VENEZUELA: RESPONSE ON TITLE III OF LIBERTAD ACT

C O N F I D E N T I A L CARACAS 001096

SIPDIS

SIPDIS

FOR WHA/CCA
NSC FOR WH S/DIRECTOR DFISK

E.O. 12958: DECL: 04/28/2015
TAGS: ETRD ETTC PREL VE
SUBJECT: VENEZUELA: RESPONSE ON TITLE III OF LIBERTAD ACT

REF: SECSTATE 57782

Classified By: ECONOMIC COUNSELOR ANDREW N. BOWEN FOR REASONS 1.4 (B) A
ND (D).


1. (C) Post sees no evidence that the BRV has undertaken
policies or actions to advance democracy, human rights, or
fundamental freedoms in Cuba over the last six months. In
fact, Venezuela has continued to provide financial support to
the Castro regime and strengthen its trade relationship with
Cuba. In response to the reftel tasking, Post provides
answers below:


2. (C) What is the nature of investments (and names, if
known) that host country businesses have in Cuba?

In April 2005, both the BRV state-run PDVSA company and the
Venezuelan Industrial Bank (BIV) opened offices in Havana,
Cuba. In February, the BIV later capitalized its Havana
branch with USD 50 million to extend letters of credit to
facilitate Venezuelan exports to Cuba, and to provide credit
to Cuban state companies and mixed companies that operated in
Cuba. BIV support is also designated for an endogenous
development project in Cuba, housing development in the
aftermath of Hurricane Emily, and financing for the Cuban
Petroleum Company (CUPET). In April 2006, PDVSA formed a
joint venture with the CUPET to refurbish and start
operations at the Cienfuegos refinery in Cuba, implementing a
prior agreement signed in 2005. Local media report that Cuba
owns 51 percent of the shares and Venezuela owns 49 percent
of the shares. We also understand that private Venezuelan
companies, such as galvanized steel construction sheeting
company, Lamigal, operate in Cuba, but we do not have a full
listing. We are unaware of BRV entities or persons
trafficking in confiscated properties in Cuba.


3. (C) Are there any bilateral trade agreements between host
country and Cuba?

Venezuela and Cuba have signed numerous bilateral agreements
in areas such as oil, education, health, culture, and various
trade agreements to advance ABLA (the Bolivarian alternative
to the U.S.-supported Free Trade Area of the Americas).
Venezuela provides Cuba with 90,000 to 98,000 barrels of oil
daily. (Note: Post believes that the real number is closer to
98,000 barrels daily. End Note.) Local media report that the
maximum price of the oil to Cuba is USD 27 per barrel, as
compared to the average USD 53.74 per barrel for the
Venezuelan basket for March 2006. By some estimates, this
costs Venezuela between USD 1.7-2 billion a year. Although
the BRV does not publish official statistics on the oil trade
with Cuba, local media estimate that that Cuba has
accumulated debt of USD 2.5 billion from 2000-2005 for oil
from Venezuela.

Adan Chavez, the Venezuelan Ambassador to Cuba, said that
Venezuela-Cuba trade was USD 2.5 billion in 2005 and was
expected to grow to USD 3.5 billion in 2006. He noted that
Venezuelan oil exports to Cuba were worth USD 1.8 billion and
that Cuba sold approximately USD 500 million in goods and
services to Venezuela in 2005. According to press reports,
citing BIV data, 40 Venezuelan companies currently export
goods, such as food, clothing, uniforms, boots, and
construction materials, to Cuba.

Contacts allege that BRV imports from Cuba sometime bypass
customs and tax officials and enter the country through
military ports. These items are not considered within the
official trade statistics, compiled by local tax authority
SENIAT.


4. (C) Are there any exchange programs between host country
and Cuba, including but not limited to: scholarships for
host country nationals to study in Cuba; Cuban-paid medical
travel for host country nationals; and Cuban doctors working
in host country.

Venezuela and Cuba have wide-ranging exchange programs,
including Cuban medical travel for Venezuelan nationals
provided in exchange for Venezuelan oil shipments. According
to Venezuela's Ministry of Communication, about 21,000 Cuban
medical personnel were working in Venezuela as of mid-2005.
President Chavez himself has put the figure just under
30,000.


5. (C) Has the host country, in Post's opinion, worked to
promote the advancement of democracy and human rights in
Cuba? This can include: voting in favor of the U.S. backed
resolutions at multilateral fora condemning the human rights
abuses in Cuba; public statements or other governmental
actions, such as resolutions in the national assemblies
condemning human rights abuses in Cuba; actions in support of
civil society in Cuba through host country's diplomatic
missions or other fora.

No. Venezuela makes a point to vote with Cuba and against
the United States in multilateral fora. At the U.N. General
Assembly in 2005, Venezuela's permanent representative called
Washington's Cuba policy a &destabilizing act of war8 and
&genocidal.8 Venezuela often defends Cuba publicly.
Venezuela's National Assembly has passed several laws
outlining avenues for cooperation with Cuba.


6. (C) Have there been any high-level diplomatic visits
between Cuba and host country in the past six months?

High-level visits between Cuba and Venezuela are frequent and
ongoing.

BROWNFIELD