CHAVEZ-URIBE SUMMIT: ECONOMICS FOCUS WITH SECURITY

C O N F I D E N T I A L CARACAS 003715

SIPDIS


STATE FOR WHA/AND
NSC FOR CBARTON
TREASURY FOR OASIA-GIANLUCA SIGNORELLI
HQ USSOUTHCOM FOR POLAD
BUENOS AIRES FOR TREASURY (MHAARSAGER)

E.O. 12958: DECL: 12/01/2014
TAGS: PREL ECON PINS ENRG ETRD VE
SUBJECT: CHAVEZ-URIBE SUMMIT: ECONOMICS FOCUS WITH SECURITY
SOUNDBITES

REF: A. BOGOTA 11751


B. CARACAS 2172

C. CARACAS 3032

Classified By: ECONOMIC COUNSELOR RICHARD M. SANDERS FOR REASON 1.4 D

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SUMMARY
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1. (C) Most Venezuelan press reports on the Chavez-Uribe
summit in Colombia November 9 focused on security issues,
especially Chavez's declaration that the GOV does not support
the FARC. The joint declaration, on the other hand, avoided
such topics, focusing almost completely on economic issues
such as energy (including a Chavez proposal to re-route a gas
pipeline under consideration) and trade. A Colombian
diplomat in Caracas confirmed that indeed, economics
predominated. END SUMMARY.

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CHAVEZ: "WE DO NOT SUPPORT THE FARC"
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2. (U) President Hugo Chavez traveled to Cartagena on
November 9 and met with his Colombian counterpart, Alvaro
Uribe. While the joint declaration that resulted focused
nearly 100% on economic issues (see below) - press reports in
Venezuela were dedicated almost entirely to security issues,
in particular President Chavez's emphatic denial of support
for the FARC. Chavez stated in Cartagena, swearing upon his
mother, "We say to the Colombian people, let no one believe
this great lie that some keep repeating up there, above all
in the North. We do not support the FARC; we want peace in
Colombia." He added, "it is very important that the
community know in what direction the Venezuelan government is
going: that of commitment to reestablish the dominion of the
Colombian democratic institutions and of security so that our
peoples are not affected by drug trafficking, guerrilla war,
or paramilitaries." Uribe for his part said that he
recognized "the interest of the Chavez government to help us
in this security problem."

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PIPELINE PLANS: GAS AND OIL
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3. (C) Patricia Cortes, Colombian political counselor in
Caracas, however told econoff November 17 that discussions
largely focused on economic themes. She highlighted the
discussions for possible gas and oil pipelines connecting the
two nations, noting that both items were pushed by her
government. She noted that the gas pipeline could be
approved by early next year - a technical meeting is
scheduled to take place in Caracas November 23 to 27 - but
added that Chavez suggested a new route for the pipeline
during the Cartagena meeting. The previously discussed route
was from Lake Maracaibo to Ballenas, on the northern shore of
Colombia, but Chavez's new proposal was from Punto Fijo (the
port serving the giant Paraguana refinery) to the border of
the two countries on the Gulf of Venezuela. The former route
would be primarily over land, with about equal parts in each
country, while the latter route would be almost entirely in
Venezuelan territorial waters.

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THE OTHER ECONOMIC ISSUES
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4. (U) The declaration had more text devoted to trade than
any other subject, calling for increased cooperation in
agriculture and fighting smuggling. Chavez raised
electricity purchases (western Venezuela has chronic power
shortages),and the two leaders "endorsed" work already
completed toward that end. There was also agreement to
create an undefined "binational nucleus of endogenous
development" with an eye toward a total of four, two in each
country. Agriculture ministers will meet in January 2005 to
further that plan. (NOTE: "endogenous development" is


Chavez-speak for aggressive state sponsorship of small scale
agricultural and manufacturing cooperatives. END NOTE.)


5. (C) Cortes indicated that the Colombians considered
contraband a major issue. There has long been a problem with
illegal imports of gasoline, given the cheap price thanks to
GOV subsidies. However, the fixed exchange rate has created
a whole new area for rent-seeking, as buyers purchase
products based on their dollar value at the official exchange
rate and sell them at the parallel rate. A major example is
steel - SIDOR, the largest steel manufacturer in Venezuela,
is producing in near-record quantity (see ref B) - and Cortes
acknowledged that steel was a product that was being imported
illegally into Colombia.

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COMMENT
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6. (C) Since the killing of Venezuelan soldiers and a
civilian in Venezuelan territory on September 17 (ref C),
Chavez's denials of support for the FARC have grown stronger
- in the lead-up to the summit, he swore "on his mother" that
the GOV did not support the organization. But while the
press, aided by some of Chavez's comments, tended to focus on
that aspect, the economic agenda clearly predominated in
terms of substance.
Brownfield


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2004CARACA03715 - CONFIDENTIAL