Código Fecha Clasificación Origen
08BUENOSAIRES500 18 April 2008 Solo uso oficial Embassy Buenos Aires

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R 181322Z APR 08




E.O. 12958: N/A

1. (U) Summary. Argentine think tank the Liberty Foundation
celebrated its twentieth anniversary March 26-28 with an
international seminar drawing over 300 participants from around the
region and Spain. Participants included noted author Mario Vargas
Llosa as well as five ex-Presidents of Latin America: Vicente Fox
(Mexico); Jorge Quiroga, (Bolivia); Osvaldo Hurtado (Ecuador);
Francisco Flores (El Salvador); and Luis Alberto Lacalle (Uruguay).
During the conference, the five presidents gave presentations where
they discussed the gains Latin America has made over the last
decade, the rise of illiberal democracy, the region’s development
challenges, and the measures Latin America needs to undertake to
sustain growth. The conference took place in Rosario, Argentina’s
second-biggest industrial center and a "Socialist" party bastion,
and was noteworthy for presenting contrarian, conservative views in
a country that is majority-left. Unfortunately, a bus carrying
Vargas Llosa and other conference participants was stoned and
detained by protesters who then smashed all its windows,
highlighting the challenges faced by those expressing conservative
political views in Argentina. End summary.

2. (U) On March 26, five ex-Presidents of Latin America addressed
an audience of 300 center-right intellectuals, political officials,
and policy wonks on the challenges and opportunities in Latin
America. Vicente Fox (Mexico); Jorge Quiroga, (Bolivia); Osvaldo
Hurtado (Ecuador); Francisco Flores (El Salvador); and Luis Alberto
Lacalle (Uruguay) each gave presentations. Noted Peruvian author
Mario Vargas Llosa moderated the panel. The session was the
highlight of a two-day event that brought together conservative
thinkers from all over the region, as well as the United States and
Europe, to discuss contemporary Latin American issues.

Gains Latin America Has Made over the last Decade


3. (U) Fox began by noting the tremendous strides Latin America
has made over the last ten years: poverty in Latin America decreased
ten percentage points, and poverty in Mexico decreased by 30%. He
credited the region’s success to trade liberalization, noting that
NAFTA has helped transform Mexico into the seventh largest trading
economy in the world. He noted that a study by investment firm
Goldman Sachs predicted that, by 2040, the U.S. economy would be
eclipsed by China and India, and that Japan and Mexico would round
out the top five economies. He cautioned, however, that the
prediction could be true for the region as well if Latin America
gets the fundamentals right by defending liberal democracy and
establishing "responsible market economies."

4. (U) Flores agreed with this assessment, adding that free trade
agreements, open economies, and regional integration have been a
catalyst for economic growth. By following this policy
prescription, poverty decreased by 20% in Central America in the
last 10 years, he said. Hurtado argued that the policies advocated
by the "Washington Consensus," when applied correctly, were not at
all bad. He held up Chile as the model example, and cited other
regional gains: life expectancy in Latin America has increased to 70
years, children have improved access to education, social programs
have increased. He argued that the region must defend and deepen
market reforms in order to sustain this "virtuous circle." Latin
America still lags behind all other regions in terms of commerce,
investment, and international influence, he cautioned.

Rise of Illiberal Democracy

5. (U) Despite Latin America’s progress in recent years, Flores
expressed concern over the rise of illiberal democracy. He warned
that populist demagogues are destroying liberal democracy with its
own resources, in Venezuela and elsewhere. Bolivia, Nicaragua,
Ecuador, and now even in El Salvador, he said, there are leaders who
use popular elections to give them the cloak of legitimacy. Once in
power, they seek to dismantle democracy by introducing
constitutional reforms to stay in power, limiting press freedoms,
silencing the opposition, promoting class divisions, and provoking
North-South conflict. To appease the private sector, they simply
co-opt the business community. As a result, the private sector
courts the new leadership in the hopes of preserving and expanding
business interests. It is a new version of authoritarianism that
did not arise from revolution, but rather by popular vote, he
observed. As a result, other countries mistakenly view these
developments as an expression of the popular will. However, a free
society cannot elect to become a dictatorship, he argued.

6. (U) Flores attributed Chavez’s rise and consolidation of power
to the breakdown and de-legitimization of traditional political
parties. For too long, political parties have been the only means
to access power. As parties concentrated power, public resources
became the sole property of political parties. As corruption took
hold, disillusioned citizens stopped participating in the parties,

BUENOS AIR 00000500 002 OF 003

which further impeded party reform and a revitalization of party
leadership. As the public becomes increasingly disenchanted with
the electoral system, it has resulted in public demonstrations
demanding that we "get rid of all of them." The resulting political
vacuum is then filled by the radical left, he argued.

7. (U) Hurtado agreed, adding that the "fastest way to get rid of
democracy is to destroy political parties." Countries in the region
that are doing well have solid political parties. He stressed that
political parties must first be rebuilt before countries in the
region can tackle their remaining challenges. Both Quiroga and
Lacalle agreed with this point, and underscored the importance of
participating in the political process.

