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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 

CARACAS 00000958 003.2 OF 005 


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

¶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 

CARACAS 00000958 005.2 OF 005 


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