US embassy cable - 04CARACAS3979

C O N F I D E N T I A L  CARACAS 003979 
 
SIPDIS 
 
 
NSC FOR CBARTON 
HQSOUTHCOM FOR POLAD 
USDA FOR ELLEN TEPSTRA AND KEN ROBERTS 
 
E.O. 12958: DECL: 09/22/2014 
TAGS: PGOV, ECON, EAGR, VE, ENV 
SUBJECT: LAND "INTERVENTIONS" PRESAGE REDISTRIBUTION 
 
REF: CARACAS 03928 
Classified By: ACTING POLITICAL COUNSELOR MARK WELLS FOR 1.4 (D) 
 
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Summary 
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1.  (C)  Venezuelan Governors in Cojedes and Monagas States 
have issued decrees ordering land "interventions" and 
charging committees of government and goverment-allied 
officials to review the ownership rights of over three dozen 
ranches and rural properties.  The first decree, issued by 
Governor Jhonny Yanez Rangel in Cojedes on December 9, 
affects a profitable British cattle company and a popular 
wildlife reserve.  Another Cojedes decree cordons off land 
for the installation of a used Cuban mill, according to a 
sugar industry representative.  President Hugo Chavez, who 
urged local leaders to combat large, idle estates in 
November, has reaffirmed the agrarian reform of state 
governments.  Eight other governors have backed the 
intervention, and both IRS equivalent SENIAT and state oil 
corporation PDVSA have announced policies to support land 
reform.  Althugh opposition figures have railed against the 
dcree, rancher spokesmen have reacted cautiously.  overnor 
Yanez cited widespread cooperation by ladowners and 
justified the initiative as an attemp to fulfill 
constitutional demands while the Natonal Lands Institute, 
legally responsible for lad redistribution, has tarried. 
Although Yanez sad he did not expect to have to expropriate 
land,his committee probably will compel property owners o 
"offer" land to the government.  Other states re likely to 
follow in moves that could encourag future invasions and 
discourage investment.  En summary. 
 
2.  (C)  On December 9, Cojedes stateGovernor Jhonny Yanez 
Rangel issued a decree ordeing "interventions" in all idle 
lands, "latifundos" (i.e., giant, idle estates), and 
territorieswith ownership conflicts and/or "distribution 
prblems."  Although the decree failed to define 
"itervention," it singled out 25 private properties ad 
ranches for "occupation."  Aother decree provided for the 
establishment of a sugar mill and surrounding sugar cane 
farms on private land.  A third decree established a 
high-level technical committee made up of state government, 
military, academic, judicial, and para-statal officials 
charged with presenting a report to the governor on each of 
the 25 cases within 90 days.  Monagas Governor Jose Gregorio 
Briceno followed Yanez's lead on December 27, decreeing 
"intervention" in the cases of 14 specific properties, 
according to press.  Briceno's decree granted a committee 12 
months to resolve property issues. 
 
3.  (U)  The decree in Cojedes affects at least two 
significant properties.  The technical committee has chosen 
to begin its work on January 8 with the controversial 
intervention of Hato Charcote, a property owned by a 
profitable regional cattle ranching subsidiary of the British 
company Vestey.  The decree also singled out Hato Pinero, an 
estate that serves as a ranch, wildlife reserve, 
environmental research center, and popular tourist 
destination.  Yanez justified the intervention of Hato 
Primero to the press by remarking that "such an important 
animal reserve cannot be private property." 
 
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Reactions to Cojedes Decree 
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      4.  (C)  During his December 27 message to military 
personnel, President Hugo Chavez praised Yanez's "war against 
the latifundio," which Chavez during his November 12-13 
speeches at Fuerte Tiuna (REFTEL) had ordered regional 
leaders to wage in their respective territories.  Vice 
President Jose Vicente Rangel also supported the 
intervention, affirming that it served to implement the 
federal land and agrarian development law.  An undetermined 
number of Chavista Governors met on December 22 with their 
legal advisers to analyze the Cojedes initiative, and eight 
of them signed an accord supporting the decree.  An 
 
opposition internet columnist mused that the other 
pro-government governors refused to sign because they lacked 
the funds to support peasant cooperatives.  At least one 
Chavista governor publicly warned of potential problems; 
Portuguesa Governor Antonia Munoz said the Cojedes initiative 
could instigate more land invasions and owner-peasant 
standoffs. 
 
      5.  (C)  Other government agencies have towed the line 
on land reform.  Tax collection agency SENIAT reported on its 
 
website December 7 that it would impose a new tax on idle or 
underutilized land.  According to December 29 press reports, 
state oil corporation PDVSA executive Rafael Aleman promised 
PDVSA financial backing to guarantee agricultural 
self-sufficiency in Cojedes. 
 
