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S E C R E T ASUNCION 000396 
 
SIPDIS 
 
SIPDIS 
 
SOUTHCOM FOR POLAD, NSC FOR JOSE CARDENAS 
STATE FOR DS/DSS/ITA 
STATE FOR DS/ICI/CI 
 
E.O. 12958: DECL: 04/20/2027 
TAGS: PGOV PREL KDEM ECON AR BO BR CH PA UY VE
SUBJECT: COM CONFERENCE: A SOUTHERN CONE PERSPECTIVE ON 
CHAVEZ'S INFLUENCE 
 
REF: A. 06 ASUNCION 0709 
     ¶B. BRASILIA 0708 
     ¶C. STATE 66324 
 
Classified By: DCM MICHAEL J. FITZPATRICK; Reasons 1.4(b),(d) 
 
¶1. (C) SUMMARY: During May 8-9 Southern Cone / Brazil COM 
Conference in Rio de Janiero, the five Southern Cone 
Ambassadors discussed aggressive plans of Venezuela's Hugo 
Chavez to create a unified Bolivarian movement throughout 
Latin America, particularly focusing on activities within 
their respective countries.  This report is the product of 
observations and analyses provided by all these posts. 
Venezuelan President Hugo Chavez is aggressively seeking to 
divide Latin America between those who buy into his populist, 
anti-American policies and authoritarian message and those 
who seek to establish and strengthen free-market, democratic 
based policies and institutions.  In the Southern Cone, 
Chavez is working to win adherents to his camp through what 
appears to be a multi-faceted plan that relies heavily on his 
ability to offer energy and grandiose (and graft-inspiring) 
petrodollar-based projects.  Some regional leaders and some 
of the region,s dispossessed may find the rhetoric 
attractive but many more seem willing to take Chavez,s money 
while paying only lip service to his politics.  And still 
others in the region find him frankly distasteful. In the 
end, however, Chavez shouldn,t be underestimated.  Money 
talks, democratic institutions in the region are still weak, 
and free market economics have yet to provide consistent 
solutions to the Southern Cone,s social and political ills. 
Septel will offer our posts' collective views about how to 
best address the threat this campaign represents to U.S. 
interests, but it is clear we need more (and more flexible) 
resources and tools to counter Chavez's efforts to assume 
greater dominion over Latin America at the expense of U.S. 
leadership and interests.  END SUMMARY. 
 
THE PLAYBOOK 
------------ 
 
¶2. (C)  The Venezuelan Embassy in 2006 outlined in detail its 
strategy for Paraguay in a document somewhat like our MSP. 
This playbook articulates the following as Venezuela's 
principal political and economic goals for the region: 
 
-- Stimulate Multipolarity in the International Community 
-- Promote Latin American and Caribbean Integration 
-- Strengthen Venezuela's Position in the International 
Economy 
-- Promote a New Regime of Integrated Hemispheric Defense 
-- Consolidate and Diversify International Relations 
 
While the terms are rather grandiose and nebulous, writ large 
they reinforce Chavez' desire to transform the playing field 
in Latin America positioning Venezuela at the lead. 
 
POLITICAL EFFORTS TO DISRUPT DEMOCRACY 
-------------------------------------- 
 
¶3. (S/NF) Chavez has engaged political leaders of countries 
in the region promoting his vision for the region under the 
banner of "Latin American Solidarity and Integration" as part 
of a campaign that invests a high premium in personal 
contact.  He has also taken pains to engage local populations 
to foster his image as the standard bearer for the 
common-person, often times extending generous aid for social 
projects, and painting an image of the U.S. as elitist and 
favoring only big business.  Meanwhile, clandestinely, the 
Venezuelan Government has provided money and material support 
to Bolivarian and sympathetic leftist groups through its 
embassies in the region often as part of a campaign to expand 
influence, including in the results of key elections. 
 
