LAND "REFORM" FITS AND STARTS

C O N F I D E N T I A L SECTION 01 OF 03 CARACAS 000767

SIPDIS

NSC FOR CBARTON
HQSOUTHCOM ALSO FOR POLAD
USDA FOR BGRUNENFELDER, PSHEIKH, ETERPSTRA, KROBERTS

E.O. 12958: DECL: 09/22/2014
TAGS: PGOV ECON KDEM VE
SUBJECT: LAND "REFORM" FITS AND STARTS

Classified By: POLITICAL COUNSELOR ABELARDO A. ARIAS FOR 1.4 (D)

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


1. (C) Repeating Venezuelan land reform history, the GOV's
Bolivarian push to seize property is falling short of its
ambitious goals. It is encountering opposition from various
interest groups, public insecurity generated by land
invasions, and backpedaling from some regional leaders.
Nonetheless, the GOV continues to promote changes to the land
law that would authorize property invasions and allow for
more expropriation. Active in certain areas of the country,
it nationalized on March 13 a popular nature reserve and a
profitable British cattle ranch in Cojedes State. Although
the federal agencies and states involved appear to have
bitten off more than they can chew with their wide-reaching
plans to reorder property ownership and land cultivation,
their proposals reserve for state planners much more
discretion in choosing properties for expropriation. End
summary.

--------------
History of Backsliding
--------------


2. (C) The Venezuelan Government has a history of promising
radical land reform but has never succeeded in implementing
it on a large scale. During the 1960-70s, the GOV initiated
redistribution, but it was unable to staunch a wave of
urbanization that left only 10 percent of the population in
rural areas. "Agribusiness" Professor Carlos Machado told
poloff that the government realized in about 1990 that the
last round of land redistribution predating President Hugo
Chavez had failed. As of 1996, the National Land Institute
had about 7.3 million hectares of undistributed idle land,
according to government land surveys. In 2001, the National
Assembly passed Chavez's land and agrarian development law,
but the National Land Institute (INTI) and the Venezuelan
judiciary failed to sort out property ownership while
continuing to disregard many land invasions. On the heels of
Chavez's rally for sweeping agrarian land redistribution on
January 10, 2005, administration officials and regional
leaders--sometimes working at cross-purposes--have
expropriated land but are falling short of realizing Chavez's
ambitious vision.

--------------
Regional Leaders on the Defensive
--------------


3. (U) Mayor of greater Caracas Juan Barreto scrapped urban
expropriation plans in February when faced with their
unfeasibility. According to February 23 press reports,
Barreto announced that the city would expropriate three
residential complexes to house people left homeless by early
February rains. The city suspended the plans February 28
after the single councilman voting against the expropriation
pointed out that the residences were uninhabitable: none
were fully constructed and one, built on fragile terrain, had
been ordered demolished. The councilman told reporters
Barreto also had neglected to inform both the borough mayor
and the property owners before announcing the expropriation.
Barreto told a reporter that he planned to negotiate with
owners a fair price for another 42 properties that could be
made suitable for expropriation and inhabitation. His
administration, meanwhile, has identified 183 properties for
potential expropriation.


4. (C) Public security problems have dogged the land
redistribution efforts of Carabobo Governor Luis Felipe
Acosta Carlez, who publicly declared that property invasions
were not crimes. A wave of urban invasions sparked face-offs
in late January between squatters and owners, whom National
Guard troops dispersed with tear gas during protests. Acosta
insisted he had proof that opposition parties were organizing
invasions to discredit him. Yet, he maintained he would not
uproot squatters, and his attorney general responded that
neighborhood patrols would establish a dialog with the
"occupants of a precarious nature." A reliable Chavista
source told DCM that Acosta's inner circle were in cahoots
with squatters. Their angle was to force owners to agree to
certain Acosta-linked construction companies to build housing
on invaded property; only then would the owners be
compensated.
--------------
Governors Break Ranks
--------------


5. (C) A few pro-Chavez governors have veered from the
party line on the land redistribution issue. Monagas
Governor Jose Briceno Gregorio, the founder of a small party
who ran on the MVR ticket in the October elections, issued a
decree prohibiting land invasions and directed the removal of
illegal occupants by force, if necessary. Portuguesa
Governor Antonia Munoz (MVR) complained on a television
program on 28 February that some documents allowing peasant
occupations were issued in her state for what she described
as productive land. The editor of a ranchers' newspaper told
poloff February 1 that four of the most fertile states,
Barinas, Portuguesa, Guarico, and Zulia had not yet
redistributed much property. The editor added that Chavez
was irritated with his father, Barinas Governor Hugo de los
Reyes Chavez, for shirking significant redistribution because
he feared large-scale property invasions.

