VZCZCXYZ0041
PP RUEHWEB

DE RUEHLP #3244/01 3351350
ZNY CCCCC ZZH
P 011350Z DEC 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 1502
INFO RUEHAC/AMEMBASSY ASUNCION 6340
RUEHBO/AMEMBASSY BOGOTA 3664
RUEHBR/AMEMBASSY BRASILIA 7527
RUEHBU/AMEMBASSY BUENOS AIRES 4784
RUEHCV/AMEMBASSY CARACAS 2036
RUEHPE/AMEMBASSY LIMA 2108
RUEHME/AMEMBASSY MEXICO 1932
RUEHMN/AMEMBASSY MONTEVIDEO 4234
RUEHQT/AMEMBASSY QUITO 4673
RUEHSG/AMEMBASSY SANTIAGO 9258
RUEHSO/AMCONSUL SAO PAULO 2071
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

C O N F I D E N T I A L LA PAZ 003244 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/AND 
TREASURY FOR SGOOCH 
ENERGY FOR CDAY AND SLADISLAW 
 
E.O. 12958: DECL: 11/30/2016 
TAGS: EAGR ECON PGOV BL
SUBJECT: LAND REFORM BILL AIMS TO FACILITATE REDISTRIBUTION 
 
REF: A. LA PAZ 3096 
     ¶B. LA PAZ 3155 
     ¶C. LA PAZ 3204 
 
Classified By: Ecopol Counselor Andrew Erickson for reason 1.4 (d). 
 
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Summary 
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¶1. (SBU) The senate approved the GOB's land reform bill late 
on November 28 in a controversial legislative maneuver with 
just over half of its members present.  The bill provides 
that if property is deemed unproductive through biannual 
reviews, it will revert to the state.  It also centralized 
the National Agrarian Reform Institute (INRA) and 
strengthened the role of the agriculture ministry in the 
titling and reversion process.  INRA reversion decisions can 
only be disputed before the national agrarian tribunal.  A 
pro-land reform NGO representative characterized the new law 
as drastic, and lamented that it may not significantly 
benefit the nation's indigenous population, particularly the 
landless from the West.  Santa Cruz oilseed producers worry 
that the bill's limitation of legal recourse for land owners 
and the provision of a public right of denunciation of 
"unproductive" land could produce legal insecurity and make 
it difficult for farmers to access credit.  End summary. 
 
------------------------------ 
Senate Passes Land Reform Bill 
------------------------------ 
 
¶2. (C) The senate approved the GOB's controversial land 
reform bill (ref A) late on November 28.  Fourteen opposition 
senators out of the total 27 senators had abandoned the 
senate session one week earlier to protest the bill (ref B), 
resulting in the lack of a quorum and essentially shutting 
down the senate.  However, two alternate opposition senators 
(suplentes) from the Podemos and UN parties joined the 12 MAS 
party senators on the 28th in voting in favor of the bill. 
While some political commentators have openly speculated that 
the two alternates were bribed, such speculation remains 
unproven.  The bill was approved under significant pressure 
from social groups after thousands of indigenous marchers in 
favor of land reform reached La Paz on November 28 (ref C). 
The president's legal adviser told Econoff on November 28 
that the government planned to issue five decrees to 
implement the reforms had the senate not approved the bill. 
(Comment:  The dubious manner in which the bill was approved 
raises more concerns than the bill itself.  End comment.) 
 
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Overview of Reforms 
------------------- 
 
¶3. (SBU) The bill provides, in line with the current law, 
that if INRA determines that medium and large properties are 
not fulfilling an "economic and social function", they can be 
"reverted" to the state.  Under the 1996 law, land was deemed 
to not be fulfilling an economic and social function only if 
the landowner was not paying taxes.  The revised law allows 
for reversion to the state if the land is not actually being 
worked.  The reform bill states that even after land is 
titled, it can be reviewed every two years to determine if it 
is serving an economic and social function.  If it is not, it 
will revert to the state without compensation.  Bi-annual 
reviews can be initiated by INRA itself or based on 
denunciations by the agrarian and forestry regulators, the 
park service, the national agrarian commission, or regional 
agrarian commissions.  Small properties that are unproductive 
and productive medium and large properties can also be 
"expropriated" with compensation for the "public good" in 
order to be given to indigenous communities. 
 
