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Viewing cable 06LAPAZ1845, MILLENNIUM CHALLENGE ACCOUNT UPDATE

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Reference ID Created Released Classification Origin
06LAPAZ1845 2006-07-06 15:56 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy La Paz
VZCZCXRO0855
PP RUEHLMC
DE RUEHLP #1845/01 1871556
ZNR UUUUU ZZH
P 061556Z JUL 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 9862
INFO RUEHAC/AMEMBASSY ASUNCION 5981
RUEHBO/AMEMBASSY BOGOTA 3299
RUEHBR/AMEMBASSY BRASILIA 7148
RUEHBU/AMEMBASSY BUENOS AIRES 4405
RUEHCV/AMEMBASSY CARACAS 1688
RUEHPE/AMEMBASSY LIMA 1694
RUEHMN/AMEMBASSY MONTEVIDEO 3902
RUEHQT/AMEMBASSY QUITO 4319
RUEHSG/AMEMBASSY SANTIAGO 8876
RUEHLMC/MILLENNIUM CHALLENGE CORP
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 02 LA PAZ 001845 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/AND 
TREASURY FOR SGOOCH 
ENERGY FOR CDAY AND SLADISLAW 
MCC FOR AKIRSHENBAUM 
 
E.O. 12958: N/A 
TAGS: EAID ECON ETRD PGOV BL
SUBJECT: MILLENNIUM CHALLENGE ACCOUNT UPDATE 
 
REF: STATE 101248 
 
1. (SBU) Summary: Econoff delivered reftel information to 
Bolivia's Millennium Challenge Account (MCA) representative, 
Javier Hurtado, on July 5.  Hurtado was optimistic that 
Bolivia would not follow in the Gambia's footsteps.  He plans 
to contract seven technical team members within the next 
week.  He emphasized the importance of the U.S. market for 
Bolivian producers and repeated the GOB's plea for extension 
of ATPDEA benefits.  He claimed that the GOB wants to reduce 
coca cultivation for both counternarcotics and environmental 
reasons and that providing farmers with fair trade 
opportunities would reduce coca growing.  He said that the 
construction of the proposed MCA-funded northern road should 
be done in conjunction with a program to ensure sustainable 
forestry management.  End summary. 
 
GOB Optimistic that Bolivia Will Not Follow Gambia 
--------------------------------------------- ----- 
2. (SBU) Econoff discussed the Millennium Challenge 
Corporation's (MCC's) suspension of Gambia's eligibility with 
Bolivia's Millennium Challenge Account (MCA) Representative, 
Javier Hurtado, on July 5 per reftel.  Econoff reminded 
Hurtado of the importance of maintaining passing scores on 
the MCC's 16 indicators to obtain MCA funds, particularly in 
the areas of democracy, rule of law, and promoting economic 
freedom, as discussed by Hurtado with MCC officials during 
his June trip to Washington.  Hurtado expressed optimism that 
the GOB would continue to qualify for MCA funds and would 
improve its relationship with the USG.  He asserted that the 
outcome of the July 2 Constituent Assembly (CA) elections was 
positive as the representation of multiple parties and 
interest groups ensured that the MAS could not consolidate 
power.  He said that although Bolivia sympathized with Cuba, 
the GOB did not intend to implement a communist economic 
agenda, but rather would focus on finding markets and fair 
trade opportunities for the nation's indigenous 
entrepreneurs. 
 
MCA Process Moving Forward 
-------------------------- 
3. (SBU) Hurtado told Econoff that the World Bank has 
approved funding for Bolivia's MCA technical team; however, 
World Bank official Oscar Antezana told us that the World 
Bank has not committed any such funds.  Hurtado has 
identified eight team participants -- himself, an 
environmental specialist, a development expert, a civil 
engineer, a monitor, an administrator, a treasurer, and a 
social consultant.  He said that contracts would be signed 
within the next few days and that the team would begin 
working by early September.  Hurtado, the owner of a 
successful organic food company, plans to commit himself 
full-time to moving the MCA process forward once the team is 
up and running.  He said that the GOB is ready to focus more 
attention on the MCA process now that CA elections are over. 
He asked us to notify him if "the door of opportunity for MCA 
funds is closing" on Bolivia so that he may plan accordingly. 
 
ATPDEA Concerns and Trade Agenda 
-------------------------------- 
4. (SBU) Hurtado expressed concern that non-renewal of ATPDEA 
trade benefits for Bolivia would harm its chances of 
receiving MCA funds, would damage its economy, particularly 
in El Alto, and would damage the bilateral relationship. 
Econoff responded that ATPDEA benefits were not linked to MCC 
benefits, but that Bolivia's commercial policies and trade 
openness were factors considered by the MCC, along with rule 
of law, including counternarcotics cooperation.  Hurtado 
replied that Bolivia would like to negotiate a trade 
agreement with the U.S., but qualified that such trade 
agreement must be designed to decrease the inequalities 
between the two economies.  He argued that a Free Trade 
 
LA PAZ 00001845  002 OF 002 
 
 
Agreement was appropriate for a country like Canada that had 
a similar level of development as the U.S., but not for 
Bolivia, which was on vastly unequal footing.  He 
acknowledged that U.S. market access is vital for Bolivian 
producers. 
 
Coca Production 
--------------- 
5. (SBU) On coca, Hurtado replied that the GOB was committed 
to decreasing coca cultivation, not only to reduce cocaine 
production but also to limit environmental damage done by 
coca growers.  He argued that providing farmers with markets 
and fair trade opportunities would do more to decrease coca 
cultivation than eradication.  He explained that he was 
requesting Inter-American Bank (IDB) funding to bring fifty 
organic trade association representatives from the U.S. to 
Bolivia to discuss exports of Bolivian products.  He said 
that this type of initiative, in conjunction with the 
proposed MCC-funded northern road project, could enable 
farmers to escape poverty by transporting and selling their 
products.  He said that prior alternative development efforts 
had not achieved their goals because of the intermediation of 
corrupt government officials.  He noted that the Morales 
administration sought to distance itself from former corrupt 
leaders, but not from donors.  Hurtado advised that the U.S. 
and other donors take a proactive approach to the Morales 
administration in order to counter Venezuelan influence in 
Bolivia.  (Comment:  Contrary to Hurtado's suggestion, 
several ministries, including Development Planning and 
Government, have sent us signals that our involvement in some 
matters is unwanted.  Increased U.S. largesse seems unlikely 
to deter Venezuela's actions or the GOB's acceptance of such 
actions.  End comment.) 
 
Environmental Concerns About Proposed Road 
------------------------------------------ 
6. (SBU) Hurtado said that the proposed northern road should 
be constructed in conjunction with a program to ensure that 
local communities and migrants from other regions managed the 
forests sustainably.  He feared that road construction might 
lead to irresponsible logging companies or migrant farmers 
moving into the area and cutting trees, although the land was 
not suitable for cultivation. 
 
7. (SBU) Comment: Although the GOB's actions to date indicate 
potential problems in the areas of rule of law (contract 
violation/intimidation of judiciary), civil liberties (press 
intimidation), fiscal policy (large spending plans), trade 
policy (no FTA negotiations), and regulatory quality 
(increased GOB role in the economy and elimination of 
independent regulatory system), the GOB could possibly 
improve its scores on the investing in people, political 
rights, and control of corruption categories if it is true to 
its stated goals of improving health and education, 
increasing indigenous political inclusion, and combating 
corruption.  Hurtado seems a capable manager of the MCA 
process, but the GOB's economic and political policies could 
prove to be his largest stumbling blocks.  End comment. 
GREENLEE