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C O N F I D E N T I A L LA PAZ 003270 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/18/2017 
TAGS: BL ECON PBTS PGOV PREL CI VE BR
SUBJECT: BOLIVIA CALM FOR PRODUCTIVE BRAZIL/CHILE SUMMIT 
 
 
Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d) 
 
¶1. (C) Summary. Bolivian President Evo Morales joined his 
Brazilian and Chilean counterparts December 16 to sign a $900 
million road project to link South America's Pacific and 
Atlantic coasts via Bolivia.  He also received a $750 million 
commitment for natural gas investments from Brazil the next 
day.  The opposition, meanwhile, suspects the lack of a crack 
down for autonomy measures passed December 14 and 15 in four 
opposition-controlled states has much to do with Evo wanting 
to bask in the international spotlight.  Indeed, Morales and 
the official government news agency heralded the agreements 
as victories demonstrating Morales' international legitimacy, 
in contrast to an unreasonable and violent opposition.  Lula 
seemed eager to play the role of international cheerleader, 
calling Morales the "face of Bolivia" and the harbinger of 
"historic change" to the continent.  End Summary. 
 
The Road Less Traveled By No More 
--------------------------------- 
 
¶2. (U) Bolivian President Evo Morales, Brazilian President 
Luiz Inacio Da Silva, and Chilean President Michelle Bachelet 
signed $900 million Declaration of La Paz December 16 to 
complete 4,700 kilometers of highway linking South America 
from Atlantic to Pacific.  New highways added to existing 
motorways will link La Paz with the Chilean ports of Arica 
and Iquique to the west and with the Brazilian metropolis of 
Sao Paulo on the east.  Once completed in about two years, 
the highway will transport an estimated 2,000 million metric 
tones of largely agricultural and mineral products.  Bachelet 
stressed the highway's significance to integrating South 
America with the Asian-Pacific rim while Lula underscored the 
interconnectedness of all South American countries.  Morales 
said the highway is symbolic of power of compromise and, in 
an apparent barb at the opposition, said "we are betting that 
transformations between Bolivians and between South Americans 
will be peaceful." 
 
Chilly Chilean Relations Warming 
-------------------------------- 
 
¶3. (U) Bachelet and Morales met for 45 minutes after the 
signing.  Although neither advisors nor the media was allowed 
into the one-on-one meeting, it was widely speculated the two 
leaders talked about the polemic issue of Bolivian access to 
the Pacific.  Although few Chilean heads of state have 
visited Bolivia since Bolivia lost its coastal territories to 
Chile in 1884, Bachelet has traveled to La Paz three times 
during Morales' two years in office.  While relations have 
warmed, resulting in the July 2007 13-points agenda, which 
includes Bolivian demands for ocean access, Bolivian 
resentment continues to run high and the countries have not 
formally re-established diplomatic ties broken in 1978. 
Bachelet expressed confidence that "the prejudices that no 
one can justify can disappear, because often the insecurities 
and such prejudices have been limited by the relations among 
counties that are calling for integration." 
 
Lula Fills YPFB Stocking with Cash 
----------------------------------- 
 
¶4. (U) Lula and Morales also signed an energy cooperation 
agreement December 17.  The Brazilian state energy company 
Petrobras will invest an estimated $750 million in natural 
gas exploration and production with Bolivian's state energy 
company YPFB.  Lula estimated the project would increase 
production by about 8 million cubic meters per day within 
four or five years.  The joint-venture will look for new 
fields in Tarija, Santa Cruz, and Chuquisaca.  Petrobras also 
agreed to pay $180 million a year for liquid components 
(propane and butane) in the 30 million cubic meters of 
Bolivian natural gas currently piped to Brazil each day. 
Petrobras remains the largest investor in Bolivian natural 
gas.  Lula stressed future expansion of bilateral relations 
beyond the hydrocarbon sector into agricultural, education, 
health, counternarcotics, and industrial cooperation. 
 
Saccharin Praise for the "Face of Bolivia" 
------------------------------------------ 
 
¶5. (U) Lula said the gas deal was possible because the 
Bolivians were willing to provide "rules of the game" for 
investment. He said the agreement signaled the end of tense 
relations following the May 2006 "nationalization" of the 
hydrocarbon industry, after which Petrobras froze investment. 
 "I would like to think we have overcome this (bilateral 
problems) and that we have initiated a new step in our 
relations with more positive, more constructive (relations) 
based on dialogue," said Lula.  He added that Morales 
"represented an historic change" for the region and that 
"Bolivia has a president with the face of its people," 
referring to Morales' indigenous roots.  Lula also gave 
Morales some advice in "these times of conflict" on December 
17, telling Evo to have "patience, patience, patience, 
because, certainly, the people will ultimately pick the 
(right) direction for democracy."  State media agency ABI 
characterized the Lula and Bachelet visits as a sign of 
"support for the democratic government of Evo Morales" and of 
rejection for the Bolivian opposition, which is meanwhile 
"trying to divide the country." 
 
Evo Backs Off to Bask in Brazil/Chile Summit 
-------------------------------------------- 
 
¶6. (C) Opposition leaders in Santa Cruz told PolOff the 
Lula/Bachelet trip ensured Evo would not crack down on 
opposition-led departments (states) for passing autonomy 
measures December 14 and 15.  According to opposition 
leaders, the government feared violent clashes would steal 
the international spotlight from the summit and force a more 
critical look at the Morales administration worked to 
restrain Morales from any provocative actions.  They 
predicted a lull in the government-opposition standoff until 
after the holidays. 
 
Comment 
------- 
 
¶7. (C) Evo got what he wanted: with no bloody conflicts to 
distract the international spotlight, Evo came away from the 
summit with substantive international agreements and many 
photo ops.  Lula appeared to be only too willing to offer 
cash and praise for the Morales administration.  The 
long-anticipated deal with Petrobras was intended to show Evo 
that Lula and Brazil can be a superior partner to Venezuelan 
President Hugo Chavez.  Politically, Lula is trying to move 
Bolivia back into its political orbit.  In interviews, 
Brazilian officials have downplayed Bolivia's domestic 
turmoil and focused on gas deals for its ever increasing 
energy demands.  Relations with Chile indeed seem to be 
improving, but they are rebounding from a very low starting 
point and, as one of our Foreign Ministry contacts told us, 
"any agreement on the lost territories is years away."  End 
Comment. 
GOLDBERG