CHAVEZ VISIT TO SPAIN JULY 24-25

C O N F I D E N T I A L MADRID 000839

SIPDIS

DEPARTMENT FOR EUR/WE, WHA/AND

E.O. 12958: DECL: 07/31/2018
TAGS: PREL ETRD VE SP
SUBJECT: CHAVEZ VISIT TO SPAIN JULY 24-25

REF: MADRID 826

Classified By: DCM Hugo Llorens for reasons 1.4 (b) and (d)


1. (C) Venezuelan President Hugo Chavez met with King Juan
Carlos and President Zapatero on July 25. MFA Deputy
Director General for the Andean Countries Ramon Santos told
Poloff that the bilateral meetings fully "normalized"
relations following the contretemps between King Juan Carlos
and Chavez at the November 2007 Ibero American Summit. The
Venezuelan relationship is important to Spain due to the high
level of investment by Spanish companies and the estimated
250 thousand Spaniards resident in Venezuela; some holding
substantial real estate and other commercial properties.


2. (C) As reported reftel, FM Moratinos told Ambassador
July 24 that Spain shared our concerns regarding civil and
political rights, free and fair elections, democratic
participation and rule of law in Venezuela. Moratinos
assured Ambassador that points regarding those issues were
included in the agenda for all the bilateral meetings with
Chavez. Zapatero was also expected to insist the GOV deny
support to members of the Basque terrorist organization ETA
who are living in Venezuela. Santos could not share any
specifics about those points in Zapatero's bilateral meeting,
but said that the relationship was now on a footing that
would allow Spain to have a full dialogue with Venezuela.
Santos said that apart from a lunch and press conference,
Zapatero had a private, one-on-one session with Chavez and
the MFA did not have a full read-out of the closed door
conversation. Based on the overall tone of the talks, Spain
still hopes to finalize plans for an investor dispute
mechanism that would provide extra legal protections for
Spanish citizens in Venezuela. Santos said that the King's
meeting with Chavez focused on re-establishing cordial and
productive ties with Venezuela. While no MFA staff members
were in the meeting held at Palma de Majorca, Santos believed
that the meeting was more about atmospherics than substance.
Chavez and the King engaged in bridge-mending, and the press
highlighted the exchange of a t-shirt emblazoned with their
photos and the caption "Por que no te callas", to illustrate
that bygones were bygones.


3. (C) Given popular concern about the local economic
outlook, the Spanish press focused its coverage on energy
issues rather than on the need to engage Venezuela on
democratic pluralism and participation. According to media
reports, Chavez told King Juan Carlos that it was very
important for Venezuela to have Spanish company Repsol
participate in the Faja del Orinoco Project (tapping one of
the largest oil reserves in the world),which could guarantee
Spain,s oil supply for decades to come. Some press outlets
reported that Zapatero and Chavez "agreed" on a deal whereby
Venezuela would provide Spain the option to buy 10,000
barrels of oil a day for $100 each, a subsidy that could be
worth close to $100 million per year at current prices. The
oil payments would be devoted to a bilateral fund in Spain to
finance the transfer of Spanish technology, medical
equipment, renewable energies expertise, construction
materials and food to Venezuela. Santos said that the press
reports of an "agreement" missed the point that the offer was
under consideration by the Spanish government. He said that
the Spanish Ministry of Industry would have to investigate
the offer and make a recommendation on whether or not to
accept the Venezuelan proposal. In addition, the MFA is
gathering information about the offer, including implications
for EU trade agreements, although Santos said that Portugal
had already accepted a similar proposal from Venezuela. The
offer to Spain for concessional oil pricing by Venezuela is a
new factor in our discussions; no Spanish government
officials mentioned the prospect in previous conversations
with Embassy officials.


4. (SBU) In advance of the Chavez visit, a Spanish citizen
whose Venezuelan wife was killed during riots after the
August 15, 2004 Venezuelan referendum asked a Spanish
National Court judge to detain and depose President Chavez
while the latter is in Spain. The widower filed charges
against Chavez in January 2008 in his wife's death. The
charges were later dismissed because neither the victim nor
her alleged killers were Spaniards.
Aguirre