-- In Argentina, Chavez enjoys the support of a number of 
political leaders and organizations, some of which have close 
ties to President Kirchner.  Kirchner presently sees little 
downside to maintaining a close relationship with Chavez, 
particularly in an election year, since Chavez remains 
relatively popular in Argentina -- 52 percent of Argentines 
 
viewed Chavez favorably in December 2006 -- and the U.S. is 
not.  Kirchner has attempted to distance himself publicly 
from Chavez's anti-U.S. position and has tried to maintain 
the perception of a more independent line to meet mainstream 
voter approval, but his economic strategy clearly envisions 
closer commercial and financial ties with Chavez and 
positioning himself between Chavez and Lula on the regional 
political spectrum.  At the same time, Kirchner seeks to 
balance his relationship with Chavez.  This is evident in the 
support Kirchner and his wife have shown for Venezuela's 
Jewish community, while he has refrained from any public 
calls in support of press freedom or RCTV, for example. 
 
-- In Bolivia, Venezuelan personnel/advisors are likely 
present in all of Bolivia's nine departments and are active 
in many, if not all, sectors of the Bolivian government.  The 
Morales Government frequently consults with  Chavez and their 
relationship runs deep.  Venezuelan Ambassador to Bolivia, 
Julio Montes, publicly pledged in October 2006, "Venezuelan 
blood will be shed if the Bolivian revolution were 
threatened." 
 
-- Brazilian leaders have become more wary of Chavez over the 
course of the past year, and Chavez is unpopular in both the 
political class (politicians, journalists) and with the 
general public.  Chavez is increasingly seen here as an 
emerging rival to Lula for regional leadership, and a threat 
to the kind of integrated, progressive and outward-looking 
South America that successive Brazilian governments have 
sought to encourage. Against this negative backdrop, Lula has 
performed an awkward balancing act: publicly supporting 
Chavez's re-election and touting the benefits of economic 
integration with Venezuela, while privately seething with 
frustration at Chavez's unpredictable behavior and rhetorical 
grandstanding.  It appears Lula will continue in this mode, 
and he seems prepared to let political criticism of his role 
vis-a-vis Chavez roll off his back. This is because of both 
traditional Brazilian foreign policy priorities with 
Venezuela and some residual ideological sympathy among Lula 
and his inner circle for Chavez's fading socialist-populist 
image. 
 
-- Chile is generally not fertile ground for Chavez or his 
"Bolivarian revolution."  But Chilean leaders recognize that 
Chavez is aggressive and that he bears close watch.  Chilean 
Army Intelligence (DINE) reports that the Venezuelan Embassy 
is funding Bolivarian and leftist groups.While President 
Bachelet is a socialist with a certain ideological sympathy 
for Chavez, she is a also a pragmatist who recognizes that 
Chile's successful free market economic policies and stable 
democratic political model is preferable to what Chavez 
offers.  As a result, Chile will continue to quietly promote 
its own model, although Bachelet will not likely challenge 
Chavez openly. 
 
-- Many Paraguayan leaders (both from the opposition and the 
ruling Colorado Party) are suspicious of Chavez's motives and 
voice concern about his "interference into internal 
politics."  The Venezuelan agreement with Bolivia to 
strengthen Bolivia's military adds to the concerns.  At the 
same, President Duarte, has tilted leftward in his rhetoric 
and applauded Chavez' vision over the last two months.  He is 
seeking to fend off the challenge posed to Colorado control 
of the government in the 2008 election by leftist priest 
Fernando Lugo who is leading the polls.  While Lugo's 
campaign evinces little evidence of significant funding, it 
has been alleged that he has been offered assistance by the 
Venezuela Embassy on orders from Chavez and has signaled 
interest in receiving funds.  Several small mostly student or 
social interest based groups in Paraguay receive financial 
and material support from Venezuela but presently register 
little influence on the political scene; local municipal 
officials have told emboffs that Venezuela has provided 
peasant leaders training in leading social movements. 
Venezuela has funded flights for hundreds of poor Paraguayans 
to fly to Cuba for eye surgery and Venezuela appears to be 
winning converts at the mass levels, while the elites are 
increasingly nervous. 
 
-- In Uruguay, Venezuela's influence is growing but is not 
yet great. Chavez was most active and visible on the eve of 
Venezuela's entry into Mercosur, but soon after his interest 
seemed to have waned.  Some officials privately snicker at 
his antics behind his back.  In public, though, they are 
happy to congratulate Chavez and take advantage of any 
economic benefits (especially oil) that he is willing to 
bestow.  For example, Chavez donated USD 20 million for a 
cancer center at a local public hospital. (President Vazquez 
is an oncologist so the donation seemed especially aimed at 
pleasing him.)  Chavez has also invested in failing companies 
and financial institutions. 
 
