VZCZCXRO4129
PP RUEHLMC
DE RUEHLP #0644/01 0682112
ZNY CCCCC ZZH
P 092112Z MAR 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 8367
INFO RUEHAC/AMEMBASSY ASUNCION 5665
RUEHBO/AMEMBASSY BOGOTA 2935
RUEHBR/AMEMBASSY BRASILIA 6808
RUEHBU/AMEMBASSY BUENOS AIRES 4039
RUEHCV/AMEMBASSY CARACAS 1370
RUEHPE/AMEMBASSY LIMA 1278
RUEHMN/AMEMBASSY MONTEVIDEO 3617
RUEHQT/AMEMBASSY QUITO 4008
RUEHSG/AMEMBASSY SANTIAGO 8529
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUMIAAA/USCINCSO MIAMI FL
RUEHC/DEPT OF LABOR WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 04 LA PAZ 000644 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA A/S SHANNON AND PDAS SHAPIRO 
STATE ALSO FOR WHA/AND 
NSC FOR DFISK 
USCINCSO FOR POLAD 
 
E.O. 12958: DECL: 03/09/2015 
TAGS: PGOV PREL ECON EPET EINV ELAB PMAR BL
SUBJECT: MORALES TO FOCUS ON ECONOMIC ISSUES WITH SECRETARY 
RICE 
 
REF: A. LA PAZ 615 
     ¶B. LA PAZ 584 
 
Classified By: Ambassador David N. Greenlee for reasons 1.4d and b. 
 
¶1.  (C) Summary: In a March 8 meeting, President Evo Morales 
told the Ambassador he would raise Bolivia's threatened soy 
markets, the extension of U.S. trade preferences and the 
Millennium Challenge Account in his discussion with Secretary 
Rice in Chile.  The Ambassador said the Secretary would 
likely reiterate U.S. priority interests in democracy and 
counter-narcotics.  Morales reaffirmed his commitment to 
combating narcotics trafficking, but asserted that the 
emphasis should be placed on interdiction.  In response to 
the Ambassador's query about bilateral friction, Morales 
raised the military counter-terrorism unit (ref) and said he 
had interpreted the Embassy's ending support for it as a 
"decertification" of himself as President.  The Ambassador 
gave a detailed explanation of the CT unit and clarified the 
concrete reasons for the Embassy's action.  He also urged the 
President to keep confidential matters like this and the visa 
revocation of the MAS alternate Senator in their proper 
channels, and speculated that Morales deliberately used such 
issues with the U.S. to score political points at home. 
After pointedly asking -- "Do you trust me?" -- Morales 
petitioned the Ambassador to bring sensitive information 
directly to him to ensure its appropriate handling, and said 
he had felt "attacked" by U.S. actions.  Separately, VP 
Alvaro Garcia Linera confirmed that he had cancelled his 
scheduled visit to Washington. 
 
¶2.  (C) Notwithstanding the rancorous public rhetoric, the 
mood of the meeting was basically cordial and direct.  This, 
Morales' focus on Bolivia's commercial interests and his 
non-mention of Bolivian efforts to extradite former President 
Sanchez de Lozada ("Goni") suggest, in the best case, that 
pragmatism may be gaining on ideology in the President's 
sense of how to conduct the U.S. relationship.  End Summary. 
 
 
¶3.  (SBU) The Ambassador met with President Morales in the 
late afternoon of March 8 at the National Palace.  (In the 
President's somewhat spare office hung two co-equal portraits 
made exclusively with coca leaves: one of Che Guevara, the 
other of Morales.)  The meeting, which we requested to 
clarify Morales' plans with respect to his scheduled March 11 
meeting with Secretary Rice in Santiago, lasted 90 minutes. 
Vice-President Alvaro Garcia Linera and poloff (note-taker) 
also participated. 
 
Morales as Economic Minister 
---------------------------- 
¶4.  (C) President Morales expressed thanks for the meeting 
with Secretary Rice, and said he would use the opportunity to 
focus on Bolivia's commercial and economic interests.  He 
underscored the democratic gains represented by his election 
and by the subsequent approval of the Constituent Assembly 
legislation (ref B), but claimed these would be jeopardized 
if Bolivia lost its access to key markets.  He said he would 
first raise Bolivia's soy markets, particularly in Colombia, 
that were threatened by that country's accession to a free 
trade agreement with the U.S.  The possible immediate loss of 
the Colombian market, Morales averred, had "hit me like a 
bucket of cold water."  Morales said Bolivia's producers 
needed several years to adjust to the competition, and 
entreated the Ambassador to help them secure a window of 
continued protection.  The second issue, he said, was the 
government's desire for an extension of its trade preferences 
in the U.S. market under the Andean Trade Preferences and 
Drug Enforcement Act (ATPDEA), emphasizing the vulnerability 
of Bolivia's key export sectors such as wood, textiles and 
 
LA PAZ 00000644  002 OF 004 
 
 
jewelry.  Morales' final issue was the government's intention 
to pursue a compact with the Millennium Challenge Corporation 
(MCC).  Morales noted the success of the U.S. "Alliance for 
Progress" policy in the past, particularly in regard to 
crucial road infrastructure projects, and hoped to pursue an 
MCA agreement that would have a similar impact. 
 