8. (U) Lacalle called on governments that are elected
democratically to govern democratically. He stated that when a
government loses an election, it should accept the results.
Peaceful transition of power is the hallmark of a functioning
democracy. We must be careful, he warned, not to succumb to the
tyranny of the masses that overthrows governments by taking to the
streets to demand that an elected government resigns. He made a
case for the elimination of the possibility of reelection, saying
that in Uruguay, a president has 60 months to get the job done and
get out.

Chavez Oil Trumps All

9. (U) Quiroga agreed that Chavez and other populist demagogues
pose a threat to the region, and expressed frustration over what he
characterized as "OAS and EU reticence to criticize Chavez." When
Chavez closed RCTV and proposed constitutional reforms to allow for
indefinite reelection, no one at the OAS said a word. He attributed
this to Venezuela’s vast petroleum reserves. He argued that even
the USG is compelled to "put up with Chavez" because of U.S.
dependence on Venezuelan oil. Quiroga stated that the only people
who can stand up to Chavez are the people of Latin America. He
stressed that it was not a matter of right versus left, but a matter
of principle. He asked, rhetorically, "does Latin America want to
be ruled by law or by caprice?"

Rule of Law

10. (U) Hurtado also stressed the importance of the rule of law,
noting that the separation of powers and maintaining checks and
balances are key. Lacalle added that Latin America should replace
its patronage politics and culture of entitlement with the U.S.
concept of government accountability to the "taxpayer." He exhorted
governments to spend wisely, saying that "governments will be judged
by how well they spend, rather than by how much they spend."

Need Investment in Physical and Human Infrastructure


11. (U) Fox observed that additional challenges to the region’s
development include lack of investment in physical infrastructure
and human capital. He noted the region’s growing energy needs, and
praised Brazil for developing a comprehensive energy policy that
includes alternative energy. He noted the positive role
public/private partnerships can play in infrastructure
modernization, citing Mexico’s experience in securing private
financing for publicly-administered housing, ports, roads, and
airports. Hurtado noted the importance of fine-tuning social policy
to benefit not only the poor, but also the middle class. In
particular, he advocated greater funding to improve the quality of
public schools, so that more members of the middle class see
concrete benefits to sending their children to public schools.

Organized Crime as a Threat to Democracy

12. (U) Fox highlighted organized crime and narcotrafficking as a
serious threat to the region’s democracy. He indicated that
Mexico’s war against organized crime and drug trafficking is
sincere. He defended Calderon’s decision to use the military,
instead of the police, to take on drug traffickers, saying that
Mexico has no other choice. He noted that other countries have had
to take similar measures to protect their democracies. Fox praised
Uribe for Colombia’s March 1 operation against the FARC in Ecuador.
There is no excuse for guerillas to be in Ecuador, he said, adding
that there are clear signals that Chavez is involved.

Principle of Non-intervention & Regional Hypocrisy


BUENOS AIR 00000500 003 OF 003

13. (U) Commenting on the region’s long-standing commitment to the
principle of non-intervention, Lacalle stated that the region has
used this principle as an excuse to turn a blind-eye to th
peccadilloes of their neighbors. He said it was hypocritical for
countries to condemn Colombia for its operation against FARC
terrorists in Ecuador, and not condemn FARC terrorist operations in
Colombia, Ecuador, and Venezuela. He added that it was hypocritical
for countries to condemn U.S. involvement in Iraq and remain silent
when Castro and Chavez meddle in the internal political processes of
other countries.

Don’t Mix Politics with Economics

14. (U) Lacalle went on to say that the United States has been a
leader in promoting shared democratic values. He advised the
audience not to confuse the United States with the Department of
State, arguing that a nation is not the same as its foreign policy.
He stressed, to great applause, that it is okay to cooperate and
trade with the United States, and still voice opposition to the war
in Iraq. He also cautioned against injecting political ideology
into Mercosur. He stated that it is ironic that the grouping was
moving forward with a Mercosur Parliament when it could not even
address economic and energy integration.

Latin America can only Look to Itself for Answers


15. (U) As the panel came to a close, Hurtado noted that Latin
America has always complained that the region’s development lagged
behind the rest of the world due to unfavorable terms of trade. Now
that economic winds favor Latin America, if countries don’t take
advantage of this opportunity by strengthening democracy, opening
economies, and improving education, the region will have lost
another opportunity, and Latin America will only have itself to
blame. Lacalle concluded the panel by observing that Latin
Americans have been "prisoners of the past" for too long. He
stated, "I do not want to be a son of the past. I want to be a
father of the future."

16. (SBU) The conference was noteworthy for presenting contrarian,
conservative views, in a country that is majority-left. It took
place in Rosario, Argentina’s second-biggest industrial center and
the leading port for soy and other agricultural exports, at the
height of the farmers’ strike triggered by the GOA’s announcement of
quasi-confiscatory taxes on grain exports — hardly the sort of
measure that would be endorsed by the crowd at this conference.
Rosario is also run by a Socialist mayor and is in a Socialist-run
province, but both the governor and mayor attended and supported the
conference. Media coverage of the conference focused on some of the
unfortunate violence it elicited: a bus carrying Vargas Llosa and
other conference participants was stoned and detained by protesters,
who then smashed all its windows.