ECONOMIC STRATEGIES TO STRANGLE FREE TRADE 
------------------------------------------ 
 
¶4. (U) Chavez uses his petrodollars to advance economic and 
political objectives in the region.  He has aggressively 
pursued energy agreements in exchange for support of 
political objectives including Venezuela admission into 
Mercosur and the creation of Bancosur.  In the process, he 
has contributed to an increased politicization of Mercosur 
and shored up resistance to ALCA. 
 
-- In Argentina, though Kirchner shares some of Chavez's 
leftist perspective, he is primarily a pragmatist; his 
affable ties with Caracas are driven more by Venezuela's 
attractive offers of high-profile investments, placement of 
GoA sovereign debt (USD 4.2 billion to date), loans to 
Argentine national companies  and trade deals than by 
ideological affinity.  In return for Chavez's economic 
largesse, Kirchner supported Venezuela's failed bid for a UN 
Security Council seat, its early entry into Mercosur and 
allowed him to stage an anti-Bush rally on March 9. 
 
-- In Bolivia, Venezuela spent USD 195 million on Bolivian 
products, mostly soy, in 2006.  In April 2006, Bolivia signed 
onto the Bolivarian Alternative for America (ALBA), an 
agreement with Venezuela, Cuba, Nicaragua, and Ecuador, under 
which Venezuela has pledged at least USD 200 million in 
support of a national development bank, development projects, 
and financial assistance. 
 
-- Brazil is not directly vulnerable to Chavez in financial 
terms.  Brazil has been running sustained current account 
surpluses, which have allowed it to pay down external debt 
and build up foreign reserves. However, Venezuela and 
Bolivia's championing of a Bank of the South, an idea 
resisted by Brazil, is starting to create demarcations within 
South America, something that will work against Brazilian 
integration plans.  Chavez's obsession with opposing the 
U.S.-Brazil partnership on biofuels pushed President Lula for 
the first time to lay down a red line with respect to Chavez. 
(ref. B) 
 
-- Venezuela's direct foreign investment in Chile is tiny, 
little more than USD 100,000 between 1995 and-2000. 
Chile-Venezuela bilateral trade is also fairly small, 
representing less than 10 percent of Chile's trade with Latin 
America. There has been discussion in the press of an 
alliance between the Chilean oil company ENAP and Petrolera 
Venezolana (PDVSA) but nothing has been finalized.  Earlier 
this year the head of ENP said publicly that Venezuela was 
not in Chile's plans for 2007.  That said, many Chileans 
expect that, given Chile's precarious energy situation, 
Chavez could eventually use oil to foster greater sympathy 
for his political agenda.   However, opinion polling in 
January suggested that eight-in-ten Chileans had heard 
something of what Chavez has been saying and doing vis--vis 
Chile.  Among those, 77 percent rejected his conduct and 81 
percent believed Chavez,s motivation was self promotion. 
 
-- Paraguay signed an energy agreement with Venezuela April 
¶17.  Under the agreement which has come under harsh attack by 
Paraguay's conservative business community and which still 
must be approved by the Congress, Venezuela's PDVSA would 
invest an astounding (for Paraguay) USD 600 million to 
modernize Petropar's oil refinery. The modernization project 
is expected to bring the refinery's capacity up to about 
 
35,000 barrels per day (bpd).  This is hardly cost-effective 
strictly speaking as the smallest refinery in neighboring 
Argentina has a capacity of approximately 120,000 bpd.  But, 
it offers current leaders plenty of "grease."  Venezuela has 
offered to help Paraguay prospect for gas in the western part 
of Paraguay.  In addition, Paraguay is considering joining 
the Venezuelan Bancosur project. 
 
