of the 
Constitution, Article 168, has not been updated from the 
December 2007 draft. Under the "Transitory Provisions" at the 
end of the text, new language was added, which states "Terms 
in office before this text comes into force will be taken 
into account to compute new terms in office."  The opposition 
feels this addition will limit Evo to one more term. 
However, in light of recent comments from Development 
Minister Carlos Romero that "Reelection, for now, includes 
only one term," as well as the significant potential for a 
MAS takeover of both houses of Congress (and with this the 
subsequent ability to modify the Constitution more easily), 
some doubt that Evo will honor this agreement. 
 
¶3. (C) Land reform: In what could be one of the biggest gains 
for the opposition, Article 399 has been updated to state 
that any new limits on the size of agricultural land holdings 
would apply only to lots acquired after the new Constitution 
enters into force.  At first glance, this change would appear 
to provide significant legal cover for property owners 
seeking to maintain large properties, especially in the 
eastern (opposition) part of the country, or "Media Luna." 
The opposition also added an assurance in Article 57 that the 
government would not expropriate any urban land holdings, and 
struck the prior vague allowance for expropriation when 
property was "not fulfiling a social function".  However, the 
issue is not settled. Article 57 also specifies that the 
government has the ability to expropriate rural land holdings 
for "public need or utility" when necessary, a potentially 
large loophole. (Note: Land redistribution has long been a 
plank in the MAS platform, and hard-core MAS supporters 
complained at the loss of the "social function" clause. 
Assuming approval of the constitution in the January 
referendum, we may see significant pressure on Evo to seize 
land. End note.) 
 
¶4. (C) Control of Congress (to MAS): A significant change 
appears to have been made in the composition of the Senate, 
favoring the MAS. Article 148 has been changed to increase 
the number of Senators from 27 to 36 and to allow for the 
election of Senators via proportional representation. The 
expansion of seats and the change from a winner-takes-all 
system could well augur a MAS takeover of the Senate and thus 
control over both houses of congress (now to be called the 
Plurinational Legislative Assembly). The opposition's past 
ability to eke out wins in five of the nine departments gave 
them control of the Senate and the ability to check, to some 
degree, implementation of the MAS agenda.  Proportional 
representation could lead to a landslide of MAS Senators from 
the western half of the country and the election of several 
more from the Media Luna, leaving opposition parties out in 
the cold. Given that the new draft allows the constitution to 
be modified by a two-thirds vote of Assembly members present, 
this change could enable the MAS to modify the constitution 
at will. (Note: the opposition did manage to modify the text 
regarding constitutional amendments--previously a simple 
majority in one house of congress was all that was necessary 
to amend the constitution, and would have given the MAS the 
almost-instant ability to make any changes it wished.  With 
the change to proportional representation, however, MAS may 
achieve a two-thirds majority, making the change moot and the 
end result the same. End note.)  Note also that Articles 147 
and 148 state that not only will there be "equal 
participation" between men and women in the Congress, but 
that there will be "proportional participation of indigenous 
nations and villages." 
 
- - - - - - - - - - - - - - - 
State Control of the Economy 
- - - - - - - - - - - - - - - 
 
¶5. (C) Hydrocarbons: MAS negotiators held firm in their goal 
to insert the state squarely into the economy and to keep the 
executive branch in control of the hydrocarbon sector. 
Foreign companies are dissuaded from participating in the 
hydrocarbon industry. Left unchanged, Article 366 states that 
all foreign companies involved in the hydrocarbon industry 
must submit to government sovereignty. The government will 
not recognize the authority of foreign tribunals, 
arbitrators, or external jurisdictions, and will not allow 
companies to make diplomatic claims or requests. Per Article 
359, production of hydrocarbons is an "inalienable right of 
the central government". All income from commercialization of 
hydrocarbons is the property of the state. While the 
Constitution does allow partnerships with foreign companies, 
the effect of this language will likely deter foreign 
investors wary of being caught without any exit strategy or 
recourse to international arbitration. 
 
¶6. (C) Bilateral treaties: The portions of the text devoted 
to rejection of imperialism and neo-colonialism not only 
strike a populist tone, they also contain details that will 
further deter foreign investment. Article 320, left untouched 
from the initial draft, states that "Bolivian investment will 
be prioritized above foreign investment." All foreign 
investment will be under Bolivian authority, and the state 
will not accept conditions on the part of other states, 
banks, or financial institutions. These terms conflict with 
agreements such as the U.S. - Bolivia Bilateral Investment 
Treaty, which requires equal treatment for both parties. 
 
¶7. (C) Utilities: Under the new Constitution, access to water 
and sewerage would be declared fundamental human rights, 
which the government would deliver to all Bolivians (see 
Article 20), and which may not be subject to concessions or 
privatization. This could lead to significant increases in 
infrastructure costs (and potentially lawsuits demanding 
access) at a time when dropping hydrocarbon prices may not 
support new spending. If handled incorrectly, this element of 
the constitution could lead to uprisings and demands from 
rural and poorer areas, MAS strongholds. 
 
