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Cablegate: The Cubans in Venezuela's Ports

VZCZCXYZ0019
RR RUEHWEB

DE RUEHCV #1181/01 2521224
ZNY CCCCC ZZH
R 091224Z SEP 09
FM AMEMBASSY CARACAS
TO RUEKJCS/SECDEF WASHDC
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
RUMIAAA/HQ USSOUTHCOM MIAMI FL

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001181

SIPDIS

NSC FOR LROSSELLO
TREASURY FOR MKACZMAREK
USDOC FOR 4332 MAC/ITA/WH/JLAO
HQ SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 09/01/2019
TAGS: ECON PGOV ETRD EINV MARR CU VE
SUBJECT: THE CUBANS IN VENEZUELA'S PORTS

REF: CARACAS 1022 AND PREVIOUS

CARACAS 00001181 001.2 OF 002


Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) a
nd (d)

1. (C) SUMMARY. Post has comfirmed that a wholly Venezuelan
government-owned company, Bolipuertos, is now charged with
the management of Venezuela's ports. Cuba's ASPORT has a 49
percent share in Puertos del Alba, a separate company, which
will reportedly be focused on business development. Contacts
in shipping circles, however, tell us that the Cubans are
active in the ports as "advisors" to Bolipuertos and were
instrumental in pushing for the take over of port operations.
Bolipuertos has taken over private warehouse operations at
three ports named in the original March 25 Decree (Guamache,
Maracaibo, Puerto Cabello) as well as a fourth -- La Guaira,
the port serving Caracas. Shipping contacts report rumors
that the government may nationalize stevedoring and customs
agent services. Insurance premiums have reportedly increased
35-40 percent since May. END SUMMARY.

BOLIPUERTOS & PUERTOS DEL ALBA
------------------------------

2. (SBU) Post has clarified the issue of the management of
Venezuela's ports. Two companies of virtually the same name
have been decreed by the Government of the Bolivarian
Republic of Venezuela (GBRV). The first -- Bolivariana de
Puertos S.A. (BPSA or Bolipuertos) -- was founded by Decree
on June 12, 2007. This company was to be a mixed
Venezuelan-Cuban company with Cuba's Grupo Empresarial de la
Industria Portuaria (ASPORT) having a 49 percent share. We
understand that this first Bolipuertos was never actually
registered as a company. The second Bolivariana de Puertos
(BP or Bolipuertos) was created by Decree No. 6,645 dated
March 25, 2009, to "maintain, administer and develop"
Venezuela's ports. According to that Decree, the Venezuelan
state holds 100 percent of the capital of the second
Bolipuertos which was assigned to the Ministry for Public
Works and Housing. Neither of these companies is Puertos del
Alba in which the Cubans have a significant investment.

3. (C) On July 29, 2009, as reported reftel, the GBRV
published another Decree in the National Gazette authorizing
the creation of Puertos del Alba, a state-owned company to be
charged with "modernizing, renovating, equipping, and
constructing" ports in Venezuela and Cuba. Cuba's ASPORT has
a 49 percent share in Puertos del Alba with the 51 percent
majority share remaining with Bolipuertos. A close Embassy
contact tells us that the intent of the GBRV is to "follow
the Cuban model" by installing a company (Bolipuertos) that
will run all aspects of port operations in Venezuela while
Puertos del Alba will act as its business development arm.
Other contacts assert that Bolipuertos retains Cuban
"advisors" on staff, but they do not believe that the Cubans
have formal managerial responsibility in the company. These
advisors, however, are believed to have urged the GBRV to
move ahead with taking control of the ports.

4. (C) The March 25, 2009, Decree creating (or re-creating)
Bolipuertos stipulated that it would be responsible for the
infrastructure of Puerto El Guamache (the Isla Marguerita
cruise ship port), Maracaibo Port, Puerto Cabello
(Venezuela's largest port), as well as that of "any ports to
be developed in the future." As reported reftels, a
subsequent Decree dated July 30, declared the immediate
nationalization of private warehouse operations at the three
ports named in the March 25 Decree as well as a fourth -- La
Guaira, the port serving Caracas. Our contacts in the
shipping industry tell us that it appears likely that
Bolipuertos will also take control of port operations at
Guanta, Palua/Puerto Ordaz, Guiria and Cumana.

PORT SERVICES STILL TROUBLED
----------------------------

5. (C) Operations in Puerto Cabello were interrupted for
four days following the take over of warehouse operations at
the beginning of August. Reports of significant problems
have continued since the resumption of operations. Former
Petroleum Chamber President Andres Duarte (protect
throughout) informed Econoffs that his stevedore company has
not been allowed to remove equipment from the port for
maintenance or weekend storage in what many believe is a

CARACAS 00001181 002.2 OF 002


precursor to the expropriation of stevedoring and other
terminal services. Another contact whose company provided
warehouse services at Puerto Cabello, directed Econoffs'
attention to another company, Venezolana de Exportaciones y
Importaciones, C.A. (VEXINCA), established by Decree No.
38954 dated June 17, 2008. According to this contact,
VEXINCA, which is run by the military as are the ports at
this point, is actively offering customs services to the
clients of private sector customs agents. Our contact
speculates that VEXINCA may eventually be designated as the
sole provider of customs services in Venezuela.

INSURANCE AND OTHER RISKS
-------------------------

6. (C) Duarte informed Econoffs that insurance premiums have
increased 35-40 percent since the May 2009 announcement of
the Marine Committee of the Lloyd's Market Association that
it had withdrawn maritime war-risk policy coverage for
Venezuela. Other local shipping contacts have confirmed a
bulletin that ran in a British shipping magazine in August
noting that it may be difficult to make claims against
Bolipuertos for robbery, damage etc. According to Duarte,
Norweigan and Panamanian owned ships that used to bring soda
ash to Venezuela have already been swapped out for older
vessels with much smaller cargo capacity that cannot maintain
the previous off-loading rate of 50,000 tons per day. Duarte
also confirmed that the GBRV will have to pay a higher
premium on refrigerated shipping containers to European and
Brazilian firms as Maersk will no longer send them to
Venezuela as it has been unable to retrieve them in the past
due to the chaos in the ports. It has also been reported that
shipping line Hamburg Sud will no longer serve Venezuela.
7. (C) COMMENT: Many observers note that decreased traffic
arising from the global recession has saved Venezuela's ports
from complete strangulation. The wilderness of stacked
containers at the ports has improved. However, few here
believe that the GBRV has the know-how or the logistical
experience to manage the ports even with the assistance of
Cuban advisors. There is speculation that some port
operations may ultimately be handed over to friendly
governments on a concessionary basis.
DUDDY

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