-- Uruguay's President Vazquez plays to centrists in his 
economic policy, so Chavez's economic populism will likely 
not take root in Uruguay.  At the same time, Uruguay has a 
heavy debt burden and no known hydrocarbon deposits.  As 
such, Venezuelan oil and money could prove tempting as part 
of a bid to boost the economy. Venezuela's PDVSA has invited 
Uruguay's state oil company ANCAP to prospect for oil in 
Uruguay and in Venezuela and to associate itself with ANCAP's 
refinery through a USD 600 million investment. 
 
MERCOSUR: THE TAIL WAGGING THE DOG? 
----------------------------------- 
 
¶5. (C) The entry of Venezuela into Mercosur clearly altered 
the power balance and dynamics of the organization.  Mercosur 
has increasingly devolved from an imperfect customs union 
into a more restrictive and anti-American political 
organization.  A prime example of Mercosur's unflinching 
support for Venezuela was demonstrated on the UNSC 
semi-permanent seat bid.  After more than 50 successive 
votes, Mercosur members continued to support Venezuela's 
candidacy.  Mercosur solidarity held fast until Uruguay was 
mentioned as a possible compromise candidate. Argentina is 
said to have vetoed the move and Brazil was reportedly not 
supportive of Uruguay either.  On numerous occasions 
Paraguayan and Uruguayan MFA officials have signaled that 
they must consult closely with their Mercosur partners on key 
matters relating to foreign policy. 
 
¶6. (C) It is widely believed in Uruguay that the inspiration 
for Brazil's supporting Venezuela's admission to Mercosur was 
the belief that Chavez could better be controlled from within 
the organization than if left to his own devices on the 
outside.  It appears in hindsight, however, that Chavez has 
proved to be more difficult to contain than originally 
thought by Mercosur members. Chavez has openly challenged the 
Brazilians by supporting and allegedly encouraging Evo 
Morales's move to grab Petrobras' assets in Bolivia, and has 
frequently stolen the stage at Mercosur gatherings from 
Brazil's President Lula.  That friction, however, provides an 
opportunity. 
 
EXPANDING REACH OF DEFENSE, CAUSING UNSTABLE CONDITIONS 
--------------------------------------------- ---------- 
 
¶7. (C) Venezuela has expanded its reach into the region using 
military advisors and intelligence officers to reach out to 
leftist groups as well as directly engage military 
counterparts through exchange programs. In some cases this is 
creating animosity and raising concerns among military 
personnel and political figures alike. 
 
-- Although the Argentine military does not have a natural 
affinity for their Venezuelan counterparts, it has 
participated in military exchanges with Venezuela.  Argentina 
has established a one-man liaison office with the Venezuelan 
Army.  Venezuelan officers also have a presence in the 
Argentine Army and Air War Colleges (equivalent to US Command 
and General Staff College (CGSC)).  In 2006, Venezuelan 
military officers briefed the Argentine Army War College on 
the BRV's concept of asymmetric warfare, and Venezuelan 
officers are reportedly attending the Argentine National 
Defense University.  The Venezuelans do not yet appear to 
have cultivated formal ties with the Argentine Navy.  DAO 
contacts also report a Venezuelan office at the Prefectura, 
although Post is unaware of the person's status or 
activities.  This cooperation does not appear very 
significant yet. 
 
-- In Bolivia, there has been an increased presence of 
Venezuelan military personnel, although the exact number is 
 
unknown. Estimates indicate that there are at least one 
hundred, if not several hundred, Venezuelan military advisors 
and intelligence operators scattered throughout Bolivia. 
Venezuelan military personnel are reportedly conducting 
intelligence and counterintelligence activities in La Paz and 
Santa Cruz, in coordination with Cuban intelligence agents. 
In November 2006, the Bolivian Senate approved a 
Bolivian-Venezuelan military agreement which called for 
increased military cooperation between the two countries and 
the construction of two military bases in eastern Bolivia. 
There are reports of Venezuelan weapons entering Bolivia, but 
these reports have not been corroborated. There are also 
reports that Venezuela may be helping Bolivia to broker arms 
deals with Russia and Iran in an effort to help Bolivia move 
away from U.S. military assistance. 
 