 
¶4. (SBU) Decisions of the INRA national director can only be 
disputed before the national agrarian tribunal within thirty 
days of notification of an INRA resolution.  The bill also 
provides that a national agrarian commission, composed of 
ministry, social sector, and business representatives, will 
exercise social control over INRA and the Tribunal to ensure 
that unproductive properties are reverted to the state.  In 
an effort to prevent corruption, the law prescribes that INRA 
may not give land to central government or departmental 
government workers.  The MAS and the opposition parties did 
not agree on the main themes of the reform -- the definition 
of "economic and social function," the circumstances in which 
land can be reverted or expropriated, and the structure of 
the National Agrarian Reform Institute (INRA). 
 
--------------------------------------------- -- 
NGO Concerned that Reforms Won't Solve Problems 
--------------------------------------------- -- 
 
¶5. (SBU) Researcher of the NGO Fundacion Tierra (Land 
Foundation) Gonzalo Colque told Econoff on November 30 that 
the bill that was passed by the congress was the most drastic 
of the GOB proposals that the government was negotiating with 
social and business organizations.  In the end, he said, the 
government did not reach consensus, but imposed its most 
radical proposal.  He argued that the intention of the law is 
good and that reforms were needed because the 1996 law did 
not encourage productivity.  Because land was only reverted 
if the owner did not pay taxes, and taxes had been lowered to 
around USD 0.40 per hectare, land-owners had no incentive to 
use their land productively.  However, some of the 
modifications are vague, and thus, may put legitimate land 
owner rights in danger, he said.  The new law offers land 
owners limited legal recourse, he added. 
 
¶6. (SBU) According to Colque, the government does not have 
the resources to conduct productivity reviews of property 
every two years, so the law may have limited economic impact 
in the end.  He said that it is unclear how much the nation's 
indigenous people will benefit, because the law favors 
original people of the East, who only make up one percent of 
the country's indigenous population.  Expropriated lands can 
only be given to communities through community title.  This 
favors original communities in the East who still live in 
traditional groups.  However, the landless indigenous from 
the West that have migrated to the East will have difficulty 
obtaining titles. 
 
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Readout from Santa Cruz 
----------------------- 
 
¶7. (SBU) Advisor of the Santa Cruz Oilseed Producers 
Association Diego Montenegro told Econoff on November 29 that 
the law that was passed by the senate was the same as the 
version passed by the chamber of deputies on November 15.  He 
said that the law's three main elements were the 
centralization of INRA in La Paz, the strengthening of the 
agriculture ministry's role in the titling and reversion 
process, and the facilitation of land reversion to the state. 
 He said that the law also limited legal recourse of land 
owners.  He argued that the ability of people to denounce 
lands as unproductive arbitrarily, without sanction for 
frivolous denunciations, would produce legal insecurity and 
make it difficult for farmers to access credit.  He explained 
that Santa Cruz already had planned a civic strike for 
December 1 and that hunger strikes were ongoing to protest 
MAS maneuvers to control the Constituent Assembly and that 
the region would probably not take additional measures to 
specifically protest the INRA reforms.  (Note: Many people in 
Santa Cruz are concerned about the law because they hold 
large tracts of valuable land that were obtained through 
 
irregular means, such as based on political connections 
during dictatorial periods.  End note.) 
 
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Comment 
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¶8. (C) Although reforms were desperately needed to resolve 
Bolivia's divisive land issues, the GOB's imposed reforms 
raise concerns about respect for due process and 
legitimately-held land rights.  The dubious manner in which 
the law was approved raises even more serious concerns about 
respect for democracy, although commentators have argued that 
the process was technically legal.  While the law makes it 
easier for the state to redistribute land and has disgruntled 
large agricultural producers and cattle ranchers in the 
eastern regions of Bolivia, we suspect that the law will not 
have a significant impact on land distribution in practice 
due to the GOB's limited institutional capacity to implement 
it.  The real danger lies in the GOB's need to prioritize its 
application against certain estates, farms, and properties. 
This selective application could be used to target political 
enemies.  End comment. 
URS