ALBA SUMMIT: THE USUAL RHETORIC AND A NEW PROPOSAL

C O N F I D E N T I A L CARACAS 001661 SIPDIS HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR RJARPE NSC FOR JSHRIER COMMERCE FOR 4431/MAC/WH/MCAMERON E.O. 12958: DECL: 11/28/2018 TAGS: ECON PREL VE SUBJECT: ALBA SUMMIT: THE USUAL RHETORIC AND A NEW PROPOSAL Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) and (d). ¶1. (U) The Bolivarian Republic of Venezuela (BRV) hosted on November 26 the third extraordinary summit of heads of state and government of the Bolivarian Alternative for the Peoples of Our America (ALBA) - trade pact for the peoples. In attendance were the following representatives of ALBA countries: President Chavez of Venezuela, President Morales of Bolivia; President Ortega of Nicaragua, President Zelaya of Honduras, Prime Minister Kerrit of Dominica; and Vice President of the Council of Ministers Cabrisas of Cuba. Ecuadorian President Correa attended as an observer. ¶2. (SBU) The summit featured criticism of "neoliberal" economic policies and the lending policies of the Corporacion Andina de Fomento (CAF) and the Inter-American Development Bank. President Chavez threatened to shut CAF's headquarters in Caracas if it refused to give requested loans. The assembled leaders pronounced their support for President Correa's decision to review sovereign bond issuances for "irregularities" and possibly not pay the debt if irregularities were found. The summit's declaration included a proposal to develop a monetary zone among the ALBA countries (with the exception of Dominica and the addition of Ecuador) through the establishment of a common currency called the SUCRE (unitary system of regional compensation). ¶3. (C) Comment: The summit was high on rhetoric and low on substance. From an economic standpoint, the idea of creating a common currency shared by ALBA countries is far-fetched, to say the least, and no local independent observer expects steps toward implementation in the near future. Perhaps more telling were remarks made by PDVSA vice president Eulogio del Pino to the National Assembly's Finance Committee and reported in national media on November 28. Del Pino noted that PDVSA was reconsidering some international projects in light of lower oil prices, "such as the refineries in Ecuador and Nicaragua, where we are seeking funding and lowering equity stakes." With Venezuela's ability to bankroll ALBA projects severely curtailed by current oil prices, we do not expect the substance to return to ALBA summits any time soon. End comment. GENNATIEMPO