VZCZCXRO1697
RR RUEHAO
DE RUEHCV #0459/01 0482053
ZNR UUUUU ZZH
R 172053Z FEB 06
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 3262
INFO RUEHBO/AMEMBASSY BOGOTA 6012
RUEHLP/AMEMBASSY LA PAZ 1668
RUEHPE/AMEMBASSY LIMA 9873
RUEHQT/AMEMBASSY QUITO 1740
RUEHAO/AMCONSUL CURACAO 0602
RUEHGL/AMCONSUL GUAYAQUIL 0299
RUEHMI/USOFFICE FRC FT LAUDERDALE 2821
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 02 CARACAS 000459 
 
SIPDIS 
 
SIPDIS 
 
HQ SOUTHCOM ALSO FOR POLAD 
USOFFICE FRC FT LAUDERDALE FOR CLAMBERT 
 
E.O. 12958: N/A 
TAGS: ECON ELTN EAIR ETRD KDEM PGOV ASECVE VE
SUBJECT: CARACAS BRIDGE CLOSURE: WEEK SIX 
 
REF: A. CARACAS 00043 
     ¶B. CARACAS 000126 
 
This message is sensitive but unclassified, please treat 
accordingly. 
 
------- 
SUMMARY 
------- 
 
¶1. (SBU)  Six weeks after the Caracas-La Guaira bridge 
closure, transportation remains cumbersome and important 
sectors of the greater Caracas-area economy continue to be 
affected.  BRV plans for a February 26 opening of the bypass 
road will not restore pre-closure traffic volume.  U.S. 
airlines have cancelled some flights and port traffic has 
flowed away from La Guaira.  The closure is expected to 
continue to be a drag on GDP growth and increase inflationary 
pressures.  The coastal state of Vargas has suffered the 
most, and the BRV has responded by enacting tax breaks and 
subsidies for truckers and Vargas businesses.  Post continues 
to require Embassy personnel and dependents to use Embassy 
armored vehicle shuttles to travel to/from the coast.  So 
far, the prior lack of BRV attention to infrastructure 
problems has had minimal negative impact on President Chavez 
himself.  End Comment. 
 
----------------------- 
BYPASS ROAD NOT PANACEA 
----------------------- 
 
¶2. (SBU)  The BRV has stood firm on its February 26 deadline 
to open the bypass road, a two-lane highway skirting the 
mountainside along the bridge.  Currently, the primary 
alternate route continues to be the "Old Highway," with a 
travel time averaging between two and seven hours and heavy 
cargo restrictions.  The secondary alternate route over the 
Avila Mountain and through Galipan has an average travel time 
of 1.5 hrs, though it can only be utilized in daylight hours 
and with four-wheel-drive vehicles.  The Ministry of 
Infrastructure (MINFRA) has plans for a new parallel bridge 
by March 2007, six months earlier than originally announced. 
(Note: We remain highly dubious about the March 2007 date. 
End note). 
 
¶3. (SBU)  According to MINFRA, the 2.5 km bypass road will be 
open to all traffic at all hours.  Engineering groups, 
however, estimate the road will only support 30 percent of 
prior bridge highway traffic volume.  The Venezuelan 
Engineering Association expressed doubts about the quality of 
this hastily-built road, as it lies on the same parts of the 
mountain whose shifting led to irreparable cracks on the 
bridge.  Moreover, the rainy season, which starts in April, 
will likely cause mudslides and road damage.  MINFRA 
blueprints of the road show up to a 7 percent grade on some 
stretches, which is very steep for cargo trucks, as well as 
multiple tight turns difficult for trucks to maneuver. 
MINFRA has not addressed this issue publicly, yet poor truck 
maintenance and the slow speed of required travel could pose 
significant bottlenecks. 
 
