Identifier
Created
Classification
Origin
09CARACAS477
2009-04-16 20:56:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Caracas
Cable title:
CHAVEZ ANNOUNCES ALBA LEADERS WILL AGREE TO LAUNCH
how-toVZCZCXRO1905 PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC DE RUEHCV #0477 1062056 ZNR UUUUU ZZH P 162056Z APR 09 FM AMEMBASSY CARACAS TO RUEHC/SECSTATE WASHDC PRIORITY 2909 INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS RHEHNSC/NSC WASHDC RUMIAAA/HQ USSOUTHCOM MIAMI FL RUCPDOC/DEPT OF COMMERCE RUEATRS/DEPT OF TREASURY
UNCLAS CARACAS 000477
SENSITIVE
SIPDIS
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
NSC FOR RKING
COMMERCE FOR 4431/MAC/WH/JLAO
E.O. 12958: N/A
TAGS: ECON EFIN PREL VE
SUBJECT: CHAVEZ ANNOUNCES ALBA LEADERS WILL AGREE TO LAUNCH
THE SUCRE, A REGIONAL COMPENSATION MECHANISM
REF: 2008 CARACAS 1661
UNCLAS CARACAS 000477
SENSITIVE
SIPDIS
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
NSC FOR RKING
COMMERCE FOR 4431/MAC/WH/JLAO
E.O. 12958: N/A
TAGS: ECON EFIN PREL VE
SUBJECT: CHAVEZ ANNOUNCES ALBA LEADERS WILL AGREE TO LAUNCH
THE SUCRE, A REGIONAL COMPENSATION MECHANISM
REF: 2008 CARACAS 1661
1. (U) President Chavez claimed on April 16 that leaders of
the Bolivarian Alternative for the Peoples of Our AMERICA
(ALBA) would approve an agreement to establish a "unitary
regional compensation system" called the Sucre during their
April 16 summit. His announcement builds on a proposal
contained in the November 2008 ALBA declaration (ref A).
Details of the agreement, if indeed there is one, have not
been published. A Venezuelan Ministry of Finance (MoF) press
release described the Sucre as being composed of a regional
monetary council, a currency (or counting) unit called the
Sucre, a central compensation chamber, and a fund of reserves
and "commercial convergence." According to press reports,
President Chavez said the Sucre would be functional as of
January 1, 2010, with pilot projects launched in September
2009. He described the Sucre as a "virtual currency,"
suggesting that as of January 2010 countries belonging to the
system could conduct trade based on Sucre equivalents.
According to the MoF, the ultimate goal would be the
establishment of a "common monetary zone" encompassing all of
Latin AMERICA and the Caribbean. The current agreement
appears to encompass Ecuador and all ALBA countries except
Dominica (i.e., Venezuela, Cuba, Bolivia, Nicaragua, and
Honduras).
2. (SBU) Comment: The Sucre fits the geopolitical vision
and rhetoric of President Chavez and some of his allies but
is unlikely to be of economic significance in the near
future. Chavez's announcement of the Sucre's "birth" is
designed to give ALBA leaders momentum going into the Summit
of the Americas, promoting a vision of regional economic
development independent of the United States and the dollar.
Exactly what if anything the Sucre will turn out to be,
however, remains unclear. In the future will Venezuela claim
to be sending Cuba 10,000 Sucres worth of oil in return for
10,000 Sucres worth of medical services? If the near-term
purpose of the Sucre is to act as this type of "virtual
currency" for trade purposes, it is plausible but
economically meaningless. Developing a true currency union
would of course be economically significant but seems highly
implausible in the near term from an economic and political
standpoint, given the geographical separation and economic
and monetary differences between the countries involved. End
comment.
CAULFIELD
SENSITIVE
SIPDIS
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
NSC FOR RKING
COMMERCE FOR 4431/MAC/WH/JLAO
E.O. 12958: N/A
TAGS: ECON EFIN PREL VE
SUBJECT: CHAVEZ ANNOUNCES ALBA LEADERS WILL AGREE TO LAUNCH
THE SUCRE, A REGIONAL COMPENSATION MECHANISM
REF: 2008 CARACAS 1661
1. (U) President Chavez claimed on April 16 that leaders of
the Bolivarian Alternative for the Peoples of Our AMERICA
(ALBA) would approve an agreement to establish a "unitary
regional compensation system" called the Sucre during their
April 16 summit. His announcement builds on a proposal
contained in the November 2008 ALBA declaration (ref A).
Details of the agreement, if indeed there is one, have not
been published. A Venezuelan Ministry of Finance (MoF) press
release described the Sucre as being composed of a regional
monetary council, a currency (or counting) unit called the
Sucre, a central compensation chamber, and a fund of reserves
and "commercial convergence." According to press reports,
President Chavez said the Sucre would be functional as of
January 1, 2010, with pilot projects launched in September
2009. He described the Sucre as a "virtual currency,"
suggesting that as of January 2010 countries belonging to the
system could conduct trade based on Sucre equivalents.
According to the MoF, the ultimate goal would be the
establishment of a "common monetary zone" encompassing all of
Latin AMERICA and the Caribbean. The current agreement
appears to encompass Ecuador and all ALBA countries except
Dominica (i.e., Venezuela, Cuba, Bolivia, Nicaragua, and
Honduras).
2. (SBU) Comment: The Sucre fits the geopolitical vision
and rhetoric of President Chavez and some of his allies but
is unlikely to be of economic significance in the near
future. Chavez's announcement of the Sucre's "birth" is
designed to give ALBA leaders momentum going into the Summit
of the Americas, promoting a vision of regional economic
development independent of the United States and the dollar.
Exactly what if anything the Sucre will turn out to be,
however, remains unclear. In the future will Venezuela claim
to be sending Cuba 10,000 Sucres worth of oil in return for
10,000 Sucres worth of medical services? If the near-term
purpose of the Sucre is to act as this type of "virtual
currency" for trade purposes, it is plausible but
economically meaningless. Developing a true currency union
would of course be economically significant but seems highly
implausible in the near term from an economic and political
standpoint, given the geographical separation and economic
and monetary differences between the countries involved. End
comment.
CAULFIELD