CONFIDENTIAL: VENEZUELAN GOVERNMENT IGNORES USG OVERTURES ON AVIATION

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TO RUEHC/SECSTATE WASHDC PRIORITY 2674
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RULSDMK/DEPT OF TRANSPORTATION
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C O N F 1 D E N TIA L SECTION 01 OF 02 CARACAS 000269
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HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR MMALLOY COMMERCE FOR 4431/MAC/WH/JLAO
E.O. 12958: DECL: 02/28/2019
TAGS: ECON PGOV PREL ETRD EINV EAIR VE
SUBJECT: VENEZUELAN GOVERNMENT IGNORES USG OVERTURES ON AVIATION
REF: 2008 CARACAS 647
CARACAS 00000269 001.2 OF 002 

Classified By: Economic Counselor Damall Steuart for reasons 1.4 (b)and(d). 

¶1. (C) SUMMARY: A Venezuelan private sector organization advocated strongly for the Venezuelan civil aviation
authority (INAC) to support the issuance of visas for F AA inspectors and to meet with the Embassy to discuss visa
matters. The Venezuelan govemment (GBRV) has not acceded to either request. While five intemational airlines recent1y
received a disbursement of dollars from Venezuelan exchange control agency (CADIVI), no US carriers were inc1uded.
Charge Caulfield's request to meet with CAD IVI to discuss US company requests for dollars has also gone unanswered. END SUMMARY.
LOCAL SUPPORT FOR THE USG HAS NOT BUDGED THE GBRV 

¶2. (C) XXXXXXXXXXXX told Econoffs in January that
INAC wanted a solution to its US visa issues with an emphasis on obtaining visas for Venezuelan military pilots. On February 11, the AlDCM called
INAC and offered to discuss visa matters with INAC President
Jose Martinez. Although XXXXXXXXXXXX met with Martinez and encouraged him to meet with the AlDCM, INAC has yet to
respond to the Embassy's offer. 

¶3. (C) XXXXXXXXXXXX was also a strong proponent of an FAA visit. Two of Venezuela's three FAA-certified aircraft maintenance facilities have lost their certifications as F AA inspectors have been unable to obtain visas. The third
facility will lose its certification in June 2009. XXXXXXXXXXXX explained that this situation is extremely detrimental for
Venezuelan businesses in the aviation sector, but that he and
his association members have been unsuccessful in convincing
the Venezuelan govemment to issue FAA visas. (Note: After
failing in their second attempt to obtain visas, F AA
inspectors withdrew their passports from the Venezuelan
Embassy in early February.) 

FOREIGN EXCHANGE PAIN 

¶4. (C) On February 10, the Charge requested a meeting with CADIVI to discuss the outstanding dollar requests by US businesses in all sectors. CAD IVI has not responded to the Charge's request to date. All three US carriers with
operations in Venezuela strongly support a meeting between
the Embassy and CAD IVI and would be willing to provide whatever documentation Post might need for their sector.
(Note: CADIVI is the agency that administers the GBRV's currency controls. To receive US dollars at the official
exchange rate for transactions such as dividend repatriation
and operating costs, a company must obtain CAD IVI approval. There are no reliable figures for how much money US companies as a whole have requested from CADIVI, but most believe the number is in the billions. See reftel for more information on CADIVI.) 

¶5. (C) On February 17, Econoffs met with XXXXXXXXXXXX
And XXXXXXXXXXXX. Both said they would encourage CAD IVI President Manuel Barroso to respond to the Embassy's request. However, neither was optimistic. XXXXXXXXXXXX pointed out that
the Vice President ofIATA had come to Venezuela twice for appointments with CADIVI but Barroso "stood him up" both times. 

¶6. (C) Three months ago when it became c1ear that Venezuela's
supply of dollars would dwindle, XXXXXXXXXXXX said,
Barroso started approving all dollar authorizations personally. The approvals are "completely arbitrary" according to XXXXXXXXXXXX who argued that Barroso is a military man and a "mini Chavez" who
"wants all the power in his own hands." XXXXXXXXXXXX said Barroso recent1y asked Chavez for another year as the head of CADIVI and Chavez agreed as Barroso used to be a member of Chavez' personal security detachment and remains his "good
friend." Nevertheless, XXXXXXXXXXXX argued that CADIVI was not discriminating against US airlines when it recent1y disbursed
dollars to five non-U S carriers. XXXXXXXXXXXX explained that there are simply not enough dollars to go around. American Airlines,
the largest operator in the Venezuelan market, is awaiting
the most substantial dollar disbursement of any airline. 

COMMENT 

¶7. (C) While there is strong private sector support for increased bilateral cooperation on aviation issues, the GBRV
chooses not to respond to USG overtures. Sources in the sector report that sorne in INAC want to accept the Embassy's repeated offers to begin a dialogue on technical issues. However, INAC officials current1y answer direct1y to the Venezuelan Vice President who does not seem disposed to increasing cooperation with the USG. (A more detailed discussion of intemal INAC operations will follow septel.) US airlines, and indeed the intemational business community, are increasingly concemed with the difficulty in obtaining dollars from CAD IVI in part due to the rumored possibility that the GBRV may devalue in the near future. The GBRV unfortunately seems uninterested in their concems.
GENNA TIEMPO