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C O N F I D E N T I A L LA PAZ 000693 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/28/2018 
TAGS: ASEC PREL PGOV ECON EAID AGR BL
SUBJECT: BOLIVIA FORECAST: LEADING UP TO MAY 4 
 
REF: LA PAZ 677 
 
Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d). 
 
------- 
Summary 
------- 
 
¶1.  (C)  Short of an outbreak of widespread chaos and 
violence, the opposition-led department (state) of Santa Cruz 
is on track to hold a referendum on its autonomy statute 
despite President Evo Morales' attempts to stop or at least 
postpone it.  The Catholic Church and the international 
community will likely fail to bring the opposition and 
Morales' Movement Toward Socialism (MAS) to the negotiating 
table prior to the May 4 referendum.  Morales may offer some 
last ditch enticements to delay the referendum, or at a 
minimum to cast himself as a reasonable "peacemaker," but the 
opposition can be expected to proceed undeterred.  Faced with 
the prospect that he cannot stop the referendum, Morales may 
issue a series of new "nationalization" announcements on or 
around May 1 to steal the political limelight.  He might use 
food security as a pretext for such a move, which would also 
show action to reverse rising food costs, while 
simultaneously reinforcing blame on opposition businessmen 
for the inflation.  It is also likely that Morales will step 
up attacks against USG/USAID, with the possible closure of 
one of USAID's programs, using an on-going bilateral 
portfolio review to support its action. The USAID democracy 
program is the most likely target. 
 
¶2.  (C)  Recognizing he cannot block the referendum, Morales 
will likely avoid direct government intervention, instead 
continuing to play down the referendum's significance by 
denouncing it as illegal and illegitimate.  Nevertheless 
there is a chance the he may resort to more drastic actions. 
Rumors are circulating that Morales is contemplating 
arresting Santa Cruz political leaders and that his 
government may take over some Santa Cruz agro-businesses. 
Both the national police and military are reluctant to 
interfere.  However, Bolivia is slipping further into 
potential chaos with more strikes, blockades, and protest 
marches.  In such an environment the central government may 
be able to convince security forces that they must establish 
order as constitutionally required.  Alternatively, it is 
quite possible that, as in the past, Morales will send his 
"social groups" as shock troops to disrupt the referendum. 
This is the first of a two-part cable series looking at 
Bolivia's future pre- and post- May 4.  This cable examines 
scenarios up to the May 4 referendum.  End Summary. 
 
--------------------------------------- 
May 4: Santa Cruz Says Full Speed Ahead 
--------------------------------------- 
 
¶3.  (C)  The Santa Cruz political leadership has made it 
clear that there is no turning back on their May 4 referendum 
to approve their department's (state) autonomy statutes. 
Opposition Senate President Oscar Ortiz (Santa Cruz, PODEMOS) 
tells us the referenda are inevitable and Congress no longer 
has any power to hold back prefecture governments from moving 
forward.  While the other lowland departments will also hold 
referenda on their own autonomy statutes (Beni and Pando on 
June 1, Tarija on June 22), Santa Cruz' vote is the most 
important because it is first and Santa Cruz holds the 
undisputed leadership role amongst the opposition 
departments. 
 
---------------------------------------- 
Church Mediated Talks: A Road To Nowhere 
---------------------------------------- 
 
¶4.  (C)  Church mediated talks will likely not proceed, and 
if they do move forward will almost certainly fail before May 
¶4.  Neither the MAS nor opposition are interested in real 
negotiations.  As of March 25, Catholic Church officials 
stated that neither side had taken any steps to set an 
agenda, date, or place for talks )- indicating there is no 
will to negotiate.  Although, Vice President Alvaro Garcia 
Linera in a March 26 meeting with the Ambassador indicated 
that the MAS had sent the Church a proposed agenda. 
 
