VZCZCXRO0975
RR RUEHLMC
DE RUEHSN #0862 2001359
ZNR UUUUU ZZH
R 181359Z JUL 08
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 9821
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RUEHRC/USDA FAS WASHDC

UNCLAS SAN SALVADOR 000862 
 
STATE PASS USAID/LAC 
STATE ALSO PASS USTR 
STATE FOR WHA/CEN, EEB, INR/B 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PINR ETRD ES
SUBJECT: NEW MINISTER OF ECONOMY FOCUSED ON DOMESTIC ISSUES 
 
REF: A. SAN SALVADOR 33 
     ¶B. SAN SALVADOR 830 
 
¶1. (SBU) Summary. New Minister of Economy Ricardo Esmahan 
D'Aubuisson plans to focus primarily on domestic issues, including 
small and medium enterprise development, energy, and hydrocarbons 
during his year in office.  He does not plan to play an active role 
in treaty negotiations with the European Union, and will delegate 
most of the responsibility for treaty negotiation and enforcement to 
the Ministry's relevant offices.  Esmahan also stated that he would 
discuss payment options for U.S.-based electricity distributor AES 
with his counterpart at the Ministry of Finance.  End Summary. 
 
¶2. (U) EconCouns and Econoff paid an initial courtesy call on new 
Minister of Economy Ricardo Esmahan D'Aubuisson July 14.  Esmahan 
assumed office on June 30, replacing Yolanda de Gavidia. 
 
¶3. (SBU) Esmahan stated that, as he would have only a short time as 
Minister, he planned to focus on domestic economic issues.  His 
trade negotiators and treaty administration teams were "so strong" 
that they can successfully manage their own operations.  He thought 
the most critical areas where he could have an effect were small and 
medium enterprise development, energy, and hydrocarbons. 
 
¶4. (SBU) Discussing the government's rising subsidy costs (septel), 
Esmahan noted that the current subsidies were not sustainable, yet 
more and more groups were demanding more and larger subsidies, from 
the bakers to the bus owners.  Econcouns raised the case of 
U.S.-based electricy distributor AES (reftel A), which needs to 
receive $17 million of $45 million in unpaid subsidies it is owed by 
the Government of El Salvador, or it will not be able to buy 
additional electricity.  Esmahan replied that he was aware of the 
situation and would be discussing how to resolve it when he meets 
with Minister of Finance Handal later in the week. 
 
¶5. (SBU) Esmahan said he was not aware of a possible CAFTA-DR 
ministerial, which ex-Minister de Gavidia had raised in her final 
meeting with Econcouns (reftel B), though he would be open to the 
idea.  He added that he had spoken with his counterparts in the 
region and none of them had mentioned the possibility of a meeting. 
He indicated that he does not plan to take an active role in the 
Central American-European Union Association Agreement negotiations, 
noting that any realistic agreement wouldn't conclude until after 
the next government takes office. 
 
¶6. (SBU) COMMENT: Esmahan has a limited background in economics and 
is still getting up to speed on most of the issues he will face (he 
is, however, well versed in agricultural issues).  In office less 
than two weeks, he provided few specifics on his plans.  He has made 
some early missteps, like announcing a plan to reinstate 
international price parity controls for gasoline which President 
Saca shot down the next day (reftel B), that he will have to avoid 
going forward if he is to be a major player in economic policy.   In 
conversations with Econoff, an analyst for a leading credit agency 
bemoaned the current lack of economic expertise in the Saca 
administration.  END COMMENT. 
 
¶7. (U) BIO NOTE: Esmahan previously served as President of the 
Agricultural and Agro-industrial Chamber of El Salvador from 
2003-2008, President of the Federation of Central American 
Agricultural Chambers from 2003-2007, and advisor to the board of 
directors of the Salvadoran Association of Private Industry (ANEP) 
from 2004-2008.  He previously served in government as Director 
General of the Office of Consumer Protection from 1994-1995 and 
represented the agricultural industry during CAFTA-DR and other 
trade agreement negotiations.  He is a lawyer by training.  Esmahan 
is a nephew of ARENA party founder Roberto D'Aubuison.  He speaks 
Spanish and English.  END BIO NOTE. 
 
Glazer