VZCZCXYZ0001
PP RUEHWEB

DE RUEHLP #3041/01 3132040
ZNR UUUUU ZZH
P 092040Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 1247
INFO RUEHAC/AMEMBASSY ASUNCION 6263
RUEHBO/AMEMBASSY BOGOTA 3584
RUEHBR/AMEMBASSY BRASILIA 7445
RUEHBU/AMEMBASSY BUENOS AIRES 4706
RUEHCV/AMEMBASSY CARACAS 1956
RUEHPE/AMEMBASSY LIMA 2016
RUEHME/AMEMBASSY MEXICO 1877
RUEHMN/AMEMBASSY MONTEVIDEO 4156
RUEHQT/AMEMBASSY QUITO 4595
RUEHSG/AMEMBASSY SANTIAGO 9174
RUEHSO/AMCONSUL SAO PAULO 2028
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 003041 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/AND 
TREASURY FOR SGOOCH 
ENERGY FOR CDAY AND SLADISLAW 
 
E.O. 12958: N/A 
TAGS: EAGR ECON KJUS SMIG SOCI BL
SUBJECT: LOWER HOUSE APPROVES FRAMEWORK FOR LAND REFORM 
 
REF: LA PAZ 2600 
 
¶1. (SBU) Summary: The framework of the Morales 
administration's controversial bill to modify the 1996 
agrarian reform (INRA) law (reftel) was approved by the lower 
house on November 7, after a week-long march by several 
hundred indigenous people in the eastern lowlands.  The 
chamber of deputies must now approve each article of the bill 
before passing it to the senate.  The conflictive bill is 
opposed by cattle ranchers in the East, who worry that the 
bill could create legal uncertainty over land title, which 
could lead to disinvestment, diminished production, and 
violent conflicts.  The bill is supported by social groups 
and NGOs who believe that land reform is needed to resolve 
social conflict, produce a more equitable distribution of 
scarce resources, and rectify past injustices, such as large 
tracts of land given unfairly to political cronies.  End 
summary. 
 
-------------------------------- 
Indigenous March for Land Reform 
-------------------------------- 
 
¶2. (SBU) The Morales administration presented a bill to 
congress in September to modify the 1996 National Agrarian 
Reform (INRA) law, in line with campaign promises to 
implement an "agrarian revolution", and mobilized marches in 
October to pressure congress to pass the bill (reftel).  The 
GOB has already redistributed some state-held lands, but has 
taken little action thus far to revert privately-held lands 
to the state.  The press reported on November 1 that around 
300 indigenous people from the eastern lowlands had begun a 
march to La Paz, demanding congressional approval of the 
reform bill and expropriation of lands that did not fulfill 
an economic or social function.  The march was projected to 
last for 45 days, but ended on November 7 in Yapacani, Santa 
Cruz after the lower house of congress approved the framework 
for land reform.  Opposition leaders claim that the 
government staged the march in order to pressure congress. 
 
------------------------------------------ 
Lower House Approves Land Reform Framework 
------------------------------------------ 
 
¶3. (SBU) According to press reports, the chamber of deputies 
approved the framework for land reform on November 7 but must 
now approve the details before passing the bill to the 
senate.  Opposition Senator Walter Guiteras told the press 
that 30 of the bill's 42 articles had been agreed upon by the 
lower house.  The framework agreement was approved after 
agricultural producers from the eastern lowlands abandoned 
the negotiations between the executive, legislature, and 
social groups prior to the vote, complaining that the reforms 
would not provide legal security to the productive sector. 
 
---------------------------------- 
Cattle Ranchers Opposed to Reforms 
---------------------------------- 
 
¶4. (SBU) In a meeting on October 31, members of the cattle 
ranchers association of the Beni (Fegabeni) told Econoff that 
President Morales is an enemy of the Beni, so there are no 
GOB aid projects for the region.  They had come to La Paz to 
attend a meeting with Vice President Alvaro Garcia Linera and 
other organizations on land reform.  According to Fegabeni, 
the meeting was a failure, with only about ten percent of the 
reform proposals agreed upon by those in attendance.  They 
said that the GOB's land reform plan took away legal security 
from land owners, because the GOB would be able to review at 
any time, even after titling, if the land was being used in a 
socially or economically beneficial way.  If the government 
determined that the land was not being used productively, the 
land would revert to the state.  They are worried that the 
bill could create legal uncertainty over land title, which 
could lead to disinvestment, diminished production, and 
violent conflicts. 
 
----------------------- 
NGO in Favor of Reforms 
----------------------- 
 
¶5. (SBU) The General Manager of Fundacion Tierra (Land 
Foundation), Jaime Burgoa, told Econoff on November 6 that he 
was not sure why the government was pushing the INRA reform 
bill since the law currently in place already gives the 
government the legal basis that it needs to take over land 
that is not fulfilling an "economic and social function." 
Thus, the GOB is unnecessarily putting obstacles in its path, 
he said.  He was also uncertain why the government had 
proposed a reform bill to congress, when it had initially 
said the matter would be settled by the Constituent Assembly. 
 He speculated that the government had decided to confront 
its political rivals in the east -- landholders in Santa 
Cruz, Beni, and Pando -- sooner rather than later because it 
felt strong enough to win the fight and also wanted to 
maintain its popularity with its bases.  Burgoa doubted that 
even if the land reform bill was passed, the government would 
have the institutional capacity to enforce it.  He said that 
lack of enforcement and institutional capacity were the main 
problems with the current law.  Because of a lack of 
resources, the National Agrarian Reform Institute, which was 
supposed to have completed the land titling process 
nationwide within ten years (by October 2006), failed in its 
mission.  Its mandate was extended for another seven years in 
October. 
 
¶6. (SBU) Although Burgoa admitted that some of the opposition 
worries were justified, he said that his NGO supported the 
government's intentions regarding land reform, which was 
needed to resolve social conflict, produce a more equitable 
distribution of scarce resources, and rectify past 
injustices, such as large tracts of land given unfairly to 
political cronies.  However, he thought that some of the 
articles of the reform bill should be modified to improve 
their effectiveness.  For example, he said, if the government 
were to compensate land owners for expropriated land, it 
should calculate the amount of compensation based on the land 
value used to calculate tax payments, which is low, rather 
than the higher market value.  He also suggested that the 
size of cattle estates be limited to 10,000 hectares rather 
than 50,000, that currently minimal land taxes be increased, 
and that the government create a new form of title that 
recognizes both the community and individual property rights 
of indigenous people rather than just one or the other, in 
accordance with the reality of indigenous areas.  The NGO has 
also proposed that land owners regularly file land plans to 
be reviewed by the government to determine if land is 
fulfilling a social and economic function as required by the 
law. 
 
------- 
Comment 
------- 
 
¶7. (SBU) The passage of the land reform framework by the 
lower house, although the devilish details remain to be 
resolved and the law is likely to be blocked by the 
opposition-controlled senate, will further boost President 
Morales' popularity with the masses.  However, the INRA law 
reform debate and reversion of privately-held lands to the 
state are likely to engender explosive conflicts and increase 
regional hostilities during the next several months.  Post 
will continue to monitor the issue closely.  End comment. 
GOLDBERG