PETROCARIBE #33: CHAVEZ TIES WORRY ST. VINCENT

C O N F I D E N T I A L BRIDGETOWN 000353

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR, WHA/AND, WHA/EPSC, AND
EEB/ESC/IEC/EPC
CARACAS FOR ANDREW BOWEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 03/08/2017
TAGS: ECON ENRG PREL PGOV PHUM PINR XL
SUBJECT: PETROCARIBE #33: CHAVEZ TIES WORRY ST. VINCENT
PRIVATE SECTOR

REF: A. BRIDGETOWN 286

B. BRIDGETOWN 228

Classified By: Amb. Mary M. Ourisman for reasons 1.4 (b) and (d).


1. (C) Summary: Recent discussions with St. Vincent and the
Grenadines' (SVG) private sector representatives reveal
widespread anxiety over the Vincentian government's growing
ties with Venezuela, especially the close relationship
between Vincentian Prime Minister Ralph Gonsalves and
Venezuelan President Hugo Chavez. Business representatives
agreed that if Gonsalves were to back his socialist rhetoric
with action, the country would probably face investment
flight and a threat to its tourism industry. While
Gonsalves' relationship with Chavez has yielded many tangible
benefits for St. Vincent, he is likely to steer clear of any
steps that would seriously undermine the country's already
precarious economic position. End Summary.

Texaco: No Tears Shed
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2. (C) Texaco appears to be the company with the most to lose
from Gonsalves' embrace of Chavez. As reported in ref B,
Gonsalves is unlikely to renew the St. Vincent government's
(GOSVG) contract with Texaco to supply fuel to the island.
Poor relations between Gonsalves and Texaco representatives,
combined with widespread popular support for perceived
Petrocaribe benefits would most likely be the impetus for the
contract's termination. EconOff met with Texaco's St.
Vincent Country Manager, Brian John, who appeared certain
that his company had little chance of obtaining a contract
renewal from Gonsalves' government. Faced with the
possibility of no longer being St. Vincent's main supplier,
and perhaps losing his own job, John was surprisingly
dispassionate about the situation and unwilling to criticize
Chavez or Petrocaribe. John told EconOff that he expects
Venezuela would have no problems supplying 100 percent of
SVG's fuel: "It does not take a rocket scientist to figure
out how to do this. Venezuela has made a few mistakes but
has learned from them and will probably have no problems in
the future."


3. (C) Note: In the past, Texaco denied EconOff direct
access to local staff in Antigua and Barbuda and St. Kitts
and Nevis, unless Texaco's regional director based in Puerto
Rico was present. It is unclear why Texaco has taken a
guarded approach with Embassy Bridgetown, but the company may
prefer to keep its distance from U.S. government officials
because of possible future negotiations with Venezuela on
fuel storage agreements in Caribbean countries where Texaco
owns and operates such facilities. End Note.

SVG Chamber of Commerce: Unimpressed, but Still Vigilant
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4. (C) According to the President of St. Vincent's Chamber of
Commerce, Lennox Lampkin, the private sector was unhappy with
Chavez's virulent, anti-U.S. outbursts during his visit to
the island in February. Lampkin suggested that St. Vincent's
relationship with the United States is very important and
should not be tested in such a dramatic and public fashion.
Lampkin also noted that the GOSVG's pro-Venezuela stance
could threaten a key pillar of the country's economy:
tourism. Lampkin clarified, "The majority of cruise ships do
not have Venezuelans and Cubans, but rather Americans and
British. At the end of the day," he added, "Venezuela can
construct a new airport, but the majority of those flying to
St. Vincent with money in their pockets will not be
Venezuelan."


5. (C) Lampkin spent the last 35 years in the Netherlands and
returned to St. Vincent with ambitious ideas to contribute to
his country's economic development. He sees Petrocaribe as a
cosmetic, short-term solution that will not help in this
effort. Lampkin firmly believes that investing in
alternative energy is not only a good idea, but also
necessary to diversify the country's energy mix and reduce
the consequences of 100-percent reliance on a single source,

Venezuela, to meet the country's energy needs. According to
Lampkin, 25-35 percent of an average worker's salary goes
toward the electricity bill. Lampkin is seeking potential
investors for alternative energy projects in St. Vincent.
"The hotel industry," said Lampkin, "has already expressed
keen interest in solarizing their businesses."

