VZCZCXRO4323
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #0213/01 0481126
ZNR UUUUU ZZH
P 171126Z FEB 09  ZDK ZUI RUEHSD 0088
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2618
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEHC/DEPT OF LABOR
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 02 CARACAS 000213 
 
SIPDIS 
SENSITIVE 
 
C O R R E C T E D COPY (PARA MARKINGS, ADDED CAPTION) 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ELAB PGOV PREL VE
SUBJECT: RECYCLE AND REUSE: VENEZUELAN TOILET PAPER SHORTAGE 
 
CARACAS 00000213  001.6 OF 002 
 
 
¶1.  (U) The following message is sensitive but unclassified. 
Please handle accordingly. 
 
¶2. (SBU)  Summary.  In the ramp up to the February 15 
referendum, toilet paper is the latest consumer product 
shortage.  The Government of the Bolivarian Republic (GBRV), 
through its consumer protection agency, continues to assert 
that local production of toilet paper is sufficient to meet 
national demand.  However, according to local press reports 
and Embassy contacts, the two largest producers in Venezuela 
face labor disputes (a strike at one was settled on February 
12), while a third paper producer, expropriated in 2005, 
operates at ten percent capacity.  The GBRV has instituted 
rationing of toilet paper at supermarkets throughout the 
country.  Post currently holds a two and one half month 
supply of toilet paper, but a bulk order placed in November 
2008 remains unfilled. 
 
-------------------------------------- 
Paper Production - Conflicting Reports 
-------------------------------------- 
 
¶3. (SBU)  Spot shortages of toilet paper began early this 
year.  In early February, the Venezuelan consumer protection 
agency, Indepabis, publicized in the press its inspection of 
the Papeles Venezolanas (Paveca) paper factory to verify 
production levels of toilet paper and napkins.  According to 
the press, Indepabis found that the factory produced 200 tons 
of toilet paper daily, sufficient to supply forty-five 
percent of national demand.  Carlos Guia, the regional 
coordinator for Indepabis in Carabobo, said, as reported by 
the local press, that he visited the factory in response to 
"rumors about shortages of toilet paper and napkins."  Also, 
Guia said that Paveca's operations primarily use local 
inputs, relying on imported materials for fifteen percent of 
the inputs required for toilet paper production. 
 
¶4. (SBU)  On February 6, however, local news reports detailed 
a growing crisis in paper production.  According to the 
press, Covinpa, a cooperative of employee shareholders of La 
Industria Venezolana Endogena de Papel (Invepal), claimed 
that Invepal had accumulated losses of 45 million BsF 
(approximately 21 million USD at the official exchange rate 
of 2.15 BsF to 1 USD) since the company was expropriated by 
the GBRV in 2005.  (Note: Invepal is a general paper producer 
and part of the GBRV's vision of the socialist productive 
model.  Employee shareholders retain 17.3 percent ownership 
in the enterprise. End Note.)  Convinpa president Ramon 
Lagardera told the press that 2008 production was only ten 
percent of Invepal's capacity due to lack of inputs.  One 
hundred percent of required materials, he explained, are 
imported and he blamed Invepal management for the missing 
inputs due to their poor management.  Also, Lagardera said, 
lack of inputs forces Invepal to halt paper production 
several times a year. 
 
------------------------------------------ 
Labor Unrest Halts Toilet Paper Production 
------------------------------------------ 
 
¶5. (SBU)  On February 9, Papeles Venezolanos (Paveca) 
announced that a strike involving 1,500 employees had 
paralyzed its Carabobo factory.  Two rival labor unions, an 
established union and a new parallel Chavista union, known as 
La Hojilla (in English, the razor blade,) were at odds over 
eight labor claims with the local labor inspector.  In short, 
La Hojilla charges that the established union has not backed 
La Hojilla's labor claims.  According to Paveca, the 
company's many factories produce and distribute approximately 
270 tons of toilet paper daily and the company feared 
large-scale toilet paper shortages in eight Venezuelan states 
and Caracas due to the Carabobo factory closure.  On February 
12, EmbOff spoke with a Paveca company officer who confirmed 
the plant's closure due to labor unrest.  Late in the evening 
on February 12, Paveca announced a resolution of the strike. 
The rival labor unions agreed to hold employee elections on 
February 25 to choose a dominant labor union and subsequent 
elections on March 25 to determine leadership of the dominant 
union.  An Embassy contact confirmed to EmbOff that Paveca 
agreed to pay the striking workers four days of lost wages. 
Paveca reopened the paper factory on February 13, but it may 
well be struck by further labor unrest. 
 
-------------------- 
Finding Toilet Paper 
-------------------- 
 
¶6. (SBU)  Prior to the recent labor unrest and accompanying 
halts in paper production, toilet paper had been particularly 
 
CARACAS 00000213  002.3 OF 002 
 
 
difficult to find in Caracas supermarkets.  When consumers do 
find toilet paper, they may purchase only one package due to 
rationing. 
 
¶7. (SBU)  On a bi-annual basis, Post procures necessary 
sanitary paper products through a main paper products 
distributor.  Currently, Post holds a two and one half months 
supply of toilet paper.  In November 2008, Post ordered a 
bulk supply of jumbo toilet paper rolls, but the order 
remains outstanding.  The distributor has explained that the 
delay is due to a problem in the Manpa factory in Maracay and 
no jumbo toilet paper is available in Venezuela.  To date, 
the distributor has substituted small toilet paper rolls, 
which enables Post to meet its operational needs.  EmbOff 
spoke to a Manpa officer who said that union problems are 
also the norm for Manpa, but the factory is operating. 
 
------- 
Comment 
------- 
 
¶8. (SBU)  In the run-up to the February 15th referendum, 
scarcity of toilet paper, part of the Venezuelan basket of 
basic goods, further underscores the inability of the GBRV to 
guarantee consumers access to everyday necessities.  But the 
shortage is an excellent example of the impact of Bolivarian 
economic theory: government expropriation of private 
enterprise, the promotion of a socialist productive model, 
the rise of parallel labor unions, other labor unrest, and 
the lack of necessary imported inputs continue to hobble 
production of essential goods throughout the country.  If 
production problems persist, Post is uncertain if the local 
distributor can continue to provide substitute products. 
While it may be comical, the current toilet paper shortage 
indicates another industry gravely harmed by the economic 
policies of the GBRV. 
CAULFIELD