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UNCLAS SECTION 01 OF 03 CARACAS 000944 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV VE
SUBJECT: VENEZUELA URBAN AND RURAL EXPROPRIATIONS CONTINUE 
(PART 2 OF 2) 
 
REF: A. CARACAS 808 
     ¶B. CARACAS 330 
     ¶C. CARACAS 444 
     ¶D. 05 CARACAS 2956 
 
This message is sensitive but unclassified, please treat 
accordingly. 
 
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Summary 
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¶1. (SBU)  Threats of rural land expropriations continue in 
Venezuela.  The private agricultural landholders are 
suffering, as squatters occupy and destroy land under the 
complicit eye of authorities.  The National Assembly also 
passed legislation allowing seizure of agricultural 
stockpiles in cases of "emergency."  Few interventions by the 
BRV's land institute (INTI) result in actual expropriations 
-- most landowners instead negotiate a settlement with the 
government or wait the battle out in court.  However, the 
famed "Cha-Az Method" (government-owner negotiation process 
touted by the BRV as an amicable land reform solution) 
ultimately failed when INTI took over the landmark La 
Marquesena ranch on March 15 (the landowner had abandoned the 
negotiation process to wait for a court decision).  A week 
later, Chavez gave "idle" land owners a three-month ultimatum 
to negotiate, or else the Armed Forces would occupy the land 
forcibly.  As of February 2006, over 900 land occupation 
documents have been issued, causing affected Spanish 
landowners to prompt their government to intervene.  In an 
attempt to justify takeovers, Chavez has declared that nearly 
90 percent of existing land titles are illegal.  The ultimate 
beneficiaries of "rescued" land are Chavez' voter base - 
peasants and members of agricultural cooperatives.  End 
Summary. 
 
--------------------------------------------- -- 
Rural expropriations damage agricultural sector 
--------------------------------------------- -- 
 
¶2. (SBU)  Rural land expropriations continue to make 
headlines.  The president of the Venezuelan Cattleman's 
Association (Fedenaga) has repeatedly denounced that the 
National Land Institute (INTI) and the BRV are backing 
landowners into a corner by "taking over property through 
violent means."  There are increasing reports of invasions 
and extorsions by squatters, who threaten landowners with 
property destruction unless a percentage of the harvest is 
handed over.  Though few actual expropriations have taken 
place, the BRV has called takeovers "rescues" - and has 
largely obtained the land through capitulation of landowners 
in negotiations.  Many farms occupied by squatters and 
targeted by INTI are still pending legal process. 
 
¶3. (SBU) In Yaracuy state alone, over 35 properties have been 
"confiscated" by INTI, many with complicity of military, 
local and state government authorities.  Invasions and 
vandalism in this state have accounted for, according to 
Fedecamaras (the private sector umbrella business chamber), 
the loss of 5,000 jobs, destruction of over 4,000 hectares of 
sugar cane crop, and a revenue loss of USD 14.8 million.  In 
the case of El Charcote ranch in Cojedes state (also targeted 
for expropriation by INTI), squatters drove down the price of 
the land (even burning some of it) and the British owners 
finally settled, receiving far less for their land than its 
original worth. 
 
¶4. (SBU) On March 29, the National Assembly passed 
legislation reforming the existing Agricultural Storage Law, 
which now allows the government to confiscate stored goods in 
cases of "emergency" and if "food sovereignty" (domestic 
production to cover domestic demand) is compromised.  Owners 
will have a 24 hour window in which to "justify" their 
stockpiles to authorities.  In addition, the law previews BRV 
plans for sustainable development through construction of 
public storage infrastructure.  (Note: this move hints at a 
BRV strategy to replace or compete directly with the 
agricultural private sector (Ref C). End Note.) 
 
CARACAS 00000944  002 OF 003 
 
 
 
------------------------ 
Failure of Cha-Az Method 
------------------------ 
 
¶5. (SBU)  In Chavez' November 2005 push against "latifundios" 
(idle lands), Hato La Marquesena, an 8,400 hectare cattle 
ranch and environmental preserve, was hailed as an example of 
land reform resulting from amicable negotiations between 
owner and government (see Refs B,D).  The process was 
baptized the "Cha-Az Method" (CH for Chavez, AZ for Azupure, 
the ranch's owner).  However, Azupure didn't reach an 
agreement via negotiation, and chose to wait the battle out 
in court instead.  To his surprise, on March 15 INTI declared 
that the land was government property (despite lack of court 
resolution) and has moved forward with plans to invite 
cooperatives onto the ranch and begin construction of a 
government-funded genetic studies center (Centro Genetico 
Florentino). 
 
¶6. (SBU)  The new Minister of Agriculture, Elias Jaua, 
declared on March 9 that "the revolution is above legal 
order" when justifying INTI's takeover of the ranch.  INTI's 
director, Richard Vivas, announced that the owners had not 
responded to INTI's court motion for over a month (though 
Azupure's lawyers say they have a 60-day window to respond), 
and declared that Azupure couldn't produce a title chain to 
prove the land was privately-owned (Note: only a court can 
make this determination, not INTI.  End Note.)  He later said 
that if a court ruled in Azupure's favor in the future, INTI 
would indemnify the cost of the land and any improvements 
made upon it as per expropriation law.  On April 4, BRV 
officials attempted to move 8,000 of Azupure's cattle off the 
land designated for construction, but after managing to move 
only 700, the cows wandered back to their original grazing 
grounds. 
 
