VZCZCXRO1905
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #0477 1062056
ZNR UUUUU ZZH
P 162056Z APR 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2909
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY

UNCLAS CARACAS 000477 
 
SENSITIVE 
SIPDIS 
 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR RJARPE 
NSC FOR RKING 
COMMERCE FOR 4431/MAC/WH/JLAO 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL VE
SUBJECT: CHAVEZ ANNOUNCES ALBA LEADERS WILL AGREE TO LAUNCH 
THE SUCRE, A REGIONAL COMPENSATION MECHANISM 
 
REF: 2008 CARACAS 1661 
 
¶1.  (U) President Chavez claimed on April 16 that leaders of 
the Bolivarian Alternative for the Peoples of Our America 
(ALBA) would approve an agreement to establish a "unitary 
regional compensation system" called the Sucre during their 
April 16 summit.  His announcement builds on a proposal 
contained in the November 2008 ALBA declaration (ref A). 
Details of the agreement, if indeed there is one, have not 
been published.  A Venezuelan Ministry of Finance (MoF) press 
release described the Sucre as being composed of a regional 
monetary council, a currency (or counting) unit called the 
Sucre, a central compensation chamber, and a fund of reserves 
and "commercial convergence."  According to press reports, 
President Chavez said the Sucre would be functional as of 
January 1, 2010, with pilot projects launched in September 
¶2009.  He described the Sucre as a "virtual currency," 
suggesting that as of January 2010 countries belonging to the 
system could conduct trade based on Sucre equivalents. 
According to the MoF, the ultimate goal would be the 
establishment of a "common monetary zone" encompassing all of 
Latin America and the Caribbean.  The current agreement 
appears to encompass Ecuador and all ALBA countries except 
Dominica (i.e., Venezuela, Cuba, Bolivia, Nicaragua, and 
Honduras). 
 
¶2.  (SBU) Comment:  The Sucre fits the geopolitical vision 
and rhetoric of President Chavez and some of his allies but 
is unlikely to be of economic significance in the near 
future.  Chavez's announcement of the Sucre's "birth" is 
designed to give ALBA leaders momentum going into the Summit 
of the Americas, promoting a vision of regional economic 
development independent of the United States and the dollar. 
Exactly what if anything the Sucre will turn out to be, 
however, remains unclear.  In the future will Venezuela claim 
to be sending Cuba 10,000 Sucres worth of oil in return for 
10,000 Sucres worth of medical services?  If the near-term 
purpose of the Sucre is to act as this type of "virtual 
currency" for trade purposes, it is plausible but 
economically meaningless.  Developing a true currency union 
would of course be economically significant but seems highly 
implausible in the near term from an economic and political 
standpoint, given the geographical separation and economic 
and monetary differences between the countries involved.  End 
comment. 
CAULFIELD