--------------
Nationalizing Famous Ranches
--------------


6. (C) INTI announced March 13 the nationalization of
110,000 hectares of five ranches, including Hato Pinero,
which is a cattle ranch, animal reserve, and ecological
research site in Cojedes State. Calling the move a "rescue"
rather than an expropriation, INTI added that it would offer
no payment because the ranchers never legally owned the
properties. The ranches have 60 days to appeal the ruling in
court, according to press reports. A manager at Hato Pinero
told econcouns in late February that while the ranch owners
felt some accommodation could be reached with the state
government, the national government provoked much more
concern. Indeed, INTI director Eliecer Otaiza described Hato
Pinero managers in early March as feudal lords who subjected
their workers to slave labor, according to a pro-GOV website.
The Hato Pinero manager said INTI inspectors surveying the
ranch appeared ignorant of the operations of such an
enterprise, including such basics as the fact that the land
appeared idle during the dry season because cattle could not
be grazed there.


7. (C) INTI also took nearly half of the profitable,
British-owned El Charcote cattle ranch. Hato El Charcote
employees shared Hato Pinero's analysis about INTI and its
inspectors. A British Embassy official told poloff that
although Cojedes Governor Jhonny Yanez Rangel admitted
privately that El Charcote had firm rights to title, INTI
declared 5,000 of the ranch's nearly 13,000 hectares "idle"
federal land and gave peasant squatters the right to occupy
the rest. Before nationalizing the 5,000 hectares without
warning, INTI had "invited" the ranch to "donate" the land,
according to the British Embassy. Like Hato Pinero, Hato El
Charcote has much land unsuitable for farming. Ranch owners
plan to appeal INTI's ruling.

-------------- -
Environment Advocates Challenge Redistribution
-------------- -


8. (C) Some environmental activists have crossed party
lines to oppose redistribution. An environmental lawyer and
legal advisor to the GOV's institute of cultural patrimony
told poloff that although the land law contained
environmental protections, some ranches existing to protect
fauna such as Hato Pinero would probably be up for
redistribution. The National Assembly's environment
committee, which includes several pro-Chavez deputies, had
also registered in early March its "profound worry" over the
fate of Hato Pinero. Governor Yanez lashed out at the
committee, calling its work an "injustice and an
obstruction," and Otaiza said ranchers were guilty of
destroying forests.


9. (U) In Yaracuy State, environmental associations and a
local citizens' assembly protested that the Governor Carlos
Gimenez's land intervention decree would threaten a local
river supplying water to central Yaracuy by attracting
loggers to its banks. Yaracuy's secretary of government told
the press he recognized the threat to state rivers and would
take 90 days to review specific cases.

--------------
Legal Changes
--------------


10. (U) The National Agrarian Council, established by the
land reorganization decree issued by Chavez January 10, is
contemplating changes to the land law that would allow for
more expropriation. According to press reports, the new
rules would specify the types of crops to be grown on
particular classes of soil. Otaiza publicly reassured
farmers that they would not necessarily have to change crops
because INTI would take into account productivity as well as
cultural, labor, and environmental factors before certifying
land. Arguing that measuring Venezuelan land with "absolute
figures" is a mistake, Otaiza proposed the abolition of a
land law article that protected small properties from
expropriation.


11. (U) Otaiza has also advocated a legal change to protect
squatters who have cultivated land occupied for several
years. Otaiza told reporters in January that the rights of
occupants were "not linked" to the issue of who held title to
the land. Although the legal changes have not yet been
considered by the National Assembly, INTI recently
expropriated 1,500 hectares in Aragua State and gave it to
squatters whom the supreme court ordered off the land last
year, according to press reports.

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


12. (C) Chavez has done little to drive the land
reorganization process since issuing his decree, and it
shows. Having missed the deadline to turn in a list of idle
lands required in Chavez's January 10 decree, INTI and the
governors are sputtering along making public statements and
dealing with individual properties. They probably will
continue taking plots of land, pressuring owners to sell, and
ignoring invasions. The grandiose review and reordering of
land ordered by Chavez, however, is probably not in the
cards. INTI's bureaucracy lacks both the competence to
evaluate all rural land and the expertise to mount the
exhaustive scientific review it plans to use to decide who
grows what where.


13. (C) INTI director Otaiza has argued for greater
government involvement in delineating land according to its
size, character, and use while assuring the public that he
will not be rigid in applying the rules. The former
intelligence chief's lack of familiarity with the issue may
hinder him from staying on message, but his ambiguity will
also provide land inspectors more discretion in deciding
property owners' fate. Such power will afford them new
opportunities for graft.


14. (C) Land "reform" is not a burning issue in Venezuela.
The issue is, however, important to the more radical leftists
who support and advise Chavez, and land reform fits in well
with Chavez's message to supporters inside and outside
Venezuela that he is unafraid to challenge the status quo.
It should also, however, offer opportunities for us to build
coalitions among the agriculture, business, environmental,
and political communities.
Brownfield