US embassy cable - 05CARACAS1954

C O N F I D E N T I A L  CARACAS 001954 
 
SIPDIS 
 
 
NSC FOR CBARTON 
HQSOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 05/04/2015 
TAGS: PGOV, EAGR, VE 
SUBJECT: PROBLEMS WITH VENEZUELAN COOPERATIVES 
 
 
Classified By: POLITICAL COUNSELOR ABELARDO A. ARIAS FOR 1.4 (D) 
 
1.  (C)  Summary:  Rural cooperatives are a pivotal part of 
Venezuelan President Hugo Chavez's land redistribution 
effort.  Thousands of agricultural cooperatives are forming 
to petition land and monetary grants from the GOV as 
participants in Chavez's "Mision Vuelvan Caras" job training 
program complete their instruction.  At the same time, many 
cooperatives, lacking sufficient GOV support and plagued with 
land and financial disputes, are folding.  In the near term, 
failures of rural cooperatives will not pose significant 
political problems for Chavez because Venezuela's population 
is about 90 percent urban; Chavez has a strong personal 
commitment to this program.  End summary. 
 
2.  (C)  Venezuelan President Hugo Chavez regularly hails 
cooperatives as a key to his plan to redistribute land and 
develop the agricultural sector.  Some 90 percent of 
Venezuelan cooperatives are agricultural, although mining, 
carpentry, oil services, and other technical businesses have 
also been collectivizing under Chavez, according to former 
Agriculture Minister Hiram Gaviria. 
 
3.  (U)  Most members of farming cooperatives are graduates 
of Chavez's "Mision Vuelvan Caras" (About Face Mission) job 
training program.  Roughly half of Vuelvan Caras graduates 
are involved in the agricultural sector; other sectors 
include tourism, light industry, infrastructure management, 
etc., according to the official website.  Vuelvan Caras 
participants--who often join up along with family 
members--receive six months of training while receiving a 
"scholarship" of about 80 dollars a month.  After completing 
their instruction, Vuelvan Caras participants form 
cooperatives of six to eight people, propose a project, and 
those planning to farm receive rights to work collectively a 
plot of sometimes expropriated or--in the parlance of the 
GOV--"rescued" land to realize their proposal.  Popular 
Economy Minister Elias Jaua told reporters the GOV spends 
over USD 400 million to run each six-month program and then 
nearly USD 300 million to finance cooperatives that form in 
each graduating class. 
 
4.  (U)  In March and May, over 500,000 participants 
completed the Vuelvan Caras program, and Chavez used his 5 
June "Alo Presidente" broadcast to celebrate the formation of 
their new cooperatives.  During the program, Chavez announced 
the GOV would grant letters allowing peasants to farm some 
32,000 hectares of a "rescued" ranch.  The ranch's legal 
adviser objected the same day that only the courts had the 
authority to declare the ranch public land. 
 
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Problems 
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5.  (C)  Former Agriculture Minister Hiram Gaviria told 
poloff the missions he visited were providing adequate 
training, but he predicted the GOV would not provide the 
money, technical assistance, supplies, and support in 
bringing products to market that the graduates would need to 
keep their cooperatives afloat.  Manuel Gomez, the 
anti-Chavez director of a Venezuelan peasant advocacy NGO, 
told poloff in late May the GOV had spent millions of US 
dollars on construction for a cooperative in Miranda State 
that was not able to produce.  He said over 50,000 
cooperatives were registered with the government, but 
determining how many really existed was impossible because 
cooperatives tended to fold as fast as they formed. 
 
6.  (C)  Inter- and intra-cooperative disputes are common. 
Gomez told poloff a group of peasants were up in arms because 
the GOV had booted them from the land used for the 
aforementioned Miranda cooperative.  Vuelvan Caras 
participants in Monagas State in late May also protested that 
the National Land Institute was planning to grant 500 
hectares of local private land to cooperatives from another 
area, according to press reports.  A pro-Chavez website noted 
that the director of the GOV office overseeing cooperatives 
said his entity daily received over 20 complaints, 45 percent 
of which stemmed from financial disputes between cooperative 
members.  A peasant asked by Chavez on his "Alo Presidente" 
show if he had been planning to form a cooperative responded 
that members of such groups ended up fighting amongst 
themselves.  Not satisfied with his explanation that 
 
cooperatives were organized poorly, Chavez finally talked the 
peasant into blaming the disputes on capitalism. 
 
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Crime Comes With Cooperatives 
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7.  (C)  Peasant organization leader Manuel Gomez said a 
Venezuelan secret police (DISIP) officer confided to him that 
the GOV's agrarian reform was "creating chaos."  According to 
the officer, scam artists promising land and cash grants were 
charging peasants to sign up for fake cooperatives.  DISIP 
officers were investigating organizations with "campesino" 
(peasant) in the title to try to catch the swindlers, Gomez 
said. 
 
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Comment 
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8.  (C)  Although many cooperatives are failing, they are 
unlikely to be a political liability for Chavez in the near 
term.  Many peasants, who fall for "get land quick" schemes, 
are still looking to Chavez to solve their problems.  If they 
ever do turn on Chavez, they will not constitute a 
significant voting bloc.  Indeed, Chavez's tirades against 
rich landowners more likely are aimed at the roughly 90 
percent of the population that is urban and has little 
understanding of rural issues.  Chavez has a strong personal 
commitment, however, to strengthening cooperatives and small 
farmers, since they buttress his vision of a more 
self-sufficient, non-capitalist, revolutionary society. 
 
9.  (C)  The GOV, determined to spend its oil bonanzas on 
programs that are both politically profitable and which point 
to a "non-capitalist" path to development, is likely to keep 
pumping money into these cooperatives.  At best, they may 
provide a subsistence living for some peasants.  But without 
attacking the chronic problems of Venezuelan agriculture, 
most notably unfavorable exchange rate policies (the current 
availability of foreign exchange at preferential rates for 
food imports is the latest chapter in a long history of 
anti-farmer policies), it is difficult to expect much real 
benefit from the cooperative program. 
Brownfield 
 
 
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      2005CARACA01954 - CONFIDENTIAL