ID

23590

Etiquetas

PGOV, ECON, EPET, ELAB, EIND, PHUM, PREL, MARR, SP, VE

Fecha

2004-12-03 16:10:00

RefID

04MADRID4612

Origen

Embassy Madrid

Clasificación

CONFIDENTIAL

Destino

Encabezado

Contenido

This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 MADRID 004612

SIPDIS

E.O. 12958: DECL: 12/03/2014

TAGS: PGOV, ECON, EPET, ELAB, EIND, PHUM, PREL, MARR, SP, VE

SUBJECT: CHAVEZ COURTS SPANISH SOCIALISTS;LEAVES POLITICAL

TURMOIL AND ECON PROMISES IN HIS WAKE

Classified By: Political Counselor Kathy Fitzpatrick for reasons 1.5 (B

) and (D)

1. (C) SUMMARY: Venezuelan President Hugo Chavez visited

Spain November 21-23, in a trip that was touted by the

Spanish government as primarily economic in nature. Chavez

commenced his stay by stating that good relations with Spain

"have become of strategic importance" and that he "welcomes

the new course" of the Spanish government. Chavez also made

three economic announcements, which concerned petroleum

production and possible contracts for Izar, the troubled

Spanish shipbuilder. During Chavez's visit, Spanish Foreign

Minister Miguel Angel Moratinos stated during a television

interview that the previous Aznar government had supported

the 2002 coup against Chavez in cooperation with the US

government. Moratinos' statements led to the Partido Popular

(PP) calling for his resignation and threatening to break off

cooperation with the Zapatero government. Chavez departed

November 23, continuing on a tour that included stops in

Libya, Russia, Iran and Qatar, but returned on November 30

for a private dinner with King Juan Carlos. In the Spanish

Congress December 1, Moratinos said that he had not meant to

indicate the Aznar government was involved in the coup

attempt; rather, that the Aznar government should have

condemned the attempt and did not do so. Moratinos did not

mention the U.S. in his appearance, except to refer to

Washington having joined in the OAS's condemnation of the

coup attempt. While Deputy Foreign Minister Bernardino Leon

told Charge November 29 that the Zapatero government had

firmly conveyed the messages to Chavez that the Secretary had

suggested to Moratinos in their phone call, MFA Director

General for Latin American Affairs Sandomingo told us that

Chavez had not responded substantively to these messages.

Sandomingo indicated that these issues arose during Chavez's

meeting with Moratinos, and that the Zapatero meeting was

mainly ceremonial, and focused on economic issues. END

SUMMARY.

//COURTING THE SOCIALISTS//

2. (U) Chavez arrived in Spain on November 21, greeted by

about 200 supporters. During a memorial service for the

victims of the March 11 train bombings, Chavez gave a speech

in which he stated that stronger relations with Spain "have

become of strategic importance" and that he "welcomes the new

course" of the Spanish government. On November 22, Chavez

began his day by delivering an anti-imperialism speech at a

local university. He criticized the foreign policy of the

previous Aznar government stating, "It was sad that Spain was

subordinate to Washington and how nice it is to now see a

free, happy and independent Spain with new ideas." Chavez

also stated that the US "appeared to be predestined to plague

America with misery in the name of liberty" and said, "we

reject the war in Iraq, we reject any type of attack, we

reject the sanctions against Cuba and any kind of threat to

the people of Iran." After his speech, Chavez met with the

President of the Chamber of Deputies Manuel Marin, and then

with Zapatero. That evening, Chavez attended a social

gathering with left-wing artists, politicians and journalists

during which he publicly praised Cuban leader Fidel Castro

and Argentinean President Nestor Kirchner. On November 23,

Chavez attended a meeting with Defense Minister Jose Bono,

which resulted in a general agreement on increased military

cooperation between the two countries with details to be

determined at a later date.

//ECONOMIC ANNOUNCEMENTS//

3. (U) In 2003, Spanish exports to Venezuela fell 48

percent, from EUR 616mil (800.8mil USD) to EUR 320mil (416mil

USD), while imports from Venezuela dropped 58 percent.

Chavez had been expected to announce the formation of the

first ever joint venture company in the Venezuelan oil

industry, but negotiations did not conclude before his trip.

The venture, which includes state-owned Petroleos de

Venezuela (PDVSA) and Spain's largest oil firm Repsol-YPF,

will aim to improve oil and gas production in the Lake

Maracaibo region, where both companies maintain oil fields.

Under Venezuelan law, Repsol-YPF would be limited to 49

percent of the joint venture company's capital. During his

visit, Chavez made three significant economic announcements.

First, that the GOV is considering giving priority to the

Spanish shipbuilder Izar for repairing petroleum tankers. As

a result, it is likely that the GOV will send two tankers to

Spain in early 2005 for repairs. Second, Chavez announced

that the PDVSA might contract with Izar for the construction

of three new petroleum tankers. The deal would be worth an

estimated EUR 150mil (195mil USD) and would provide three

years worth of work for Izar. Finally, Chavez announced that

Venezuela would not support any proposed reductions in oil

production at the next OPEC summit. After his meeting with

the Zapatero, Chavez skipped a scheduled speech that was to

be delivered to over 200 businessmen at the Spanish Chamber

of Commerce. In his place, Venezuelan Commerce Secretary

Wilmar Castro addressed the group and urged them to invest in

Venezuela. Chavez also met with President of the Spanish

Business Association Jose Maria Cuevas. In his meeting with

Chavez, Cuevas reportedly stressed that legal security and

political stability were key to business investment in

Venezuela. Cuevas also reportedly stressed the importance of

open dialogue with Venezuelan business leaders, mentioning

the business group Federcamaras specifically. The

Federcamaras leader, Pedro Carmona, led the coup against

Chavez in 2002 and is currently in exile.