Eastern Caribbean Group of Companies: I Tried to Tell Him
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6. (C) EconOff met with the President of the Eastern
Caribbean Group of Companies, Julian Ferdinand, who also sits
on the Trade Negotiating Team for the Organization of Eastern
Caribbean States (OECS) as the lead representative of the
private sector. Ferdinand is well-known in the private
sector for his discipline, professionalism and diplomacy,
which have earned him occasional access to PM Gonsalves.
Recently, Ferdinand used such an opportunity to warn
Gonsalves of the private sector's uneasiness with his tight
embrace of Chavez. Ferdinand cautioned Gonsalves that the
country cannot afford investment flight and encouraged him to
remain committed to promoting a market-based economy and the
country's private sector. Despite his good relationship with
Gonsalves, Ferdinand would not speculate on whether Gonsalves
would heed his advice.

All in the Family
--------------


7. (C) EconOff also met with one of St. Vincent's most
successful businessmen, Ken Boyea. Boyea is also Gonsalves'
first cousin and former confidant, but their relationship
soured when Boyea ran against Gonsalves for the PM job in

2001. (Note: Boyea's brother, Cally Boyea, is Exxon/Mobil
Country Manager in Barbados. Their sister, Ann Boyea, is
very active with the opposition party in St. Vincent. The
Boyea family is well-known and influential in St. Vincent's
public and private circles. End Note.) Ken Boyea remains
one of the most outspoken critics, at least in private, of
Gonsalves and his left-leaning tendencies. Boyea's major
concern is the possibility of Gonsalves' adoption of
socialist-style economic policies at the expense of
efficiency and sustainability. Boyea, like Ferdinand, has
observed rising private sector anxiety in reaction to
Chavez's increasing economic influence over the country.

Popularity Goes a Long Way
--------------


8. (C) KPMG Partner (and former Chamber of Commerce
President) in St. Vincent, Brian Glasgow, conveyed similar
private sector concerns in his conversation with EconOff.
However, Glasgow recognized the political appeal of
Gonsalves' social programs with his low-income constituency.
He pointed to the "tangible services" provided by Venezuela
and Cuba, such as medical assistance, fuel price
stabilization, scholarships, and low-interest mortgages.
According to Glasgow, these benefits are significant to both
those who cannot regularly afford them and to Gonsalves, who
gets credit for them from the electorate. Glasgow was
careful to reserve judgment on Petrocaribe because of his
company's contracts with the GOSVG, and admitted that he had
to be cautious because of Gonsalves' history of terminating
contracts with organizations and/or people that oppose his
political views.

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


9. (C) On February 17, Hugo Chavez called on all Vincentians
to forge a "sea of resistance against U.S. imperialism." The
only resistance, however, seems to be coming from the private
sector, and it is aimed at Gonsalves and Hugo Chavez. The
private sector is clearly jittery about possible
repercussions of Chavez's influence, especially if foreign
investors begin viewing Gonsalves as a Chavez acolyte intent
on launching his own socialist revolution. The extent to
which St. Vincent's private sector is actually threatened by
this new relationship, however, remains unclear. In

Ambassador Ourisman's meeting with Gonsalves on February 26
(ref A),the PM sought to assure her that the CARICOM Single
Market and Economy (CSME),as well as other trade
arrangements, are priorities for the Eastern Caribbean that
will not be affected by his own relationship with Chavez.


10. (C) Gonsalves will probably continue to try to have
things both ways: posturing with Chavez while assuring the
United States that he remains a reliable partner. Gonsalves
is also savvy enough to realize that no amount of Venezuelan
aid could replace the potential losses in foreign investment
and tourism revenue, if he were to shift further left in his
economic policies. He will therefore likely channel his
pro-Bolivarian energy toward specific regional integration
issues that allow him to be perceived as CARICOM's guardian
of the common man, such as labor protection, on which he has
been vocal in the past, or other issues, such as reparations
for the trans-Atlantic slave trade, that help him acquire the
attention and popularity he craves in the region.
OURISMAN