EXPLAINING VENEZUELA'S COZINESS WITH IRAN

Reference ID 06CARACAS958
Date 2006-04-07 20:08
Released 2010-12-01 21:09
Classification SECRET//NOFORN
Origin Embassy Caracas



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RUEHBR/AMEMBASSY BRASILIA PRIORITY 5360
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RUEHSG/AMEMBASSY SANTIAGO PRIORITY 3426
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RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0110
RUEHAO/AMCONSUL CURACAO PRIORITY 0723
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0090
RUEHMI/USOFFICE FRC FT LAUDERDALE PRIORITY 2980
RHEHNSC/NSC WASHDC PRIORITY
RUMIAAA/HQ USSOUTHCOM MIAMI FL PRIORITY
RUEHUB/USINT HAVANA PRIORITY 0622


S E C R E T SECTION 01 OF 05 CARACAS 000958

SIPDIS

NOFORN
SIPDIS

HQSOUTHCOM ALSO FOR POLAD
FOR FRC LAMBERT

E.O. 12958: DNG: CO 04/08/2026
TAGS: PGOV MASS PARM VE
SUBJECT: EXPLAINING VENEZUELA'S COZINESS WITH IRAN,
C-NE6-00140

REF: A. CARACAS 00661
¶B. 05 CARACAS 01822
¶C. CARACAS 00330
¶D. TD-314/18176-06
¶E. TD-314/18093-06
¶F. HAVANA 04139
¶G. IIR 6 902 9642 06

CARACAS 00000958 001.2 OF 005


Classified By: POLITICAL COUNSELOR ROBERT R. DOWNES FOR 1.4
(D)

-------
Summary
-------

¶1. (S//NF) Manifest in the public rhetoric of both
countries, a shared hatred for the USG is the driving factor
in the budding relationship between Iran and Venezuela. The
BRV is favoring Iran with petroleum deals and other contracts
that appear to make little commercial sense. Although rumors
of Venezuela's cooperation with an Iranian nuclear weapons
program appear baseless, Iran and Venezuelan spokesmen have
announced their intention to develop Venezuela's civilian
nuclear capabilities. Press reports and Embassy contacts
suggest Venezuela is preparing to try to exploit its own
uranium deposits with Iran's assistance. Sensitive reporting
indicates Venezuela may also be seeking armaments,
cooperation on maintaining aircraft purchased from the United
States, and help in training its military reserves. Post
will continue to monitor the relationship while seeking to
exploit Venezuela's missteps as it isolates itself from
countries alarmed about Iran's nuclear ambitions. End
summary.

¶2. (SBU) Iran and Venezuela have been signing bilateral
agreements galore. Iranian parliamentary speaker Gholam-Ali
Haddad Adel told the press during his visit to Caracas in
mid-February that the two countries had signed 100 accords.
Iranian President Mohammad Khatami and Venezuelan President
Hugo Chavez inked twenty of these together in March 2005,
including plans to cooperate in petrochemical, agricultural,
and housing projects. Venezuela often signs agreements to
show off its importance on the world stage without following
through. Yet, in the case of Iran, there appears to be more
to the budding relationship than show. Below we examine
several possible explanations for the bilateral coziness, in
rough order of importance.

--------
Ideology
--------

¶3. (SBU) Iran shares a disdain for the U.S. Government that
the BRV seeks in its foreign allies. Chavez' ill-defined,
left-wing, anti-American ideology often drives his foreign
policy decisions, even when his foreign counterparts only
appear to be seeking commercial benefits. With Iran,
however, he has found a partner that shares his desire to try
to face down the United States. Evident in his daily
rhetoric, Chavez' ideology--and his accompanying attempts to
use it to stir up his political base--best explain his
decision to isolate himself from much of the world by
supporting Iran. (Venezuela joined only Syria and Cuba in
voting February 4 to oppose Iran's referral to the U.N.
Security Council for its involvement in uranium enrichment.)
Chavez, who regularly alleges the U.S. military has stolen
Iraq's oil, has accused Washington of having designs on
Iran's supply. Other BRV officials have taken Chavez'
ideological cue to the point of making Venezuela appear

CARACAS 00000958 002.2 OF 005


fanatical. General Alberto Muller, a key proponent and
planner of Venezuela's new military doctrine, announced
February 14 that Iran would be acting "in legitimate defense"
if it were to use nuclear arms, although he cautioned that
Venezuela did not support the production of such weapons.
According to Argentine newspaper La Nacion, Venezuelan
Ambassador to Argentina Roger Capella Mateo stormed out of a
Mercosur meeting with Spanish Foreign Minister Miguel Angel
Moratinos when Moratinos said his country opposed Iran's
refusal to submit to nuclear controls.

