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P 021320Z JAN 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2378
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
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RUMIAAA/HQ USSOUTHCOM MIAMI FL
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C O N F I D E N T I A L CARACAS 000003 
 
SIPDIS 
 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR RJARPE 
NSC FOR JSHRIER 
COMMERCE FOR 4431/MAC/WH/JLAO 
 
E.O. 12958: DECL: 12/31/2018 
TAGS: ECON EFIN PGOV VE
SUBJECT: CADIVI CUTS MAXIMUM DOLLAR ALLOCATIONS TO 
TRAVELERS BY HALF 
 
REF: A. CARACAS 1758 
     ¶B. CARACAS 647 
 
Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) 
and (d). 
 
¶1.  (U) CADIVI, the government of the Bolivarian Republic of 
Venezuela (GBRV) entity that administers foreign exchange, 
cut the maximum dollar allocations to Venezuelans traveling 
abroad by half for 2009.  Each individual will be allowed to 
spend up to USD 2,500 abroad on his or her Venezuelan credit 
card, down from USD 5,000 in 2008.  The maximum one-time 
pre-travel cash allocation will drop from USD 600 to USD 500, 
and the maximum allocated for credit card purchases over the 
Internet from Venezuela remains the same, at USD 400 per year. 
 
¶2.  (U) The cut comes as no surprise, as Minister of Finance 
Ali Rodriguez indicated December 19 that one was forthcoming 
(though he did not mention the magnitude; ref A).  The 
purpose, as Rodriguez indicated, is to save dollars in a 
period of low oil prices.  Per CADIVI's website, in 2008 
CADIVI has authorized reimbursement to banks of USD 4.5 
billion for credit card purchases and USD 333 million for 
cash for travelers through December 19.  In the regulatory 
note defining the cut, CADIVI also included several 
provisions to try to reduce fraud, including a moratorium of 
six months for newly issued credit cards and a measure 
designed to make it harder to receive reimbursement for 
purchases made just across the Venezuelan border. 
 
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Comment 
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¶3.  (C) This cut will cause many of the Venezuelans who are 
used to traveling abroad more angst about their situation in 
Venezuela.  Given Venezuela's overvalued official exchange 
rate, CADIVI allocations make travel cheap for those who can 
afford it.  Every CADIVI dollar costs 2.15 bolivars (Bs), 
whereas on the parallel foreign exchange market the rate is 
currently 5.3 Bs per USD.  Traveling on a CADIVI dollar, in 
other words, costs less than half what it otherwise would, 
and indeed can even be profitable for the traveler if he or 
she brings back goods to sell.  From a psychological 
standpoint, some Venezuelans consider the CADIVI "cupo", as 
it is called, as almost a birthright of the Bolivarian 
Republic, a lifeline to the outside world they deserve for 
enduring the current government.  For these Venezuelans, the 
cut is painful emotionally as well as economically. 
 
¶4.  (C) However painful to some, the cut in the CADIVI cupo 
is unlikely to cause significant political damage to 
President Chavez.  Assuming in 2008 the average user of the 
two credit card cupos used half of the maximum allocations, 
about six percent of Venezuelans (1.7 million people) would 
be beneficiaries.  With the exception of some fraudulent 
users (ref B), these six percent would be drawn almost 
exclusively from Venezuela's upper and upper middle classes 
(i.e., those with credit cards who travel abroad), the people 
least likely to support Chavez.  At the same time, the cut, 
which analysts cited in a press reported estimated might save 
the GBRV USD one billion in 2009, will not make a significant 
dent in the shortage of foreign currency the GBRV will have 
to contend with if oil prices stay where they are (septel). 
End comment. 
CAULFIELD