---------------------------------------- 
International Community: Interest Waning 
---------------------------------------- 
 
¶5.  (C)  With the Catholic Church tapped as the "facilitator 
du jour" both the European Union (EU) and the Organization of 
American States (OAS) have put on hold their earlier offers 
to serve as mediators.  Regional neighbors such as Brazil, 
Argentina and Peru )- who were once seen as potential 
facilitators -- are also waiting for a call to action.  Most 
in the international community now see themselves being 
pulled into talks only after both sides accept the need for 
it, perhaps after a more direct confrontation.  In his March 
26 meeting with the Ambassador, the Vice President did bring 
up the possibility of having a "Friends Group" including 
Brazil, Argentina, Peru, and the United States act as 
facilitators.  However the Vice President said thinking on 
such an effort was still evolving and that the timing was not 
yet right.  As May 4 approaches, it is likely that the 
government will want international involvement if for nothing 
else than to portray itself as the "reasonable" party. 
 
------------------------------------------- 
Desperate Times Call for Desperate Measures 
------------------------------------------- 
 
¶6.  (C)  The Bolivian government is likely to make 
increasingly desperate offers to tempt Santa Cruz to postpone 
its May 4 referendum.  Vice President Alvaro Garcia Linera 
and other MAS leaders have occasionally stated that 
everything is "on-the-table" for discussion with regards to 
revising the MAS constitution.  Such an offer should, in 
theory, be welcomed by an opposition that views the MAS draft 
constitution as a threat to their livelihood.  However, since 
the MAS in practice has not acted on its previous offers to 
"revise" its constitution the opposition sees little reason 
to believe the MAS will do so in the run-up to the May 4 
referendum.  President Morales may offer a last minute 
compromise on the (IDH) funding cuts to the departments in 
exchange for postponing the May 4 referendum.  Unfortunately, 
the opposition will likely disregard any offers (concessions) 
as disingenuous, as too little too late, or simply another 
clever government negotiating trick.  Morales will paint the 
opposition's failure to accept the government's offers as 
proof that the Santa Cruz leadership is unreasonable and has 
"separatist" intentions. 
 
----------------------- 
Rational Actors Wanted 
----------------------- 
 
¶7.  (C)  Periodically, rumors surface that the government may 
resort to more drastic actions such as the arrest of key 
Santa Cruz leaders, or the "nationalization" of certain Santa 
Cruz businesses.  While such actions may appear irrational to 
us, increasingly Morales and his closest advisors seem to be 
making policy decisions based less on logic and more on 
impulse.  For example, on March 19, the Ministry of Rural 
Development issued a decree prohibiting the export of cooking 
oil as a means to hold back inflation and ensure adequate 
cooking oil supplies for the domestic market, despite the 
fact that the domestic market represents less than 20 percent 
of the gross sales of cooking oil.  Santa Cruz political and 
business leaders have denounced the measure as a political 
weapon meant to dampen their autonomy efforts.  To justify 
its actions the government has been disseminating (largely 
false) information that cooking-oil in Bolivia is "the most 
expensive in the world" and that Santa Cruz agro-businesses 
sell their product overseas for less than it does in Bolivia. 
 
¶8.  (C)  Initial reactions to the cooking-oil decree have 
likely surprised the Morales administration.  Truckers 
blocked roads around the country, arguing the export 
prohibition is destroying their livelihood.  While the 
truckers' strike seems to be waning, it could escalate and 
prompt a confrontation well before the May 4 referendum. 
Furthermore, Santa Cruz food producers are threatening to cut 
off food shipments to La Paz )- such an action could provoke 
the government to take more drastic measures (see paragraphs 
12 and 13).  Ironically, the government's distribution of 
subsidized cooking-oil has provoked anger within its own 
stronghold of La Paz, as people have had to wait up to four 
hours to get their &cheap8 oil.  Meanwhile, the Santa Cruz 
Prefecture is contemplating authorizing exports of 
cooking-oil despite the government ban to help its local 
businesses, and as means to exercise its autonomy.  Despite 
Santa Cruz, threats there are no signs the government will 
rescind its decree anytime soon.  On March 27, the Minister 
of Development Planning stated it would remain in effect for 
six months.  There are fears that the national government 
will use the cooking-oil protests to create chaos and disrupt 
the autonomy vote.  Percy Anez Rivero, Vice President of 
Banco Mercantil Santa Cruz, told Emboffs that "we are 
painfully aware that the government may provoke violence as a 
means to suppress Santa Cruz.  The (Santa Cruz) business and 
political leadership are making every effort to ensure this 
does not happen."   Nevertheless, with neither side 
apparently ready to give in, serious confrontations could 
occur in the very near term. 
 