¶7. (SBU)  Although Chavez has said in the past that he will 
respect court rulings, he declared on March 19 that he would 
give a three-month window for landowners to negotiate with 
the government or else he would send in the Armed Forces to 
occupy their land.  (Note: Given the lethargy of the courts, 
they will not likely make any land dispute rulings before 
this time frame  End Note.)  He urged mayors, governors and 
peasant groups to "have more initiative" in fighting 
latifundios, and linked the issue with Venezuela's dependence 
on food imports. 
 
------------------ 
Going Back to 1492 
------------------ 
 
¶8. (SBU)  Many of the "cartas agrarias" (documents that allow 
land occupation) issued by INTI are for land owned by Spanish 
citizens. (Note: INTI has issued over 900 as of February 
2006, versus the 3,000 issued in the entire 2005 calendar 
year.  End Note.)  Over 40,000 hectares of Spanish-owned 
sugar cane farms have been invaded (affecting over 200 
families), prompting owners to call on the Spanish Embassy in 
Caracas to intervene.  Spanish Foreign Minister Moratinos 
reportedly engaged Chavez himself on the issue, who promised 
not to expropriate Spanish-owned lands. (Note: this has 
prompted many Venezuelan landowners to opt for Spanish 
citizenship.  End Note.)  In Yaracuy state, Italian and 
Portuguese landowners have also been affected by the 
invasions. 
 
----------------------------- 
Taking land on a technicality 
----------------------------- 
 
¶9. (SBU)  On March 19, Chavez proclaimed that "there are no 
real property titles, as the law dictates, in 90 percent of 
the (agricultural) land in Venezuela."  However, legal 
experts vehemently disagree, noting that the Civil Code and 
the Notary and Registry Law have guidelines on land titles 
and most existing land titles follow them.  In addition, 
experts note that the law puts the onus of proof regarding 
land ownership on the government, not on the private 
 
CARACAS 00000944  003 OF 003 
 
 
landholder.  The lack of willingness of courts to make timely 
rulings (or any rulings at all) on title disputes sways 
public opinion to Chavez' claim that land titles, even if 
held, are illegal.  (Note: Most likely, Chavez' comments are 
intended to make him appear magnanimous by allowing ranchers 
to negotiate for land that they allegedly do not own.  End 
Note.) 
 
¶10. (SBU) Aside from "food sovereignty," other BRV players 
have found creative ways to justify land "rescues."  INTI's 
president cited on March 29 that land in the border state of 
Tachira was being used for narcotrafficking and confiscated 
fourteen ranches.  Portuguesa state governor Antonia Munoz 
made a call on March 24 to all peasants in the region to 
"keep their eyes peeled" for idle lands and aggressive 
landowners, and praised INTI's efforts to deliver "social 
justice" to the state.  Various INTI spokespeople have 
declared they'll protect peasant rights and interests. 
 
------------------------ 
Who gets "rescued" land? 
------------------------ 
 
¶11.  (SBU)  The immediate benefactors of BRV-"rescued" land 
are squatters and agricultural workers, who receive documents 
(but not land titles) permitting them to occupy and work the 
land legally.  Most "rescued" land is handed over to 
agricultural cooperatives (often made up of the same 
squatters and agricultural workers) or used by the BRV for 
various ad hoc projects, such as the genetics center in La 
Marquesena and an agricultural training school in El 
Charcote.  Though there is a severe housing crisis in 
Venezuela (Ref A), rural land is rarely sought out for 
housing solutions.  Anecdotal evidence suggests that urban 
dwellers who receive rural land tend to return to the city. 
 
¶12. (SBU)  In 2004, Chavez created Mision Vuelvan Caras 
(Mission About Face), which trains participants to create 
"endogenous development models" (loosely-defined business 
models similar to cooperatives, with collective 
decision-making and use of local natural resources for 
production).  Graduates from this program are called 
"lanceros" (javelin-throwers) -- they receive preferential 
loans from Fondafa (Agricultural, Forestry and Fishing 
Development Fund) and first dibs on expropriated land. 
Productivity statistics for "Fundos Zamoranos," as the 
cooperatives on rescued rural land are called, are not known. 
 One analyst said that agricultural financing increased by 45 
percent in 2005 while agricultural production only rose three 
percent. 
 
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Comment 
------- 
 
¶13. (SBU)  Though Chavez has made public calls for more 
initiative in fighting idle lands, the number of ranches 
actually expropriated remains low.  Most owners cave into BRV 
pressure and reach a settlement or choose to wait the battle 
out in court -- though Chavez has made it clear that those 
who wait will ultimately lose out.  The people who receive 
the rights to work on (but not own) "rescued" lands are 
clearly those in Chavez' political base, and continuation of 
"idle" land interventions fits well within his election year 
strategy.  Threats of expropriation are wreaking havoc on the 
agricultural sector and deterring investment.  After 
decreasing his herd size in view of expropriation threats, 
one rancher emblematically said: "We cattle farmers have one 
foot in Venezuela, and the other out."  If the government's 
solution is to alienate ranchers and substitute them for 
unproductive cooperatives, the BRV can kiss their "food 
sovereignty" dream goodbye. 
BROWNFIELD