US embassy cable - 05MADRID1761

C O N F I D E N T I A L MADRID 001761 
 
SIPDIS 
 
DEPARTMENT PASS TO EUR/WE 
 
E.O. 12958: DECL: 05/09/2015 
TAGS: ECON, EPET, ENRG, PREL, BL, SP 
SUBJECT: SPAIN: RESPONSE TO BOLIVIA HYDROCARBON LEGISLATION 
 
REF: STATE 83302 
 
Classified By: Political Counselor Kathy Fitzpatrick for reasons 1.4(B) 
 and (D) 
 
1.(C) On May 9, Poloff delivered reftel points on Bolivia's 
hydrocarbons legislation to Juan Carlos Sanchez, Subdirector 
General of the Andean Community at the Spanish MFA.  Sanchez 
expressed his government's concern about the situation in 
Bolivia and stated that the GOS has been actively involved in 
finding a resolution to the problems there, to include 
dispatching a special envoy.  However, Sanchez said that the 
GOS would not issue a public statement in regard to the 
hydrocarbon legislation, as they didn't want to be seen as 
interfering in Bolivia's internal politics.  Spain is 
promoting a joint EU declaration and hoped to gain consensus 
among the member states for a statement calling on the GOB to 
observe the rule of law.  Sanchez cautioned that Spain is 
balancing its economic interests with its interest in 
maintaining a stable Bolivian government that respects 
democracy and human rights.  According to Sanchez, the GOS 
believes that the best option is convincing the Bolivian 
public that the legislation is bad for the country and 
allowing the Bolivian legislature to repeal the law.  In 
Spain's view, this would be preferable to Mesa being seen as 
capitulating to foreign pressure. 
 
2.(C) According to Sanchez, FM Moratinos spoke to President 
Mesa about this legislation during a telephone conversation 
on May 8.  During the conversation, Mesa reportedly stated 
that he was politically unable to veto the legislation 
because he didn't have enough Congressional support to 
prevent the legislature from overriding his veto.  Mesa 
reportedly said that he doesn't want to appear weak 
politically, as several opposition groups have banded 
together and were trying to remove him from office.  Sanchez 
said that keeping Mesa in office and ensuring continued 
respect for the Bolivian democratic institutions was a 
priority for Spain. 
 
3.(C) Sanchez conveyed to Poloff that Spain's main economic 
interest in Bolivia, the petroleum company Repsol, has vowed 
to pull out of the country should the legislation take 
effect.  Sanchez quoted Repsol President Antonio Brufau Niubo 
as stating bluntly that "Bolivia is getting 18 percent now. 
If they want 50 percent, it will be 50 percent of nothing". 
 
COMMENTS 
3.(C) The GOS is very concerned about this issue, enough so 
that they dispatched former Deputy Foreign Minister, Juan 
Costa, as a special envoy.  Spain believes that Repsol's 
potential withdrawal would be a blow to the Bolivian economy 
and that the threat may provide Spain with a valuable 
bargaining chip in negotiations with the government. Spain is 
concerned about the economic effects of this legislation, but 
appears to be more concerned about political stability.  As a 
result, the GOS is not likely to take a strong public stand 
on this issue but will likely continue to diligently work 
behind the scenes in negotiations with Bolivia and within the 
EU. 
MANZANARES