CONSTITUTIONAL REFORM - GETTING WORSE AND WORSE.

C O N F I D E N T I A L SECTION 01 OF 04 CARACAS 002050

SIPDIS

SIPDIS

SOUTHCOM ALSO FOR POLAD
STATE PASS USAID FOR DCHA/OTI

E.O. 12958: DECL: 10/16/2032
TAGS: PGOV KIPR PHUM KDEM ECON VE
SUBJECT: CONSTITUTIONAL REFORM - GETTING WORSE AND WORSE.

REF: A. CARACAS 710

B. CARACAS 1635

C. CARACAS 1727

D. CARACAS 1913

E. CARACAS 2013

F. CARACAS 2019

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Classified By: Robert Downes, Political Counselor, for Reason 1.4(d)

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SUMMARY
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1. (C) Late on Friday October 12 the Venezuelan National
Assembly's Mixed Commission on Constitutional Reform
announced the addition of 25 amendments to the constitution,
on top of the 33 proposed by President Chavez on August 15
(Ref A). While a few of the changes are fairly innocuous,
many will have a substantial impact on the economic and
political structure of Venezuela. International attention has
thus far largely focused on two articles that would permit
the President to suspend civil liberties and human rights
indefinitely in certain circumstances. International groups
and even leaders of pro-government parties are condemning
these measures. The latest changes, both on the political
and economic side, are widespread, ending political
decentralization, further weakening the supreme court and
National Electoral Council, providing more government control
of oil industries, possibly eliminating protections for
intellectual property and national treatment of foreign
investment to name a few. The Venezuelan Conference of
Bishops issued a statement October 19 criticizing the
proposals as giving too much power to the state and
restricting civil liberties. The National Assembly began
the article by article third reading of the 58 proposals on
October 16 and intends to approve the measure before the end
of October to allow for the currently scheduled December 2
national referendum. Most local commentators seem resigned
to the probability that Chavez' package will be approved in
December. End Summary

CONSTITUTIONAL AMENDMENTS DOUBLE
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2. (C) On August 15, when he introduced his package of 33
so-called "constitutional reforms" (Ref B) Chavez argued that
since he was only amending less than 10 percent of the
articles in his 1999 Constitution that he didn't need to call
a constitutional assembly. Many opposition observers and
Embassy staff suspected he would submit additional measures
before the National Assembly completed its third reading of
the proposal. They were not surprised therefore when Chavez,
using the National Assembly's Mixed Commission as a cover,
introduced 25 additional amendments late on October 12. What
was surprising was the number and scope of these amendments.
The 58 proposals, which will likely be passed by the National
Assembly before the end of October, and be approved by a
national referendum scheduled for December 2, will
fundamentally change the Venezuelan political and economic
system.

GOOD-BYE CIVIL LIBERTIES
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3. (C) Thus far most international and domestic reaction to
the additional amendments has focused on changes to articles
337 and 338 which will permit the President to suspend civil
liberties and human rights indefinitely in vaguely defined
"special circumstances". The current articles permit
suspension of civil liberties, but both the scope and
duration of the suspensions are carefully circumscribed and
exclude denial of the right to life, incommunicado detention,
suspension of due process, torture, information and other
"untouchable human rights". The much broader changes have
drawn criticism not only from international organizations,
such as Human Rights Watch and Reporters Without Borders, but
also the leaders of three pro-government parties. Podemos,
Patria Para Todos and the Communists have all raised public
concerns with the measures. The Archbishop of Merida
Baltazar Porras called proposals "morally unacceptable". The
Council of Bishops issued a statement on October 19 calling
the proposals "Extremely grave because they modify the
fundamental structure of the democratic state ... increase
excessively the power of the government, and limit personal
liberties and freedom of religion."

FURTHER CONCENTRATION OF PRESIDENTIAL POWER

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4. (C) As noted in reftels, the initial 33 amendments sharply
expanded the constitutional powers reserved to the president.
The additional amendments continue this trend. They weaken
the power of the Supreme Court and National Electoral
Council, merge the military into a militia for popular power,
undermine university autonomy and eliminate decentralization
as a goal for the constitution. The new amendments also make
it much more difficult for the national assembly or for the
public to propose amendments the constitution in the future,
but makes it relatively easy for the President to do so.

THE ECONOMY SHIFTS TOO
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5. (SBU) A number of proposed constitutional modifications to
the previous proposals (Ref E) will have significant economic
and commercial consequences. These include, weakening
intellectual property rights (IPR) protection and the
protection of personal property, legalizing opaque off-budget
slush funds, increasing presidential discretion in funding
state and local government, possibly eliminating national
treatment of foreign investment, and increasing state control
of petroleum operations.


6. (SBU) Intellectual Property Rights: Article 98 of the
1999 constitution guaranteed state protection for
intellectual property rights in &scientific, literary and
artistic works, inventions, innovations, trade names,
patents, trademarks, and slogans, in accordance with the
conditions and exceptions established by law and the
international treaties executed and ratified by the Republic
in this field.8 The proposed article weakens this
protection and states, "Cultural creation is free. This
liberty is understood as the right of cultural diversity in
the invention, production of the creative, scientific,
technological, and humanistic works, including legal
protection of the rights of the author over his work."