¶8. (C) Article 124, which deals with acts of treason, 
includes a clause regarding "acts against natural resources". 
In the December 2007 draft, a more broadly-worded clause 
stated that whoever realized acts that would "dispose of 
natural resources belonging to the social ownership of the 
Bolivian people in favor of foreign businesses, persons, or 
states" would be considered a traitor. This clause has been 
modified to apply to those who "violate Constitutional rules 
against natural resources," which, while still vague, does 
not seem as easily applied to Bolivians doing business with 
foreign companies. (Note: One of the MAS's complaints against 
ex-President Gonzalo "Goni" Sanchez de Lozada is that he 
profited off of sales of mines previously belonging to the 
state. The government is working on an extradition petition 
for Sanchez de Lozada. End note.) 
 
¶9. (C) Domestic financial policy: In a subtle but potentially 
significant update to Article 327, which deals with the 
Central Bank and financial policy, the Executive Branch was 
granted more leeway to meddle in monetary policy. It appears 
likely the MAS struck the following text "(the Central Bank) 
has autonomy in its administrative and technical services" to 
increase their sphere of influence in financial policy 
matters. The director of the Central Bank is already 
appointed by the President, and this change could signal 
further state involvement in this sector. 
 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
Autonomy Sections: Heavily Re-written, But For What? 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶10. (C) The sections on autonomy were extensively changed 
during the final compromise negotiations, but to little 
effect. The central government retains control of taxation, 
land titling, hydrocarbon production in all aspects, and 
distribution of the Direct Hydrocarbon Tax (IDH). The powers 
granted to the departments do not match those in the autonomy 
statutes passed by Santa Cruz, Beni, Pando, and Tarija. The 
departments are not privileged entities and do not have legal 
standing above the other autonomous areas, being instead held 
equal to indigenous territories and municipalities (Article 
276). (Note: The draft constitution also states that any 
power not designated specifically reverts to the central 
government (Article 297), the reverse of the U.S. 
Constitution. End note.)  One outcome of this leveling of the 
powers of autonomous areas could be a power vacuum into which 
the civic committees and similar groups will insert 
themselves. Post-compromise protests by the regional 
opposition stem from the lack of power granted to the 
departments in the final draft. 
 
¶11. (C) As part of the new draft, departmental, municipal, 
and indigenous autonomous areas may create and administrate 
taxes, but only if the tax is not analogous to central 
government taxes, which does not leave much to tax beyond 
tourism and infrastructure. A new Framework Law on Autonomies 
and Decentralization (see Article 271) will be written to 
regulate and coordinate the different types of autonomies. 
This Framework Law is expected to state that any other law 
passed by the departments regarding autonomy is void, 
reasserting the central government's control. 
 
¶12. (C) The opposition was successful in nullifying much of 
the impact of the new "Regional" autonomy section of the 
Constitution. The Regional autonomy area may have been 
introduced by the MAS to mollify Chaquenos, many of whom have 
agitated for greater recognition for the Chaco region, which 
spans several departments.  However, the opposition 
successfully modified Article 280 to state that a regional 
autonomous area cannot span two departments, keeping any 
regional autonomous areas subsumed inside the departments. 
The regional autonomy area is also limited in the final draft 
to playing a vague role of primarily "planning and 
facilitation."  However, the regional autonomy level may 
still offer some benefits to the city of El Alto: in the 
final draft, new language confers regional autonomy status on 
urban areas with populations above 500,000 people.  While the 
direct benefits of receiving "regional" status may be 
nebulous, it is a way to offer recognition to La Paz's poorer 
neighbor. 
 
¶13. (SBU) In a change to the final draft, the leaders of the 
Departments are now to be called "Governors" instead of 
Prefects (see Article 279). 
 
- - - - - - - - - - 
Freedom of the Press 
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¶14. (C) The final draft appears to have addressed some of the 
concern raised by media groups regarding suppression of free 
speech. Negotiators eliminated language in Articles 106 and 
107 that had assured respect for free expression "in 
accordance with the principle of responsibility," a vague and 
troubling clause given President Morales' proclamation that 
the media is his "main enemy." Instead, the Constitution 
calls for "auto-regulation," perhaps signaling the 
establishment of an industry group.  It remains to be seen 
whether this will be an effective compromise or an ultimately 
damaging inclusion, since state media would presumably be 
included and self-censorship may result. 
 