--------------------------- 
Gearing Up the Shock Troops 
--------------------------- 
 
¶9.  (C)  Both sides, the government and the opposition, 
appear to be gearing up their shock troops in the run up to 
the referendum.  Already, MAS-aligned indigenous groups and 
community leaders of "immigrant" communities (generally 
populated by altiplano or Cochabamba economic migrants) have 
stated that they will block roads starting May 3 in Santa 
Cruz to disrupt the election.  The migrant communities of San 
Julian and Yapacani already saw violent clashes between pro- 
and anti-MAS groups in 2006 and 2007.  President of the 
Eastern Indigenous Peoples' Confederation (CIDOB) Adolfo 
Chavez stated publicly that his organization would resist the 
autonomy referendum and is preparing for conflict with the 
Santa Cruz Youth Union. 
 
¶10.  (C)  Members of the Youth Union have frequently attacked 
pro-MAS/government people and installations (including the 
government TV channel).  Their actions frequently appear more 
racist than politically motivated.  Several months ago, a 
group of mainly white Youth Union members attacked an 
altiplano migrant who they alleged was pro-MAS 
(anti-autonomy).  The attack was televised.  (Note: The 
government is certainly looking to capture on video an attack 
by a light-skinned pro-autonomy supporter on an indigenous 
person or persons on or around referendum day, as a means to 
discredit the entire referendum process.  End Note).  Such 
events provide fodder for the government's arguments that the 
Santa Cruz leadership is anti-indigenous and seeks to 
separate the country. The Youth Union and other pro-autonomy 
groups state they are forming a "guardia civil" (civil 
protection brigade) to guard polling places and prefecture 
installations.  The Youth Union has boasted to the press that 
it has signed up 7000 members to participate in the guardia 
civil )- the number is likely inflated but many of those who 
have signed-on are militant. 
 
---------------------- 
Bold Actions on May 1? 
---------------------- 
¶11.  (C)  In the past the government has used May 1 
(International Labor Day) as a day to unveil its boldest 
initiatives )- in May 2006 it was the "nationalization" of 
the oil and gas sector.  As May 1 falls just three days 
before the Santa Cruz referendum we can expect a number of 
"bold" announcements around that day to distract attention 
from May 4.  Rumors are circulating that Morales will 
announce the "official" nationalization of other sectors of 
the economy such as mining, communications, or energy.  While 
such a move would be largely symbolic as the government has 
already attempted to grab a larger stake in all three, it 
would be popular with more than just the MAS base. 
 
¶12.  (C)  There are now rumors that the government is 
contemplating "nationalizing" the cooking-oil manufacturers, 
if companies do not abide by the government's March 19 
decree.  The government on March 26 announced that it would 
buy soybeans directly from producers, to essentially control 
the cooking-oil supply-chain.  But, soy producers citing the 
government's previous delays in payments, have responded that 
they would rather let their crop rot than sell it to the 
government.  Embassy contacts tell us the national government 
does not have the technical knowledge, must less the physical 
capability, to make good on their threat. 
 
