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UNCLAS SECTION 01 OF 02 LA PAZ 001159 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR DRL/IL LAUREN HOLT 
LABOR FOR ILAB TINA MCCARTER 
 
E.O. 12958: N/A 
TAGS: ELAB EINV ENRG ECON PGOV SOCI PREL BL
SUBJECT: NATIONALIZATION AS GRAND POLITICAL GESTURE 
 
 
LA PAZ 00001159  001.7 OF 002 
 
 
¶1.  (SBU) Summary: By announcing the nationalization of 
Bolivia's hydrocarbons sector, President Evo Morales has 
again proven himself a master of the grand political gesture. 
 Timed to coincide with the kick off the campaign for the 
Constituent Assembly and accompanied by the symbolic taking 
of gas fields by Bolivian armed forces, the announcement has 
been enthusiastically received by a vast majority of the 
population and is likely to boost the government's sagging, 
though still high, popular support.  Morales did not announce 
the expected labor day-focused increase to the minimum wage 
or derogation of the infamous privatization decree 21060, 
instead calling nationalization the "best gift of all" to 
Bolivian workers.  The nationalization announcement was a 
quintessentially populist gesture that has played extremely 
well in Bolivia's political theater, but its longer-term 
economic consequences, particularly on the investment 
climate, appear grave.  End Comment. 
 
¶2.  (SBU) Whatever else it brings (see septel), President Evo 
Morales May 1 announcement of an executive decree 
nationalizing the country's hydrocarbons resources was a 
grand political gesture performed by a populist political 
master.  The mood in Plaza Murillo in downtown La Paz 
adjacent to the national palace, as more than ten thousand 
mostly mixed race and indigenous Bolivians waited expectantly 
for their president to speak, was festive.  The band played 
revolutionary songs, firecrackers exploded overhead, and many 
people waved two-sided flags - one side Bolivian, the other 
Cuban.  In his initial announcement, made just after noon, 
President Morales' voice was piped in from the department of 
Tarija -- where he spoke, appropriately, from one of 
Bolivia's largest gas fields -- while Vice President Garcia 
Linera, members of the cabinet and other party luminaries 
waved grandly from the palace balconies to the crowd below. 
In the late evening, Morales appeared in person in plaza 
Murillo to give a second speech to the still-waiting masses, 
this time highlighting an anti-imperialist (and indirectly 
anti-American) theme and pledging that the nationalization of 
the mining and forestry sector would follow. 
 
¶3.  (SBU) The atmosphere throughout the day was manifestly 
one of a political campaign getting underway -- May 1 also 
marked the initiation of the 60-day campaign period for the 
scheduled July 2 election of representatives to the 
Constituent Assembly -- and the government party got off to a 
great start.  Popular reaction to the announcement has been 
overwhelmingly positive.  Some observers have described a 
feeling of widespread "euphoria" that the government has 
followed through with a key campaign promise in a manner that 
resonates deeply with most Bolivians.  One opposition Senator 
described it as "explosive," particularly the media coup 
associated with the symbolic taking of gas fields by 
Bolivia's armed forces (septel).  Others have commented on 
the brilliance of its organization and execution, coming as a 
kind of May surprise and followed up by a barrage of 
carefully timed and packaged publicity on national radio and 
television.  Almost everyone believes the announcement will 
help shore up the Government's popular support, which had 
sagged from 80 to 62% in a poll released in late April, 
particularly among its social sector bases. 
 
¶4.  (SBU) Contrary to widespread expectations, Morales did 
not announce any labor-specific measures on the International 
Day of the Worker.  Many media and other observers believed 
he would take the opportunity to raise the minimum wage or to 
nullify the infamous privatization decree 21060 -- 
particularly Article 55, which allows employers to hire and 
fire workers freely.  Instead, Morales let nationalization do 
the political trick, calling his announced decree the "best 
gift of all" to Bolivian workers.   All told, the 
government's move successfully outflanked a planned march by 
the splintering Bolivian Worker's Central (COB), and appeared 
to take the wind out of the sails of any potential radical 
 
LA PAZ 00001159  002.7 OF 002 
 
 
social sector challenge.  Sounding like a scratchy broken 
record, COB executive secretary Jaime Solares criticized 
Morales for failing to announce "nationalization without 
indemnification" and for refusing to raise the minimum wage. 
Some news reports suggest that Morales will announce the 
minimum wage hike today (May 2), but many observers believe 
he may save that ruse until the political need arises again 
down the line. 
 
Comment: Short-term Gain for Long-term Loss 
------------------------------------------- 
¶5.  (SBU) Morales' nationalization decree was a 
quintessentially populist gesture made for Bolivia's 
surrealistic political theater, where it has played extremely 
well.  It was the perfect accompaniment for the bells, 
whistles and balloons of yet another campaign season, and has 
surely put the government's disintegrating opposition back on 
its heels.  By contrast, the longer-term economic 
consequences of the action, particularly for the investment 
climate, could be grave.  In that sense, Morales and his 
advisors have again demonstrated a willingness to trade off 
sound economic policy for short-term political gain. 
GREENLEE