Identifier
Created
Classification
Origin
04CARACAS2668
2004-08-19 19:47:00
CONFIDENTIAL
Embassy Caracas
Cable title:  

VENEZUELAN BUSINESS ADJUSTS TO CHAVEZ'S VICTORY

Tags:  ECON PGOV VE 
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C O N F I D E N T I A L CARACAS 002668 

SIPDIS


NSC FOR SHANNON/BARTON
STATE PASS AID FOR DCHA/OTI - RPORTER
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 08/19/2014
TAGS: ECON PGOV VE
SUBJECT: VENEZUELAN BUSINESS ADJUSTS TO CHAVEZ'S VICTORY

REF: A. CARACAS 2643


B. CARACAS 2505

Classified By: Economic Counselor Richard M. Sanders. Reason: 1.4(d).

-------
Summary
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C O N F I D E N T I A L CARACAS 002668

SIPDIS


NSC FOR SHANNON/BARTON
STATE PASS AID FOR DCHA/OTI - RPORTER
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 08/19/2014
TAGS: ECON PGOV VE
SUBJECT: VENEZUELAN BUSINESS ADJUSTS TO CHAVEZ'S VICTORY

REF: A. CARACAS 2643


B. CARACAS 2505

Classified By: Economic Counselor Richard M. Sanders. Reason: 1.4(d).

--------------
Summary
--------------


1. (C) Venezuela's business community has absorbed the
unpleasant news of Chavez's referendum victory. Albis Munoz,
President of umbrella business confederation FEDECAMARAS,
made a relatively conciliatory public statement (even as the
opposition Democratic Coordinating Committee, with which it
is linked, continued to charge fraud); she subsequently told
econcouns that while her group would oppose Chavez's
anti-business policies, it would look to rebuild lines of
communication. Antonio Herrera, executive director of the
U.S.-Venezuela Chamber of Commerce (VENAMCHAM),stated that
his group needed to re-establish the access it traditionally
had at the highest levels of government even if that meant
being viewed as "collaborationist." The oil sector has
already made clear its desire to work with GOV, and a
pro-Chavez agri-business leader insisted that the business
sector must keep "its seat at the table." We expect that
that over time some minimal relationship can be
re-established between business and government. End Summary.

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FEDECAMARAS Grits Its Teeth
--------------


2. (U) On August 17, Albis Munoz, President of the
Venezuelan Federation of Chambers of Commerce and Industry
(FEDECAMARAS),the umbrella group representing Venezuela's
various sectorial business groups, held a press conference at
which she called for reconciliation after the referendum, and
the re-establishment of "friendly environments for national
survival and reconstruction," While not formally recognizing
Chavez's victory and urging that the National Electoral
Council resolve doubts about its validity, she stressed that
Venezuela "cannot remain in confrontation," and urged that
the GOV undertake policy changes to improve the business
climate such as moderating its threatening tone, modifying
price and exchange controls, and improving "juridical
security" and respect for private property.


3. (C) In an August 18 meeting with econcouns, Munoz

characterized her remarks as a response to Chavez's victory
speech, which had both conciliatory and confrontational
elements, and suggested that they were comparable to those of
the Catholic Church (ref a). FEDECAMARAS executive director
Mario Tepedino separately told econcouns that they had been
badly received within the Democratic Coordinating Committee,
which is still pursuing the effort to prove fraud in the
referendum vote counting; however, Munoz had felt she had no
choice, given the pressures that Venezuelan businessmen face
now that they have to continue to live with Chavez. Munoz
said that while FEDECAMARAS has been "progressively
distancing itself" from a direct political role, it would not
break from its institutional linkage to the Democratic
Coordinating Committee, and that she would not shrink from
telling Chavez that she opposes him "as long as he keeps
opposing the business community."


4. (C) That said, FEDECAMARAS would look for vehicles to
achieve some measure of normality in its relations with the
GOV. She did not see herself meeting with Chavez in the near
future, but she planned to write to him, forwarding him a
copy of her organization's plan for economic recovery, which
had been adopted at the group's July annual conference. She
said that FEDECAMARAS would be pursuing initiatives to revive
the tourism and construction section, where it could
conceivably have common ground with the GOV. It is working
on outreach to labor, including the pro-Chavez UNT labor
central as well as the anti-Chavez CTV, its traditional
counterpart, perhaps through an event sponsored by the
Central University. While FEDECAMARAS would largely stick to
economic issues in its public statements, there were lines
that the GOV could not cross without the organization feeling
impelled to speak out -- in particular arrests of opposition
political figures.

--------------
VENAMCHAM Turns the Page
--------------


5. (C) Even more so than FEDECAMARAS, the U.S.-Venezuelan
Chamber of Commerce and Industry (VENAMCHAM),the entity
which represents not only major U.S. firms investing here,
but a range of local firms with some U.S. connection
(agents/distributors, large purchasers of U.S. inputs, etc.)
also appears to be looking to re-position itself to deal with
the continuation of the Chavez government. (Note: While
VENAMCHAM, traditionally a higher profile organization than
most American chambers in Latin America, had avoided
officially supporting Chavez's temporary ouster in April 2002
or the December 2002-February 2003 general strike, it has
been seen by the GOV as largely oppositionist and, as such as
been denied normal access to senior officials. End note.)