6.  (U)  Many opposition press outlets have reported that the 
states lack authority to enforce the federal land law.  Pedro 
Pablo Alcantara, an Accion Democratica (AD) National Assembly 
deputy who chairs heads the agriculture and ranching 
subcommittee, told the press that Yanez needed legal training 
and called his decree an "absurdity."  According to a 
December 21 press report, Albis Munoz, president of umbrella 
private sector organization FEDECAMARAS, doubted the legality 
of the decree and noted that her organization worried the 
Cojedes plan would encourage land invasions and discourage 
investment. 
 
7.  (C)  Ranchers thus far have tempered their remarks. 
Venezuelan rancher association (FEDENAGA) president Jose Luis 
Betancourt, who told poloff on November 23 that the 
government had seemed more disposed to resolve problems by 
approaching ranchers directly, said that the governor had not 
fulfilled a commitment to draft another decree providing for 
negotiations with the private sector, according to December 
19 press reports.  Nonetheless, he affirmed the governor's 
jurisdiction to administer territory and said FEDENAGA would 
comply with a reorganization of land if the government 
proceeded legally.  Alberto Cudemus, president of pork 
producer association FEPORCINA and one of the business 
leaders closest to the GOV, told the agriculture counselor 
that the administration has to make noise on the land reform 
issue, but he expected few results because state technical 
committees typically accomplish little. 
 
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Governors Try to Make Plans Palatable 
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8.  (C)  Faced with such criticism, Yanez has since aimed at 
making his decree sound more moderate.  During his December 
27 press conference, Yanez--interrupted by several phone 
calls from President Chavez--asserted he was only carrying 
out the precepts of the constitution.  (Note:  the Venezuelan 
constitution requires the government to promote national 
agricultural self-sufficiency, in part by dictating land 
tenure.  It also provides for government reclamation of 
"latifundios.")  Arguing that the intervention will clear up 
doubts about land ownership, he added that land expropriation 
"is not foreseen."  Yanez predicted that over 90 percent of 
the landowners--many of whom had already offered to surrender 
territory--would reach agreements with the state over land 
tenure.  In response to criticism from the British Embassy, 
he spun the decree as an effort to address British requests 
for the state to deal with peasant land invasions on Vestey 
property. 
 
9.  (C)  Governor Briceno's plan included provisions to 
preempt criticism.  Briceno attached to his decree a 
moratorium on land invasions in "intervened" land.  Monagas 
State will also have a committee for negotiation and 
conciliation, whose goal will be to resolve problems that 
arise during the implementation of the decree. 
 
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INTI Unreliable 
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      10.  (U)  The federal bureaucracy legally charged with 
implementing the land reform law, the National Lands 
 
Institute (INTI), has yet to play a prominent role in the 
interventions.  Yanez has faulted INTI, headed by former 
intelligence chief Eliecer Otaiza, for impeding the 
constitutional drive for land reform.  In October, INTI 
announced a freeze on the handover of land titles while the 
agency underwent a restructuring.  INTI has also come under 
fire from both the opposition and the government for the 
amount of uncultivated government land that remains 
undistributed.  According to the Ministry of Agriculture and 
Land, 53 of INTI's largest rural properties average 112,000 
hectares, whereas under the land law, a "latifundio" is 
defined as having over 5,000 hectares. 
 
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The Cuba Angle 
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11.  (C)  The president of a sugar refinery in neighboring 
Portuguesa state suggested to poloff that a sweetheart deal 
with Cuba was behind the GOV's drive to produce sugar while 
world prices remain low.  According to the executive, the GOV 
purchased the mill second-hand from Cuba, which has been 
forced to close 60 mills in the past two years.  He said he 
could not imagine why erecting the complex would cost the USD 
250 million outlined in the federal budget, especially since 
the mill was already at port in Puerto Cabello.  National 
Assembly deputy Salomon Centeno (AD), whose Cojedes property 
was named in the decree, told the press that Cubans had been 
in the state studying the feasibility of erecting the mill 
there over the past few years. 
 
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Comment 
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      12.  (C)  The plan has run the typical course of 
Chavista initiatives; that is, a radical decree, a follow-on 
plea for better understanding coupled with a slight 
rhetorical retreat, and an outcome that--short of drastic 
changes in the near term--sets a precedent for greater state 
control over the private sector.  All parties may indeed 
"agree" in 90 percent of the cases, but landowners will have 
no guarantee that current cooperation exempts them from 
future arm-twisting to cough up territory.  Because the 
micromanaging Chavez is encouraging the "interventions," 
other governors likely will follow by ordering property 
redistribution in their own states. 
 
      13.  (C)  Fears that the initiative will incite new 
invasions and discourage investment are justified.  Land 
reform of a sort has long been part of the Chavez 
government's policies, and televised public ceremonies in 
which the President hands out "cartas agrarias" to allow land 
occupation have been a recurring part of the country's 
political theater.  "Cartas agrarias," however, cannot be 
sold or mortgaged and thus do not serve as an adequate basis 
for sustainable rural development.  There is every reason to 
think that we will see more legal and rhetorical attacks on 
large landowners as Chavez contrives to "deepen the 
revolution." 
Brownfield 
 
 
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      2004CARACA03979 - CONFIDENTIAL