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### Viewing cable 09SANTIAGO566, SCENESETTER FOR PRESIDENT BACHELET'S VISIT TO

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09SANTIAGO566 | 2009-06-17 19:07 | 2011-03-18 14:02 | CONFIDENTIAL | Embassy Santiago

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    VZCZCXRO1595
    OO RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
    RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
    DE RUEHSG #0566/01 1681957
    ZNY CCCCC ZZH
    O 171957Z JUN 09
    FM AMEMBASSY SANTIAGO
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 5072
    INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS IMMEDIATE
    RUEKJCS/JOINT STAFF WASHDC IMMEDIATE
    RHMFISS/HQ USSOUTHCOM MIAMI FL IMMEDIATE
    RHEHNSC/NSC WASHDC IMMEDIATE

` `

    C O N F I D E N T I A L SECTION 01 OF 03 SANTIAGO 000566

    SIPDIS

    NSC FOR DENIS MCDONOUGH/DAN RESTREPO
    OVP FOR BRIAN MCKEON

    E.O. 12958: DECL: 06/16/2019
    TAGS: PGOV PREL ECON ETRD MARR CI ENRG SOCI
    SUBJECT: SCENESETTER FOR PRESIDENT BACHELET'S VISIT TO
    WASHINGTON

    Classified By: AMBASSADOR PAUL SIMONS FOR REASONS 1.4 (B/D).

    -------
    SUMMARY
    -------

    ¶1. (C) Chilean President Michelle Bachelet's June 23-24 visit
    to Washington represents an opportunity to broaden and deepen
    the "equal partnership" we enjoy with one of the
    hemisphere,s most successful democracies. Chile is off to a
    strong start with the Obama Administration. The Vice
    President,s March visit to Chile powerfully signaled
    Washington's interest in engaging with Chile and the region,
    while Presidents Bachelet and Obama worked effectively
    together at the Summit of the Americas. Meanwhile, in early
    June, Chile played a constructive role in backing the U.S.
    resolution on Cuba's conditional re-entry into the OAS.
    President Bachelet is keenly interested in forging even
    stronger bonds with the Obama Administration. The visit will
    offer an opportunity to review regional developments with a
    trusted partner and deepen cooperation on new issues ranging
    from renewable energy to assistance for Haiti and Central
    America.

    --------------------------------------------- ---
    Sky High Approval Ratings for President Bachelet
    --------------------------------------------- ---

    ¶2. (C) Chile's first female president, Michelle Bachelet, is
    wildly popular, enjoying the highest approval rating ever
    (76%) of any Chilean president. Under talented Finance
    Minister Andres Velasco, Chile has responded effectively to
    the global financial crisis, drawing down on Chile's
    sovereign wealth funds to finance a USD 4 billion economic
    stimulus program featuring new jobs, labor subsidies for
    youth workers, and targeted tax cuts. Despite her economic
    success, Bachelet views her legacy primarily in the social
    sphere. Her initiatives have expanded Chile's privatized
    pension scheme to vulnerable lower-income populations,
    offered free day care and basic nutrition for low-income
    families, expanded access to health care, and strengthened
    public education.

    --------------------------------------------
    A Tight Race Ahead: December 2009 Elections
    --------------------------------------------

    ¶3. (C) Despite President Bachelet's popularity, the ruling
    center-left Concertacion coalition faces a tight race in
    December's presidential and parliamentary elections. The
    President is constitutionally precluded from immediate
    re-election, and candidates from the two main political
    coalitions are at a loss as to how to portray themselves.
    Chileans are tired of 20 years of Concertacion rule, some
    inefficiency and mismanagement in government, and the same
    faces dominating Chilean politics. On the other hand,
    President Bachelet is enormously popular, her policies are
    generally well-regarded, and Chileans are grateful that the
    financial crisis has not hit their country harder.
    Billionaire entrepreneur Sebastian Pinera, representing the
    center-right Alianza coalition, has a 10 to 15 point lead
    over likely Concertacion candidate Eduardo Frei, a Senator
    and former President (1994-2000). Upstart challenger Marco
    Enriquez-Ominami, a 36-year old legislator, is bucking the
    Concertacion establishment to run a surprisingly successful
    independent candidacy, but it is more style than substance in
    our estimation. Either of the two leading candidates would
    be strong partners for the Obama Administration.

    -------------------------------------
    A Bruised Economy Poised for Recovery
    -------------------------------------

    ¶4. (SBU) Chile is fortunate to be in a strong economic
    position to face the global economic downturn. The country
    traditionally runs budget surpluses (5.2% of GDP in 2008),
    has virtually no public debt, and has over USD $20 billion in
    offshore sovereign wealth funds, much of it from record
    copper revenues. One of world,s most open economies, Chile
    boasts trade agreements with 58 countries. Thanks to strong
    economic growth and targeted initiatives, poverty has dropped
    from 40% of the national population in 1990 to 14% in 2006.
    Nonetheless, the global economic downturn has significantly
    impacted Chile,s real economy, with unemployment rising to
    double digit levels and the economy set to contract by 1%
    this year.

