VZCZCXRO3363
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHTM
DE RUEHLP #2813/01 2911814
ZNR UUUUU ZZH
R 181814Z OCT 07
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 5351
INFO RUEHZI/WHA IM POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 LA PAZ 002813 
 
SIPDIS 
 
PASS USAID WASHDC 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ECON KPAO CONS AMGT BL
SUBJECT: NOTES FROM SANTA CRUZ - OCTOBER 2007 
 
REF: A) La Paz 2632  B) La Paz 2204 
 
¶1. (SBU) Summary: Santa Cruz Department, with 26 percent of 
Bolivia's population, is its fastest-growing region responsible for 
32 percent of Bolivian GDP.  Political and business leaders lament 
the lack of central government funds dedicated to Santa Cruz but on 
the other hand resent central government attempts to control 
regional policy-making and rally around the cry of "autonomy."  The 
strength of Santa Cruz's private enterprise and economic diversity 
was evident at the annual "Expocruz" trade fair.  Business is going 
strong, despite concerns about the nation's political uncertainty 
and economic policies that discourage new investment.  Santa Cruz 
represents the diversity of Bolivia, with new migrants arriving 
daily from throughout the country in search of a better life.  Local 
interlocutors welcomed increased Embassy attention through the work 
of the new American Presence Officer.  End summary. 
 
 
¶2. (U) September 24 is the "Day of Santa Cruz" and the date around 
which the Chamber of Industry, Trade, Services, and Tourism of Santa 
Cruz (CAINCO) holds its renowned annual trade fair, Expocruz.  In 
conjunction with the Ambassador's participation in Expocruz, the 
visit of WHA DAS McMullen and WHA/AND Director Chacon, and the Santa 
Cruz Day festivities, American Presence Officer (APO) made a series 
of initial calls on political and business leaders.  Following is 
the first of what will be regular reporting cables from the American 
Presence Post in Santa Cruz (currently based at Embassy La Paz). 
 
Give Us More Money and then Leave Us Alone 
------------------------------------------ 
 
¶3. (SBU) There are two common themes among Santa Cruz political 
leaders: a desire for more money from the central government and a 
desire to be left alone to spend that money and govern their affairs 
as they see fit.  Current decentralization laws allocate central 
government monies to municipalities according to population, but the 
2001 census data is no longer accurate.  Municipal Council President 
Oscar Vargas estimates there are eight new residents in his city per 
hour due to births and immigration, and has installed an electronic 
"Cruceno-counter" on the corner of his building to highlight the 
difference between the census results (1,135,526) and the current 
population (1,521,423 as of October 12). 
 
¶4. (SBU) During a September 21 awards ceremony to honor local 
heroes, Vargas made that point directly to President Evo Morales. 
He characterized his admittedly-provocative speech as a history of 
Santa Cruz autonomy.  In his own speech, Morales pointed out that 
increased revenue from the Direct Tax on Hydrocarbons (IDH--part of 
the renegotiation of oil and gas concessions) had brought much more 
money to Santa Cruz for primary and secondary education, health 
clinics, roads, and universities.  (Note: The government has since 
announced a plan to divert 30 percent of IDH revenues from local 
governments and universities to pension benefits.  Santa Cruz 
leaders are at the forefront of the protest against this plan.) 
Morales further insisted that "autonomy" would be guaranteed and 
that the question before the constitutional assembly was how to 
resolve regional autonomy with indigenous autonomy.  Finally, he 
asked the front-row seats full of former government officials why 
they had not guaranteed regional autonomy when they had the chance, 
but instead were "bothering Evo now?"  A poem read by one of the 
honorees, highlighting the diversity of Santa Cruz due to migration 
from all parts of the country, served to break the tension.  The 
speech by Mayor Percy Fernandez was also conciliatory, as Fernandez 
with humor asked Morales to stop demonizing Crucenos as responsible 
for all of Bolivia's problems because "we're not bad people!" 
 
Expocruz and the Business Climate 
---------------------------------- 
 
¶5. (U) The 32nd annual trade fair "Expocruz" took place September 
21-30, generating $172,593,617 of potential business deals and 
approximately 50,000 new jobs (12,000 direct and 38,000 indirect). 
There were 2,100 participants exhibiting goods and services from 18 
countries to nearly 507,000 visitors.  One of the primary sectors 
for business at EXPOCRUZ has traditionally been cattle.  This year 
the fair exhibited 800 animals, hosted 14 auctions, and did business 
in excess of a million dollars.  The second main draw is the "Circle 
of Business" and its match-making among companies.  This year 740 
companies from 18 countries participated in nearly 8,000 encounters, 
resulting in $119.3 million of business contracts.  In a country 
with a GDP of $10.3 billion (2006), this is no small amount.  The 
organizers of Expocruz celebrated their success as proof that the 
private sector, supporting production in Bolivia, is the best 
vehicle for economic growth. 
 
