BRAZIL LOOKS TO THE IDB FOR HELP ON INFRASTRUCTURE

UNCLAS BRASILIA 002724

SIPDIS

SENSITIVE

NSC FOR CRONIN
TREASURY FOR OASIA - DAS LEE AND FPARODI
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON
DOE FOR LADISLAW
AID/W FOR LAC/SA

E.O. 12958: N/A
TAGS: EAID EFIN ENRG
SUBJECT: BRAZIL LOOKS TO THE IDB FOR HELP ON INFRASTRUCTURE
WOES



1. (SBU) On October 11, EconCouns met with Ministry of
Planning International Affairs Secretary Jose Carlos Miranda
at the latter's request. In that conversation, Miranda
stated that the Brazilian government wanted to work closely
with new IDB President Moreno so as to facilitate the flow
of Bank financing to the GOB's portfolio of pending
infrastructure projects. While last spring the GOB had
strongly supported its national candidate - Joao Sayad --
for the IDB presidency, Miranda made clear that his Ministry
saw no reason that Brazil should not maintain its strong,
historic ties to the Bank. Particularly welcome, he
declared, was the agreement to initiate an IDB Brazil
Infrastructure Fund, which in the end could bring in up to
US$800 million in low-cost financing. Indeed, Miranda
commented, what was urgently needed now was for the Bank and
Brazil to get personnel issues settled so that
implementation of already-identified infrastructure projects
could begin in earnest.


2. (SBU) To that end, Miranda asked that Embassy convey a
private letter from his boss, i.e., Planning Minister Paulo
Bernardo - Brazil's representative to the IDB - to Secretary
Snow proposing several Brazilian candidates for positions
within the Bank. Miranda noted that similar correspondence
had already been conveyed to IDB President Moreno. The
letter to Secretary Snow, he said, follows up on (separate)
conversations the Secretary had with Minister Bernardo and
Finance Minister Palocci in the wake of September's
IMF/World Bank meetings. (Embassy has forwarded Bernardo's
letter to Secretary Snow via FEDEX.)


3. (SBU) Key among the projects that Brazil wanted to move
quickly, Miranda said, was its pending Public-Private
Partnerships (PPPs). While previously the PPPs had been
stalled because of a dispute as to which GOB entity would
manage the guarantee fund, this issue had now been resolved
(in favor of Banco do Brasil) and all the necessary
regulations had been promulgated two months ago. Miranda
observed that the first project to be bid would be
extensions to the North-South Railway. Andean Development
Fund (CAF) financing was already in place, with Italy to
provide assistance on bid issues.


4. (SBU) Turning to the energy field, Miranda characterized
the situation in Bolivia as "worrisome at best." He saw Evo
Morales as the best of those on the left as he at least was
willing to sit down and talk - something which could not be
said of Morales' more radical compatriots. Given the
instability in Bolivia, Miranda said, Lula Chief of Staff
Dilma Rousseff (formerly Energy Minister) had traveled to
Washington in mid-September to meet with Moreno to seek his
support for the proposed South American gas ring. This
project envisions the construction of gas pipelines linking
Peru, Brazil, Chile, Paraguay, Uruguay, and Argentina.
Rousseff wanted to move quickly on the gas ring to help
mitigate Brazil's dependence on Bolivian gas exports.
Miranda said that studies done by the GOB's energy
parastatal (Petrobras) indicated that gas from the Brazil's
plentiful Campos Basin would not be on line until 2007 or
2008 - leaving the country vulnerable in the short-run.

DANILOVICH