7. (SBU) It is not clear what these changes are intended for
or whether this article applies to only copyrights or also
includes patents. Although the proposed article does not
explicitly do away with IPR protections, it notably omits any
mention of abiding by established law and international
treaties and no longer refers to various intellectual
property rights by name. According to local analysts, this
measure could be construed as violating a number of
Venezuela's bilateral and multilateral obligations, including
TRIPS and would complicate any efforts to rejoin the Andean
Community. Approval of the now proposed article 98 would
seem to complicate Venezuela's proposed membership in
Mercosur (Ref A),if passed in its current form (Septel).


8. (U) Property Rights: Article 115 of the current
Constitution guarantees the right of property and gives
individuals the right to "use, enjoy, and dispose of their
goods." Property may be expropriated for public benefit or
social interest only after final legal judgment, and with
timely payment at fair compensation. The proposed article
115 would recognize five types (and six classes) of property
and guarantee that there are different types of property Ref
E). Under Chavez, proposal of August 15, 2007 the phrase to
"use, enjoy, and dispose of their goods" was removed from the
definition of private property. In the National Assembly
version of October 15, 2007 the phrase was reinserted,
perhaps due to public objection to its removal. The proposed
change allows the State the right to occupy any kind of
property, during an ongoing judicial process or
expropriation, as opposed to after final judgment and after
fair indemnity.


9. (C) Income Distribution: In the current article 167 the
BRV distributes 25 percent of budget federal revenues among
the states. Under the proposed article, beginning in 2009,
30 percent of these State distributions would be divided
equally among the states and 70 percent would be weighted by
the population of each entity (states and Federal District).
Also a minimum of five percent of annual federal income
would be transferred to the newly created National Fund of
Popular Power for distribution to communities, communal
councils and communes. (Comment: Chavez has repeatedly
attacked the independent power centers in the states and
municipalities, whether controlled by pro-government or
opposition leaders.)


10. (SBU) National Treatment: The proposed reform of Article

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301 retains language on the State's obligation to protect
national investment but deletes the final line of the current
article that guarantees national treatment for foreign
investment.


11. (SBU) PDVSA: Article 303 currently decrees that all
shares of the state oil company PDVSA shall be retained by
the State. However, an exception is made for entities
necessary to the development of PDVSA businesses. The
proposed new article 303 excludes any total or partial
privatization of any PDVSA related entities and eliminates
the current articles, exceptions. As is the case with other
proposed articles it is not clear what this means for current
private sector participants in joint ventures with PDVSA.
The proposed changes to article 302 appear to eliminate
private sector participation in the exploration,
exploitation, collection, transportation, and storage of
liquid, solid or gaseous hydrocarbons.

WHERE IS THE OPPOSITION?
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12. (C) As the opposition to President Chavez boycotted the
2007 National Assembly elections, they have no formal role in
the National Assembly's review process. Opposition parties
do however uniformly oppose Chavez' entire constitutional
amendment package and have been speaking out publicly at
every opportunity. Nonetheless some in the opposition camp
continue to debate the wisdom of participating in the
referendum vote. Opposition parties such as Un Nuevo Tiempo,
more left wing Causa R, and the Christian Democrats (Copei)
are working together and along with Primero Justicia, have
signaled that they will likely participate in the referendum
voting. They have also called a march for November 3.
Accion Democratica's leaders are opposed to participating in
what they view as a flawed or fraudulent process, but may
allow their members to make up their own minds.


13. (C) Thus far the most effective opposition has come from
pro-government party Podemos, whose leaders have objected
both to the substance and constitutionality of the amendment
process. Podemos rank and file answered Sucre governor Ramon
Martinez' call for a march on October 19 against elements of
the package, although the number of actual marchers was
reduced because the national guard prevented buses of
marchers from the states of Anzoatequi, Sucre, Zulia, and
Carabobo from reaching Caracas. Podemos Secretary General
Ismael Garcia noted the party's representatives will vote
against some, but not all of the proposed articles. They
have abstained from all articles so far. The Venezuelan
Communist Party and left-wing Patria Para Todos have publicly
criticized elements of the proposals, but have indicated that
they will, for the moment, neither march nor vote against the
package.


14. (C) Student leaders have been relatively quiet in public
until recently. Several were, along with opposition
journalists, involved in scuffles outside of the National
Assembly's debate on October 15 (REF F). Calling the
proposed changes as a "Coup Against the Constitution",
student leaders have called a march on October 23. Embassy
understands from student and opposition leaders that the
students are somewhat more fractured than they were in May
and June, also arguing over whether or not to participate in
the referendum. The students, however, will likely work more
closely together once they begin to engage in more public
demonstrations on October 23. Student and opposition leaders
told PolCouns they expected a sizable turnout on that date.


15. (C) Members of the Catholic Church, most notably, Bishop
Baltazar Porras of Merida have publicly criticized the
proposed constitutional amendments. The Council of Bishops
statement mentioned previously was read to the press by the
Bishop of Cumana Diego Padron on October 19 and was stronger
than many observers expected in its rejection of the proposed
changes. It asserted that the proposals undermined
pluralism, which the Council characterized as a sacred value
in the constitution.

COMMENT
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16. (C) The leadership of the National Assembly is rapidly
pushing the package through its third reading, with the
stated intention of completing work by Friday, October 26,
but in no case beyond the end of October. By the end of the
day on October 18 the assembly had already approved 20 of the

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58 amendments with more scheduled for consideration on
October 19. Thus far the political opposition, church,
students and pro-government parties have been ineffective at
either modifying or delaying the amendment process. While
pro-government party Podemos has asked the Supreme Court to
rule on the constitutionality of the current process, there
seems little likelihood the court will rule against Chavez.
DUDDY