CHAVEZ HAS FRIENDS IN BELIZE

UNCLAS BELMOPAN 000495

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR WHA/CEN (MACK)

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN EAID BH VE
SUBJECT: CHAVEZ HAS FRIENDS IN BELIZE

REF: A) (06) Belmopan 44, B) (06) Belmopan 66


1. (SBU) Summary. Since November 2006 Venezuela has given the
Belizean government a US$5 million grant, US$50 million in loans,
and US$1.6 million for road construction. Several sources have
confirmed that recently an additional US$10 million grant has been
promised. The government appears to be planning to use the money
for new, unbudgeted spending initiatives including free school
textbooks, infrastructure projects, and mortgage subsidies for lower
income households in an apparent effort to influence voters in the
run up to parliamentary elections. End summary.


2. (U) On August 2, Poloff met with Artemio Osorio, Director of
Budget and Finance in the Finance Ministry, to discuss foreign
monetary contributions to Belize. Of particular interest were
reports of recent large contributions from Venezuela. Osorio stated
that Venezuela provided a US$5 million grant in November 2006 that
the government used for refurbishing schools, purchasing land to
build a hospital, and for small individual home improvement grants.
He added that Venezuela also provided US$50 million in loans when
Belize's debt was restructured earlier this year (refs A and B).


3. (U) When asked about any other contributions, he added that
Venezuela had also provided US$800,000 for an asphalt grant. He
stated it was too expensive to import the asphalt from Venezuela so
Belize bought the asphalt locally and Venezuela reimbursed the
purchase. Venezuela had also provided another US$800,000 USD grant
for culverts used for road development.


4. (U) Mr. Osorio did not mention the latest grant from Venezuela
until Poloff brought up an article published on August 2, 2007 by
Godfrey Smith, Minister of Tourism and National Emergency
Management. The article entitled "Should Hugo Come?" discusses the
additional US$10 million grant and the possibility of a Chavez visit
in the ruling party's newspaper. The article advocates that "Mr.
Chavez should be invited to Belize." Osorio then confirmed that the
money had been requested and was expected but that it had not yet
been received. Osorio first stated that the money would be
allocated for road development. He noted that the discussions about
this grant began when a Venezuelan delegation visited Belize in
early July.


5. (U) When asked how the GoB planned to pay for the unbudgeted,
recently announced large expenditure programs which included free
textbooks costing US$3.25 million and a mortgage subsidy program
costing US$1 million, Osorio noted that perhaps some other programs
would need to be cut. When asked if the Venezuelan grant could be
used to fund these programs he replied, "Yes", and noted that even
after these two programs were fully funded there would still be an
additional $6 million in potential unbudgeted spending.


6. (SBU) Comment. There are no campaign finance laws in Belize so
in reality much of the grant could be put straight into the
government's reelection campaign. Belize's Minister of Home Affairs
(and party campaign chairman) Ralph Fonseca is currently in
Venezuela. Additionally, local newspapers have speculated that
Chavez may be helping to bankroll the upcoming general elections for
the incumbent party. End comment.

HILL