LAND "INTERVENTIONS" PRESAGE REDISTRIBUTION

C O N F I D E N T I A L CARACAS 003979 SIPDIS NSC FOR CBARTON HQSOUTHCOM FOR POLAD USDA FOR ELLEN TEPSTRA AND KEN ROBERTS E.O. 12958: DECL: 09/22/2014 TAGS: PGOV ECON EAGR VE ENV SUBJECT: LAND "INTERVENTIONS" PRESAGE REDISTRIBUTION REF: CARACAS 03928 Classified By: ACTING POLITICAL COUNSELOR MARK WELLS FOR 1.4 (D) -------------- Summary -------------- ¶1. (C) Venezuelan Governors in Cojedes and Monagas States have issued decrees ordering land "interventions" and charging committees of government and goverment-allied officials to review the ownership rights of over three dozen ranches and rural properties. The first decree, issued by Governor Jhonny Yanez Rangel in Cojedes on December 9, affects a profitable British cattle company and a popular wildlife reserve. Another Cojedes decree cordons off land for the installation of a used Cuban mill, according to a sugar industry representative. President Hugo Chavez, who urged local leaders to combat large, idle estates in November, has reaffirmed the agrarian reform of state governments. Eight other governors have backed the intervention, and both IRS equivalent SENIAT and state oil corporation PDVSA have announced policies to support land reform. Althugh opposition figures have railed against the dcree, rancher spokesmen have reacted cautiously. overnor Yanez cited widespread cooperation by ladowners and justified the initiative as an attemp to fulfill constitutional demands while the Natonal Lands Institute, legally responsible for lad redistribution, has tarried. Although Yanez sad he did not expect to have to expropriate land,his committee probably will compel property owners o "offer" land to the government. Other states re likely to follow in moves that could encourag future invasions and discourage investment. En summary. ¶2. (C) On December 9, Cojedes stateGovernor Jhonny Yanez Rangel issued a decree ordeing "interventions" in all idle lands, "latifundos" (i.e., giant, idle estates),and territorieswith ownership conflicts and/or "distribution prblems." Although the decree failed to define "itervention," it singled out 25 private properties ad ranches for "occupation." Aother decree provided for the establishment of a sugar mill and surrounding sugar cane farms on private land. A third decree established a high-level technical committee made up of state government, military, academic, judicial, and para-statal officials charged with presenting a report to the governor on each of the 25 cases within 90 days. Monagas Governor Jose Gregorio Briceno followed Yanez's lead on December 27, decreeing "intervention" in the cases of 14 specific properties, according to press. Briceno's decree granted a committee 12 months to resolve property issues. ¶3. (U) The decree in Cojedes affects at least two significant properties. The technical committee has chosen to begin its work on January 8 with the controversial intervention of Hato Charcote, a property owned by a profitable regional cattle ranching subsidiary of the British company Vestey. The decree also singled out Hato Pinero, an estate that serves as a ranch, wildlife reserve, environmental research center, and popular tourist destination. Yanez justified the intervention of Hato Primero to the press by remarking that "such an important animal reserve cannot be private property." -------------- Reactions to Cojedes Decree -------------- ¶4. (C) During his December 27 message to military personnel, President Hugo Chavez praised Yanez's "war against the latifundio," which Chavez during his November 12-13 speeches at Fuerte Tiuna (REFTEL) had ordered regional leaders to wage in their respective territories. Vice President Jose Vicente Rangel also supported the intervention, affirming that it served to implement the federal land and agrarian development law. An undetermined number of Chavista Governors met on December 22 with their legal advisers to analyze the Cojedes initiative, and eight of them signed an accord supporting the decree. An opposition internet columnist mused that the other pro-government governors refused to sign because they lacked the funds to support peasant cooperatives. At least one Chavista governor publicly warned of potential problems; Portuguesa Governor Antonia Munoz said the Cojedes initiative could instigate more land invasions and owner-peasant standoffs. ¶5. (C) Other government agencies have towed the line on land reform. Tax collection agency SENIAT reported on its website December 7 that it would impose a new tax on idle or underutilized land. According to December 29 press reports, state oil corporation PDVSA executive Rafael Aleman promised PDVSA financial backing to guarantee agricultural self-sufficiency in Cojedes. ¶6. (U) Many opposition press outlets have reported that the states lack authority to enforce the federal land law. Pedro Pablo Alcantara, an Accion Democratica (AD) National Assembly deputy who chairs heads the agriculture and ranching subcommittee, told the press that Yanez needed legal training and called his decree an "absurdity." According to a December 21 press report, Albis Munoz, president of umbrella private sector organization FEDECAMARAS, doubted the legality of the decree and noted that her organization worried the