VZCZCXYZ0021
PP RUEHWEB

DE RUEHKG #1687/01 2371837
ZNY CCCCC ZZH
P 251837Z AUG 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC PRIORITY 3460
INFO RUCNCOM/EC CARICOM COLLECTIVE PRIORITY
RUEHCV/AMEMBASSY CARACAS PRIORITY 0439
RUEHME/AMEMBASSY MEXICO PRIORITY 2885
RUEHQT/AMEMBASSY QUITO PRIORITY 0712
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RHMFISS/HQ USSOUTHCOM J7 MIAMI FL PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0060
RUEKJCS/DOD WASHDC PRIORITY

C O N F I D E N T I A L KINGSTON 001687

SIPDIS

SIPDIS

STATE FOR WHA/CAR (BUDDEN), EB/ESC/IEC/EPC (MCMANUS),
WHA/EPSC (CORNEILLE)

E.O. 12958: DECL: 08/25/2016
TAGS: EAID ECON EPET KMCA PGOV PREL MOPS MARR UNSC
JM, VE, TD
SUBJECT: JAMAICA/VENEZUELA: DEAL CLARIFIED AND IRRITATION
AT T&T

REF: A. KINGSTON 1592 (NOTAL)
     ¶B. 05 KINGSTON 2661 (NOTAL)
     ¶C. KINGSTON 1624 (NOTAL)

Classified By: Ambassador Brenda Johnson, reasons 1.4 (b) and (d)

¶1. (C) Summary:  Clear numbers that clarify the extent of
Jamaica's deals with Venezuela (outlined ref. A.) have
emerged.  The Venezuelan government has purchased a 49
percent stake in the GOJ-owned PetroJam refinery for USD 64
million, according to Dr. Jean Dixon, Permanent Secretary at
the Ministry of Industry, Technology, Energy and Commerce
(MITEC).  Dixon was a member of a GOJ delegation that
traveled to Caracas August 18-19 with Foreign Minister
Anthony Hylton.  The purpose of that visit was to build upon
agreements that had been developed during the August 14 visit
of President Chavez to Montego Bay.  There is lingering
resentment among GOJ officials that inaction by Trinidad and
Tobago in the face of rising oil prices has pushed the region
into Chavez' arms, but nevertheless GOJ representatives
continue to portray GOJ-GOV relations primarily in terms of
economic opportunity.  GOJ has not yet made a final
determination on its vote for the non-permanent seat on the
UNSC, according to a reliable MFAFT official.
End summary.

-------------------
The Deals Clarified
-------------------

¶2. (U) Clear numbers emerged that clarify the extent of
Jamaica's deals with Venezuela that Post outlined in ref. A.
The final total of Venezuelan assistance remains unclear,
however, because the estimates of the costs of the upgrade
and expansion of the PetroJam refinery have not been
finalized.

¶3. (SBU) According to Dr. Jean Dixon, Permanent Secretary at
the Ministry of Industry, Technology, Energy and Commerce
(MITEC), the refinery was appraised at USD 130 million.  The
Venezuelan government ) through Petroleos de Venezuela
Sociedad Anonima (PDVSA) - purchased a 49 percent stake for
USD 64 million.  Dixon speculated that the media reports of a
USD 290 million deal were the result of reporters' confusion
in their haste to make deadlines.

¶4. (SBU) The upgrade, she said, was likely to cost between
USD 250 to 300 million.  Of that figure, PDVSA would
contribute 49 percent.  Dixon also noted that it was likely
that delegations would travel regularly between Caracas and
Kingston as the plans for the project came closer to fruition.

--------------------------------------------- ---
GOJ trip to Caracas: Building on the Chavez Trip
--------------------------------------------- ---

¶5. (SBU) Dixon was a member of a GOJ delegation that traveled
to Caracas August 18-19.  The purpose of that trip was to
build upon the agreements that had been developed during the
August 14 visit of President Chavez to Montego Bay.  In a
private meeting, XXX XXX, the Deputy Director for
Foreign Trade at the Ministry of Foreign Affairs and Foreign
Trade (MFAFT), confirmed this, stating that Foreign Minister
Hylton "did not conclude any new agreements" in Caracas; that
his travel to Venezuela arose from "his special interest in
energy supply security."

---------------------------------------
Bitterness Towards Trinidad and Tobago?
---------------------------------------

¶6. (C) XXXXXXXXXXXX (protect) then went a step further.  She stated
that there was an undercurrent of resentment from Minister
Hylton directed towards Trinidad and Tobago Prime Minister
Manning.  She noted that, as oil prices reached record highs,
many felt that the GOTT did nothing to help the region.

¶7. (C) She opined that many were upset that it was Chavez who
stepped in to offer relief, and that "if (Trinidad and
Tobago) had acted, we wouldn't be in this awkward situation,"
referring to the GOJ's desire to maintain good relations with
the USG while accepting largesse from Venezuela.  (Note:
Econoff had heard private sector contacts express this
sentiment, but this is the first time to Post's knowledge
that a GOJ representative has acknowledged displeasure with
GOTT.  End note)

¶8. (C) XXXXXXXXXXXX predicted that Hylton's displeasure with the
GOTT would "become apparent" over the coming months, although
she stopped short of explaining how it would be manifested.
(Comment: XXXXXXXXXXXX seemed to indicate that this would be
troublesome, saying that Hylton's actions "will provoke a
response from the Trinis, and I've seen the Trinis angry("
but refused to elaborate.  End comment.)

------------------------------
Purely a Business Relationship
------------------------------

¶9. (C) Nevertheless, XXXXXXXXXXXX was quick to emphasize that the
USG should see PetroCaribe and ties to Venezuela as a case of
"economic realpolitik," rather than any sign of an
ideological shift, or even of fondness for Chavez the man.
She echoed the comments of Dr. Dixon (ref. B) in saying that
the GOJ had long been dependent on Venezuelan oil, and that
the GOV ) especially now, with an equity stake in the energy
industry in Jamaica ) would not do anything that made poor
business sense.

------------------------------
UNSC Membership Vote Undecided
------------------------------

¶10. (SBU) On the subject of the GOJ's vote for the
non-permanent seat on the United Nations Security Council,
XXXXXXXXXXXX reiterated that the final decision had not been made
(ref. C), but when econoff expressed surprise at this, XXXXXXXXXXXX
also noted with a wry smile that "no one was unhappy that
it's a secret ballot."

-------
Comment
-------

¶11. (C) Closer ties to Venezuela as a result of PetroCaribe,
as well as low-interest loans for critical infrastructure
projects, are part of the GOJ's stated policies, and will
characterize the long-term picture.  Despite this, there are
ways in which the USG can counter an over-reliance on the
GOV.  Post continues to encourage the GOJ to aggressively
pursue Millennium Challenge Corporation's Threshold Program,
with a view to a full compact further down the road.
Likewise, USG assistance in seeking alternative energy
sources, and encouraging a diversification of the country's
portfolio, may help to ease the burden of their crippling oil
bill.  End comment.
JOHNSON