Identifier
Created
Classification
Origin
05CARACAS20
2005-01-05 14:36:00
CONFIDENTIAL
Embassy Caracas
Cable title:  

CHAVEZ: CHINA MY OLD FRIEND

Tags:  PREL ECON PHUM KDEM 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 SECTION 01 OF 02 CARACAS 000020 

SIPDIS

NSC FOR CBARTON
USCINCSO ALSO FOR POLAD

E.O. 12958: DECL: 09/10/2014
TAGS: PREL ECON PHUM KDEM VE
SUBJECT: CHAVEZ: CHINA MY OLD FRIEND

REF: A) CARACAS 03928 B) CARACAS 03826

Classified By: ACTING POLITICAL COUNSELOR MARK WELLS FOR 1.4 (D)

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

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000020

SIPDIS

NSC FOR CBARTON
USCINCSO ALSO FOR POLAD

E.O. 12958: DECL: 09/10/2014
TAGS: PREL ECON PHUM KDEM VE
SUBJECT: CHAVEZ: CHINA MY OLD FRIEND

REF: A) CARACAS 03928 B) CARACAS 03826

Classified By: ACTING POLITICAL COUNSELOR MARK WELLS FOR 1.4 (D)

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


1. (U) Venezuelan President Hugo Chavez visited China from
December 21-26 and met with Chinese President Hu Jintao,
Premier Wen Jiabao, ex-president Jiang Zemin, and other
senior GOC and business officials. Chavez claimed that
Venezuela has become the number one destination for Chinese
investment in Latin America and estimated that in 2005 the
trade relationship would reach almost USD 3 billion. Chavez
announced the signing of eight bilateral agreements focused
on increasing cooperation in the energy, agriculture and
technology fields. He also said Chinese Vice-President Zeng
Quinghong and Chinese National Petroleum Company (CNPC)
officials would visit Venezuela January 27-29 to begin the
implementation of the signed agreements. While praising
Mao's dictum about every country learning to walk on its own
two feet, Chavez again criticized U.S. "imperialism" and
praised China as a big country that does not act like an
empire. End Summary.

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Second Best Is Good Enough
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2. (U) President Hugo Chavez visited China December 21-26,
meeting with Chinese President Hu Jintao, Premier Wen Jiabao,
ex-president Jiang Zemin, and other senior GOC and business
officials. Chavez signed eight agreements in Beijing that
will reportedly lay the foundation for giving Chinese oil
companies preferential access to oil and gas projects in
Venezuela as well as in the development of infrastructure
projects. (Note: The Chinese National Petroleum Corporation
(CNPC) currently operates two oil fields in Venezuela.) The
press has reported that China and Venezuela also reaffirmed a
commitment to the development of a second orimulsion (a
water/extra heavy crude mixture used for electrical
generation) plant by the Chinese in Venezuela.


3. (U) With respect to oil exports, Chavez said Venezuela
would look to build an oil pipeline through Panama to
facilitate oil exports to China. After 100 years of U.S.

domination, said Chavez, he was going to put Venezuela's oil
exports at China's disposition, especially now that China had
become the world's second largest importer of crude oil.
Chavez said Venezuela would continue selling oil to the U.S.,
"but not only to them." (Foreign Minister Ali Rodriguez
later told reporters that Venezuela would increase production
to accommodate increasing sales to China so as not to disrupt
service to its "traditional partners.")


4. (U) China's Minmetal and Venezuela's Corpozulia also
agreed to increase coal production in Zulia State and to
explore the possibility of an alliance to expand the iron and
steel industry in Guayana. Separately, the GOV approved a
credit for USD 40 million to buy Chinese farm tools and
machinery for small- and medium-sized farms in Venezuela,
while the Chinese agreed to loan Venezuela USD 700 million
for house construction. The Chinese also agreed to
increased investment for the construction of a Venezuelan
national railroad.

--------------
Mao and Bolivar: The Best of Friends
--------------


5. (U) Speaking at a press conference, Chavez asserted that
national heroes Mao Tse Tung and Simon Bolivar would have
been friends if they had known each other "because their
thoughts, despite the distance in time and geography, sprang
from the same source." If Bolivar had lived a few more
decades, Chavez asserted, he would have ended up a socialist.
Citing Mao's dictum about every country learning to walk on
its own two feet, Chavez said Latin America had paid a high
price to be free and not follow the decisions coming from the
Washington consensus and the International Monetary Fund
(IMF). He again criticized U.S. "imperialism" and called
capitalism "the path to hell," while complimenting China for
being a big country without being imperialistic. Chavez
described himself as "Bolivarian, Christian, and Maoist." He
also reaffirmed Venezuela's "one China" policy and opposition
to Taiwanese independence.

--------------
Comment
--------------


6. (C) In trying to follow his "multi-polar world" foreign
policy, Chavez is seeking support from countries he sees as
sympathetic to his anti-U.S. message. He is also playing his
oil card. While Chavez clearly wants to diversify
Venezuela's oil export market away from the U.S., we doubt
that China would be the optimal partner from a strictly
business point of view. The cost of shipping heavy
Venezuelan crude to China, much less the costs associated
with tooling Chinese refineries to receive it, would be
large. However, purely economic considerations seem to
figure less and less in the policy decisions of the GOV. The
future of Venezuela's patented orimulsion fuel is a case in
point. Stating that it wished to optimize the state's return
on each barrel of extra heavy crude produced, the GOV moved
in the past year to terminate orimulsion expansion deals with
the Canadians and the Italians. Despite this, as noted
above, Chavez has reportedly agreed to the development of a
second orimulsion plant by the Chinese. If this project
moves ahead, it will be a clear indication of the political
bent of Venezuela's energy policy.
Brownfield