------------------------------------ 
AIRLINES AND PORTS SHRINK OPERATIONS 
------------------------------------ 
 
¶4. (SBU) In the first three weeks following the closure, U.S. 
airlines reported modest cancellations, since most travelers 
were using previously-booked holiday tickets.  However, by 
Jan 26, American Airlines cancelled half of its Miami-Caracas 
flights, Continental changed flight times for Houston and 
Newark routes.  Delta's schedule remained unchanged.  Airline 
representatives met with the Ambassador and expressed 
concerns about decreasing demand if the situation didn't 
improve.  Aeropostal, the major Venezuelan airline, reported 
a 43 percent drop in January sales.  European airlines, who 
mostly use Caracas as a regional hub, have reportedly 
experienced less of a demand decrease. 
 
¶5. (SBU) The effect of the bridge closure on the Port of La 
Guaira is unclear.  SENIAT, the customs and internal revenue 
 
CARACAS 00000459  002 OF 002 
 
 
agency, reported that the port is 100 percent operational, 
though the president of the National Association of (Port) 
Agents said that 50 percent of the cargo has been diverted to 
nearby Puerto Cabello.  Lending credence to lower volume, the 
La Guaira Port Authority announced on January 22 that it 
would keep old tax rates as an incentive to retain business. 
 
--------------- 
ECONOMIC IMPACT 
--------------- 
 
¶6. (SBU) According to a study by the economic consulting 
firm, MetroEconomica, the closure of the bridge will cause an 
estimated 2 percentage point contraction in GDP growth.  The 
Caracas-Vargas region generates about 24 percent of 
Venezuela's non-oil GDP, and 20 percent of total GDP, which 
makes it a significant artery of economic activity for the 
country.  MetroEconomica, as well as the Venezuelan-American 
Chamber of Commerce (VenAmCham) estimate that inflation will 
rise by 1.5 percentage points, mainly due to a reported 400 
percent increase in transportation costs.  Both organizations 
recognize that the opening of the bypass road will mitigate 
these pressures. 
 
--------------------- 
VARGAS IS HIT HARDEST 
--------------------- 
 
¶7. (SBU)  Since the closure of the bridge, Vargas' tourism 
has decreased 70 percent and nearly all businesses have felt 
the impact of the closure.  Hospitals report critical staff 
shortages due to long commute times, and grocery stores 
report interruptions in supply of products from the interior. 
 The BRV has pledged USD 63 million in assistance, which 
includes subsidies for airline jet fuel, gasoline subsidies 
for truckers and public transportation, sales and port tax 
exemptions, fare subsidies for taxi and bus drivers, and 
salary guarantees. 
 
----------------------------------- 
CONTINUED IMPACT ON POST OPERATIONS 
----------------------------------- 
 
¶8. (SBU)  Post continues to operate armored vehicle shuttles 
twice daily on the "Old Highway" and has authorized travel on 
the Galipan route for official offroad vehicles during the 
daytime.  Long travel times continue to hamper Embassy 
operations and increase costs, as Embassy employees and 
TDYers must now plan an entire day to travel back and forth 
from the airport.  As expected, this has affected morale and 
has decreased official and recreational travel.  When the 
bypass road opens, Post will re-evaluate travel restrictions 
and transport costs. 
 
------- 
COMMENT 
------- 
 
¶9. (SBU) We expect the bypass road will somewhat alleviate 
problems caused by bridge closure, however, bottlenecks will 
likely slow traffic and continue to make traveling to/from 
the coast a production. (Note: An estimated 2,000 
tractor-trailers traveled the highway before the collapse, 
and now only 800 make the trip on the "Old Highway."  End 
Note.)  The bridge incident has proved embarrassing for the 
BRV, highlighting the lack of attention by Chavez on what was 
widely recognized as a pressing problem.  Suprisingly, the 
BRV has yet to pay a political cost for the bridge collapse, 
despite efforts by the media and opposition groups to 
highlight the issue.  Until the government provides a 
solution that restores the prior traffic flow, travel will 
continue to be burdensome and the sectors of the economy, 
particularly in Vargas, will continue to suffer.  End Comment. 
BROWNFIELD