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