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DE RUEHCV #0574/01 0751252
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R 161252Z MAR 07
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 8154
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RHEBAAA/DEPT OF ENERGY
RUEATRS/DEPT OF TREASURY
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 02 CARACAS 000574 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
ENERGY FOR CDAY, DPUMPHREY, AND ALOCKWOOD 
TREASURY FOR KLINGENSMITH AND NGRANT 
COMMERCE FOR 4431/MAC/WH/MCAMERON 
NSC FOR DTOMLINSON 
HQ SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON PREL EINT VE
SUBJECT: CHAVEZ SHADOWS POTUS TOUR, PROMISING AID AND LATIN 
AMERICAN INTEGRATION 
 
REF: A. CARACAS 387 
     ¶B. PORT AU PRINCE 492 
     ¶C. LA PAZ 679 
     ¶D. BUENOS AIRES 489 
 
¶1.  (SBU) Summary: During Chavez' March 9-13 "shadow tour" of 
President Bush's Latin American trip, he continued to 
aggressively push forward his own brand of dollar diplomacy 
and the "Bolivarian alternative" of regional financing and 
integration to counter USG initiatives in the region.  Chavez 
signed 11 additional agreements with Argentina including the 
creation of a South American gas exporters association along 
the lines of OPEC.  He also welcomed Bolivia to the "Banco 
del Sur" ("Bank of the South") project, announced 
construction of a USD 2.5 billion refinery in Nicaragua, and 
jointly announced with Cuba a USD 1 billion humanitarian fund 
for Haiti.  In typical Chavez fashion, he offered few details 
to support these grandiose projects/promises.  Septel will 
address political perceptions and media reaction.  End 
Summary. 
 
------------------------- 
Argentina: 11 New Accords 
------------------------- 
 
¶2.  (SBU) Chavez and Kirchner signed eleven new agreements 
during Chavez' visit to Argentina March 9 (Reftel D).  This 
latest round of agreements comes on the heels of Kirchner's 
visit to Venezuela's heavy-oil belt February 21-22, during 
which the two presidents inked 17 agreements (Reftel A). 
These new agreements expand on the accords signed in the 
Faja, including increased agricultural and scientific 
cooperation between Argentina and PDVSA Agriculture, and 
joint Venezuelan-Argentine development of natural gas-powered 
vehicular engines.  Venezuela and Argentina also signed a 
treaty to create an organization of South American gas 
producers and exporters (OPEGASUR), which they hope will 
become the gas equivalent of OPEC. 
 
¶3.  (SBU) Chavez and Kirchner also welcomed Bolivia to the 
working group for the "Banco del Sur" (Bank of the South). 
Both also expressed their hope that the Bank would become a 
distinctly Latin American financing alternative to the IMF 
and the World Bank.  During the signing ceremony, Chavez, as 
he did two weeks earlier in the Faja, highlighted the 
importance of the Bank of the South as a tool for Latin 
American integration.  "..the Bank of the South is vital for 
what Peron called the second national independence.  And when 
I say national I am always saying national 
Argentine-Venezuelan, and even more, our America, South 
America.  The Southern Bank!" proclaimed Chavez.  While less 
dramatic than Chavez, Kirchner also quipped that the new bank 
was a way out of "subordination" to IMF policies while 
linking the Banco del Sur project to increased 
Venezuelan-Argentine cooperation in gas.  Kirchner commented 
that the bank would be an excellent financing tool for the 
proposed Argentina-Bolivia-Venezuela mega gas pipeline.  "For 
this, the Banco del Sur is a central tool, and we need to 
foresee as well the possibilities of advancing strongly with 
the Southern gas pipeline." 
 
