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PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
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DE RUEHCV #0103/01 0262144
ZNY CCCCC ZZH
P 262144Z JAN 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2486
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000103

SIPDIS

E.O. 12958: DECL: 01/26/2019
TAGS: ECON EFIN PREL EINV PGOV VE
SUBJECT: ECONOMIC TIES WITH IRAN GROWING SLOWLY

Classified By: Economic Counselor Darnall Steuart for reasons
1.4 (b) and (d).

¶1. (C) Summary. Emboffs met with a local businessman to
discuss his possible involvement in the establishment of a
Venezuelan-Iranian Chamber of Commerce. In the private
sector, expatriate Iranians cautiously build enterprises
within Venezuela, ever wary of the political and economic
pitfalls of doing business in Venezuela. Private sector
Iranians seek concrete guarantees from the Government of the
Bolivarian Republic of Venezuela (GBRV) to secure their
investments within country. High-level activities, including
planning meetings and the signing of cooperation agreements
between the governments of Iran and Venezuela continued in
¶2008. Despite little concrete progress on previously
announced joint ventures, Venezuela and Iran announced the
creation of the Banco Binacional Irani-Venezolano, funded
with initial capital of 1.2 billion USD. End Summary.

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FORMATION OF VENEZUELAN-IRAN CHAMBER OF COMMERCE?
--------------------------------------------- ----

¶2. (C) On January 13, Emboffs met with XXXXXXXXXXXX, at the request of a
long-standing Embassy contact. XXXXXXXXXXXX sought the meeting as
he had recently been asked by the Government of Iran (GOI) to
participate in the establishment of a proposed
Venezuelan-Iranian Chamber of Commerce. The Chamber will
draw members from the local business community and seeks to
strengthen private sector ties between Venezuela and Iran.
XXXXXXXXXXXX explained that the position with the proposed new
Chamber was strictly ceremonial, but he said he rather not be
involved for fear that such involvement would jeopardize his
future ability to do business with US entities or persons.

¶3. (C) XXXXXXXXXXXX explained that his main contact within the
Iranian business community is an Iranian expatriate
businessman, who has lived for the last 20 years in exile in
Panama. He said that his contact refuses to visit the
Iranian Embassy in Caracas and solely does business with the
private sector. XXXXXXXXXXXX added that many private sector
Iranians are cautious about business dealings in Venezuela
due to the lack of transparency and questionable application
of property rights. He said they are also unimpressed by
their prospective partners' work ethic and efficiency.
Iranians, as other international businesspeople, are seeking
guarantees for their investments. He viewed the current
private sector activity as opportunism by private sector
Iranians, rather than a concerted effort by the GOI to
bolster economic and commercial ties between the two
countries.

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2008: COOPERATION ADVANCES ON PAPER ONLY
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¶4. (SBU) The GBRV and GOI signed, in 2008, a myriad of
agreements, creating joint enterprises in areas as diverse as
education, energy, finance, housing and agriculture. The
most significant entity announced was the establishment of a
binational bank, the Banco Binacional Irani-Venezolano. The
announcement, published in the Venezuelan official gazette on
May 19, stated the bank was to be headquartered in Tehran,
with initial funding of 1.2 billion USD (600 million USD from
each country.) At the same time, the GBRV announced the
formation of a binational fund (Fondo Unico Binacional) by
the GOI and the GBRV. This fund, to be headquartered in
Caracas, was to be capitalized with 1 million USD, with each
country contributing 50 percent. Both the bank and the fund
were to finance vaguely defined "bilateral projects and
programs." In November, during the signing of an additional
190 joint cooperation agreements, the countries again
announced the formation of both the bank and fund. Since
these announcements, the local press has been silent on each
entity and there have been no reports that either side has
fully funded their contributions. In addition, the GBRV's
news agency has failed to provide any information regarding
the workings of the organizations or their accomplishments.

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COMMENT
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¶5. (C) The inability of Iran and Venezuela to effectively
implement cooperation agreements is a further indication of
the difficulties in getting things done in Venezuela even in
areas where political will exists. As oil revenues dry up,
Post predicts less GBRV funding for ambitious development
projects, such as those mentioned above, that have little
impact on the average Venezuelan. Reports of the reluctance
of Iranian businesspersons to engage in commercial
enterprises in Venezuela without ironclad guarantees of
investment protection, despite the close ties of the two
governments, is not surprising given Chavez's history of
expropriations.
CAULFIELD