-- The Brazilian military is more wary than some other 
segments of the Brazilian government of the potential for 
regional instability caused by Chavez, especially in light of 
the military buildup of the Venezuelan Armed Forces.  In 
addition, the developing threats from Bolivia to militarily 
reoccupy Petrobras refineries in Bolivia, and to abrogate a 
recently concluded contract, is creating additional friction 
between Brazil and Bolivia, and, by extension between Brazil 
and Venezuela, who is seen as the driving force behind 
Bolivia's extreme actions.  Of added concern is Iran's 
interest in capitalizing on the influence of Venezuelan 
President Chavez to improve Iran's relations with certain 
Latin American countries. (ref. B) 
 
-- Chile has not reported any military exchange or 
significant engagement.  However, Venezuelan material support 
for leftist groups along the border with Bolivia raised 
tensions between Bolivia and Chile. 
 
-- Bolivia and Venezuela announced a deal to build a new 
military base along the disputed Chaco border region (at 
Puerto Quijarro) raising tensions between Paraguay and 
Bolivia in late 2006.  President Duarte reportedly confronted 
Bolivian President Morales at the UN requesting an 
explanation.  Ensuing border crossings by Bolivian military 
personnel into Paraguay further raised eyebrows.  Tensions 
have since abated but Paraguayan military personnel and many 
politicians are still suspicious of Bolivian and Venezuelan 
intentions.  DAO reported that there is a Venezuelan student 
at the Paraguayan War College.  It is unclear what his status 
or activities are at this point.  Post has learned that 
retired Paraguayan military officers have met with Argentine 
and Venezuelan Bolivarian groups. 
 
-- Uruguay is not aware of any specific security or military 
agreements reached or in the works between Venezuela and 
Uruguay, although there are obvious linkages under regional 
agreements such as the Rio Group and Mercosur.  Military 
cooperation so far is limited to military student exchanges. 
However, President Vazquez' security detail is run by his 
brother Jorge, a former OPR-33 guerilla. The "secret service 
agents" he manages are recruited from the Communist-dominated 
PIT-CNT umbrella labor union and trained in Caracas or Havana. 
 
THE POWER OF MASS MEDIA 
----------------------- 
 
¶8. (U) In various countries, aggressive media indoctrination 
campaigns prompt support for Chavez, primarily, and his plan 
for a united Bolivarian South American bloc to challenge the 
U.S.  Venezuela's Telesur is the main source to broadcast 
anti-U.S. propaganda and targets mostly the poor and rural 
sections of countries in the region. 
 
-- In Argentina, Post suspects the Venezuelan government may 
be involved in influencing the Argentine press, mostly by 
feeding media outlets anti-American rhetoric.  The clear 
Chavez advocate in Argentine print media is the leftist and 
pro-government Pagina/12.  Pagina/12 has not criticized the 
closing of RCTV, an issue about which other major Argentine 
print media, such as La Nacion and Clarin, raised press 
freedom concerns.  The Clarin Group, in character with its 
style of journalism, is essentially neutral towards Chavez 
 
and avoids both outright criticism and open support of him. 
Several papers are strongly opposed to Chavez, including La 
Nacion, Ambito Financiero and La Prensa. 
The GoA owns a 20 percent non-voting share in Telesur and 
mainly contributes to Telesur via content, such as television 
material.  Miami-based Direct TV has a channel dedicated to 
Telesur, but the service reaches only a small percentage of 
Argentines.  Some direct programming of Telesur news shows 
appears on state-owned Channel 7, but Channel 7 recently 
moved the Telesur programming to off-peak airtime, after 
midnight.  A network of approximately ten independent, 
neighborhood, left-leaning radio stations in Argentina have 
been receptive to Chavez' media promotion campaigns and are 
regularly broadcasting parts of his program "Alo Presidente" 
live, according to media reports. 
 
-- In April 2006, Bolivia bought a five percent stake in 
Caracas-based Telesur, proposed by Chavez as a Latin American 
alternative to CNN programming.  Most of the Telesur 
broadcasting is out of Venezuela, with only 20 hours per 
month dedicated to Bolivian local broadcasting.  In addition, 
the Venezuelan government pledged  USD 1.5 million for 30 
community radio stations, targeting the most rural 
populations in Bolivia.  To date, 8 out of the 30 stations 
have been inaugurated. 
 