¶6. (SBU) This point, which might seem obvious to international 
observers, was highlighted again and again as a sharp contrast to 
President Morales' "revolutionary" vision for the country.  At a 
roundtable with journalists, the Ambassador heard a variety of 
opinions ranging from cautious optimism ("Evo won't destroy us, he 
 
LA PAZ 00002813  002 OF 002 
 
 
knows he needs us") to deep dissatisfaction with the direction the 
economy is taking, to panic that the President has a dark, 
unstoppable plot to confiscate and destroy all private industry in 
the country.  Business leaders were generally concerned that 
political uncertainty is constraining new investment, though noted 
that currently business was profitable, and Bolivians feel better 
off now than during the past five years (reftel). 
 
Economic Diversity, Environmental Degradation 
--------------------------------------------- 
 
¶7. (SBU) CAINCO briefed APO and Poloff on programs it is running to 
foment small business development in Santa Cruz in the poorest 
neighborhoods, including the inspiring success story of a disabled 
woman who now produces marmalades and sauces for a national grocery 
store chain.  CAINCO directors bristle at accusations by the MAS 
government that they are all "oligarchs," when they mostly see 
themselves as self-made men and women who are giving back to their 
community.  The truth is probably somewhere in the middle. 
 
¶8. (U) Santa Cruz has been the Department (of Bolivia's nine) with 
the most economic growth during the last 23 years.  It has 26 
percent of the country's population and is responsible for 32 
percent of GDP, according to the Bolivian Institute for Foreign 
Trade, though it still lacks infrastructure such as improved roads 
and other transportation systems.  Santa Cruz has very favorable 
conditions for agriculture, strong forestry and hydrocarbons sectors 
and a growing manufacturing sector, and is close to huge export 
markets in Brazil and Argentina.  The economic diversity and 
strength of private enterprise continue to attract migration from 
throughout Bolivia. 
 
¶9. (U) One unfortunate side-effect of the rapid development is the 
economic degradation caused by slash-and-burn land-clearing 
techniques and the annual tradition of burning off the old grass on 
extensive cattle ranches.  During Expocruz, the air was full of 
smoke, and poor visibility resulted in the cancellation of many 
flights throughout the country.  At one point during the height of 
the burning, NASA qualified the air quality in Santa Cruz city as 
the worst in the entire Western Hemisphere.  In addition, population 
pressure is encroaching on protected areas.  During a visit to 
Amboro National Park, APO and USAID environment officer observed 
recently-cleared land in the protected "yellow zone" around the park 
planted with teak allegedly destined for a future paper factory. 
Pre-existing communities around the park are allowed to use the land 
for traditional agriculture, and a USAID-funded biodiversity 
protection project engaged them in conservation efforts.  Therefore, 
local environmental NGOs contribute the teak plantations to bigger 
business interests. 
 
American Presence Post Update 
----------------------------- 
¶10. (SBU) Though our intent to open an APP has not been publicly 
announced yet (nor even discussed privately with the government), 
interlocutors welcomed the idea of increased Embassy focus on Santa 
Cruz, with a specific embassy officer (the APO) serving as a liaison 
between the Department of Santa Cruz and the U.S. Mission, and as a 
source of information on U.S. policies and activities in Bolivia. 
One local contact suggested that the USG has a problem of 
"branding," since Bolivian citizens do not always associate familiar 
USAID and NAS assistance programs with the United States Government. 
 In spite of the country team's many successful efforts to 
communicate the USG's friendship and support to Bolivia (ref B), 
there is still room to do more.  Thus, an important goal for the APP 
will be to publicize USG assistance programs in direct outreach to 
neighborhoods in the city of Santa Cruz and towns throughout Santa 
Cruz Department. 
 
¶11. (SBU) Office space on the DEA compound, where the U.S. consular 
agent is also housed, is under renovation to provide work space for 
two LES and the APO (during her TDY visits to Santa Cruz) and a 
conference room for public diplomacy activities and warden meetings. 
 The hiring process for a PAS-funded LES is in progress, after which 
the hiring process for a PROG-funded LES will begin. 
 
¶12. (SBU) Post plans to roll out the "Virtual Presence Post" website 
for Cochabamba in early November, the website for VPP Chuquisaca 
(Sucre) about a month later, and the VPP website for Santa Cruz 
early next year.