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Cablegate: Venezuelan Crackdown On Smuggling Unlikely to Hurt

VZCZCXYZ0015
RR RUEHWEB

DE RUEHBO #0277 0222202
ZNR UUUUU ZZH
R 222202Z JAN 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1052
INFO RUEHCV/AMEMBASSY CARACAS 9818
RUEHPE/AMEMBASSY LIMA 5819
RUEHZP/AMEMBASSY PANAMA 1117
RUEHQT/AMEMBASSY QUITO 6511

UNCLAS BOGOTA 000277

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD PREL ECON CO
SUBJECT: VENEZUELAN CRACKDOWN ON SMUGGLING UNLIKELY TO HURT
COLOMBIA

REF: A. (A) 07 BOGOTA 8519

B. (B) 07 BOGOTA 7225

1. (SBU) On January 21, Venezuela initiated a crackdown on
the smuggling of subsidized food and gasoline into Colombia
via the northeastern Colombian border town of Cucuta.
Contacts tell us that so far the crackdown has had limited
impact. Pedro Sayago, Executive Director of the local
Chamber of Commerce, compared the posting of hundreds of
Venezuelan National Guards to the border near Cucuta with
President Chavez's threats to close cross-border trade late
last year (ref A) and the two border shutdowns earlier in
2007 (ref B). He said none of the three actions changed the
"rhythm" of border relations

2. (SBU) According to Lorena Garnica, special advisor to
the Colombian Ministry of Agriculture and Rural Development,
northeastern Colombia does not face the risk of a food
shortage. Garnica said Colombia easily produces sufficient
food to meet internal needs, noting that food exports to
Venezuela topped USD 750 million between January-October 2007
while legal food imports from Venezuela were less than USD 30
million during the same period. Still, Garnica agreed that
no one knows the value of the food smuggled into Colombia
from Venezuela.

3. (SBU) Colombian Farmers' Association (SAC) President
Rafael Mejia cautioned, nevertheless, that reducing the flow
of subsidized food from Venezuela would almost certainly
raise the price of food, especially milk, for Colombians near
the border. He estimated that border consumers might spend
15-25 percent more for food if the crackdown continues.
Mejia said the critical issue is whether the crackdown might
foreshadow a Venezuelan reduction in food imports from
Colombia. Such a reduction could, depending on its size,
have significant repercussions for Colombian farmers.
However, given Venezuela's large demand for imported food,
Mejia described such a reduction as Venezuela "cutting off
their nose to spite their face."

Brownfield

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