US embassy cable - 05CARACAS767

C O N F I D E N T I A L SECTION 01 OF 03 CARACAS 000767 
 
SIPDIS 
 
NSC FOR CBARTON 
HQSOUTHCOM ALSO FOR POLAD 
USDA FOR BGRUNENFELDER, PSHEIKH, ETERPSTRA, KROBERTS 
 
E.O. 12958: DECL: 09/22/2014 
TAGS: PGOV, ECON, KDEM, VE 
SUBJECT: LAND "REFORM" FITS AND STARTS 
 
Classified By: POLITICAL COUNSELOR ABELARDO A. ARIAS FOR 1.4 (D) 
 
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Summary 
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1.  (C)  Repeating Venezuelan land reform history, the GOV's 
Bolivarian push to seize property is falling short of its 
ambitious goals.  It is encountering opposition from various 
interest groups, public insecurity generated by land 
invasions, and backpedaling from some regional leaders. 
Nonetheless, the GOV continues to promote changes to the land 
law that would authorize property invasions and allow for 
more expropriation.  Active in certain areas of the country, 
it nationalized on March 13 a popular nature reserve and a 
profitable British cattle ranch in Cojedes State.  Although 
the federal agencies and states involved appear to have 
bitten off more than they can chew with their wide-reaching 
plans to reorder property ownership and land cultivation, 
their proposals reserve for state planners much more 
discretion in choosing properties for expropriation.  End 
summary. 
 
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History of Backsliding 
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2.  (C)  The Venezuelan Government has a history of promising 
radical land reform but has never succeeded in implementing 
it on a large scale.  During the 1960-70s, the GOV initiated 
redistribution, but it was unable to staunch a wave of 
urbanization that left only 10 percent of the population in 
rural areas.  "Agribusiness" Professor Carlos Machado told 
poloff that the government realized in about 1990 that the 
last round of land redistribution predating President Hugo 
Chavez had failed.  As of 1996, the National Land Institute 
had about 7.3 million hectares of undistributed idle land, 
according to government land surveys.  In 2001, the National 
Assembly passed Chavez's land and agrarian development law, 
but the National Land Institute (INTI) and the Venezuelan 
judiciary failed to sort out property ownership while 
continuing to disregard many land invasions.  On the heels of 
Chavez's rally for sweeping agrarian land redistribution on 
January 10, 2005, administration officials and regional 
leaders--sometimes working at cross-purposes--have 
expropriated land but are falling short of realizing Chavez's 
ambitious vision. 
 
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Regional Leaders on the Defensive 
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3.  (U)  Mayor of greater Caracas Juan Barreto scrapped urban 
expropriation plans in February when faced with their 
unfeasibility.  According to February 23 press reports, 
Barreto announced that the city would expropriate three 
residential complexes to house people left homeless by early 
February rains.  The city suspended the plans February 28 
after the single councilman voting against the expropriation 
pointed out that the residences were uninhabitable:  none 
were fully constructed and one, built on fragile terrain, had 
been ordered demolished.  The councilman told reporters 
Barreto also had neglected to inform both the borough mayor 
and the property owners before announcing the expropriation. 
Barreto told a reporter that he planned to negotiate with 
owners a fair price for another 42 properties that could be 
made suitable for expropriation and inhabitation.  His 
administration, meanwhile, has identified 183 properties for 
potential expropriation. 
 
4.  (C)  Public security problems have dogged the land 
redistribution efforts of Carabobo Governor Luis Felipe 
Acosta Carlez, who publicly declared that property invasions 
were not crimes.  A wave of urban invasions sparked face-offs 
in late January between squatters and owners, whom National 
Guard troops dispersed with tear gas during protests.  Acosta 
insisted he had proof that opposition parties were organizing 
invasions to discredit him.  Yet, he maintained he would not 
uproot squatters, and his attorney general responded that 
neighborhood patrols would establish a dialog with the 
"occupants of a precarious nature."  A reliable Chavista 
source told DCM that Acosta's inner circle were in cahoots 
with squatters.  Their angle was to force owners to agree to 
certain Acosta-linked construction companies to build housing 
on invaded property; only then would the owners be 
compensated. 
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Governors Break Ranks 
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5.  (C)  A few pro-Chavez governors have veered from the 
party line on the land redistribution issue.  Monagas 
Governor Jose Briceno Gregorio, the founder of a small party 
who ran on the MVR ticket in the October elections, issued a 
decree prohibiting land invasions and directed the removal of 
illegal occupants by force, if necessary.  Portuguesa 
Governor Antonia Munoz (MVR) complained on a television 
program on 28 February that some documents allowing peasant 
occupations were issued in her state for what she described 
as productive land.  The editor of a ranchers' newspaper told 
poloff February 1 that four of the most fertile states, 
Barinas, Portuguesa, Guarico, and Zulia had not yet 
redistributed much property.  The editor added that Chavez 
was irritated with his father, Barinas Governor Hugo de los 
Reyes Chavez, for shirking significant redistribution because 
he feared large-scale property invasions. 
 
