UNCLAS SECTION 01 OF 02 BRASILIA 003185

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON BR FTAA ETRO US
SUBJECT: CODEL HYDE DISCUSSES FTAA, CORRUPTION SCANDAL WITH
BRAZILIAN CONGRESSIONAL REPRESENTATIVES


1. Summary. Brazilian Congressional representatives told
CODEL Hyde December 2 that they would like to see an increase
in dialogue between the U.S. and Brazilian legislatures on
important topics like the Free Trade Area of the Americas
(FTAA). One representative said Brazil's recent corruption
scandal had affected the GOB's economic policy and bore some
of the blame for weak GDP numbers in the third quarter. Both
American and Brazilian Congressional representatives agreed
to increase dialogue on key issues. End Summary.


2. On December 2, CODEL Hyde met with Brazilian
Congressional Representatives Vilmar Rocha (PFL) and Maria
Jose Maninha (PSOL) in Brasilia, Federal District.

FTAA
--------------

3. Representative Maria Jose Maninha told CODEL participants
that the Brazilian Congress seeks an FTAA agreement that is
symmetrical, serves Brazil's best interests, and reasonably
addresses the agricultural sector's needs. She explained
that the Brazilian Congress is working to develop within the
lower house parameters for trade negotiations that would
affect all major trade development initiatives, including the
FTAA, Mercosul, and the WTO. Vilmar Rocha requested the
establishment of a stronger exchange of information and an
increase in dialogue between American and Brazilian
Congressional representatives on the FTAA and other important
issues, such as the environment and immigration.

Corruption Scandal
--------------

4. Maninha believed that the current political crisis is the
"most profound political crisis to date." The corruption
scandal has "tainted Lula and his administration," weakened
Brazil's political party structures, and affected the GOB's
economic policy, she said. The recent decrease in Brazil's
GDP during the third quarter of 2005 and overall slowing
economic growth rate projections are evidence of the
scandal's affect on the economy, she explained.


5. According to Rocha, substantive changes in GOB policy
will likely not take place before the October 2006 local and
national elections. Congress will develop a more substantive
agenda after the results of next year's elections, Rocha
stated.


Income Distribution and Other Social Issues
--------------

6. Rocha noted that Brazil's high crime rate largely results
from urban population increases due to rural relocation to
urban areas. Brazilian security institutions are
ill-equipped to address recent population increases and as a
result, are unable to quell violence, Rocha explained. The
representatives blamed high crime rates on the influx of
rural poor to the cities and said strong economic growth was
needed to address the problem. Maninha said she believes
that the creation of social and economic policies to create
economic growth and increase employment can alleviate
Brazil's social problems. She added that the GOB's "Zero
Fome" (Zero Hunger) program has provided assistance to ten
million Brazilian families, and the GOB's Social Security
program has provided monetary assistance to the elderly and
the poor.

GOB/USG Congressional Relations
--------------

7. Rocha explained to the delegation that up until recently,
foreign affairs and other international issues were addressed
solely by the Executive Branch of the Brazilian Ministry of
External Relations. Interest in international affairs has
increased among Brazilian Congressional representatives
recently and the development of strong relations between
American and Brazilian Congressional representatives is a
priority. Chairman Hyde and Representative Watson agreed,
and added that discussions between Brazilian and American
Congressional representatives should occur more regularly.

PARTICIPANTS
--------------

8. U.S.
Rep. Henry Hyde
Rep. Thomas Lantos
Rep. Eni Faleomaveaga
Rep. Mel Watt
Rep. Diane Watson
Rep. Luis Fortuno
Assistant Administrator Adolfo Franco, USAID
Embassy Charge Patrick Linehan

Brazil
Representative Vilmar Rocha (PFL-GO)
Representative Maria Jose Maninha (PSOL-DF)


9. This cable was not cleared by CODEL Hyde prior to
transmission.

LINEHAN