Cojedes plan would encourage land invasions and discourage investment. ¶7. (C) Ranchers thus far have tempered their remarks. Venezuelan rancher association (FEDENAGA) president Jose Luis Betancourt, who told poloff on November 23 that the government had seemed more disposed to resolve problems by approaching ranchers directly, said that the governor had not fulfilled a commitment to draft another decree providing for negotiations with the private sector, according to December 19 press reports. Nonetheless, he affirmed the governor's jurisdiction to administer territory and said FEDENAGA would comply with a reorganization of land if the government proceeded legally. Alberto Cudemus, president of pork producer association FEPORCINA and one of the business leaders closest to the GOV, told the agriculture counselor that the administration has to make noise on the land reform issue, but he expected few results because state technical committees typically accomplish little. -------------- Governors Try to Make Plans Palatable -------------- ¶8. (C) Faced with such criticism, Yanez has since aimed at making his decree sound more moderate. During his December 27 press conference, Yanez--interrupted by several phone calls from President Chavez--asserted he was only carrying out the precepts of the constitution. (Note: the Venezuelan constitution requires the government to promote national agricultural self-sufficiency, in part by dictating land tenure. It also provides for government reclamation of "latifundios.") Arguing that the intervention will clear up doubts about land ownership, he added that land expropriation "is not foreseen." Yanez predicted that over 90 percent of the landowners--many of whom had already offered to surrender territory--would reach agreements with the state over land tenure. In response to criticism from the British Embassy, he spun the decree as an effort to address British requests for the state to deal with peasant land invasions on Vestey property. ¶9. (C) Governor Briceno's plan included provisions to preempt criticism. Briceno attached to his decree a moratorium on land invasions in "intervened" land. Monagas State will also have a committee for negotiation and conciliation, whose goal will be to resolve problems that arise during the implementation of the decree. -------------- INTI Unreliable -------------- ¶10. (U) The federal bureaucracy legally charged with implementing the land reform law, the National Lands Institute (INTI),has yet to play a prominent role in the interventions. Yanez has faulted INTI, headed by former intelligence chief Eliecer Otaiza, for impeding the constitutional drive for land reform. In October, INTI announced a freeze on the handover of land titles while the agency underwent a restructuring. INTI has also come under fire from both the opposition and the government for the amount of uncultivated government land that remains undistributed. According to the Ministry of Agriculture and Land, 53 of INTI's largest rural properties average 112,000 hectares, whereas under the land law, a "latifundio" is defined as having over 5,000 hectares. -------------- The Cuba Angle -------------- ¶11. (C) The president of a sugar refinery in neighboring Portuguesa state suggested to poloff that a sweetheart deal with Cuba was behind the GOV's drive to produce sugar while world prices remain low. According to the executive, the GOV purchased the mill second-hand from Cuba, which has been forced to close 60 mills in the past two years. He said he could not imagine why erecting the complex would cost the USD 250 million outlined in the federal budget, especially since the mill was already at port in Puerto Cabello. National Assembly deputy Salomon Centeno (AD),whose Cojedes property was named in the decree, told the press that Cubans had been in the state studying the feasibility of erecting the mill there over the past few years. -------------- Comment -------------- ¶12. (C) The plan has run the typical course of Chavista initiatives; that is, a radical decree, a follow-on plea for better understanding coupled with a slight rhetorical retreat, and an outcome that--short of drastic changes in the near term--sets a precedent for greater state control over the private sector. All parties may indeed "agree" in 90 percent of the cases, but landowners will have no guarantee that current cooperation exempts them from future arm-twisting to cough up territory. Because the micromanaging Chavez is encouraging the "interventions," other governors likely will follow by ordering property redistribution in their own states. ¶13. (C) Fears that the initiative will incite new invasions and discourage investment are justified. Land reform of a sort has long been part of the Chavez government's policies, and televised public ceremonies in which the President hands out "cartas agrarias" to allow land occupation have been a recurring part of the country's political theater. "Cartas agrarias," however, cannot be sold or mortgaged and thus do not serve as an adequate basis for sustainable rural development. There is every reason to think that we will see more legal and rhetorical attacks on large landowners as Chavez contrives to "deepen the revolution." Brownfield NNNN 2004CARACA03979 - CONFIDENTIAL