US embassy cable - 05SANSALVADOR2875

UNCLAS SECTION 01 OF 03 SAN SALVADOR 002875 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, OVIP, PREL, EPET, ECIN, ES 
SUBJECT: SECRETARY GUTIERREZ' BILATERAL MEETING WITH 
PRESIDENT SACA 
 
REF: A. SAN SALVADOR 2818 
 
     B. SAN SALVADOR 2787 
     C. SAN SALVADOR 108 
 
1. (SBU)  Summary: Secretary of Commerce Carlos Gutierrez 
began his October 20-21 visit to El Salvador with a friendly 
but businesslike meeting with President Elias Antonio 
("Tony") Saca.  Saca reaffirmed El Salvador's commitment to 
CAFTA and to its relationship with the United States, 
thanking President Bush for his attention to El Salvador.  He 
also stressed the importance of the CAFTA-DR agreement in 
pushing back against growing populism in the region, in 
particular that led by Venezuelan President Hugo Chavez. 
Saca commented on problems and progress in Central American 
integration and stability.  Ambassador Rene Leon, in the 
meeting, renewed El Salvador's request to bring a U.S. 
Customs presence to El Salvador to improve its 
competitiveness in the region.  End Summary. 
 
2.  (U)  Secretary of Commerce Carlos Gutierrez began his 
October 20-21 visit to El Salvador with an hour-long meeting 
with President Elias Antonio ("Tony") Saca.  Participants 
were: 
 
USG 
--- 
Secretary of Commerce Carlos Gutierrez 
 
SIPDIS 
Ambassador H. Douglas Barclay 
Claire Buchan, Secretary's Chief of Staff 
Israel Hernandez, A/S and Director General, Commercial Service 
Walter Bastian, DAS Western Hemisphere 
Regional FCS Director Daniel Thompson 
Economic Counselor Jessica Webster (notetaker) 
 
GOES 
---- 
President Elias Antonio (Tony) Saca 
Foreign Minister Francisco Lainez 
Minister of Economy Yolanda de Gavidia 
Ambassador to the U.S. Rene Leon 
Private Secretary Elmer Charlaix 
Technical Secretary Eduardo Zablah 
Vice Minister of Economy Eduardo Ayala Grimaldi 
Vice Minister of Economy Blanca Imelda Jaco de Magana 
 
3. (U)  The meeting was friendly but businesslike, covering 
CAFTA and regional political issues.  Both the Secretary and 
President Saca emphasized the value of the U.S.-Salvadoran 
relationship.  Secretary Gutierrez thanked the President for 
El Salvador's firm and steady support of the U.S., in public 
and in private, citing in particular El Salvador's 
participation in Iraq and Saca's leadership in securing 
Salvadoran and U.S. Congressional approval of CAFTA. 
President Saca thanked Secretary Gutierrez for his own work 
to get CAFTA approved. 
 
CAFTA 
 
4.  (U)  President Saca reiterated El Salvador's commitment 
to the CAFTA-DR agreement.  He expressed his confidence that 
CAFTA could be implemented in January 2006 and told the 
Secretary that El Salvador had already made most of the 
 
SIPDIS 
changes necessary to comply with the terms of the accord, 
noting that the GOES expected to secure legislative approval 
for reforms to its intellectual property rights law in 
November.  He noted that El Salvador was meeting its CAFTA 
implementation obligations, but invited the Secretary to send 
the necessary message to other Presidents in the follow-on 
meeting about the importance of meeting CAFTA commitments. 
 
5.  (U) Saca focused his comments on CAFTA-DR on the 
political message of the Secretary's meeting with Central 
American Presidents.  He said the meeting should show the 
United States' political support for the region, as a 
neighbor, especially in the face of the challenge from China. 
 The message should be how CAFTA widened the free trade area: 
 CAFTA was "half of the FTAA," he said, stressing the 
importance of entry into force on January 1, 2006 with all 
seven signatory countries.  Saca said he believed that Costa 
Rica would find a way to ratify the agreement soon, but 
conceded that entry into force on January 1 even without 
Costa Rica was important to send the right political signal. 
 
6.  (SBU)   Without CAFTA, Saca said, the outlook for the 
region would be difficult.  He was very concerned with the 
trend in Latin America toward populist policies, a trend 
which he viewed as growing steadily stronger, and called 
CAFTA a triumph in that context.  Saca said that Central 
America had gotten over populist movements, and he claimed 
that Central American presidents were like-minded in their 
philosophy.  Still, there would be elections in 18 countries 
over the next 14 months and U.S. support was important to 
support democratic outcomes.  Saca acknowledged frankly that 
El Salvador was in the United State's zone of influence and 
that the two countries needed to focus on strengthening that 
economic relationship, even though other potential trade 
partners were courting Central America and the United States. 
 
