US embassy cable - 05CARACAS160

C O N F I D E N T I A L  CARACAS 000160 
 
SIPDIS 
 
NSC FOR CBARTON 
HQSOUTHCOM ALSO FOR POLAD 
USDA FOR B. GRUNENFELDER, P. SHEIKH, E. TERPSTRA, K. ROBERTS 
 
E.O. 12958: DECL: 09/22/2014 
TAGS: PGOV, ECON, EAGR, KDEM, VE, ENV 
SUBJECT: CHAVEZ'S LAND REFORM JUGGERNAUT 
 
REF: 04 CARACAS 03979 
 
Classified By: A/DCM ABELARDO A. ARIAS FOR 1.4 (D) 
 
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Summary 
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1.  (C)  Summary:  President Hugo Chavez signed a decree to 
"Reorganize the Use and Tenure of Agricultural Land" before 
thousands of cheering supporters January 10.  Prior to the 
decree, several governors issued decrees to register property 
or otherwise assist the land reform process.  The National 
Land Institute (INTI) has announced redistribution projects 
and plans to amend the land law.  Chavez also replaced 
Agriculture and Land Minister Arnoldo Marquez_, cryptically 
avowing that Marquez_ was not under investigation.  Chavez 
will probably continue to rely on decrees to keep the land 
reform issue alive as lines of responsibility among the 
various government entities involved remain blurred and 
legislators consider amendments to the land law to bring it 
into conformity with the constitution.  Why land reform?  The 
answer is Chavez's long-term political vision.  End summary. 
 
2.  (U)  President Hugo Chavez, accompanied by cabinet 
members and 17 governors, signed before thousands of cheering 
fans on January 10 a decree to "Reorganize the Use and Tenure 
of Agricultural Land."  The decree did not establish any new 
criteria for land redistribution; rather, it used language 
from the constitution to lend authority to reviews of land 
ownership by state governments and the National Land 
Institute (INTI), the federal agency charged with land 
reform.  The decree also established a national agrarian 
committee to eliminate latifundios, (i.e., large, idle 
properties) and redistribute land to ensure its productive 
and sustainable exploitation.  Whether this committee is the 
same as the "anti-latifundio" committee chaired by Vice 
President Jose Vicente Rangel a week earlier to harmonize 
federal and state land policy was unclear; the press reported 
the two groups as having some of the same members.  Rangel 
has maintained the government's rhetorical line that the 
recent initiatives aim to standardize land ownership, not to 
expropriate property. 
 
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Cojedes Ranch Intervention Sparks More Controversy 
--------------------------------------------- ----- 
 
3.  (U)  The Cojedes Government has drawn muted criticism 
from the profitable company Agroflora, subsidiary of the 
British Vestey agro-industry group, upon raiding the Hato El 
Charcote ranch on January 8.  The Cojedes Government sent 
national guard troops and land experts to set up a base of 
operations in the ranch from which they would investigate the 
area's physical characteristics and ownership status.  Except 
for the Cojedes attorney general, who maintained that 
one-quarter of the ranch's 13,000 hectares was government 
property, state spokesmen have cast the initiative as an 
attempt to inspect the land's use and ownership status.  INTI 
director Otaiza refused to comment on the fate of the ranch, 
because, he said, the agency could not reveal its "political 
strategy."  Agroflora ran a newspaper advertisement outlining 
its claim to the property and affirming it would comply with 
any government project carried out legally.  Agroflora 
general manager Diana dos Santos urged Cojedes to coordinate 
with INTI because, she said, the federal agency was requiring 
Agroflora to submit to similar legal proceedings. 
 
4.  (C)  A British Embassy commercial officer told poloff 
that Vestey planned to go to court if necessary to prove it 
had ownership rights, which INTI had recognized in 2003.  The 
British Embassy has issued measured statements to the press 
urging respect for the rule of law but has kept its 
representations to the GOV confidential.  The Vestey Cojedes 
property has been under invasion for some four years, 
according to the British charge, and GUK representations to 
the GOV have had no effect.  The British charge told the 
Ambassador January 13 that the Vestey group has another dozen 
large ranches in Venezuela. 
 
5.  (U)  Peasants have also protested the intervention.  A 
peasant spokesman representing squatters on the land publicly 
 
threatened the government that there would be a confrontation 
if the government decided to displace them to form 
agricultural cooperatives.  The president of the Cojedes 
peasant association said the government should concentrate 
its efforts on improving the infrastructure of peasant 
settlements instead of invading land, according to press. 
 
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More States Follow Suit 
----------------------- 
 
6.  (U) Additional state governments decreed land 
"interventions" similar to that issued by Cojedes Governor 
Jhonny Yanez Rangel in December.  The states of Monagas and 
Yaracuy followed days after the Cojedes initiative with 
slightly more moderate land reform decrees.  Unlike the 
Cojedes decree, that of Monagas did not include urban 
properties, and Yaracuy's decree only mentioned government 
land, although it allowed for future interventions of private 
property.  Portuguesa Governor Antonia Munoz issued a decree 
urging the acceleration of the enforcement of the land law, 
although she did not single out properties for investigation. 
 In Aragua, Carabobo, and opposition-controlled Zulia and 
Nueva Esparta, state government spokesmen announced the 
creation of committees charged with drafting land registries. 
 According to press, the governors of Apure, Barinas, and 
Zulia are preparing to issue decrees.  Short of signing their 
own decrees, the governors of Lara and Anzoategui have 
signaled their ongoing support for the Cojedes interventions 
and described ongoing land reform studies in their states. 
On the local level, Maracaibo mayor Giancarlo di Martino said 
he would expropriate two abandoned private plots to build a 
drug rehabilitation center, a sports complex, and public 
housing, according to press. 
 