¶13.  (C)  An armed seizure of an agro-business company (or 
companies) in Santa Cruz would be viewed by the opposition as 
yet another government provocation and would likely result in 
confrontations between security forces and Crucenos (people 
from Santa Cruz).  A seizure of one or more agro-businesses 
is a much more risky endeavor than the government's 
nationalization of the gas sector in May 2006.  Unlike the 
demand to "nationalize" the hydrocarbons sector which was 
deeply rooted in the Bolivian political psyche (since at 
least 2003), there has not been the same historical demand 
for nationalizing agro-business interests.  Demetrio Perez, 
Vice President of the Association of Seed Oil and Wheat 
Producers (ANAPO), told Emboff that his organization believes 
the export ban is less a move to provoke violence and more a 
move to try and pressure Santa Cruz into not holding the 
referendum.  He is concerned that the government has hardened 
its position and places the blame directly on Vice President 
Garcia Linera, "the real force behind the export ban." 
 
-------------------------------------- 
GOB Target Acquired: Embassy and USAID 
-------------------------------------- 
 
¶14.  (C)  May 1 (or before) may also mark the beginning of a 
new barrage of attacks on the USG and USAID.  Morales will 
likely make new claims of USG/USAID support to the opposition 
as a means to undermine the autonomy referendum.  The 
government is currently conducting a 30-day in-depth review 
of USAID projects.  It is quite likely that Morales will use 
the "results" of this review as a pretext to demand the 
closing of one or more USAID programs.  Vice President Alvaro 
Garcia told the Ambassador that government was seriously 
considering ending USAID's democracy program (reftel), 
although he claimed not to be aware of the on-going portfolio 
review. 
 
--------------------------------------- 
Where Do The Military and Police Stand? 
--------------------------------------- 
 
¶15. (C)  The conventional wisdom is that security forces 
(police and military) would be reticent to intervene in Santa 
Cruz.  While the Morales administration continually argues 
the referendum is illegal, no one disputes that Santa Cruz 
referendum advocates collected enough signatures to call a 
referendum.  (Note:  The MAS' legal argument often cites a 
law they passed in Congress while their supporters forcibly 
prevented the opposition's participation that stipulates that 
only Congress can authorize a departmental referendum.  End 
Note).  Most in the military state they will hew closely to 
their role of defending the constitution, which does not 
necessarily mean they will defend Evo Morales' "political 
project."  While the Armed Forces Commander General Luis 
Trigo has recently stated that the military will "defend 
Bolivia's unity" -- seen by some as a veiled threat against 
Santa Cruz -- the legal ambiguity surrounding the referendum 
gives lower ranking security forces enough cover to stay in 
their barracks. 
 
¶16.  (C)  The arrest of Santa Cruz political leaders such as 
Prefect (governor) Ruben Costas or Civic Committee leader 
Branko Marinkovic remains a slim but not discountable 
possibility prior to the May 4 referendum.  The Morales 
administration could justify their actions based on the 
notion that Santa Cruz leaders are promoting an illegal 
referendum, and that they have committed seditious acts. 
Arrests before May 4 would be hard for the government to 
coordinate without Santa Cruz's political elite learning of 
the plans.  Arrests would enrage many pro-autonomy Crucenos 
and would likely lead to violence against security forces. 
The police would likely be reticent to act.  Many in the 
police are angry with the government for failing to raise 
their salaries.  Also, fresh in the memory of the national 
police is the attacks they suffered in Sucre (November 2007) 
defending the MAS' hastily convoked Constituent Assembly 
session.  Sucre residents attacked officers and destroyed all 
of the police's installations in Sucre, and finally forced 
the police to flee the city for three days.  Nonetheless, if 
Morales' government is looking to foment chaos to create a 
pretext for greater government intervention in Santa Cruz, 
arrests might serve this function. 
 
--------------------------------------- 
The Embassy's Plans: Keep a Low Profile 
--------------------------------------- 
 
¶17.  (C)  The Embassy plans to keep a low profile in the 
coming weeks in order to lessen the government's ability to 
use us as a distraction.  The Ambassador will minimize his 
travel to opposition-led areas before and immediately 
following the May 4 referendum to avoid providing Morales 
fodder for his accusations that the USG is "conspiring" with 
the opposition.  Nonetheless, if history is a good predictor, 
Morales will soon launch accusations against us regardless of 
how low a profile we maintain. 
GOLDBERG