--------------------------------------------- ---- 
Chavez Welcomes Bolivia to the Banco del Sur Club 
--------------------------------------------- ---- 
 
¶4.  (SBU) After his visit to Argentina, Chavez traveled to 
Bolivia to tour the flood-stricken province of Beni.  Chavez 
announced a USD 15 million aid package to Bolivia and also 
promised two rescue helicopters and 43 tractors.  Chavez then 
traveled to El Alto where he signed four new agreements with 
Morales (Reftel C).  Bolivia joined Argentina and Venezuela 
in the Banco del Sur working group and also joined the 
nascent OPEGASUR organization.  Chavez and Morales signed a 
Treaty of Trade Cooperation and issued a joint declaration 
for the consolidation of the Bolivarian Alternative for the 
Americas (ALBA) development model.  Chavez expressed his hope 
that ALBA funds could assist Bolivian disaster victims, while 
stressing 21st century socialism's role in Latin American 
integration, "socialism is the road for the union of our 
 
CARACAS 00000574  002 OF 002 
 
 
peoples, he who wants to construct the reign of God on the 
earth goes by socialism and he who wants to go directly to 
hell goes by capitalism." 
 
------------------------------------- 
USD 2.5 Billion Refinery in Nicaragua 
------------------------------------- 
 
¶5.  (SBU) Chavez' most extensive economic promises came in 
Nicaragua, where he announced that Venezuela would build a 
USD 2.5 billion refinery.  He said that Bandes would soon 
open an office in Nicaragua to provide aid and loans to the 
rural poor and that Venezuela would construct an aluminum 
factory.  Chavez and Ortega also inked several agreements 
promoting agricultural cooperation.  Ortega also signed onto 
Chavez' Telesur ("television of the south") for regional 
telecommunications integration. 
 
¶6.  (SBU) Chavez expects the refinery to process up to 150 
thousand barrels of Venezuelan oil/day which, in his view, 
would convert Nicaragua into a petroleum exporter.  Chavez 
asserted that this would provide Nicaragua with a means of 
escaping poverty and IMF tutelage.  Chavez suggested this 
project would pave the way for Nicaraguan participation in 
the Banco del Sur.  "With the refinery, we will not need to 
go begging before the IMF, nor before anyone else, for this 
we created the Banco del Sur and I am sure that after Ortega 
settles his accounts with the IMF he will affiliate himself 
with the Banco del Sur."  More than Chavez' hosts in other 
countries, Ortega appeared to parrot Chavista rhetoric: "In 
this struggle we have to unite our forces to resist and 
advance independently from the imperialist model," said 
Ortega. 
 
------------------------------------------- 
Venezuelan-Cuban Humanitarian Aid for Haiti 
------------------------------------------- 
 
¶7.  (SBU) In Haiti, Chavez' message was less about regional 
integration and more focused on offering joint humanitarian 
aid with Cuba (Reftel B).  In a tripartite meeting between 
Chavez, Haitian President Rene Preval and Cuban Vice 
President Esteban Lazo during which Fidel Castro reportedly 
Zned the meeting by phone, Venezuela and Cuba announced the 
creation of a USD 1 billion fund for Haitian development. 
Venezuela also re-announced USD 20 million of humanitarian 
aid through Bandes and USD 57 million to repair Haitian 
airports.  Cuba offered the services of its medical 
personnel, and Venezuela said it would double the amount of 
oil Haiti received through Petrocaribe from seven thousand 
barrels/day to 14 thousand barrels/day. 
 
------- 
Comment 
------- 
 
¶8.  (SBU) Though Chavez continues to assert that the parallel 
timing of his trip with President Bush's visit to Latin 
America was mere coincidence, it is painfully obvious that 
his big promises and pronouncements on regional integration 
were a direct effort to counter the President's visit. 
Chavez used his tour of the "South" to continue to 
aggressively push forward increased regional financial and 
natural gas integration with Argentina and Bolivia.  In 
typical Chavez fashion, the deals he announced and accords he 
signed contained grandiose projects with few details. 
Several of the aid promises made in Haiti were simply 
re-announcements of previous commitments.  With respect to 
the creation of an OPEGASUR, absent from the announcement was 
even a general overview as to organizational structure and 
how it would function.  Chavez continues to pitch the Banco 
del Sur an alternative to the IMF and World Bank.  While he 
and Kirchner are still hopeful to construct a South American 
gas pipeline, the suggestion that a fledgling Banco del Sur 
could finance this multi-billion project is unfathomable. 
 
BROWNFIELD