-- In Chile, Chavez and his model do not seem to be striking 
a chord even with the common people.  In general, much of the 
general population, including even among the working class, 
are cynical about Chavez's motives.  Recent polls show that 
some 77 percent of Chileans aren,t buying what Chavez is 
selling, with 81 percent ascribing to Chavez motives based 
solely on his self-aggrandizement.  Negative news stories in 
2006 noted that Chavez,s "Miracle Flights" taking poor 
Chileans to Venezuela for eye surgery ended with patients 
blinded. 
 
-- Venezuela's Telesur channel has been running a steady 
stream of high-quality, anti-U.S. propaganda pieces in 
Uruguay via Direct TV from Argentina.  The "Injerencia" 
(interference) series about CIA "meddling" in Latin America 
is a particularly slick product that incorporates documentary 
segments, present day interviews with witnesses and liberal 
use of selected declassified FOIA documents.  Uruguay has a 
ten percent stake in Telesur (which it pays by donating 
content) and the local government-owned channel has increased 
its broadcasting of conspiratorial, anti-U.S. propaganda in 
recent months.  In the print media, Chavez gathers serious 
support only from the one major leftist daily, "La 
Republica", which boldly supports him in its headlines, while 
the body of the articles is generally more moderate. The 
centrist papers and mainstream media are generally 
unsympathetic to Chavez. 
 
¶9. (S) As of early April 2007, Brazil reporting indicates 
that Venezuela was attempting to discreetly influence 
Brazilian views in favor of Venezuela in various ways.  For 
example, in late 2006 Venezuelan Embassy officers in Brasilia 
reportedly approached a Brazilian media source and offered 
monthly payments in exchange for the placement of pro-Chavez 
articles and anti-U.S. article. (ref. B) 
 
¶10. (S) As of mid-April 2006, the Venezuelan and Cuban 
Embassies in Paraguay and the Venezuelan Embassy in Argentina 
were supporting a covert action media campaign in various 
newspapers and magazines in Paraguay to discredit the U.S. 
Ambassador to Paraguay and enhance the image of the FARC. 
The media campaign used the Paraguayan newspaper "Ultima 
Hora" as the principal medium for the campaign. 
Venezuelan-supported Bolivarian movements have regularly 
produced disinformation campaigns propagating the myth the 
U.S. has a military base in northwestern, largely uninhabited 
region of Paraguay, contributing to resistance to an 
agreement for U.S. military exercises in Paraguay.  They have 
effectively used Prensa Latina stories, blogs and Clarin to 
build an artificial ground-swell of opposition. 
 
COMMENT 
------- 
 
 
¶11. (S/NF) Chavez's campaign to expand his influence in 
Southern Cone is multi-faceted, relying heavily but not 
exclusively on generous energy assistance and investment 
agreements.  It is also attractive to many of the region,s 
dispossessed, who are still waiting for globalization to 
bring them the benefits of free trade and truly democratic 
governance.  By integrating Venezuela into existing 
institutions and creating new region-wide bodies, he aims to 
unite the Southern Cone region behind his vision.  The 
campaign has produced mixed results.  Few countries have 
proven capable of resisting the appeal Venezuela's aid and 
investment packages inspire.  While Chavez's influence within 
the region has expanded significantly, regional leaders are 
suspicious of his motives and objectives.  Many agree with 
his message that the Southern Cone, and indeed, South 
America, should establish an identity separate from U.S. 
"hegemony," but are uncomfortable with the "us or them" that 
defines his message.  The U.S. cannot expect the region's 
leaders to rally to our defense; rather we need to more 
proactively make the case for and implement our transparent 
strategy for the region.  Our view of an inclusive, 
democratic community of nations that delivers prospects for a 
more prosperous future for its citizens is the right response 
to Chavez.  Septel will offer the views of the region's posts 
about how we should respond.  It is clear that we need better 
resources and tools to counter Venezuela's political efforts 
to disrupt democracy, economic strategies to strangle free 
trade, politicization of MERCOSUR, expansion of defense ties, 
and mass media campaign. 
 
¶12. (U) Amembassies Asuncion, Brasilia, Buenos Aires, La Paz, 
Montevideo and Santiago contributed to this cable. 
CASON