TITLE III LIBERTAD ACT WAIVER: VENEZUELA

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 002147

SIPDIS


STATE FOR WHA/CCA
NSC FOR CBARTON
USCINCSO ALSO FOR POLAD

E.O. 12958: DECL: 06/26/2014
TAGS: PGOV ETTC KDEM VE
SUBJECT: TITLE III LIBERTAD ACT WAIVER: VENEZUELA

REF: SECSTATE 135512

CLASSIFIED BY: MARK WELLS, ACTING POLITICAL COUNSELOR, FOR REASONS 1.4(
B) AND (D).

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SUMMARY
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1. (C) VENEZUELAN PRESIDENT HUGO CHAVEZ IS PERHAPS THE
CLOSEST INTERNATIONAL ALLY OF FIDEL CASTRO. THE TWO NATIONS'
TRADE RELATIONSHIP IS BASED ON VENEZUELA'S CONCESSIONARY
PETROLEUM EXPORTS TO CUBA. THE GOV HAS NOT TAKEN ANY STEPS
OF WHICH POST IS AWARE IN THE LAST SIX MONTHS TO ADVANCE
DEMOCRACY, HUMAN RIGHTS, AND FUNDAMENTAL FREEDOMS IN CUBA.
OBVIOUSLY, THERE IS LITTLE JUSTIFICATION FOR RECOMMENDING A
WAIVER FOR VENEZUELA UNDER TITLE III OF THE LIBERTAD ACT.
GIVEN CHAVEZ'S AFFINITY FOR EXPLAINING WORLD EVENTS IN TERMS
OF U.S. IMPERIALISM, ANY ACTION TAKEN BY THE USG AGAINST A
VENEZUELAN COMPANY IN VIOLATION OF TITLE III WOULD HEIGHTEN
THE GOV'S ANTI-U.S. RHETORIC DURING A CRITICAL JUNCTURE FOR
VENEZUELA'S DEMOCRACY. END SUMMARY.

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CUBA-VENEZUELA RELATIONSHIP
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2. (C) PRESIDENT HUGO CHAVEZ HAS WORKED DURING HIS FIVE YEARS
OF RULE TO STRENGTHEN TIES WITH THE GOC. CHAVEZ SIGNED THE
CUBA-VENEZUELA COOPERATION AGREEMENT IN 1998, WHICH PROVIDES
CUBA WITH PETROLEUM AT CONCESSIONARY TERMS. IN EXCHANGE,
CUBAN DOCTORS, TEACHERS, AND COACHES PARTICIPATE IN GOV
SOCIAL PROGRAMS FOCUSED ON THE POOR, A MAJOR COMPONENT OF
CHAVEZ'S SO-CALLED "BOLIVARIAN REVOLUTION." THE GOC IS IN
ARREARS IN ITS OIL PAYMENTS TO THE VENEZUELAN STATE IN
AMOUNTS POSSIBLY EXCEEDING $1 BILLION.


3. (C) WHILE CLAIMING TO DISAGREE WITH CASTRO'S COMMUNIST
SYSTEM, CHAVEZ NEVERTHELESS SYMPATHIZES DEEPLY WITH CASTRO TO
THE POINT OF ADMIRATION. CHAVEZ VIEWS CASTRO AS BRAVELY
STANDING AGAINST U.S. HEGEMONY IN THE HEMISPHERE. THE GOV
DOES NOT BELIEVE THERE IS ANY REASON TO PRESSURE CUBA ON
DEMOCRACY AND HUMAN RIGHTS.

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IMPACT OF TITLE III
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4. (C) CHAVEZ WIELDS ANTI-U.S. RHETORIC TO SOLIDIFY HIS
DOMESTIC SUPPORT AND ADVANCE HIS ANTI-"NEOLIBERAL" VIEWS.
WERE THE TITLE III WAIVER BE ALLOWED TO LAPSE, CHAVEZ WOULD
USE IT FOR HIS PROPAGANDA MESSAGE TO DECRY U.S.
UNILATERALISM. THIS COULD AFFECT U.S. INTERESTS IN KEEPING
THE PRESIDENTIAL RECALL REFERENDUM AGAINST CHAVEZ FOCUSED ON
THE ELECTORAL PROCESS. HOWEVER, THE AUGUST 15 REFERENDUM IS
LIKELY TO BE WON OR LOST ON THE BASIS OF DOMESTIC ISSUES.


5. (C) WE ARE NOT AWARE OF SPECIFIC VENEZUELAN PRIVATE OR
STATE-OWNED COMPANIES THAT WOULD BE AFFECTED BY THE
IMPOSITION OF TITLE III. THERE HAVE BEEN REPORTS THAT
VENEZUELAN STATE OIL COMPANY PDVSA MIGHT TAKE OVER OPERATION
OF THE CIENFUEGOS OILS REFINERY, BUT AS OF NOW THE
ARRANGEMENT HAS NOT BEEN FINALIZED. IT IS ALSO REPORTED THAT
THE CUBAN STATE FOOD PURCHASING AGENCY ALIMPORT ACTS AS AN
INTERMEDIARY IN THE PURCHASE OF COMMODITIES BY THE GOV
MINISTRY OF AGRICULTURE AND RELATED AGENCIES. NUMEROUS
VENEZUELAN FIRMS ARE SAID TO HAVE TIES WITH CUBAN
COUNTERPARTS BUT THESE APPEAR TO BE COMMERCIAL RATHER THAN
THE INVESTMENT RELATIONSHIPS THAT WOULD CONSTITUTE THE
"TRAFFICKING" CONTEMPLATED BY TITLE III.

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COMMENT
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6. (C) THE GOV UNDER CHAVEZ HAS DONE NOTHING TO IMPROVE
CUBA'S HUMAN RIGHTS AND DEMOCRACY RECORD AND CANNOT BE
EXPECTED TO DO SO IN THE FUTURE. THERE IS NO JUSTIFICATION,
THEREFORE, TO SUPPORT A WAIVER OF TITLE III OF THE LIBERTAD

CARACAS 00002147 002 OF 002

LY
STANDING AGA)
2004CARACA02147 - CONFIDENTIAL