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C O N F I D E N T I A L SECTION 01 OF 03 CARACAS 003257 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: DECL: 10/25/2016 
TAGS: ECON EAID PREL VE IR
SUBJECT: CHAVEZ' DOLLAR DIPLOMACY: SPREADING WEALTH AND 
PROMISES AROUND THE WORLD 
 
REF: A. CARACAS 854 
     ¶B. BAMAKO 1141 
 
CARACAS 00003257  001.3 OF 003 
 
 
Classified By: Economic Counselor Andrew N. Bowen for reasons 1.4 (b) a 
nd (d) 
 
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Summary 
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¶1. (C) Since 2005, President Chavez has verbally pledged over 
USD 90 billion for bilateral agreements, regional 
initiatives, government contracts, binational funds, 
donations, investments and joint ventures involving foreign 
countries.  The total figure is approximately one third of 
combined GDP for 2005-2006, and includes the value of oil 
sold with favorable financing.  Chavez has engaged in his 
"dollar diplomacy" with at least 90 countries, including 
investments in joint ventures to operate on Venezuelan soil 
and funding a handful of questionable foreign projects. 
Internally, the oposition has criticized him for spending 
money abroad while Venezuela's serious infrastructure and 
social services needs persist.  Chavez has maintained that 
his travel (and promises) are "unavoidable commitments" of 
the head of state and the Ministry of Communications and 
Information has launched a billboard campaign attempting to 
shed positive light on the deals.  If he were really to spend 
as much as he promises, Venezuela could not stay economically 
afloat.  End Summary. 
 
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Promising a third of GDP? 
------------------------- 
 
¶2. (C)  Since 2005, President Chavez has made verbal promises 
to foreign countries valued at over USD 90 billion in the 
form of agreements, binational funds for joint projects, 
donations, investments, government purchases, and joint 
ventures (as well as the value of oil sold at favorable 
terms).  Of the information EconOff could obtain from media 
reports, economic think tanks, reporting from other 
embassies, and the BRV itself, Venezuela has engaged in its 
dollar diplomacy with at least 90 countries.  The funds have 
been allocated to inter alia humanitarian aid, establishing 
new diplomatic missions, and projects in the areas of oil and 
gas (including shipbuilding), petrochemicals, aviation, 
agriculture, labor, finance (including debt purchase), 
defense, development, education, environment, health, 
housing, industry, infrastructure, media, mining, 
science/technology, telecommunications, tourism, and trade. 
(Note: A detailed matrix has been transmitted to the desk and 
is available and from EconOff at Rioja-ScottIE@state.gov. 
End Note.) 
 
¶3. (C) USD 26.7 billion of Chavez' pledges are for 
transactions that do not result in a direct, immediate, or 
tangible benefit to Venezuela, as the figure represents 
either donations abroad, funding for foreign projects, or 
discounted oil that will not be repayed within the fiscal 
year.  It is important to keep in mind that many ventures and 
projects tabulated in the overall total are on Venezuelan 
soil and could be viewed as contracts for domestic projects 
versus a handout or special concession. 
 
¶4. (C) Estimating the number of transactions that have been 
delivered is nearly impossible.  However, examples are 
popping up of Chavez not delivering -- in Bamako, the USD 100 
million in oil Chavez promised is nowhere to be found (Ref 
B).  Even estimating the USD amount of the transaction is 
difficult, especially when taking into account that some 
sources, such as the Center for Economic Research (CIECA), 
are identified with the opposition.  Many of the transactions 
between Venezuela and other countries are only memoranda of 
understanding or letters of intent.  Aside from the 
deals/purchases whose value we do know, there are over 250 
whose value is unknown (and have not been factored into the 
USD 90 billion total). 
 
---------- 
A sampling 
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CARACAS 00003257  002.3 OF 003 
 
 
 
¶5. (C) Even a cursory look at the list of Chavez' promises 
reveals some amusing spending.  In Bolivia, Chavez reportedly 
spent USD 150,000 to finance television transmission of the 
2006 World Cup, in Brazil he spent USD 1 million to fund the 
Vila Isabel Samba School, and in the United States he 
reportedly donated USD 100,000 for the Puerto Rico Festival 
in Chicago (reportedly funded by Citgo).  In July 2006, he 
donated 30,000 metric tons of cement to Guyana, despite a 
cement shortage in Venezuela at that time which justified a 
500,000 metric ton cement purchase from Cuba three months 
earlier.  Chavez has also reportedly paid for airport 
construction in the Dominican Republic and Dominica, financed 
highway reconstruction in Jamaica, and donated asphalt to 
Haiti. 
 