    SANTIAGO 00000566 002 OF 003

    -------------------------------------------
    A Strong and Dynamic Bilateral Relationship
    -------------------------------------------

    ¶5. (SBU) The U.S. and Chile have forged a vibrant bilateral
    partnership over the years, with strong institutions in both
    countries ensuring continued cooperation from the bottom up
    as well as from the top down. The new Chile-California
    Partnership for the 21st Century, launched by President
    Bachelet and Governor Schwarzenegger in June 2008, highlights
    the economic and geographic similarities between Chile and
    California and fosters collaboration in agriculture, energy
    efficiency, environmental resource management, and education.
    Bilateral military and law enforcement ties are among the
    very best in the Hemisphere. Under the U.S.-Chile Free Trade
    Agreement, annual bilateral trade has nearly tripled in five
    years to $20 billion, with Chile our fifth largest trading
    partner in Latin America. Weak intellectual property
    protection is among the very few strains in an otherwise
    thriving trade and investment relationship.

    --------------------------------------------- -----------
    Clean Energy, Health, and Education -- Shared Priorities
    --------------------------------------------- -----------

    ¶6. (SBU) U.S. Chile cooperation is set to expand into
    several Obama Administration priorities -- clean energy,
    health and education.

    -- Chile,s renewable energy endowments -- solar, wind, and
    geothermal -- are among the best in the hemisphere. A strong
    proponent of the Energy and Climate Partnership for the
    Americas initiative, Chile will sign a Memorandum of
    Understanding with the U.S. Department of Energy to
    strengthen Chile's new renewable energy center and help
    launch solar energy pilot projects in northern Chile.

    -- Improving health care is a key part of President
    Bachelet's legacy. She has expanded coverage to those most
    in need, developing health care facilities in poorer
    neighborhoods and improving coverage for dozens of the most
    frequent illnesses. The U.S. and Chile are now exploring
    ways to deepen cooperation in providing health care to third
    countries. With infant and maternal mortality rates similar
    to developed countries, Chile has focused its assistance in
    South American countries to lower the mortality rates where
    it is highest -- Bolivia, Paraguay, and Ecuador. U.S. and
    Chilean experts could expand further Chile's effective
    assistance to help reduce infant and maternal mortality rates
    in Central America and Haiti.

    --President Bachelet has sought with less success to improve
    Chile's public education system. However, she has launched
    important initiatives and worked with us to expand
    post-graduate studies in the United States. Under the Equal
    Opportunities Scholarship Program launched in 2007, up to 100
    talented and less advantaged Chileans with limited English
    are able to study English and pursue PhD programs at U.S.
    universities each year. This initiative is funded in part by
    a $6 billion GOC endowment that helps finance a broader
    expansion of graduate education, much of it focused on U.S.
    universities.

    -----------------------------------
    Possible Bachelet Discussion Topics
    -----------------------------------

    ¶7. (SBU) President Bachelet or other members of her
    delegation may raise the following topics -- that loom large
    in the Chilean context -- during her visit with President
    Obama or other USG officials:

    --Regional overview. Bachelet may wish to present her views
    on regional trends in the two months following the Trinidad
    summit. Chile may offer to weigh in with Bolivia and Ecuador
    to promote more moderate, pro U.S. policies.

    --Haiti/Central America. Bachelet may raise the potential
    for triangular U.S. Chile cooperation in heath, law
    enforcement, and agriculture with other partners in the
    hemisphere including Haiti and Central America.

    --Global economic recovery. Chile,s strong economic
    institutions, sound fiscal policies, and intellectual
    leadership give its voice weight in Latin America. Bachelet

    SANTIAGO 00000566 003 OF 003

    may wish to provide Chile's
    input on the global economic recovery, and could ask to join
    the G-20.

    -- AH1N1 Flu Virus. Chile is the fourth country with the
    most registered AH1N1 cases, and the flu virus is spreading
    rapidly in the current wet winter climate. CDC is working
    closely with its Chilean counterparts to monitor the
    outbreak. Bachelet may discuss the flu outbreak and seek
    more anti-viral medicine, Tamiflu, from the large U.S.
    stockpile.

    --Black Liquor/Intellectual property. Chile is seeking early
    elimination of a tax credit received by U.S. paper companies
    for mixing a pulp by-product with diesel fuel. The Chilean
    pulp and paper industry has decried the measure as a subsidy
    that makes their companies uncompetitive. We have been
    working with Chile,s trade ministry to see if progress on
    this issue could be combined with advances in fulfilling
    Chile,s intellectual property commitments.
    SIMONS

`