CHAVEZ THREATENS TO DENY OPPOSITION STATES

C O N F I D E N T I A L CARACAS 001435

SIPDIS

HQSOUTHCOM ALSO FOR POLAD
DEPARTMENT PASS TO AID/OTI (RPORTER)

E.O. 12958: DECL: 10/08/2018
TAGS: PGOV KDEM VE
SUBJECT: CHAVEZ THREATENS TO DENY OPPOSITION STATES
GOVERNMENT FUNDS

Classified By: POLITICAL COUNSELOR FRANCISCO FERNANDEZ
FOR REASON 1.4 (D)


1. (C) Summary. At an October 6 political rally, President
Chavez threatened to deny future development funds to state
and municipalities run by opposition politicians after the
November 23 state and local elections. Chavez said he did
not want to give the opposition resources to "steal and
conspire to kill" him. Chavez has already reduced funding
for states -- pro-government and opposition alike -- but he
may face constitutional hurdles and significant political
opposition if he tries to "starve" opposition-run polities.
Chavez's threat is clearly aimed at undermining opposition
campaigns, which continue to run strong in several key
states. End Summary.


2. (SBU) President Chavez announced October 6 that he will
launch a Regional Development Acceleration Program (PADRE)
next year to promote infrastructure development in various
regions of Venezuela. Chavez told his supporters that he
will limit PADRE to pro-government states, as determined by
the November state and local elections. Currently, PSUV
candidates are favored to win gubernatorial elections in a
solid majority of the 22 state races in Venezuela. Chavez
publicly justified his intention to refuse financial
resources for those states which elect opposition governors
by saying, "Why should I send resources to my opposition? So
that they can steal and conspire to kill me? They only want
to win the gubernatorial and mayoral races so that they can
launch another coup d' etat and carry out my assassination."


3. (C) The Venezuelan President wrested some fiscal power
away from the states before. Last year, Chavez redirected 50
percent of the development funds that flowed from the central
government's surplus oil revenues to the states -- both
pro-government and opposition -- to community councils. The
Office of the Presidency certifies community councils and
provides direct funding for their projects. Podemos National
Assembly Deputy Juan Jose Molina told PolCouns that Chavez is
also curtailing states' abilities to collect road tolls and
port and airport taxes.


4. (C) Chavez may face political and legal limits on how much
farther he can go. According to 1999 Constitution, proceeds
from oil and mineral revenues should be used to fund the
education and health sectors nation-wide and some 20% of
Venezuela's oil revenues currently flow to the states.
According to Molina, the Constitution refers to only the
amount budgeted for oil revenue, not actual proceeds, which
he claims will be less than USD 42 per barrel in the upcoming
budget. Anything earned above that amount is not subject to
Constitutional spending restrictions. Former Aragua Governor
and Un Nuevo Tiempo activist Carlos Tablante told POLOFF that
Chavez never approved a bill to allow states to collect their
own tax revenues, but he noted that municipalities are able
to do so. Should Chavez make good on his threat to "starve"
opposition states and municipalities, Tablante predicted that
opposition governors and mayors would be able to mobilize
mass demonstrations against the Chavez government.


5. (C) Comment. President Chavez's threat to deny
development funds to states and municipalities is a blunt
effort to give voters real pause before voting against his
United Socialist Party of Venezuela (PSUV) candidates. It
also appears designed to try to undermine the opposition's
efforts to present credible platforms that promise to address
pressing local needs. Chavez has already demonstrated that
he can accrue more power for the central government at the
expense of states and municipalities, and his supporters are
promoting further legislation that would allow him to
circumvent governors and mayors even more. Nevertheless,
Venezuelans generally support decentralization, and any BRV
efforts to "starve" opposition-controlled polities may prove
to be costly politically.

CAULFIELD