¶5. (C) The Ambassador said the Secretary would likely 
reiterate the U.S.'s priority interests in defending Bolivian 
democracy and in fighting narcotics trafficking, including 
limiting coca production.  In response to Morales' comments, 
the Ambassador commented that FTA negotiations with Andean 
countries -- Peru, Colombia and Ecuador -- had been underway 
for some time and had concluded with the first two countries. 
 He acknowledged that the substance of these agreements would 
be difficult to alter, particularly for the sole benefit of a 
country -- Bolivia -- that had lacked the political consensus 
to participate in the FTA negotiations.  As for the extension 
of preferential trade access to the U.S. market, he noted 
that this would depend fundamentally on the U.S. Congress, 
where anti-free trade agreement pressures were also strong, 
and on Bolivia's decisions with respect to the important 
second half of the ATPDEA agreement, specifically anti-drug 
cooperation.  Nevertheless, he promised to relay Morales' 
intentions to the Secretary.  The Ambassador welcomed the 
President's interest in the MCA, noted that the previous 
government's proposal was worth pursuing, but acknowledged 
that some economic conditions were attached to Bolivia's 
successful accession to an MCC compact. 
 
Commitment to Fight Narco-Trafficking 
------------------------------------- 
¶6.  (C) Morales reaffirmed his government's priority 
commitment to fighting narcotics trafficking even while it 
sought to "de-penalize" the coca leaf.  He said he had made 
progress in talks with Chapare-based cocaleros, would 
ultimately succeed in limiting production there to 3,200 
hectares, and would also begin negotiations to deal with the 
separate challenge of the Yungas.  The Ambassador reiterated 
that the U.S. was not party to the Chapare "cato" accord, 
agreed that the Yungas would be difficult and emphasized 
that, while interdiction cooperation remained good, 
eradication in the Chapare continued to be worryingly slow. 
Morales said he and his technical team were prepared to 
conduct a detailed discussion of the coca issue with Embassy 
counterparts on his return from Chile. 
 
Elements of Bilateral Friction 
------------------------------ 
¶7.  (C) In response to the Ambassador's open-ended query 
about bilateral friction, Morales raised the ending of U.S. 
support for the military's special counter-terrorism unit 
(ref A).  He fixed on the term "decertification" contained in 
the Embassy's letter to armed forces commander General 
Wilfredo Vargas, and said that because the unit responded 
directly to the President he had interpreted this to mean the 
U.S. was "decertifying" him as President.  The Ambassador 
acknowledged Morales' injured feelings, but believed they 
were the product of a mistaken interpretation of the facts. 
He then explained the background of the case, clarifying that 
the term "decertification" related to USG internal criteria 
and that the Embassy's formal letter was the culmination, not 
the beginning, of a dialogue that had begun months ago. 
 
¶8.  (C) The Ambassador emphasized that we did not seek to 
insert any individual into any particular government 
position, but did reserve the right to refrain from working 
with persons we knew to be untrustworthy, as we had done in 
this case.  He told Morales that the unit commander, LTC 
"Rory" Rodriguez, had strayed from established CT doctrine by 
targeting certain political figures ("including yourself") 
 
LA PAZ 00000644  003 OF 004 
 
 
during the campaign period.  "This," the Ambassador 
exclaimed, "particularly concerned us," and represented a 
dangerous politicization of a unit that was supposed to be 
narrowly and professionally focused on countering terrorism. 
 
 
¶9.  (C) Commenting on Morales' reported reluctance to return 
the military equipment donated to the special unit, the 
Ambassador relayed his discussion with Defense Minister 
Walker earlier in the day, in which the Ambassador had 
proposed the elements of a possible solution (septel).  He 
explained that this could entail placing the equipment in an 
Embassy military group warehouse, possibly distributing it to 
other Bolivian units in the future, while in the meantime 
removing it from a unit led by a potentially rogue commander. 
 The Ambassador relayed to Morales the Defmin's view that 
Bolivian sensitivy over the CT unit issue was connected to 
the Chinese-manufactured MANPADS matter, and described the 
Minister's apparent interest in completing the deal begun by 
the previous government in the latter connection, including 
receiving the USD 400K cash payment. 
 