//SPANISH FM WEIGHS IN//

4. (U) In a related development on November 22, Spanish

Foreign Minister Miguel Angel Moratinos announced during a

televised interview with the program 59 segundos that the

previous Aznar government had supported the 2002 coup against

Chavez in cooperation with the U.S. government. Moratinos

stated that the Foreign Ministry had sent instructions to the

Spanish ambassador to Venezuela to support the coup and to

participate in a joint meeting with the US ambassador and the

Venezuelan opposition leader. The Moratinos statement caused

a furor in the Spanish press and has led to public

condemnation by the opposition party, Partido Popular (PP).

The PP called for Moratinos' resignation and threatened to

break off all cooperation with the Zapatero government if a

public retraction and apology is not issued. Zapatero and

Chavez held a joint press conference the following day, which

was marked by both parties' avoidance of questions related to

the Moratinos statement in regard to Aznar's support for the

Venezuelan coup attempt in 2002. Chavez, who has made the

same accusation in the past, stated that it was "a page from

the past" and that he would rather speak about his pleasant

visit to Spain and business relations. Zapatero refused to

elaborate on Moratinos's statements and said that the matter

would be explained in front of the Spanish Congress on

December 1. On December 1, Moratinos did appear in front of

the Spanish Congress and stated that his remarks were not

meant to imply that the Aznar government had instigated or

participated in the coup, but that the government had given

the coup international legitimacy by meeting with its leader.

Moratinos then apologized about his choice of words during

the television interview, but repeated his assertion that the

Aznar government gave international legitimacy to the coup

attempt. In response, the PP has stated that they will not

meet with Moratinos to reach a pact on foreign policy as he

has lost "moral legitimacy".

//SUBSTANCE ON HUMAN RIGHTS, OTHER KEY ISSUES?//

5. (C) Deputy Foreign Minister Bernadino Leon told Charge

November 29 in a brief conversation that Moratinos had raised

human rights, regional security and other issues the

Secretary suggested he convey to Chavez. In a meeting with

SIPDIS

Polcouns November 26, MFA Director General for Latin American

Affairs Javier Sandomingo indicated that Chavez had little or

no substantive comment for Moratinos on these issues, and

that the meeting with Zapatero was largely ceremonial and

focused on economic/commercial issues. Leon said that

Moratinos would try to phone the Secretary after Chavez

return visit November 30 for dinner with King Juan Carlos.

//COMMENTS//

6. (U) Negotiations between Repsol-YPF and PDVSA are

expected to conclude within the upcoming weeks. The deal

could provide Spanish and EU markets cheaper access to

petroleum and natural gas in the future. Venezuela's

announcement that they will oppose production cuts at the

next OPEC summit should have a positive economic effect on

the price of petroleum by soothing investor fears already

shaken by the activity in Iraq.

7. (U) Izar continues to be both an economic and a political

problem for the Spanish government. A lack of civil

contracts, a proposed restructuring that would separate the

profitable military component from the struggling civil

component, and EU pressure for the refund of illegal

government subsidies threaten the employment of approximately

32,000 Spanish shipyard workers, causing Zapatero's first

real labor crisis. Shipyard workers have held public

demonstrations, some of which have resulted in scattered

violence, in several cities. A business deal with PDVSA

would not be enough to save the company, but could be a good

starting point for eventual economic stability of the civil

component. The public announcements about future work for

Izar are seen as Chavez's attempt to provide domestic

political assistance to the Zapatero government. However,

the non-committal nature of Chavez's statements leaves doubt

as to whether they will actually materialize.

8. (U) Chavez's failure to appear at the Chamber of Commerce

may have a negative effect on Spanish investment in

Venezuela. Apparently, Spanish businesses are skeptical

about doing business in Venezuela, especially after the

failed 2002 coup. The conversation between Cuevas and Chavez

highlights this problem and Chavez's failure to prioritize

business interests will not serve to soothe investors' fears.

In addition, Chavez's political speeches against the US and

comments in support of Zapatero and other socialists have

some Spanish political parties worried that he may have

worsened U.S.-Spanish relations.

9. (U) The biggest story to arise out of the visit was not

Chavez's activities, but the political polemics that emerged

following Moratinos' coup support allegation. The normally

gregarious Chavez didn't comment on the statement during his

joint press conference with Zapatero, leading many to

speculate that Zapatero asked him to tone down the rhetoric.

The PP has threatened to break off all negotiations with the

Zapatero government except for those related to the fight

against terrorism and normal institutional functions.

Moratinos' statements before Congress will probably have

little effect on smoothing over the rift that has grown

between the PP and the Zapatero government. Due to the

minority nature of the Zapatero government, this could lead

to the Socialists' inability to implement their agenda and

also threaten Spain's ability to ratify the EU constitution.

MANZANARES;"