VZCZCXYZ0008
PP RUEHWEB

DE RUEHLP #1337/01 1372018
ZNR UUUUU ZZH
P 172018Z MAY 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 9236
INFO RUEHAC/AMEMBASSY ASUNCION 5854
RUEHBO/AMEMBASSY BOGOTA 3157
RUEHBR/AMEMBASSY BRASILIA 7015
RUEHBU/AMEMBASSY BUENOS AIRES 4262
RUEHCV/AMEMBASSY CARACAS 1555
RUEHPE/AMEMBASSY LIMA 1534
RUEHMN/AMEMBASSY MONTEVIDEO 3790
RUEHQT/AMEMBASSY QUITO 4195
RUEHSG/AMEMBASSY SANTIAGO 8737
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS LA PAZ 001337 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/AND 
TREASURY FOR SGOOCH 
ENERGY FOR CDAY AND SLADISLAW 
 
E.O. 12958: N/A 
TAGS: EAGR ECON SMIG SOCI BL
SUBJECT: GOB PROMISES LAND REFORM 
 
REF: A. LA PAZ 680 
     ¶B. LA PAZ 1157 
     ¶C. LA PAZ 1288 
 
¶1. Summary: The GOB announced on May 8 that it planned to 
distribute between 11 and 14 million hectares of land to 
farmers, indigenous communities, and the landless through 
eight supreme decrees and a revision of the 1996 Agrarian 
Reform Law.  On May 17, the GOB told the press that President 
Morales would sign six decrees that day for distributing 
between 2 and 4.5 million hectares of state land to 
indigenous people and small farmers, speeding up the land 
titling process, and centralizing the structure of the 
National Land Reform Institute (INRA) to weaken local 
government control over the titling process.  Additional 
details of the reform will reportedly be announced as part of 
the GOB's National Development Plan on May 31.  The Minister 
of Agriculture plans to speed up the process of land titling, 
which has been carried out by INRA for the past decade but 
has only reached a small portion of the country.  NGOs and 
social groups welcomed the GOB announcement, while farmers, 
particularly Brazilian soy farmers, and cattle ranchers in 
the eastern lowlands were worried that the government's 
proposal threatened their lands, as well as Bolivia's food 
security and exports.  The GOB appears to be following the 
same tactic in land reform as in hydrocarbons nationalization 
and combating corruption (ref B and C) -- issuing decrees 
that overstep existing laws, usurping Congress' function, and 
promising to negotiate with interested sectors and resolve 
the legal mess later.  End summary. 
 
Land Reform Background 
---------------------- 
¶2. Beginning in the early 1950's, land reform was carried out 
in the western half of Bolivia.  The reform divided large 
landholdings into smaller plots and eliminated the mandatory, 
unpaid service obligations of the indigenous people, who had 
lived on those large estates, to their feudal landlords.  The 
land redistribution process largely bypassed the eastern 
regions, which saw the increasing concentration of land in 
fewer hands, particularly during Bolivia's military 
dictatorship period in the 1970's, when large tracts of land 
were given to those with political connections free of 
charge.  In 1996, Congress passed the National Institute of 
Agrarian Reform Law (INRA), which included a term of ten 
years, expiring in October 2006, for the adjustment of 
property rights through verification that landholdings 
fulfilled social and economic functions.  The Agrarian Reform 
Institute, with international financing, has given titles to 
those who actually work the lands.  However, INRA has only 
titled around a tenth of the country's land, and according to 
Vice President Alvaro Garcia Linera and NGOs such as 
Fundacion Tierra, it has failed in its task of land 
redistribution.  Fundacion Tierra President Miguel Urioste 
welcomed the GOB's announced reform plan as necessary, 
particularly the ability for the GOB to recoup land that was 
idle or obtained illegally, as the INRA law had only 
frustrated the indigenous, farmers, and business owners and 
led to conflict. 
 
¶3. Violent conflicts between large landholders and landless 
migrants in the East have frequently broken out during the 
last decade.  A group known as The Landless Movement 
(Movimiento Sin Tierra), at times backed by Evo Morales' MAS 
party, has invaded lands, confronted the owners, and forcibly 
taken them over.  These confrontations between landless 
migrants and landholders have at times resulted in deaths on 
both sides of the disputes. 
 
GOB Announces Land Reform 
------------------------- 
¶4. The GOB announced via press reports on May 8 that it 
planned to distribute between 11 and 14 million hectares of 
land to farmers, indigenous communities, and the landless 
through eight supreme decrees and a revision of the 1996 INRA 
Law that would return to the state all land that did not 
"fulfill a social function", that was unproductive, or for 
which the titles had been obtained through fraud.  On May 17, 
the GOB told the press that President Morales would sign six 
decrees that day for distributing between 2 and 4.5 million 
hectares of state land to indigenous people and small 
farmers, speeding up the land titling process, and 
centralizing the structure of INRA to weaken local government 
control over the titling process.  Additional details of the 
agrarian reform will reportedly be announced on May 31, as 
part of the GOB's National Development Plan.  The GOB has 
already begun land audits in two provinces of Santa Cruz with 
the intention of redistributing non-productive properties 
within six months, according to the press.  Press reports 
indicate that land in western Bolivia that was redistributed 
during the 1953 agrarian reform would not be affected. 
 