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Nationalizing Famous Ranches 
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6.  (C)  INTI announced March 13 the nationalization of 
110,000 hectares of five ranches, including Hato Pinero, 
which is a cattle ranch, animal reserve, and ecological 
research site in Cojedes State.  Calling the move a "rescue" 
rather than an expropriation, INTI added that it would offer 
no payment because the ranchers never legally owned the 
properties.  The ranches have 60 days to appeal the ruling in 
court, according to press reports.  A manager at Hato Pinero 
told econcouns in late February that while the ranch owners 
felt some accommodation could be reached with the state 
government, the national government provoked much more 
concern.  Indeed, INTI director Eliecer Otaiza described Hato 
Pinero managers in early March as feudal lords who subjected 
their workers to slave labor, according to a pro-GOV website. 
 The Hato Pinero manager said INTI inspectors surveying the 
ranch appeared ignorant of the operations of such an 
enterprise, including such basics as the fact that the land 
appeared idle during the dry season because cattle could not 
be grazed there. 
 
7.  (C)  INTI also took nearly half of the profitable, 
British-owned El Charcote cattle ranch.  Hato El Charcote 
employees shared Hato Pinero's analysis about INTI and its 
inspectors.  A British Embassy official told poloff that 
although Cojedes Governor Jhonny Yanez Rangel admitted 
privately that El Charcote had firm rights to title, INTI 
declared 5,000 of the ranch's nearly 13,000 hectares "idle" 
federal land and gave peasant squatters the right to occupy 
the rest.  Before nationalizing the 5,000 hectares without 
warning, INTI had "invited" the ranch to "donate" the land, 
according to the British Embassy.  Like Hato Pinero, Hato El 
Charcote has much land unsuitable for farming.  Ranch owners 
plan to appeal INTI's ruling. 
 
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Environment Advocates Challenge Redistribution 
--------------------------------------------- - 
 
8.  (C)  Some environmental activists have crossed party 
lines to oppose redistribution.  An environmental lawyer and 
legal advisor to the GOV's institute of cultural patrimony 
told poloff that although the land law contained 
environmental protections, some ranches existing to protect 
fauna such as Hato Pinero would probably be up for 
redistribution.  The National Assembly's environment 
committee, which includes several pro-Chavez deputies, had 
also registered in early March its "profound worry" over the 
fate of Hato Pinero.  Governor Yanez lashed out at the 
committee, calling its work an "injustice and an 
obstruction," and Otaiza said ranchers were guilty of 
destroying forests. 
 
9.  (U)  In Yaracuy State, environmental associations and a 
local citizens' assembly protested that the Governor Carlos 
Gimenez's land intervention decree would threaten a local 
river supplying water to central Yaracuy by attracting 
loggers to its banks.  Yaracuy's secretary of government told 
the press he recognized the threat to state rivers and would 
take 90 days to review specific cases. 
 
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Legal Changes 
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10.  (U)  The National Agrarian Council, established by the 
land reorganization decree issued by Chavez January 10, is 
contemplating changes to the land law that would allow for 
more expropriation.  According to press reports, the new 
rules would specify the types of crops to be grown on 
particular classes of soil.  Otaiza publicly reassured 
farmers that they would not necessarily have to change crops 
because INTI would take into account productivity as well as 
cultural, labor, and environmental factors before certifying 
land.  Arguing that measuring Venezuelan land with "absolute 
figures" is a mistake, Otaiza proposed the abolition of a 
land law article that protected small properties from 
expropriation. 
 
11.  (U)  Otaiza has also advocated a legal change to protect 
squatters who have cultivated land occupied for several 
years.  Otaiza told reporters in January that the rights of 
occupants were "not linked" to the issue of who held title to 
the land.  Although the legal changes have not yet been 
considered by the National Assembly, INTI recently 
expropriated 1,500 hectares in Aragua State and gave it to 
squatters whom the supreme court ordered off the land last 
year, according to press reports. 
 
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Comment 
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12.  (C)  Chavez has done little to drive the land 
reorganization process since issuing his decree, and it 
shows.  Having missed the deadline to turn in a list of idle 
lands required in Chavez's January 10 decree, INTI and the 
governors are sputtering along making public statements and 
dealing with individual properties.  They probably will 
continue taking plots of land, pressuring owners to sell, and 
ignoring invasions.  The grandiose review and reordering of 
land ordered by Chavez, however, is probably not in the 
cards.  INTI's bureaucracy lacks both the competence to 
evaluate all rural land and the expertise to mount the 
exhaustive scientific review it plans to use to decide who 
grows what where. 
 
13.  (C)  INTI director Otaiza has argued for greater 
government involvement in delineating land according to its 
size, character, and use while assuring the public that he 
will not be rigid in applying the rules.  The former 
intelligence chief's lack of familiarity with the issue may 
hinder him from staying on message, but his ambiguity will 
also provide land inspectors more discretion in deciding 
property owners' fate.  Such power will afford them new 
opportunities for graft. 
 
14.  (C)  Land "reform" is not a burning issue in Venezuela. 
The issue is, however, important to the more radical leftists 
who support and advise Chavez, and land reform fits in well 
with Chavez's message to supporters inside and outside 
Venezuela that he is unafraid to challenge the status quo. 
It should also, however, offer opportunities for us to build 
coalitions among the agriculture, business, environmental, 
and political communities. 
Brownfield