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INTI Plays Catch-up 
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7.  (U) INTI, which had issued a moratorium on issuing land 
titles while reorganizing its bureaucracy, also had entered 
the debate by January 11.  INTI director Otaiza affirmed his 
agency's support for the states' land interventions as 
consistent with the constitution and the land law.  Otaiza 
noted that INTI was reviewing the registries of 400,000 plots 
of land and had identified 500 plots as idle, according to 
press.  He added that INTI planned to give peasants in 2005 
one million hectares of public and private land, a decrease 
from the 1.7 million distributed in 2004.  (Note:  The GOV 
gives the right to use land, but does not grant title.) 
 
8.  (U) INTI has also been planning legislative reforms. 
Otaiza, after a "anti-latifundio summit" with the National 
Assembly leadership, said a proposal to update the 2001 land 
law would be ready by January 20.  Otaiza announced that INTI 
would seek to abolish rural areas demarcated by the law and 
make all lands subject to review.  According to press, the 
anti-latifundio committee also is considering reinserting in 
the law two articles judged unconstitutional by the Supreme 
Court of Justice.  The articles had outlined the process for 
INTI land "intervention" and had prohibited reimbursement for 
expropriated land. 
 
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Other Institutions Participate 
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9.  (U) Other government agencies and institutions subject to 
government regulation have signaled they would assist the 
land reform process.  Housing Minister Julio Montes said that 
after speaking with property owners, he would issue a decree 
calling for housing developments on idle urban land.  Montes 
said his ministry would encourage community organizations to 
build their own housing by providing USD 50 million to fund 
markets selling subsidized construction materials.  Tax 
collection agency Seniat warned that landowners who have not 
registered their property could be fined.  Bank association 
president Aristides Maza Tirado told the press the banking 
system would comply with the process, but expressed concern 
that banks--required by the GOV to extend 16 percent of their 
credit to the agricultural sector--would experience defaults 
as landowners lost property. 
 
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Minister Sacked 
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10.  (C)  During his January 9 "Alo, Presidente" broadcast, 
Chavez replaced Agriculture Minister Arnoldo Marquez_, an 
outspoken backer of Chavez's "endogenous development" 
strategy to increase local production through agricultural 
cooperatives.  Chavez explained that he was acting as a 
"manager strengthening his line-up" in removing Marquez_. 
Making an unsolicited excuse for the Minister, Chavez assured 
his listeners that Marquez_'s departure was not due to a 
Venezuelan intelligence investigation of irregularities in 
the ministry.  (Note:  Although Chavez fired former Minister 
Efren Andrades amidst press speculation about Andrades's 
corruption, Marquez_'s integrity had not been under public 
suspicion.)  Marquez_ told the press he was not stepping down 
for personal reasons, attributing his departure to broader 
changes in the cabinet.  His replacement, Antonio Albarran, 
formerly ran a sugar factory and the INTI office in Barinas 
State. 
 
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Private Sector Reaction 
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11.  (C)  While dismayed at the rush to intervene in 
agricultural lands, the organized private sector has been 
cautious in its reaction.  Albis Munoz, President of umbrella 
business organization FEDECAMARAS publicly stated on January 
12 that while Venezuelan business opposed the existing land 
law, it would obey it, and described Chavez's decree as 
"trying to resolve problems, unifying criteria."  She urged 
the GOV not to view the private sector as its enemy.  In a 
private conversation with econcouns on January 7, she said 
that despite pressures, FEDECAMARAS wanted to avoid a frontal 
assault on GOV policies that were politically popular. 
Instead, it would closely analyze individual laws and decrees 
and their implementation.  She stressed that dialogue had to 
be maintained.  Zulia businessmen were less measured in their 
private reactions, telling econcouns that if the GOV comes 
for their land, ranchers in western Venezuela will "pick up 
their guns." 
 
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Comment 
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12.  (C)  Chavez expects quick, robust action on land reform, 
and the various branches and levels of government are 
tripping over themselves to comply.  Amidst the confusion of 
ad hoc government committees--which typically accomplish 
little--and other government actors with overlapping 
responsibilities, Chavez and state executives will probably 
have to continue to direct the process by decree.  While the 
administration sorts out who will have to surrender property, 
high-profile initiatives such as land "interventions," 
construction supply stores, and various other public works 
projects will serve to promote the revolution nationwide.  In 
the longer term, changes to the land law cannot be ruled out. 
 The current law lacks teeth, having had key provisions ruled 
unconstitutional by the Supreme Court.  It also does not 
include the majority of Venezuelan land, and even though it 
requires the redistribution of "latifundios," it defines such 
properties as having soil worthless for farming.  The 
amendments to be considered by the National Assembly are 
intended to address these shortcomings, and the newly 
configured court is unlikely to consider any of the new 
provisions unconstitutional. 
 
13.  (C)  Why take on land reform?  This is, after all, an 
urbanized country whose population is not that dense, and in 
which agricultural production has long ceased to be the 
engine of development.  Our answers: 
 
--One, it ratifies here and abroad the "revolutionary" 
credentials of the regime. 
 
--Two, it appeals to the populist, client-oriented tradition 
of Venezuelan voters, some of whom are not that long removed 
from the farm. 
 
--Three, it is a freebie, and it boxes in the opposition. 
 
--Four, land reform meshes with Chavez's romanticized view of 
the countryside. 
 
--Five, this is part of Chavez's "long march" to re-educate 
Venezuelans and to inspire them to defend the unfolding 
Bolivarian Revolution. 
McFarland 
 
 
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      2005CARACA00160 - CONFIDENTIAL