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O 162106Z FEB 07
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7879
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY
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UNCLAS SECTION 01 OF 02 CARACAS 000354 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR H AND WHA/AND 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV VE
SUBJECT: SCENESETTER FOR CODEL JACKSON LEE 
 
CARACAS 00000354  001.2 OF 002 
 
 
¶1. (SBU) Embassy welcomes the visit of Congresswoman Jackson 
Lee, the first congressional visitor to come to Caracas since 
the April 23-24, 2006 visit of Representatives Delahunt and 
Meeks.  Since winning re-election on December 3, President 
Hugo Chavez has launched the "socialist" phase of the 
"Bolivarian revolution."  He announced that he intends to 
implement "five motors of the revolution": 1) an Enabling Law 
passed January 31 that gives Chavez the power to rule by 
decree in 12 broad areas for the next 18 months; 2) changes 
to the 1999 constitution, including the elimination of 
presidential term limits; 3) a public education campaign to 
impart socialist ideology; 4) a shift in powers from state 
and local governments to the central government; and 5) the 
"empowerment" of local community councils. 
 
¶2. (SBU) President Chavez is already asserting considerably 
more state control over the economy.  Venezuela,s GDP grew 
by over 10% in 2006, fueled by massive government spending 
made possible by windfall oil revenues.  Venezuelan 
government expenditures have doubled since 2004.  Inflation 
was 17% last year and is expected to exceed 20% in 2007, 
easily the highest in the hemisphere, due to government 
policies that include fixed interest rates (well below the 
rate of inflation), a fixed exchange rate (which is 
overvalued by as much as 85% currently), and the government's 
habit of creating money via off-budget funds. 
 
¶3. (SBU) Much of the increase in government spending has been 
carried out through the Missions, which provide a variety of 
social services, mostly to Venezuela,s lower classes.  The 
most popular of these missions are Mercal, which provides 
subsidized food staples, and Barrio Adentro, which is a 
medical program staffed by Cuban doctors.  While public 
opinion surveys show wide voter approval of these programs, 
Mercal has recently been hit with massive shortages and, 
according to some sources as many as 40% of the Barrio 
Adentro clinics have been shuttered, putting the lasting 
power of these programs in serious doubt. 
 
¶4. (SBU) On January 8, President Chavez announced plans to 
nationalize "strategic sectors" of the Venezuelan economy, 
including oil production, electrical generation and 
telecommunications.  Since then, the government has signed 
agreements to purchase Verizon,s 28.5% stake in the local 
telecom monopoly CANTV, as well as purchase electrical 
companies in Caracas and Margarita Island from U.S. firms AES 
and CMS Energy, respectively.  The Ministry of Energy and 
Petroleum is conducting negotiations with the International 
Oil Companies in the country,s Faja belt to convert the 
heavy-oil Strategic Associations into joint ventures with the 
state oil company, PDVSA.  It remains to be seen whether or 
not these negotiations will succeed, but President Chavez has 
announced that the 4 Strategic Associations (with investments 
by U.S. firms ExxonMobil, Chevron, and Conoco Philips) will 
be nationalized by May 1st. 
 
¶5. (SBU) With respect to politics, the Venezuelan president 
does not face any real checks and balances on his authority. 
He has stacked the judiciary, the National Electoral Council, 
the Attorney General's office, and other state institutions 
with loyal supporters.  All 167 members of the National 
Assembly support the president (the opposition boycotted the 
December 2005 national elections).  Chavez is also governing 
in an increasingly authoritarian manner.  He announced in 
January that he will not renew the license this Spring of 
RCTV, a major independent broadcast network.  In addition, he 
announced his plans to form a single pro-government United 
Socialist Party of Venezuela (PSUV) later this year, giving 
smaller pro-Chavez parties the choice to either join the 
party or leave the government. 
 
¶6. (SBU) Despite losing by a wide margin in the presidential 
race, Zulia Governor Manuel Rosales remains Venezuela's 
pre-eminent opposition leader.  He is leading opposition 
efforts to propose a separate slate of constitutional changes 
as well as to participate in local community councils.  He is 
also trying to make his Zulia-based Un Nuevo Tiempo party 
(UNT) a national party.  Nevertheless, the opposition and 
other sectors of civil society remain divided and weak.  The 
government is supporting parallel trade unions to compete 
against the independent Confederation of Venezuelan Workers 
(CTV).  President Chavez is putting increasing pressure on 
the Catholic Church, and the National Assembly is actively 
considering a law to regulate and restrict international 
support for non-governmental organizations. 
 
¶7. (SBU) The United States government commended the 
 
CARACAS 00000354  002.2 OF 002 
 
 
Venezuelan people for turning out in large numbers to vote in 
the last presidential election.  In addition, we expressed 
our interest in working with the Venezuelan government on 
issues of mutual interest, despite our significant policy 
differences.  A/S Shannon and Ambassador Brownfield have 
publicly and privately reinforced that interest in recent 
weeks.  Your visit is a timely opportunity to gauge the BRV's 
willingness to engage on a practical, cooperative agenda. 
 
BROWNFIELD