6. (C) VENAMCHAM executive director Antonio Herrera told
econcouns on August 17, following a meeting of the
organization's board of directors, that, even if it meant
being seen as "collaborationist," working relations would
have to be re-established with the GOV. He noted that the
chamber had worked with authoritarian governments before and
showed a tribute to dictator Marcos Perez Jimenez in an old
copy of its magazine. VENAMCHAM, which is "in for the long
haul," would concentrate on business issues, leaving politics
to the politicians. If the National Assembly passes the
draft law regulating the media, VENAMCHAM will criticize it
only if it affects its the business interests of its
media-owner members which include Venezuela's principal
television stations and newspapers. The freedom of speech
question is one for political leaders and human rights
groups, he insisted.


7. (C) VENMAMCHAM was still considering ways in which to
recover its relationship with the GOV. Herrera said he was
heartened by the fact that even before the referendum Capt.
Jose Vielma Mora, head of customs and tax authority SENIAT
had met with VENAMCHAM, which has a number of pending issues
ranging from difficulties with pre-shipment inspection of
goods entering the country to arbitrary tax inspections of
multinational firms. He noted that Finance Minister Nobrega
has also agreed to a meeting. He did not rule out that once
the dust settles on the issue of the referendum fraud,
VENAMCHAM might write to Chavez congratulating him and
raising its range of business concerns. Herrera said that a
"charm offensive" on Chavez's part to the USG and American
business was a distinct possibility and advantage should be
taken of any opening. (Comment: Herrera, who can be
intentionally provocative in his discourse, was probably
exaggerating a bit for effect. We expect that VENAMCHAM will
be quite cautious in its efforts to re-establish
relationships with the Chavez government. End comment.)

--------------
Sticking with the Winner
--------------


8. (C) Some businesses had already placed their bets with
Chavez ahead of the referendum. International oil companies,
although fully cognizant of the limitations of Venezuela's
hydrocarbons regime and the political minefield involved in
working with a leftist, "anti-imperialist" government, had
worked long and hard to cultivate the GOV. In the immediate
aftermath of the referendum outcome, Ali Mosheri,
locally-based head of ChevronTexaco's Latin American upstream
operations, told energy officer that his greatest concern was
that the USG not make any statement (i.e. supporting the
charges of fraud) which would provoke an adverse reaction
from Chavez. And even before the referendum Luis Xavier
Grissanti, executive director of the Venezuelan Hydrocarbons
Association (AVHI),the industry association of foreign oil
producers, made clear in a briefing for visiting U.S.
Representative C.L. Otter that the oil sector was not waiting
for any change in government but was engaged in a long-term
campaign to persuade Chavez and state oil company PDVSA to
improve the climate for foreign oil investment (ref B). AVHI
was willing to accommodate Chavez to the point of
participating in a round of public fora with businessmen
which he held prior to the referendum, despite its evident

electoral intent.


9. (C) One of the organizers of Chavez's series of public
business fora was agri-businessman Alberto Cudemus, head of
the Venezuelan Federation of Pork Producers (FEDEPORCINA).
He had unsuccessfully run against Albis Munoz's predecessor
as head of FEDECAMARAS, Carlos Fernandez (currently in Miami,
to which he fled after the failed general strike led to his
prosecution). Cudemus, who confidently predicted a wide
Chavez victory in conversation with econcouns on August 13,
said that on economic issues, Chavez listens to a range of
opinions, and that if the private sector (and the USG) did
not remain "at the table," their positions would be filled by
others with more radical voices. When it was suggested that
some actions such as arrests of political opponents might
make dialogue impossible, Cudemus said that under the right
circumstance such matters could be "negotiable" for Chavez.
(Note: Cudemus has used his connections with the Chavez
administration to evident advantage, most notably in
frustrating the entry of U.S. pork into Venezuela. End
note.)

--------------
Comment - Taking a Write-Off
--------------


10. (C) Venezuela's businessmen have read the numbers and
written off the prospects for Chavez's departure any time
within their planning horizon. (Both Munoz and Herrera were
clearly unwilling to tie their associations' fortunes to the
possibility that the opposition's effort to prove fraud at
the referendum will be successful.) Under those
circumstances, they have little choice but to find some
accommodation with him if they are to get any help on
specific issues and contain any surge towards more radical
policies. Given the tools the GOV has at its disposal to
reward or punish businesses (such as granting or withholding
foreign exchange or contracts with state industrial giants
PDVSA and CVG),their decision is understandable. The pain
of approaching the Chavez government, which remains
authoritarian, corrupt, and ideologically biased, is somewhat
lessened by the fact that many businesses which have survived
the economic turmoil of recent years enjoy oligopolies, now
that weaker competitors have failed, and with an oil boom
kicking in, there is money to be made. But Chavez, whose
preference has always been to deal with individual,
hand-picked businessmen rather than industry groups, and who
owes the organized business community nothing, is likely to
insist that the terms of any reconciliation be highly
favorable to him.
Shapiro


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2004CARACA02668 - CONFIDENTIAL