VENEZUELAN AVIATION UPDATE: NATIONALIZATIONS,

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000407

SIPDIS

HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MMALLOY
COMMERCE FOR 4431/MAC/WH/JLAO

E.O. 12958: DECL: 03/27/2019
TAGS: ECON PGOV PREL ETRD EINV EAIR VE
SUBJECT: VENEZUELAN AVIATION UPDATE: NATIONALIZATIONS,
VIOLATIONS AND NEW US FLIGHT REQUESTS

REF: A. SMITH EMAIL TO CUE ET. AL DATED FEB. 19 (NOTAL)

B. CARACAS 269

C. 2008 CARACAS 1702

D. CARACAS 307

E. CARACAS 330

CARACAS 00000407 001.2 OF 002


Classified By: Economic Counselor Darnall Steuart for reasons 1.4
(b) and (d).


1. (C) SUMMARY: In a possible violation of the Chicago
Convention on International Civil Aviation, the Government of
the Bolivarian Republic of Venezuelan (GBRV) has grounded all
foreign-registered private aircraft, 95 percent of which are
US-registered. The GBRV informed the Embassy via diplomatic
note in February that it has authorized a Venezuelan carrier
to begin new air service to the United States. On March 25
President Chavez declared privately owned airline,
Aeropostal, "social property" in a "measure to combat drug
trafficking." An industry source reports that the government
may form a Ministry of Aviation to replace the Venezuelan
civil aviation authority (INAC). END SUMMARY.

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CHICAGO CONVENTION VIOLATION?
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2. (C) President of domestic aviation association CEVETA
William Bracho (protect throughout) told Econoff on March 13,
that in violation of Article Nine of the Chicago Convention
on International Civil Aviation, INAC had banned all
foreign-registered private planes from landing in Venezuela.
Bracho noted that 95 percent of the 250 planes affected by
this ban are "November" or US-registered aircraft. He said
INAC voided the foreign aircraft flight permits for entry
into, and flight within, Venezuelan airspace as of March 13
and would only consider authorizing exceptions to the ban for
planes seeking to land at the country's largest airport,
Simon Bolivar International near Caracas.


3. (C) INAC will never publish this "restrictive and
discretionary policy", he said, as it is aware the policy
violates international treaty obligations. Bracho added that
most aircraft owners cannot register their planes in
Venezuela due to restrictions in their financing contracts.
Lenders will not allow Venezuelan registration due to the
country's "judicial uncertainty."

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INAC AUTHORIZES NEW AIR SERVICE TO THE US
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4. (C) Post received a GBRV diplomatic note February 17 which
stated that the Ministry of Foreign Affairs "would like to
inform the US Embassy that INAC has designated Rutas Aereas
de Venezuela, RAV, S.A. to operate regular passenger, cargo
and mail service from Venezuela to the United States in
conformance with the 1953 treaty in effect between the US and
Venezuela." Post emailed the text to Washington requesting
guidance (Ref A) but has not otherwise responded given the
Venezuelan government's rejection of recent USG overtures on
aviation (Ref B).

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AEROPOSTAL DECLARED "SOCIAL PROPERTY"
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5. (C) President Chavez announced on March 25 that "Right now
we are taking the ports and the airports... and now
Aeropostal, we are going to give the airline new life as
social property, a new airline like (government-owned)
Conviasa." Chavez explained he had decided to seize
privately owned airline Aeropostal in order to combat drug
trafficking. (NOTE: Two members of the Makled family, owners
of Aeropostal, have been awaiting trial for drug trafficking
charges since November 2008. The government seized
Aeropostal and other Makled assets "preemptively" in November
pending a verdict. It now seems the seizure will be
permanent regardless of the verdict. Former Aeropostal
President Dr. Mustafa Flores told Econoffs on December 12
that the drug charges were politically motivated. While
Makled family drug trafficking connections have been openly

CARACAS 00000407 002.2 OF 002


discussed for years, the timing of the arrest raised
questions about the government's motives. Abdla Makled was
running for mayor of Valencia against Chavez's chosen
candidate at the time of his arrest (Ref C). The Caracas DEA
Office considers the Makled family to be one of Venezuela's
largest drug trafficking organizations. END NOTE.)

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DEVELOPMENTS WITHIN INAC
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6. (C) The President of Venezuelan carrier Santa Barbara
Airlines (SBA) Jorge Alvarez told Econoffs February 25 that
former INAC President, General Giuseppe Angelo Yoffreda
Yorio, believes the government will do away with INAC and
replace it with a Ministry of Aviation. According to
Alvarez, Yoffreda believes if this were to happen, Yoffreda
would be named minister. Alvarez noted that the government's
2008 decision to remove INAC from the Ministry of
Infrastructure (now called the Ministry of Public Works and
Housing) and place it under the direct authority of Vice
President Carizalez has paralyzed the agency as the Vice
President has no time to run INAC. He believes forming a new
ministry would ease decision-making in the sector.


7. (C) CEVETA President Willimam Bracho confirmed on February
20 that INAC had replaced its Air Services Director Carmen
Lanza with Major Anibal Davila. Bracho told Econ staff that
Davila is active duty air force and "extremely radical".
Bracho believes that Davila's close adherence to "Chavez's
ideology" in addition to his military background will make it
even more difficult for CEVETA to work with INAC. CEVETA, he
said, is having increasing trouble with the "civil-military"
paradigm inherent in INAC's appointment of growing numbers of
military officers to traditionally civilian positions.

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COMMENT
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8. (C) Chavez's March 25 statement indicates he plans to keep
Aeropostal regardless of the outcome of the Makled's criminal
trial. The Venezuelan government will now own two airlines,
Conviasa and Aeropostal, which, in the words of former
Aeropostal President Flores "is akin to putting two ICU
patients in the same room." Chavez's decision to take the
airline is consistent with recent nationalizations in other
sectors of the economy (Ref D),as well as with his
centralization of authority over all of the country's
airports and ports (Ref E). With Washington concurrence,
Post remains willing to attempt to engage with INAC on the
Venezuelan airline's request to begin air service to the
United States. Previous meeting requests, however, have gone
unanswered.

CAULFIELD