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P 011510Z OCT 08
FM AMEMBASSY CARACAS
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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001388 
 
SIPDIS 
 
E.O. 12958: DECL: 10/01/2018 
TAGS: ECON EFIN PREL EINV PGOV VE
SUBJECT: COMMUNAL ECONOMY CENTER 
 
CARACAS 00001388  001.2 OF 002 
 
 
Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) 
and (d). 
 
¶1.  (SBU) Summary.  EmbOffs visited a newly inaugurated 
communal economic center near Caracas.  The center, extremely 
modern by Venezuelan standards, offers a space for communal 
cooperatives to sell local goods.  However, many of the 
cooperatives did not sell locally produced goods or sold 
cheap knock-off products.  A government funded supermarket 
was poorly stocked, although its prices were 25 to 50 percent 
lower than private store prices.  The Center illustrates 
both the collectivist approach envisioned by Chavez's 21st 
Century Socialism as well as government microfinance efforts 
which funnel money to programs without much evidence of 
accountability or metrics for success.  End Summary. 
 
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A SHOWCASE OF COMMUNAL COOPERATIVES 
----------------------------------- 
 
¶2.  (SBU)  The Centro de Economia Communal "Ali Primera" 
(CECAP) was inaugurated with much fanfare by Miranda State 
Governor Disodado Cabello Rondon (Cabello) on August 26th. 
Located at the Ali Primera Metro Station in Los Teques, near 
Caracas, CECAP has 35 booths for small shops.  Currently, 
twenty-two booths are occupied by communal cooperatives from 
the Altos Mirandinos subregion of Miranda and include shoe, 
clothing, party goods, arts & crafts, and gifts shops as well 
as a bakery, fast food restaurants and a PDVAL supermarket. 
The stated purpose of CECAP is to consolidate Venezuela's new 
economic model and benefit local residents by supporting 
community production and the actions of community councils. 
 
¶3.  (SBU)  CECAP occupies a new modern building, easily 
accessible by mass transit. The Bolivarian Republic of 
Venezuela (BRV), through the Fundo de Recursos Financieros 
para los Consejos Comunales (the Fund of Financial Resources 
for Community Councils), invested approximately 5 million BsF 
(approximately 2.33 million USD at the official exchange 
rate) for construction of the building and support for local 
community productive activities.  Other moneys are funneled 
through the regional government to communal cooperatives as 
well.  The center is impressive, with a main structure that 
houses the shops and adjacent parking.  The cookie-cutter 
shops boast high-end finishing including blond wood shelving, 
tempered glass store fronts and marble flooring.  In 
addition, each small shop was outfitted with a modern cash 
register.  The hours of operation are 9 am to 9 pm, seven 
days per week. 
 
------------------------------- 
ECONOMIC ACTIVITY IN THE CENTER 
------------------------------- 
 
¶4.  (SBU)  EmbOffs visited CECAP's operating stores in an 
unofficial visit.  Many people were at work cleaning the 
open-air building and there was a high security presence. 
Despite the stated goal of community production, few stores 
offered locally produced merchandise.  The clothing store 
exclusively stocked Panamanian clothing.  The shop worker 
said no locally produced clothes are available to sell.  The 
handbag store had a small selection of locally produced 
handbags.  They were, however, of poor quality and design. 
The handbag store also openly sold cheap imitations of 
European and American designer goods.  Fakes were easy to 
spot due to poor workmanship and typographical errors in the 
brand name. (One small handbag was sold under the "Bucci" 
rather than "Gucci" label and a "Tous" wallet included the 
card of the manufacturer, Dollhouse Latin America.)  The 
party store did sell locally produced pi$atas and accepted 
orders for homemade cakes, both items which are easily 
produced without significant capital investment. 
 
¶5.  (SBU)  EmbOff spoke with several store workers about the 
financing and business structure of their stores. Store 
workers explained that each store is a communal cooperative, 
with all revenues deposited into the communal account with 
Banco Communal, a government bank.  The communal cooperatives 
are granted permission to operate within the center by the 
BRV and leases do not exist.  A communal cooperative is 
formed when a group of neighbors band together and register 
as a communal cooperative.  Upon submission of a cooperative 
plan to the regional government, approved cooperatives are 
granted a loan of approximately 120,000 BsF (approximately 
56,000 USD at the official exchange rate).  Once the 
cooperative informs the government it has completed eighty 
percent of its proposal, the cooperative is permitted to 
submit another cooperative plan for additional moneys.  Store 
workers did not mention the need to repay the initial loan to 
 
CARACAS 00001388  002.2 OF 002 
 
 
have access to additional moneys nor any government 
established standards for project completion.  Due to the 
regional funding of cooperatives, the store workers praised 
Governor Cabello for the new center, rather than President 
Chavez. 
 
-------------------------------- 
PDVAL SUPERMARKET POORLY STOCKED 
-------------------------------- 
 
¶6.  (SBU)  The PDVAL supermarket, a subsidiary of PDVSA, 
Venezuela's national oil company, was a depressing matter. 
Although at first glance the store seemed adequately stocked, 
further inspection revealed otherwise.  Shelves contained a 
few basic products produced in Venezuela, including rice, 
black beans, sardines, marmalade, margarine, fruit juices and 
long life milk.  (Note:  Some of the items, such as black 
beans, are usually unavailable in private grocery stores.) 
There were two deep-freezers containing whole chickens and 
beef, both of which were imported from Brazil and appeared to 
be of poor quality.  The dairy section was poorly stocked 
with only the products of a government-owned enterprise.  The 
store contained only perhaps several daily sales hours worth 
of basic goods.  In comparison with private grocery stores, 
however, the prices were 25 to 50 percent lower.  Rationing 
of products was enforced as shoppers were permitted to buy 
only 6 kilos of any one product.  A shopper, if lucky, would 
be able to buy only a portion of the basic food basket and 
need to buy additional items at a private grocery store. 
There was no fresh fruit, vegetables or meat available. 
 
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COMMENT 
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¶7.  (C) In the past several years, the BRV has pumped large 
amounts of money into social projects (mainly the so-called 
missions) with little quantifiable success.  CECAP represents 
a collectivist model where the BRV, rather than making 
strategic investments in economically viable local 
industries, directs money towards small projects with little 
accountability or defined metrics for success.  The 
possibility of corruption and fraud within the communal 
cooperatives are high due to lack of oversight. 
CAULFIELD