US embassy cable - 04CARACAS3715

C O N F I D E N T I A L  CARACAS 003715 
 
SIPDIS 
 
 
STATE FOR WHA/AND 
NSC FOR CBARTON 
TREASURY FOR OASIA-GIANLUCA SIGNORELLI 
HQ USSOUTHCOM FOR POLAD 
BUENOS AIRES FOR TREASURY (MHAARSAGER) 
 
E.O. 12958: DECL: 12/01/2014 
TAGS: PREL, ECON, PINS, ENRG, ETRD, VE 
SUBJECT: CHAVEZ-URIBE SUMMIT: ECONOMICS FOCUS WITH SECURITY 
SOUNDBITES 
 
REF: A. BOGOTA 11751 
 
     B. CARACAS 2172 
     C. CARACAS 3032 
 
Classified By: ECONOMIC COUNSELOR RICHARD M. SANDERS FOR REASON 1.4 D 
 
------- 
SUMMARY 
------- 
 
1. (C) Most Venezuelan press reports on the Chavez-Uribe 
summit in Colombia November 9 focused on security issues, 
especially Chavez's declaration that the GOV does not support 
the FARC.  The joint declaration, on the other hand, avoided 
such topics, focusing almost completely on economic issues 
such as energy (including a Chavez proposal to re-route a gas 
pipeline under consideration) and trade.  A Colombian 
diplomat in Caracas confirmed that indeed, economics 
predominated.  END SUMMARY. 
 
------------------------------------ 
CHAVEZ: "WE DO NOT SUPPORT THE FARC" 
------------------------------------ 
 
2. (U) President Hugo Chavez traveled to Cartagena on 
November 9 and met with his Colombian counterpart, Alvaro 
Uribe.  While the joint declaration that resulted focused 
nearly 100% on economic issues (see below) - press reports in 
Venezuela were dedicated almost entirely to security issues, 
in particular President Chavez's emphatic denial of support 
for the FARC.  Chavez stated in Cartagena, swearing upon his 
mother, "We say to the Colombian people, let no one believe 
this great lie that some keep repeating up there, above all 
in the North.  We do not support the FARC; we want peace in 
Colombia."  He added, "it is very important that the 
community know in what direction the Venezuelan government is 
going: that of commitment to reestablish the dominion of the 
Colombian democratic institutions and of security so that our 
peoples are not affected by drug trafficking, guerrilla war, 
or paramilitaries."  Uribe for his part said that he 
recognized "the interest of the Chavez government to help us 
in this security problem." 
 
--------------------------- 
PIPELINE PLANS: GAS AND OIL 
--------------------------- 
 
3. (C) Patricia Cortes, Colombian political counselor in 
Caracas,  however told econoff November 17 that discussions 
largely focused on economic themes.  She highlighted the 
discussions for possible gas and oil pipelines connecting the 
two nations, noting that both items were pushed by her 
government.  She noted that the gas pipeline could be 
approved by early next year - a technical meeting is 
scheduled to take place in Caracas November 23 to 27 - but 
added that Chavez suggested a new route for the pipeline 
during the Cartagena meeting.  The previously discussed route 
was from Lake Maracaibo to Ballenas, on the northern shore of 
Colombia, but Chavez's new proposal was from Punto Fijo (the 
port serving the giant Paraguana refinery) to the border of 
the two countries on the Gulf of Venezuela.  The former route 
would be primarily over land, with about equal parts in each 
country, while the latter route would be almost entirely in 
Venezuelan territorial waters. 
 
------------------------- 
THE OTHER ECONOMIC ISSUES 
------------------------- 
 
4. (U) The declaration had more text devoted to trade than 
any other subject, calling for increased cooperation in 
agriculture and fighting smuggling.  Chavez raised 
electricity purchases (western Venezuela has chronic power 
shortages), and the two leaders "endorsed" work already 
completed toward that end.  There was also agreement to 
create an undefined "binational nucleus of endogenous 
development" with an eye toward a total of four, two in each 
country.  Agriculture ministers will meet in January 2005 to 
further that plan.  (NOTE: "endogenous development" is 
 
 
Chavez-speak for aggressive state sponsorship of small scale 
agricultural and manufacturing cooperatives.  END NOTE.) 
 
5. (C) Cortes indicated that the Colombians considered 
contraband a major issue.  There has long been a problem with 
illegal imports of gasoline, given the cheap price thanks to 
GOV subsidies.  However, the fixed exchange rate has created 
a whole new area for rent-seeking, as buyers purchase 
products based on their dollar value at the official exchange 
rate and sell them at the parallel rate.  A major example is 
steel - SIDOR, the largest steel manufacturer in Venezuela, 
is producing in near-record quantity (see ref B) - and Cortes 
acknowledged that steel was a product that was being imported 
illegally into Colombia. 
 
------- 
COMMENT 
------- 
 
6. (C) Since the killing of Venezuelan soldiers and a 
civilian in Venezuelan territory on September 17 (ref C), 
Chavez's denials of support for the FARC have grown stronger 
- in the lead-up to the summit, he swore "on his mother" that 
the GOV did not support the organization.  But while the 
press, aided by some of Chavez's comments, tended to focus on 
that aspect, the economic agenda clearly predominated in 
terms of substance. 
Brownfield 
 
 
NNNN 
      2004CARACA03715 - CONFIDENTIAL