- - - - - - - - 
Judicial Reform 
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¶15. (C) The final round of negotiations reversed some of the 
changes that the December 2007 draft would have been made to 
the judicial system, especially with regard to the impact of 
"social groups" in nominating members of the new Justice 
Council and the Constitutional Tribunal. The Justice Council, 
which will have oversight responsibility of the judicial 
system, was to be populated by members nominated by undefined 
"social groups," which potentially could have included groups 
such as the Coca Growers Union or others sympathetic to the 
MAS cause. Instead, Article 193 was changed, presumably by 
the opposition, to ensure that the National Assembly will 
nominate the Justice Council members.  Article 197 was 
amended to change indigenous represenation in the 
Constitutional Tribunal from "parity representation" to 
simply an undefined "representation".  Also, the requirements 
to be on the Constitutional Tribunal, in Article 199, were 
toughened. Previously an indigenous representative would not 
need any specific experience to be on the Consitutional 
Tribunal; now all members must have eight years of experience 
in either constitutional law, human rights law, or 
administrative law. Previously "social groups" were 
responsible for nominating the members of the Constitutional 
Tribunal; the final text was modified to state social groups 
"can suggest" candidates (Article 199, II). 
 
¶16. (C) The draft also creates an new wing of the judiciary, 
the Agro-Environmental Tribunal (Article 186). While likely 
intended to shift the balance of power in agricultural law 
from the Media Luna (where there is much more large-scale 
farming) to the national level where the MAS can have more 
control, it will also create more bureaucracy and friction 
within an already understaffed and fragmented judiciary 
system. 
 
- - - - - - - - - 
Indigenous Rights 
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¶17. (C) Several new elements regarding indigenous legal 
rights and indigenous justice emerged in the final draft. 
First, new text effectively sanctions non-democratic 
"elections" in indigenous areas, which are to be monitored by 
the newly-created "Electoral Body."  Article 191 was edited 
heavily and now clarifies that indigenous "community justice" 
applies to all members of the indigenous nation in question 
or to acts in the indigenous area. Article 15 makes clear 
that indigenous justice must adhere to the constitution, 
which specifically prohibits the death penalty, so that 
lynchings should not be confused with "community justice" 
norms. Last, any unanswered questions regarding indigenous 
rights are to be addressed in the forthcoming Law of 
Jurisdictional Demarcation, newly proposed in the 
 
Constitution (see Article 192), which will "determine the 
mechanisms of coordination and cooperation" between the 
indigenous, civil, and agro-environmental jurisdictions. 
 
¶18. (C) Economically, indigenous groups are granted several 
exclusive rights not granted to the departments, including 
the right to administer "renewable natural resources."  While 
this would not include mining or hydrocarbons, it would 
include revenue from fishing and logging (Article 304). 
(Note: In allowing both traditional or "non-democratic" 
elections within indigenous areas and the "renewable natural 
resource" revenue streams mentioned directly above, the 
Constitution does grant indigenous groups more and different 
rights than other Bolivians.  However, the opposition appears 
to have eliminated many of the other "special rights" 
mentioned in the earlier draft of the Constitution.  End 
note.)  New text protects prior investments by non-indigenous 
agents in indigenous autonomous areas (Article 30, #17), and 
also guarantees private property rights for landowners whose 
lots are located in new indigenous autonomous areas (Article 
394). 
 
¶19. (C) The final draft kept the requirement to speak at 
least two of the 37 official languages in order to work in a 
government position. An attempt to provide a five-year 
transition period for this requirement was defeated, 
according to a version of the Constitution with proposed 
changes tracked. Almost none of our contacts in the Ministry 
of Foreign Affairs speak an indigenous language, and it is 
unclear whether immediate enforcement of this new rule will 
displace much of the government's bureaucratic backbone. 
 
- - - - - - - - 
No Foreign Bases 
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¶20. (U) Article 10 remains untouched, including a prohibition 
on the installation of foreign military bases in Bolivian 
territory. 
 
- - - - - - - 
Human Rights 
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¶21. (C) A new clause to Article 13 (likely added by the 
opposition) states that any international human rights 
treaties ratified by the National Assembly will prevail, even 
during periods of martial law, over conflicting passages in 
the constitution. Given the recent establishment of martial 
law in Pando, the opposition may have hoped to preserve a 
wider range of human rights protection in any future events. 
 
- - - - 
Comment 
- - - - 
 
¶22. (C) The compromise reached in Congress on the new 
Constitution is a huge win for President Morales.  Even if 
under the spectre of thousands of armed Evo supporters, the 
lack of violence provided the democratic cover needed to 
avoid international scorn.  Furthermore, Morales has 
delivered on his promise of a new Constitution while leaving 
the door wide open for his possible continued rule through 
2014 and possibly beyond.  The Constitution is almost assured 
passage, as the opposition that helped broker the compromise 
language is not in a position to mount a serious campaign 
against it, and may actually want to be seen as for its 
passage in order to gain its own "pro-change" credentials. 
The regionally-based opposition remains opposed to the 
proposed text, but it is weak and lacks the resources to 
mount a serious "No" campaign, while Evo already is engaged 
in promoting the "Si" vote. 
URS