 
7.  (SBU)  Saca explained that there were historical and 
continuing reasons (including the large Salvadoran population 
in the United States) for El Salvador's enduring, strong 
affinity for the United States.  Saca said El Salvador lost 
little in identifying itself with the United States, adding 
that his ARENA party had won the election on a platform of 
free trade and with soldiers in Iraq.  Saca predicted that 
the outcome of the upcoming March 2006 legislative and 
municipal elections would be similar to the 2004 Presidential 
elections in which voting was strong and the majority of 
votes were cast for ARENA; the election would result in a 
more favorable Assembly composition for the government, which 
would allow the GOES to implement important programs.  Saca 
said that educating the U.S. Congress about CAFTA had been 
his role; recalling that some CAFTA opponents in Congress had 
told him that their Hispanic constituencies were against 
CAFTA, Saca countered that these voters did not represent 
Salvadorans, who wanted the GOES to be a friend of the United 
States.  Saca thanked President Bush for being attentive to 
the relationship with El Salvador. 
 
8.  (U)  The President commented that the GOES would announce 
within days the establishment of a Code of Ethics for 
government employees, drawing on the draft law that USAID had 
helped the GOES prepare, to send a message about its 
commitment to transparency.  Saca linked this to El 
Salvador's efforts to secure a compact with the Millennium 
Challenge Corporation. Technical Secretary Eduardo Zablah 
explained that the Code of Ethics would be implemented under 
Executive authority by the end of October, with the purpose 
of preventing instances of corruption, especially in 
government procurement. 
 
VENEZUELA AND OIL POLITICS 
 
9.  (SBU)  Saca called Venezuela's Chavez a "headache for 
Latin America," but also said that Chavez was the most 
important issue for the region.  Asked if Chavez was 
pressuring El Salvador, Saca said he had no doubt that Chavez 
supported the FMLN but claimed that Chavez had made no 
inroads in El Salvador.  Commenting on a recent incident in 
with the GOES refused entry of Venezuelan nationals who 
arrived on a flight carrying relief supplies, Saca said that 
the 30 people who were turned back were not relief workers 
but activists seeking to generate support for Chavez and, by 
extension, those who thought just like Chavez in Cuba and 
Nicaragua. 
 
10. (SBU) Saca commented that high world oil prices allowed 
Chavez to position himself as the "good guy"; without high 
oil prices, Chavez would not have the forum.  Asked about 
Mexico, he added that Mexico should orient its petroleum 
policy more toward Latin America.  Even though, in the end, 
Chavez' promises to sell oil more cheaply might not result in 
benefits for consumers, they generated expectations that 
Chavez used to his advantage.  Mexico could help counter 
those expectations.  Foreign Minister Lainez said that 
Foreign Ministers from the region would meet in Mexico on 
October 31 to discuss the possibility of developing PEMEX 
incentives for Central America. 
 
NICARAGUA 
 
11.  (SBU)  Saca expressed concern about political conditions 
in Nicaragua and the strength of Aleman's PLC and Ortega's 
FSLN parties.  He suggested that an agreement brokered to 
freeze reforms until 2007 provided some breathing room, but 
admitted that he did not have a clear vision of how the 
political crisis would work itself out. 
 
IRAQ 
 
12.  (SBU)  Saca said it would be a good sign if the people 
of Iraq approved the draft Constitution put to a vote last 
weekend.  He said that El Salvador had taken a large number 
of risks in Iraq and he called this the hardest theme of his 
administration. 
 
REGIONAL INTEGRATION 
 
13.  (U)   The Secretary asked about progress in harmonizing 
border crossing issues with neighboring countries, noting 
that consistency in customs administration was part of CAFTA. 
 Saca said the region had advanced in integration and El 
Salvador had simplified border crossing procedures with 
Guatemala.  Minister de Gavidia explained that El Salvador 
was working out an issue with Nicaragua over entry for 
foreign trucking.  (Comment:  Statements in the press 
conference following the meeting of Central American 
Presidents indicated that this issue was generally resolved, 
and President Bolanos' intervention was praised.)  She 
informed the Secretary that Central America was considering 
the adoption of a protocol on key customs and border issues. 
 
CONTAINER SECURITY INITIATIVE 
 
14.  (U)  Ambassador Rene Leon asked for the Secretary's help 
in getting El Salvador into the Customs and Border Patrol's 
Container Security Initiative (CSI), raising an issue that 
Saca first proposed to USTR Zoellick a year ago (ref c). 
Leon said that to take advantage of CAFTA and give it an edge 
in commerce, El Salvador needed CSI.  Leon asked for a pilot 
project at the existing Port of Acajutla to prepare for later 
introduction of CSI at the Port of La Union, where 
construction began several months ago.  De Gavidia and 
President Saca stressed the value of CSI in exploiting the 
transportation linkages between the future La Union port and 
ports in Guatemala and Honduras. De Gavidia acknowledged that 
El Salvador did not have the volume of trade to justify CSI 
but stated that El Salvador wanted parity with Honduras on 
the issue.  Secretary Gutierrez agreed to follow up. 
 
15.  (U)  This cable was cleared by the delegation. 
Barclay