Identifier
Created
Classification
Origin
05CARACAS152
2005-01-18 20:00:00
CONFIDENTIAL
Embassy Caracas
Cable title:  

SHUFFLE OF ECONOMIC MINISTRIES - THE MORE, THE

Tags:  ECON EFIN PGOV VE 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L CARACAS 000152 

SIPDIS

STATE FOR WHA/AND
NSC FOR CBARTON
TREASURY FOR OASIA-GIANLUCA SIGNORELLI
HQ USSOUTHCOM FOR POLAD
BUENOS AIRES FOR TREASURY-MHAARSAGER
USDA FOR FAS/ITP BRIAN GRUNENFELDER
USDA FOR FAS/ITP/DA PAT SHEIKH
USDA FOR FAS/OAA ELLEN TERPSTRA
USDA FOR FAS/OAA KEN ROBERTS

E.O. 12958: DECL: 01/20/2015
TAGS: ECON EFIN PGOV VE
SUBJECT: SHUFFLE OF ECONOMIC MINISTRIES - THE MORE, THE
MERRIER

REF: A. 04 CARACAS 3536

B. 04 CARACAS 3979

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

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

C O N F I D E N T I A L CARACAS 000152

SIPDIS

STATE FOR WHA/AND
NSC FOR CBARTON
TREASURY FOR OASIA-GIANLUCA SIGNORELLI
HQ USSOUTHCOM FOR POLAD
BUENOS AIRES FOR TREASURY-MHAARSAGER
USDA FOR FAS/ITP BRIAN GRUNENFELDER
USDA FOR FAS/ITP/DA PAT SHEIKH
USDA FOR FAS/OAA ELLEN TERPSTRA
USDA FOR FAS/OAA KEN ROBERTS

E.O. 12958: DECL: 01/20/2015
TAGS: ECON EFIN PGOV VE
SUBJECT: SHUFFLE OF ECONOMIC MINISTRIES - THE MORE, THE
MERRIER

REF: A. 04 CARACAS 3536

B. 04 CARACAS 3979

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

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


1. (C) President Chavez announced on January 9 several
Ministerial changes. The Ministry of Production and Commerce
has been divided, as has been the Ministry of Energy and
Mines, and there are three new institutions: the Ministry of
Light Industry and Commerce, the Ministry of Basic Industries
and Mines, and the Ministry of Tourism. The former Ministry
of Energy and Mines is now the Ministry of Energy and
Petroleum. In addition, Chavez announced that there would be
a new Minister of Agriculture and Land. This continued
expansion of new Ministries, as when three other Ministries
were added in September 2004 (ref A),serves no clear
purpose. The real effect, besides confusion, may be to
weaken private sector negotiations in those areas, as they
will be forced to divide their efforts. The Agriculture
Minister change is a strong signal of support for recent land
interventions (ref B). END SUMMARY.

-------------- -
CHANGE IS GOOD - SO LET'S MAKE LOTS OF CHANGES
-------------- -


2. (SBU) On January 11, when the new design of the weekly
"Alo, Presidente" show was unveiled, President Hugo Chavez
revealed the new design of his Cabinet, increasing the number
of economic ministries for the second time in four months
(ref A). The Ministry of Production and Commerce (MPC) is no
more, its functions divided among the newly created Ministry
of Light Industry and Commerce (MLIC),the Ministry of Basic
Industries and Mines (MIBM),and the Ministry of Tourism.
Wilmar Castro, who had been Minister of MPC, will head
Tourism, while Edmee Betancourt, recently the Vice Minister
of Industry in the MPC was promoted to Minister of MLIC, and
Victor Alvarez raised to Minister of MIBM from President of

the state-owned Bank of Foreign Commerce (BANCOEX). Some of
the functions of the MIBM had been the responsibility of the
Ministry of Energy and Mines, which will now be known as the
Ministry of Energy and Petroleum. Rafael Ramirez remains as
that Minister, in addition continuing as President of state
oil corporation PDVSA. Finally, Chavez announced that the
Minister of Agriculture and Land (MAT),Arnoldo Marquez, will
be replaced by Antonio Albarran, who is presently the
National Land Institute (INTI) Director in Barinas, Chavez's
home state.

--------------
BUT WHAT DOES IT MEAN?
--------------


3. (C) The very creation of new Ministries runs counter to
what Chavez initially claimed he would do as President. In
December 1998, two days after being elected, he said "We have
the firm determination to reduce the number of ministries;
with 11, 12 ministries maximum, I aspire to govern Venezuela
in an efficient manner." He nearly succeeded in his goal,
reducing the cabinet from 21 to 13 ministries in his first
year in office. Since 2001, he has gone in the opposite
direction, with the new total at 24 ministries - three more
than when he assumed the Presidency. Yet the increase is
allegedly for the same reason as the decrease - as Chavez
said on the 9th, "I am always thinking on how to improve the
team, its efficiency and quality."


4. (C) How these changes can improve efficiency and quality
is not clear. Taking the mining sector out of Ramirez's
portfolio certainly lightens his load, which may have been


unmanageable simply because he was doing two jobs. It could
also signify the de facto merger of the Ministry and PDVSA.
However, as none of the new entities were included in the
recently passed budget, their funding status is unclear.
CONINDUSTRIA, the association which represents the
manufacturing sector, has complained that this will negate
all negotiations that had begun with MPC (as well as BANCOEX,
perhaps). CONINDUSTRIA President Lope Mendoza noted that,
instead of being able to negotiate with the MPC as a bloc,
the sectors will be divided among the new ministries, thus
reducing their bargaining ability.


5. (C) The change at MAT brings its own uncertainty, as
Albarran (according to FAS contacts) is a near unknown in the
Venezuelan agricultural industry, though he had also managed
the Cuban-built sugar mill in Barinas state. However, the
reasons for his appointment are clearer than the MPC changes.
He is thought to be trusted by Chavez, and his background
shows the direction that MAT will likely be taking in the
future, and is a key sign of Presidential support for the
land "interventions" that are taking place (ref B). Chavez
hinted at accusations of corruption with the Ministry, saying
that while "there might be some investigations," the change
had nothing to do with them.

--------------
COMMENT
--------------


6. (C) We do not see big changes from the point of view of
U.S. interests in Venezuela. The Agriculture Ministry is
becoming ever less important an interlocutor for us, as key
functions such as purchasing of food imports for the
burgeoning MERCAL subsidized marketing program, as well as
the issuing of import quotas and sanitary certificates are
drifting to the new, separate Ministry of Food. As head of a
new Ministry of Tourism, we expect Wilmar Castro to devote
his energies principally to trying to get the new state-owned
air carrier CONVIASA off the ground. (It is supposed to
begin operations this month, but with an initial GOV
investment of only USD 10 million, it is unlikely to have
more than a symbolic presence for quite some time.) The
creation of the new Ministries of Light Industry and Commerce
and of Basic Industry and Mining may have some positive
impact. A U.S.-owned glass company with a large presence
here reports that is has had a good experience with Edmee
Betancourt in her role as Industry Vice Minister, where she
helped it obtain necessary tax exemptions to make a major new
investment in re-tooling its operations. Energy Minister
Ramirez's departure from the mining portfolio could be
helpful. A U.S. firm with a diamond mining concession here
had some of its property confiscated in an apparent shakedown
attempt orchestrated by an attorney for artisanal miners; the
company is suspicious that individuals in Ramirez's family
were behind this action. Perhaps a new Minister will provide
an opportunity to revisit this decision.
McFarland


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2005CARACA00152 - CONFIDENTIAL