---------
Petroleum
---------

¶4. (C) Ideology may be the only explanation for bilateral
cooperation in the petroleum sector. Iran and Venezuela
appear to enjoy each other's company as fellow radical
oil-producing countries. Both Iran and Venezuela are OPEC
price hawks, but their solidarity on the supply issue does
not appear to have translated into many mutual benefits.
Foreign Minister Ali Rodriguez told reporters March 11 that
Iran and Venezuela were signing agreements because their oil
policies coincided, but mentioned nothing tangible,
digressing into how Venezuela could benefit from Iranian
experience in the cooperative movement and in developing
small agricultural machines. Venezuela has granted the
Iranian company Petropars the rights to certify a block in
the Faja region. The Iranians, however, have no experience
exploiting the extra heavy crude found in the area. (The
industry perception is that if a company is granted rights to
study a block in the Faja, it will eventually be given a
block in the area to exploit.) Chevron representatives told
us that the Iranians approached them seeking assistance on
carrying out the certification studies.

--------------------------------------
Commercial Agreements: Who's to Gain?
--------------------------------------

¶5. (C) A USD 200 million binational fund to finance
investment in both countries could ensure that commercial
ties continue to grow. Nonetheless, the unprofitability of
many of the deals inked with Iran again raises the question
of whether ideological factors are driving the relationship.
For example, in January Venezuela offered Iran contracts to
build low-income housing even though Iran's bid was twice as
expensive as the Venezuelan private sector's. (Note:
corruption could explain the overpricing, as well.)
Venezuela also plans to build a USD 220 million cement plant
to supply the local market with Iran's help. Such a plant
would appear to be a poor investment. Despite the enormous
transportation costs for cement, multinational CEMEX
currently exports cement from Venezuela for a price lower
than the going Venezuela rate because its local buyers delay
payments, according to a prominent economic contact. Chavez
announced in February he would import 10 Iranian plants to
process corn flour, a Venezuelan staple. The BRV likely sees
the state takeover of this industry as a solution to recent
shortages caused by its price controls. In another example
of state economic planning and ideological ties trumping
sound investment planning, Iran will establish an ethanol
plant in Lara State, according to press reports. The BRV may
view the production of ethanol--a by-product of sugar
refinery--as a fringe benefit to its project to resurrect
failed Cuban sugar mills in Venezuela.

----------------------------------------
Going Nuclear?: Uranium Rumors and More

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----------------------------------------

¶6. (C) As reported REF A, recent rumors that Venezuela is
trafficking in nuclear weapons and mining uranium for Iran
appear to be little more than the conspiracy-mongering by
Chavez adversaries. More disconcerting, however, are BRV and
GOI statements that suggest a long-term plan to develop
Venezuela's nuclear potential. Chavez mentioned on his
weekly "Alo Presidente" program in May 2005 the possibility
of asking help from "countries like Iran" in developing a
nuclear energy program. In February 2006, Iran publicly
affirmed its willingness to help Venezuela develop nuclear
energy, according to press reports. (See REF B for a
description of Venezuela's need for foreign expertise to
restart the fledgling nuclear program it shut down in the
1980s.) In March 2005, a memorandum of understanding signed
by the Iranian and Venezuelan Presidents established that
Iran would help Venezuela create a "National Geoscience
Database" that would contain a survey of the mineral deposits
throughout Venezuelan territory. Tomasso Tosini, geologist
and director of the Earth Sciences Institute of the Central
University of Venezuela, told us in June 2005 that creating
such a "basic geological map" of Venezuela would be the
logical first step to restarting a uranium program in
Venezuela.

¶5. (C) During a February 2006 meeting with poloff, UCV
professor and senior Accion Democratica party official Nelson
Lara claimed to have information substantiating Iran's
involvement in Venezuela's mineral sector. Lara said active
duty military officers in his classes told him that 20
Iranian officials were working in the Ministry of Basic
Industry and Mines. He said the Iranians did not answer to
any Venezuelan management. Lara speculated about their
involvement in uranium mining but said he did not know the
Iranians' role in the ministry. He added that 37 Iranians
were active in the Venezuelan Institute of Geology and Mines,
which Chavez launched in mid-2004.