¶6. (C)  Outside the hemisphere, he has recently announced the 
establishment of diplomatic relations with countries where 
Venezuelan presence and interest appears minimal, such as 
Angola, Benin, Central African Republic, Chad, Mauritius, and 
Sao Tome and Principe, among others.  That said, these 
missions will presumably help advance the BRV's efforts to 
carve out a bigger role in international organizations (such 
as the UNSC race). 
 
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The big beneficiaries 
--------------------- 
 
¶7. (C) The countries that have most benefited from Chavez' 
promises (despite delivery being unconfirmed) are Argentina, 
with 25 deals (known value USD 5.4 billion, which includes 
purchase of Argentine debt) Bolivia, with 40 deals (known 
value USD 2.8 billion), Brazil, with 8 transactions (known 
value USD 10.5 billion), China, with 37 deals (known value of 
USD 9 billion), Cuba, with 47 transactions (known value of 
USD 11.1 billion), Iran, with 61 deals (known value USD 1.8 
billion), Russia, with 26 deals (known value USD 4.3 
billion), and Uruguay, with 29 deals (known value USD 2.7 
billion). 
 
---------------------- 
What does Chavez gain? 
---------------------- 
 
¶8. (C) Within Venezuela, these giveaways and promises of 
financial aid have been an increasingly contentious subject. 
The opposition has repeatedly critized the President for 
spending money abroad while Venezuela is rife with poverty, 
failing infrastructure, and poor health and education 
systems.  (Note: That said, the enormous total value of these 
transactions may be beyond the comprehension of an average 
Venezuelan.  End Note.)  To counteract the backlash, the 
Ministry of Communications and Information waged an 
advertising campaign visible around Caracas, where Chavez is 
seen shaking hands with foreign leaders and below them the 
caption: "Breaking the blockade, Venezuela is respected." 
(Note: Apparently, gratuitously using photos of world leaders 
for campaign purposes didn't sit well with some -- Portuguese 
Prime Minister Socrates Carvalho was outraged when Chavez 
used a photo taken during a recent refueling stop in Lisbon. 
End Note.)  Chavez has said publicly that his foreign travels 
are "unavoidable commitments" for a head of state, though the 
correlation between his travel schedule, mounting promises, 
and the race for the U.N. Security Council seat suggests 
otherwise. 
 
¶9. (C) From a purely economic perspective, Venezuela could 
stand to gain from some deals.  For example, if joint 
ventures on Venezuelan soil prosper, then they will have, in 
theory, a positive effect on the economy.  However, granting 
housing construction concessions, for example, to China and 
Iran, may not always make economic sense.  The former 
President of the Construction Chamber, Alvaro Sucre, said 
that the bids from those countries were over twice the amount 
offered by the private Venezuelan construction firms. 
 
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Comment 
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CARACAS 00003257  003.3 OF 003 
 
 
¶10. (C) For now, most of the promises Chavez makes abroad 
seem to be pure fluff.  A few joint ventures, such as the 
VenIran Tractor Company, are currently operating (though no 
information is available on sales or profits).  Oil with 
favorable financing terms via PetroCaribe is reaching 
Caribbean shores (though we don't know exactly how much or 
when).  However, most everything else is either unspecified 
or unconfirmed.  In cases we can confirm, the BRV aid is 
being distributed with normal revolutionary efficiency. 
 
¶11. (C)  Chavez' promises shed light on who he envisions as 
his allies in the shaping of a "multi-polar world," and how 
he views Venezuela's global role.  He is certainly 
positioning Venezuela to be the region's energy broker, with 
nearly USD 50 billion in energy deals (including barter and 
PetroCaribe) with neighboring countries.  He is also 
strengthening bilateral ties with Iran and Africa (if not in 
real dollar terms, in number of promises, deals or 
embassies).  He has attempted to create a positive impression 
of Venezuela in the first world, with donations to the poor 
in the United States (via Citgo) and Britain.   Whether such 
deals have the desired effect of wooing these countries 
toward Venezuela is questionable, especially in view of 
Venezuela's failure to get a majority of UNSC votes. 
Domestically, Chavez' spending is becoming a hot topic, as 
evidenced by the "damage control" media campaign he endorsed 
after his latest world tour in August.  Making grandiose 
pledges may be one of many diplomatic tools, but if Chavez 
were to really commit the funds he has promised, Venezuela's 
entire economy, to say the least, would crumble.  End 
Comment. 
 
WHITAKER