¶10.  (C) The Ambassador emphasized that the U.S. had not paid 
any money to anyone in the missile case, and in fact had not 
received all the material promised by the previous 
government.  He added that we considered the matter closed, 
but would be open to further discussions if this would help 
resolve all concerns conclusively for the current government 
and other involved parties.  Morales said he would meet with 
the Defense Minister Monday morning (March 13) to discuss 
both the CT unit and the missiles.  (Comment: The body 
language of both Morales and Garcia Linera during the missile 
discussion -- the former slouching down low on his chair and 
skeptically narrowing his eyes, the latter shaking his head 
outright -- suggested their extreme discomfort with the 
issue, and the likelihood they will choose not to pursue this 
kind of solution.  End Comment.) 
 
¶11.  (C) The Ambassador urged the President that keeping 
confidential matters in their proper channels would better 
 
SIPDIS 
facilitate their constructive resolution.  For example, he 
said, Morales' public attacks against the Embassy in 
connection with the visa revocation of MAS alternate Senator 
Leonilda Zurita had obscured the facts of the individual 
case, which were confidential but not/not related to her 
indigenous ethnicity or anti-American views, and had only 
guaranteed the delay of a possible resolution.  He also 
explained that the revocation had occurred in 2004, well 
before Morales' ascension as president, and that the Embassy 
had regrettably not managed to notify Zurita at the time. 
That said, the Ambassador speculated that Morales 
deliberately used such sensitive issues connected with the 
U.S., choosing to "air dirty laundry in public," in order to 
score political points at home -- but at the risk of 
undermining bilateral relations. 
 
"Do You Trust Me?" 
------------------ 
 
¶12.  (C) In a bizarre, almost soul-baring moment of the 
conversation, Morales pointedly asked the Ambassador: "Do you 
trust me?"  After receiving a politic "yes," Morales said "I 
trust you."  He then urged the Ambassador to contact him 
directly with sensitive information, such as that relating to 
the CT unit.  He emphasized that the controversy in this case 
might have been avoided had he been privy to the information 
he had just received about it.  The Ambassador said that in 
the future we would bring matters with potential political 
ramifications directly to the President's attention. 
 
¶13.  (C) Morales acknowledged he was still learning on the 
 
LA PAZ 00000644  004 OF 004 
 
 
job and that he had not entirely shed, as some observers had 
suggested, the mindset of a union leader.  He continued that 
he had felt "attacked" by recent U.S. actions, including the 
ending of support for the CT unit, the revocation of Zurita's 
visa and the absence of U.S. official representation at last 
month's "protocol greeting" ("saludo protocular") for foreign 
diplomats.  He also embarked on a circuitous and complicated 
defense of Zurita, arguing she was completely innocent of the 
charges against her and should not be disqualified for a 
visa.  The Ambassador commented that, while understandable, 
Morales' feelings were rooted in a misinterpretation of the 
facts, explaining that he had been out of the country on the 
date of the protocol event and the Charge had not been 
invited to replace him. 
 
VP Cancels U.S. Trip 
-------------------- 
¶14.  (SBU) At the close of the meeting, the Ambassador asked 
VP Garcia Linera whether reports that he had cancelled his 
planned trip to Washington because he had failed to secure a 
meeting with Vice-President Cheney were true.  Garcia 
indicated this was in fact so, but then backtracked about the 
reasons for his change of mind, saying he had too many things 
to do in Bolivia and would welcome a formal invitation from 
the USG before planning a future trip.  The Ambassador 
lamented the missed opportunity, but said we would look 
forward to facilitating a visit in the future. 
 
Comment: 
-------- 
¶15.  (C) Notwithstanding the rancorous public rhetoric 
surrounding the CT unit, visa refusals and other bilateral 
issues, the mood of the meeting was essentially cordial.  In 
this fourth discussion involving the President and the 
Ambassador, Morales' apparently growing trust facilitated the 
exchange of unvarnished truths on controversial questions. 
This, coupled with Morales' exclusive focus on Bolivia's 
commercial interests as subjects he would raise with the 
Secretary and his non-mention of Bolivian efforts to force 
 
SIPDIS 
the return for trial of former President Sanchez de Lozada 
("Goni") -- the conversation's equivalent to the "dog that 
didn't bark" -- suggest that pragmatism may be gaining on 
ideology in the President's mind.  It could also mean that 
the schism between Bolivia's real interests, which are mainly 
economic, and the government's political need to deploy 
irresponsible public rhetoric, often targeting the U.S., may 
grow wider with time. 
GREENLEE