SOUTH AMERICAN SUMMIT: NOT MUCH ADO ABOUT NOT MUCH

UNCLAS SECTION 01 OF 02 BRASILIA 002658

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PREL PGOV ECON EINV PHUM BR
SUBJECT: SOUTH AMERICAN SUMMIT: NOT MUCH ADO ABOUT NOT MUCH

REF: A) BRASILIA 2602 B) RECIFE 130


1. (SBU) Summary: The first summit meeting of the
Community of South American Nations (CASA) provided a forum
for Venezuelan President Chavez to blast the United States
and call into question CASA's very nature, as well as for
Brazilian President Lula to criticize his Argentine
counterpart, but yielded little in the way of concrete steps
forward for South American integration. The only substantive
progress on integration occurred on the eve of the summit,
with the signing of two petroleum cooperation agreements --
one between Venezuela and Brazil and the other between
Venezuela and Argentina. The lack of a concrete timetable
for progress, or for interim benchmarks, caused Chavez to
initially refuse to sign the (over-long and under-focused)
summit declaration and plan of action, and he relented only
when President Lula promised to directly address Chavez's
concerns within the next 90 days. While the summit
formalized the structure of CASA and called for the gradual
development of a free-trade zone in South America, the
absence of five heads of state -- (Colombia, Uruguay,
Suriname, Guyana and Argentina) -- including two of Brazil's
Mercosul partners, indicated a less than enthusiastic embrace
of yet another Brazilian effort to exercise leadership of the
continent. Brazilian press coverage reflected a comparable
lack of domestic enthusiasm, largely miring the story deep in
their editions. End Summary.


2. (SBU) The September 29-30 Summit of the Community of
South American Nations (CASA) succeeded in formalizing the
institution and adopted a declaration and plan of action
urging an acceleration of the physical, economic, energy,
transportation, financial and social integration of the
continent, including the call for states to contemplate the
gradual establishment of a free trade zone. But the only
concrete steps toward integration occurred on the margins of
the conference, specifically the agreement between Brazil's
Petrobras and Venezuela's PDVSA to build a $2.5 billion oil
refinery in northeast Brazil (Ref B),and PDVSA's agreement
to purchase an existing refinery in Argentina with an eye
toward amplifying the refinery's production to supply gas
stations that PDVSA intends to buy in Argentina and Uruguay.

3. (U) The Venezuelan/Brazilian refinery, expected to
process 200 million barrels of oil per day when it is
completed in 2011, will process both Brazilian and Venezuelan
heavy crude, producing both diesel fuel and liquefied
petroleum gas, and would decrease PDVSA's dependence on U.S.
refineries that specialize in heavy crude. Brazil and
Venezuela are also considering the construction of a natural
gas pipeline that would stretch from Venezuela to Argentina.



4. (U) By virtue of the above agreements, Venezuelan
President Chavez grabbed most of the press attention in the
lead-up to the Summit (Ref A),including the encomiums heaped
upon him during the signing ceremony by President Lula, who
called Chavez the first head of state to use Venezuelan oil
revenues to help the people of Venezuela, and said, "I don't
know if Latin America has ever had a president who has put
the democratic experience into practice like in Venezuela. A
president who wins elections, drafts a Constitution and
proposes a referendum in relation to his own person, holds
the referendum and wins again. Nobody can accuse that
country of not having democracy. You could even say that it
has it in excess."


5. (U) For his part, Chavez called the accord between the
two oil companies a gesture against the "seven-league giant"
-- a new appellation that Chavez has borrowed from the texts
of Jose Marti to apply to the United States. He also labeled
a major Brazilian daily a lackey of the U.S. for citing UN
figures showing poverty has expanded in Venezuela during
Chavez's time in power.


6. (SBU) Chavez then dominated the summit as well, both via
a 50-minute tirade in which he railed against the United
States, the lack of formal structure within CASA itself, the
lack of inherent worth of summit meetings, and then by
refusing to sign the summit's declaration. He cited the
absence of a concrete Program of Action, with specific goals
and timetables, as his reason for declining to join consensus
on the issue, saying that at this rate CASA wouldn't
accomplish anything before the year 2200.


7. (SBU) Lula, who had been so effusive in his praise of
his neighbor the day before, reportedly expressed extreme
frustration with him during the summit, insisting that the
declaration had never been intended as a detailed roadmap,
but rather as a general statement of principles that would
lay the groundwork for more concrete steps later on.
Nevertheless, President Lula obtained Chavez's endorsement of
the declaration only by promising to use his status as
President Pro Tem of CASA to press for the adoption of a
concrete plan of action within 90 days. The plan would then
be presented at the coming Mercosul summit, to which members
of the Community of Andean Nations have been invited.


8. (SBU) The other headlines were garnered by Argentine
President Kirchner, who attended only the dinner on the
evening of the 29th, after concluding the refinery agreement
with Chavez (which some local dailies said was the only
reason Kirchner showed up at all),and then left the next
morning, one-half hour before the opening ceremony.
President Lula took the opportunity to chastise his
counterpart, complaining that the early departures of
heads-of-state from such gatherings prevented the full
consideration of important issues. Other Brazilian
officials, however, noted that Kirchner had important
electoral business to attend to and said his absence from the
forum was not a serious matter.


9. (U) It was left to the Argentine ambassador to deny
reports that Kirchner left so as not to have to engage his
political rival, Argentine ex-president and current Argentine
Mercosur representative Eduardo Dulhade, whose wife is
running against Kirchner's for a senate seat. For his part,
Lula made a special effort to praise Dulhade's work in
Mercosur as well as praising his contributions to Argentina,
while saying leaders should not let electoral schedules keep
them from fully participating in important international
efforts at integration.


10. (SBU) Comment: Whatever his ultimate motives for
resisting the documents, Chavez's evaluation of the
declaration and associated Plan of Action and Priority Agenda
was on the mark. Aside from formulating the organizational
framework of CASA, nearly all of the items were hortatory in
nature and general to the point of vagueness. The absence of
not only Kirchner, but of Uruguayan President Vasquez,
currently the President Pro Tem of Mercosul, and the heads of
state of Suriname, Colombia and Guyana, revealed a distinct
lack of enthusiasm for yet another Brazilian attempt to
exercise leadership of South America. Brazilian press
coverage of the summit revealed a similar lack of enthusiasm.
There was almost no reporting of the summit beforehand, and
what little there was focused on the question of whether
Kirchner and others would actually attend. Most of the
resulting articles focused on Chavez's domination of the
stage and on Kirchner's early departure. The "Jornal do
Brasil" applauded the summit as one more step along the road
to integration, but most coverage dealt almost exclusively
with the sideshows. Even that coverage was overshadowed by
the continuing domestic maneuverings associated with the
ongoing political scandals, jockeying for next year's
elections, and an incipient scandal concerning football
referees. As with May's South America-Middle East summit, it
appears that Brazil and President Lula gained less than they
had hoped from this confab.


11. (SBU) Foreign Ministry officials have not yet responded
to Embassy requests for a readout of the summit. The summit
declarations, plan of action and priority agenda can be found
on the ministry's website:
www.mre.gov.br/portugues/imprensa/nota detalhe.asp?ID_
RELEASE=3278.



DANILOVICH