CHAVEZ SHADOWS POTUS TOUR, PROMISING AID AND LATIN

UNCLAS SECTION 01 OF 02 CARACAS 000574

SIPDIS

SENSITIVE
SIPDIS

ENERGY FOR CDAY, DPUMPHREY, AND ALOCKWOOD
TREASURY FOR KLINGENSMITH AND NGRANT
COMMERCE FOR 4431/MAC/WH/MCAMERON
NSC FOR DTOMLINSON
HQ SOUTHCOM ALSO FOR POLAD

E.O. 12958: N/A
TAGS: ECON PREL EINT VE
SUBJECT: CHAVEZ SHADOWS POTUS TOUR, PROMISING AID AND LATIN
AMERICAN INTEGRATION

REF: A. CARACAS 387

B. PORT AU PRINCE 492

C. LA PAZ 679

D. BUENOS AIRES 489


1. (SBU) Summary: During Chavez' March 9-13 "shadow tour" of
President Bush's Latin American trip, he continued to
aggressively push forward his own brand of dollar diplomacy
and the "Bolivarian alternative" of regional financing and
integration to counter USG initiatives in the region. Chavez
signed 11 additional agreements with Argentina including the
creation of a South American gas exporters association along
the lines of OPEC. He also welcomed Bolivia to the "Banco
del Sur" ("Bank of the South") project, announced
construction of a USD 2.5 billion refinery in Nicaragua, and
jointly announced with Cuba a USD 1 billion humanitarian fund
for Haiti. In typical Chavez fashion, he offered few details
to support these grandiose projects/promises. Septel will
address political perceptions and media reaction. End
Summary.

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Argentina: 11 New Accords
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2. (SBU) Chavez and Kirchner signed eleven new agreements
during Chavez' visit to Argentina March 9 (Reftel D). This
latest round of agreements comes on the heels of Kirchner's
visit to Venezuela's heavy-oil belt February 21-22, during
which the two presidents inked 17 agreements (Reftel A).
These new agreements expand on the accords signed in the
Faja, including increased agricultural and scientific
cooperation between Argentina and PDVSA Agriculture, and
joint Venezuelan-Argentine development of natural gas-powered
vehicular engines. Venezuela and Argentina also signed a
treaty to create an organization of South American gas
producers and exporters (OPEGASUR),which they hope will
become the gas equivalent of OPEC.


3. (SBU) Chavez and Kirchner also welcomed Bolivia to the
working group for the "Banco del Sur" (Bank of the South).
Both also expressed their hope that the Bank would become a
distinctly Latin American financing alternative to the IMF
and the World Bank. During the signing ceremony, Chavez, as
he did two weeks earlier in the Faja, highlighted the
importance of the Bank of the South as a tool for Latin
American integration. "..the Bank of the South is vital for
what Peron called the second national independence. And when
I say national I am always saying national
Argentine-Venezuelan, and even more, our America, South
America. The Southern Bank!" proclaimed Chavez. While less
dramatic than Chavez, Kirchner also quipped that the new bank
was a way out of "subordination" to IMF policies while
linking the Banco del Sur project to increased
Venezuelan-Argentine cooperation in gas. Kirchner commented
that the bank would be an excellent financing tool for the
proposed Argentina-Bolivia-Venezuela mega gas pipeline. "For
this, the Banco del Sur is a central tool, and we need to
foresee as well the possibilities of advancing strongly with
the Southern gas pipeline."

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Chavez Welcomes Bolivia to the Banco del Sur Club
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4. (SBU) After his visit to Argentina, Chavez traveled to
Bolivia to tour the flood-stricken province of Beni. Chavez
announced a USD 15 million aid package to Bolivia and also
promised two rescue helicopters and 43 tractors. Chavez then
traveled to El Alto where he signed four new agreements with
Morales (Reftel C). Bolivia joined Argentina and Venezuela
in the Banco del Sur working group and also joined the
nascent OPEGASUR organization. Chavez and Morales signed a
Treaty of Trade Cooperation and issued a joint declaration
for the consolidation of the Bolivarian Alternative for the
Americas (ALBA) development model. Chavez expressed his hope
that ALBA funds could assist Bolivian disaster victims, while
stressing 21st century socialism's role in Latin American
integration, "socialism is the road for the union of our

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peoples, he who wants to construct the reign of God on the
earth goes by socialism and he who wants to go directly to
hell goes by capitalism."

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USD 2.5 Billion Refinery in Nicaragua
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5. (SBU) Chavez' most extensive economic promises came in
Nicaragua, where he announced that Venezuela would build a
USD 2.5 billion refinery. He said that Bandes would soon
open an office in Nicaragua to provide aid and loans to the
rural poor and that Venezuela would construct an aluminum
factory. Chavez and Ortega also inked several agreements
promoting agricultural cooperation. Ortega also signed onto
Chavez' Telesur ("television of the south") for regional
telecommunications integration.


6. (SBU) Chavez expects the refinery to process up to 150
thousand barrels of Venezuelan oil/day which, in his view,
would convert Nicaragua into a petroleum exporter. Chavez
asserted that this would provide Nicaragua with a means of
escaping poverty and IMF tutelage. Chavez suggested this
project would pave the way for Nicaraguan participation in
the Banco del Sur. "With the refinery, we will not need to
go begging before the IMF, nor before anyone else, for this
we created the Banco del Sur and I am sure that after Ortega
settles his accounts with the IMF he will affiliate himself
with the Banco del Sur." More than Chavez' hosts in other
countries, Ortega appeared to parrot Chavista rhetoric: "In
this struggle we have to unite our forces to resist and
advance independently from the imperialist model," said
Ortega.

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Venezuelan-Cuban Humanitarian Aid for Haiti
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7. (SBU) In Haiti, Chavez' message was less about regional
integration and more focused on offering joint humanitarian
aid with Cuba (Reftel B). In a tripartite meeting between
Chavez, Haitian President Rene Preval and Cuban Vice
President Esteban Lazo during which Fidel Castro reportedly
Zned the meeting by phone, Venezuela and Cuba announced the
creation of a USD 1 billion fund for Haitian development.
Venezuela also re-announced USD 20 million of humanitarian
aid through Bandes and USD 57 million to repair Haitian
airports. Cuba offered the services of its medical
personnel, and Venezuela said it would double the amount of
oil Haiti received through Petrocaribe from seven thousand
barrels/day to 14 thousand barrels/day.

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Comment
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8. (SBU) Though Chavez continues to assert that the parallel
timing of his trip with President Bush's visit to Latin
America was mere coincidence, it is painfully obvious that
his big promises and pronouncements on regional integration
were a direct effort to counter the President's visit.
Chavez used his tour of the "South" to continue to
aggressively push forward increased regional financial and
natural gas integration with Argentina and Bolivia. In
typical Chavez fashion, the deals he announced and accords he
signed contained grandiose projects with few details.
Several of the aid promises made in Haiti were simply
re-announcements of previous commitments. With respect to
the creation of an OPEGASUR, absent from the announcement was
even a general overview as to organizational structure and
how it would function. Chavez continues to pitch the Banco
del Sur an alternative to the IMF and World Bank. While he
and Kirchner are still hopeful to construct a South American
gas pipeline, the suggestion that a fledgling Banco del Sur
could finance this multi-billion project is unfathomable.

BROWNFIELD