Agriculture Minister to Speed Up Land Titling 
--------------------------------------------- 
¶5. Minister of Agriculture Hugo Salvatierra told the 
Ambassador in a previous meeting (ref A) that the GOB would 
implement expedited land titling procedures, particularly in 
the eastern and northern parts of the country, "where cattle 
have more land than human beings."  According to Salvatierra, 
land redistribution and titling had been going on for the 
past ten years, but even though USD 87 million had been spent 
on the process, only 14 percent of the national land had been 
titled.  He explained that the current titling procedure 
required 704 days on average if there was no opposition, and 
that the law provided for an expedited procedure that had 
never been used.  He said the government would implement an 
expedited procedure, focusing on conflictive areas with 
large, unproductive land holdings, particularly Santa Cruz, 
the Beni, and the Chaco, and that this would help achieve a 
"legal, economic, and social solution" to Bolivia's land 
conflicts. 
 
Santa Cruz Farmers Worried 
-------------------------- 
¶6. The Eastern Agriculture Chamber of Santa Cruz (CAO) told 
the press that it would not allow land reform to hinder 
productive farming, putting Bolivia's food security and 
exports at risk.  Farmers in eastern Bolivia produce 22 
percent of Bolivia's exports and the majority of the food 
that is consumed domestically, including rice, sugar, oil, 
and beef.  CAO General Manager Edilberto Osignaga told us on 
May 16 that the CAO supported the current INRA Law, which 
contained mechanisms for resolving problems related to 
non-productive lands and for land titling, but that the CAO 
would not tolerate unilateral GOB actions that put the 
productive capacity of the region at risk.  He acknowledged 
that INRA's land redistribution goals had not been fulfilled, 
but claimed that this was because of poor administration 
rather that defects in the law itself.  He added that 
whatever reforms the GOB enacted should guarantee the legal 
security of production and incorporate the opinions of the 
producers. 
 
¶7. Because of the GOB's threats, producers were already 
having difficulty securing credit, and the few investors in 
the sector were beginning to look for options elsewhere, 
Osignaga said.  He lamented that if the GOB carved up the 
eastern, large, productive farms into small parcels, the 
agricultural sector would be destroyed, because small farms 
did not have the necessary capital to successfully compete in 
export markets. 
 
¶8. The soy industry, which accounts for roughly seven percent 
of Bolivia's GDP and provides around 150,000 jobs, might be 
particularly hard hit.  Brazilian Embassy Economic Officer, 
Octavio Cortes, told Econoffs on May 12 that approximately 
115 Brazilian-owned farms produced 60 percent of Bolivia's 
soy and held 40 percent of Bolivia's soy-producing land. 
Press reports indicated that Brazilian soy farmers had 
invested around USD 1 billion in Bolivia during the last 
decade.  According to Cortes, few of these farms were within 
50 kilometers of the Bolivian border.  (Note: Operating a 
foreign enterprise within 50 km of the border is generally 
illegal without a special waiver from the GOB; thus, 
Brazilian farms within such a radius would be particularly 
vulnerable to expropriation.  End note.)  Furthermore, Cortes 
added, these farms were productive and properly documented, 
so the Brazilian Embassy was not worried that the GOB would 
expropriate them.  That said, the farmers were concerned. 
Press reports on May 11 indicated that the National Agrarian 
Reform Institute was investigating 250 rural properties owned 
by Brazilians that were located less than 50 km away from the 
Brazilian border with the goal of redistributing those lands. 
 
Beni Cattle Ranchers Concerned 
------------------------------ 
¶9. General Manager Carmelo Arteaga of the Beni and Pando 
Cattle Ranchers Federation (FEGABENI) told us on May 16 that 
the federation did not agree with the unilateral imposition 
of GOB policies which might hurt the productive sector.  He 
said that the GOB's plans to redistribute land could impact 
Beni's 8,000 cattle ranchers, as well as its farmers and 
harvesters of brazil nuts, wood, and rubber.  Arteaga 
expressed his disappointment with Vice President Garcia 
Linera's failure to fulfill his campaign promises to foment 
production, stating that the GOB had done nothing to support 
the productive sectors of Beni and Pando, but had rather made 
their conditions worse through threats of land 
redistribution.  Garcia Linera asked producers to "calm 
down," the press reported on May 17. 
 
¶10. Arteaga explained that many people who worked the land 
did not have titles because of the failure of INRA to 
complete the titling process due to a lack of personnel and 
resources.  The lack of titles, he feared, would make those 
land owners vulnerable to having their land taken away as a 
result of the (still unclear) proposed GOB policies of 
redistribution.  The federation planned to urge the GOB to 
complete the process of titling without taking land from 
those that were using it to benefit the Bolivian economy, he 
said.  He feared that the GOB was looking for any 
justification for which to expropriate land, and thus, the 
federation had declared a "state of emergency" and planned to 
hold a meeting with various social and business sectors to 
formulate a response on behalf of the north-eastern 
departments of Beni and Pando.  According to Arteaga, the 
majority of the population of those departments were opposed 
to land redistribution. 
 
¶11. Comment: Land is one of the most controversial issues in 
Bolivian society and will be a focus of the Constituent 
Assembly.  The GOB's agrarian reform plans could shore up 
support for the MAS administration from its bases prior to 
Constituent Assembly elections, while further increasing 
tensions between the western highlands and eastern lowlands. 
The reform seems aimed, at least in part, at taking away the 
basis of power, i.e., land, from the ruling party's strongest 
regional rivals.  The GOB appears to be following the same 
tactic in land reform as in hydrocarbons nationalization and 
combating corruption (ref B and C) -- issuing decrees that 
overstep existing laws, usurping Congress' function, and 
promising to negotiate with interested sectors and resolve 
the legal mess later.  End comment. 
ROBINSON