¶6. (C) Venezuelan threats to take over property in areas
believed to have significant radioactive deposits are fueling
additional rumors that Venezuela is planning to mine
uranium. (Embassy note: Rumors that the BRV is planning to
mine these areas appear overblown. Factors besides uranium
are driving the government's targeting of land, although the
delays in expropriations reported in REF C could also reflect
BRV attempts to drag out negotiations for land until it can
gauge the true value of properties' mineral wealth.) In the
mid-1980s, the Ministry of Energy and Mines conducted
preliminary geochemical samplings that indicated the possible
presence of uranium deposits in at least two locations
currently eyed by the government:

-- The study revealed "anomalous areas to be assessed in
more detail" along the Caroni River in Bolivar State, where
the National Guard has begun evicting individual gold and
diamond prospectors reportedly to prevent them from damaging
the environment. In mid-March, National Guard attempts to
dislodge people from the Caroni basin ended in the deaths of
two miners. Demanding the withdrawal of soldiers stationed
in the Venezuelan military's fifth theater of operations
(TO5), miners responded by blocking roads and burning TO5
facilities.

-- The ministry report cited a section of Cojedes State as a
source of concentrated uranium. The area contains ranch and
nature preserve Hato Pinero, which the government has
targeted for possible expropriation. Concerned that the
ranch's alleged mineral wealth might attract BRV interest,

CARACAS 00000958 004.2 OF 005


ranch owner Jaime Perez Branger gave us a copy of an earlier
(1959) Ministry of Mines report calling Pinero's granite "the
most radioactive in the region." A footnote in the document,
however, noted that the counters used in the 1959 study would
not have detected uranium ore, one of many possible sources
of radioactivity.

-------
Defense
-------

¶7. (S//NF) Defense cooperation may also help explain the
expansion of the bilateral relationship (REFS D and E).
Indeed, an army official is scheduled to replace the current
Iranian Ambassador to Venezuela. According to sensitive
reporting, the Venezuelan Government is seeking lethal
armament from Iran such as rockets and other explosive
materiel. Venezuela has also sought from Iran parts for the
U.S. aircraft in its fleet that have been denied under the
Department's policy prohibiting the sale of components for
lethal munitions. Finally, sensitive reporting suggests that
Venezuela has sought help from Iran in establishing its
military reserve force. The Iranian popular mobilization
army (Basij) and the revolutionary guard corps (IRGC) invite
comparison with Venezuela's still evolving parallel military
structures: the reserves and the territorial guard.
Commander of the Basij Gen. Mohammed Hejazi visited Venezuela
in 2005, and an IRGC colonel has arrived here probably on
permanent assignment. A retired military officer citing
Venezuelan reservists told us March 24 that Iran had a small
number of soldiers in Venezuela training the reserves.

---------------
Shared Culture?
---------------

¶8. (S//NF) Venezuela has a Muslim population of about
250,000 including some tens of thousands of Shia'. In
addition to its political activities, the nine
Iranians--including four career diplomats--posted to the
Iranian Embassy in Venezuela represent a small but growing
number of their citizens working in Venezuela in both the
formal and informal sectors. Cultural ties between the two
countries, however, do little to help explain the expanding
relationship. Most Venezuelans are unfamiliar with Muslims
and are unable to distinguish Iranians from Arabs or from
other Muslims. Indeed, as REF F states about Iran and Cuba,
Venezuelan and Iranian societies have little more in common
than their despotic leaders' antipathy toward the United
States.

-------
Comment
-------

¶9. (C) Venezuela's support for a country that has nuclear
ambitions, supports terrorism, and talks about wiping Israel
off the map is of grave concern. It also alarms
nations--such as France (REF G)--that have tended to make
light of our concerns about Venezuela's antidemocratic
tendencies and militarization. We can exploit this alarm.
Just as the shared animosity toward Washington driving the
Iran-Venezuela relationship leads to irrational commercial
endeavors, it is also likely to lead to additional diplomatic
gaffes and other missteps that reflect poorly on the BRV
among wary international observers.

¶10. (C) We should not dismiss the uranium rumors. At the
very least, it appears clear Venezuela plans to prospect for

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uranium with the intention of starting a nuclear program.
Like many BRV schemes, the plan may remain in bureaucratic
and financial limbo for years, and it may never be
fulfilled. Yet, in the event that its ends are not peaceful,
it warrants careful monitoring. All source information
indicates Iran needs foreign sources of uranium to maintain
its nuclear program. How Iran would benefit from any
Venezuelan plan to extract uranium will be an open question
as long as Venezuela's uranium deposits remain unverified.


BROWNFIELD

Source: Wikileaks