VZCZCXYZ0000
RR RUEHWEB

DE RUEHLP #1172/01 1221953
ZNR UUUUU ZZH
R 021953Z MAY 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 9039
INFO RUEHAC/AMEMBASSY ASUNCION 5801
RUEHBO/AMEMBASSY BOGOTA 3098
RUEHBR/AMEMBASSY BRASILIA 6959
RUEHBU/AMEMBASSY BUENOS AIRES 4203
RUEHCV/AMEMBASSY CARACAS 1499
RUEHPE/AMEMBASSY LIMA 1467
RUEHME/AMEMBASSY MEXICO 1692
RUEHMN/AMEMBASSY MONTEVIDEO 3750
RUEHQT/AMEMBASSY QUITO 4139
RUEHSG/AMEMBASSY SANTIAGO 8682
RUEHUB/USINT HAVANA 0032
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 001172 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/AND LPETRONI 
STATE PASS TO USTR FOR BHARMAN 
COMMERCE FOR JANGLIN 
TREASURY FOR SGOOCH 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PREL PGOV EPET USTR BL
SUBJECT: BOLIVIA JOINS ALBA, SIGNS PEOPLES' TRADE AGREEMENT 
 
¶1. (SBU) Summary: On April 29, Bolivia formally joined the 
Bolivarian Alternative to the Americas (ALBA) and signed a 
Peoples' Trade Agreement with Venezuela and Cuba, becoming 
party to agreements meant to advance regional economic, 
political, and cultural integration.  The three countries 
promised to work together to create employment, boost 
economic growth, and broaden cooperation on a range of 
issues, but the pact offered few specifics.  With this and 
the May 1 announcement of the nationalization of the 
hydrocarbons industry (septels), Bolivia appears to have 
abandoned traditional approaches to trade in favor of an 
ideologically colored leftward shift more likely to undermine 
than to advance the interests of Bolivia's millions of poor. 
End summary. 
 
¶2. (U) In April 28 and 29 meetings in Havana, Cuba, President 
Evo Morales formally joined the Venezuela-Cuba bilateral pact 
known as the Bolivarian Alternative to the Americas (ALBA) 
and signed a Peoples' Trade Agreement with his Venezuelan and 
Cuban counterparts, making Bolivia party to agreements meant 
to advance regional economic, political, and cultural 
integration.  While Venezuelan President Hugo Chavez has 
attempted to portray ALBA as an alternative to the Free Trade 
Area of the Americas, the proposal met with little regional 
support until Bolivia's accession; it is now reportedly the 
foundation on which a series of Peoples' Trade Agreements 
will be built. 
 
¶3. (U) In the first of these peoples' agreements, Bolivia, 
Venezuela, and Cuba promised to work together to create 
employment, boost economic growth, and broaden cooperation on 
a range of issues.  The three countries agreed to develop a 
"strategic plan" to generate jobs; execute mutually 
beneficial public investments (ensuring the host country 
possesses at least 51 percent of any new enterprise whenever 
possible); arrange for reciprocal credits among banking 
institutions; consider unspecified state "compensation" 
mechanisms to facilitate trade; exchange science and 
technology information; and cooperate on health, education, 
and communication matters. 
 
¶4. (U) The pact offered few specifics for creating employment 
or generating growth, but both Venezuela and Cuba recognized 
Bolivia's "special needs" and offered to help the country 
overcome the harmful effects of "centuries of colonial and 
neocolonial dominance."  Venezuela promised to help 
strengthen Bolivia's Ministries of Hydrocarbons and Mining 
and to assist in the restructuring of state-owned oil and 
mining companies; to provide 5,000 scholarships to Bolivian 
students seeking to study at Venezuelan universities; to 
create a special $100 million fund to finance infrastructure 
and other projects; to donate $30 million to the GOB for use 
in addressing the "social and productive" needs of the 
Bolivian people; to increase its imports of Bolivian products 
(especially soy); to offer financial incentives to Bolivian 
businesses operating in Venezuela; and to make available 
Venezuela's air and maritime transportation facilities for 
Bolivia's economic development. 
 
¶5. (U) Cuba, meanwhile, promised to provide free eye 
treatments to all Bolivians lacking necessary financial 
resources; to assist Bolivian and other doctors in providing 
such treatments; to provide 5,000 scholarships to train 
Bolivian medical personnel; to continue to support the 600 
Cuban doctors working in Bolivia since the widespread January 
flooding; and to continue working (with Venezuela) to raise 
Bolivian literacy rates.  Together with Venezuela, Cuba also 
promised to eliminate tariff and non-tariff barriers to 
Bolivian exports and to guarantee the purchase of all soy and 
some agricultural goods, which may lose Andean markets as a 
result of recently signed Colombian and Peruvian free trade 
agreements with the United States. 
 
 
¶6. (U) In return, Bolivia need only export its mineral, 
agricultural, and industrial goods; implement reciprocal tax 
exemptions for Venezuelan and Cuban firms and for any joint 
enterprises formed under the Peoples' Trade Agreement; and 
contribute to the countries' energy security by continuing 
its gas exports (although it is unclear how Bolivian natural 
gas will help Venezuela and Cuba).  Together, the pact 
declares, the three countries will "fight for the unity and 
integration of the peoples of Latin America and the 
Caribbean." 
 
¶7. (SBU) Comment: With this and the May 1 announcement of the 
nationalization of the hydrocarbons industry (septels), 
Bolivia appears to have abandoned traditional approaches to 
trade and investment in favor of an ideologically colored 
leftward shift more likely to undermine than to advance the 
interests of Bolivia's millions of poor.  The Peoples' Trade 
Agreement is a pact absent of significant economic value, 
particularly when considering that the grand total of 
Bolivian exports to Cuba was only $5,291 last year; the 
agreement seems instead an empty political gesture designed 
to demonstrate the GOB's commitment to improving the lives of 
the masses.  In his opposition to accepted models of 
international trade and recent moves toward nationalization, 
Morales has complicated any chance of negotiating a free 
trade agreement with the United States - and undermined 
opportunities to generate the economic growth Bolivia so 
desperately needs.  End comment. 
GREENLEE