LULA IN CARACAS -- PARSING A "STRATEGIC ALLIANCE"

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000415

SIPDIS

E.O. 12958: DECL: 02/16/2015
TAGS: PREL MARR BR
SUBJECT: LULA IN CARACAS -- PARSING A "STRATEGIC ALLIANCE"


Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS: 1.4
(B)(D).


1. (C) Summary: President Lula da Silva's state visit to
Venezuela this week saw declarations and a formal statement
by Lula and President Chavez announcing formation of a
"strategic alliance." In practice, this seems to translate
to enhanced cooperation in integration and development aimed
at increased regional prosperity and bargaining strength in
taking on traditional economic powers. While Chavez may have
liked the sound of "strategic alliance" for other reasons,
and Brazilian media expressed some concern about reports of
possible Brazilian arms sales to Venezuela, any additional
GOB "strategic" thinking seems focused on creating a
bilateral relationship of such practical importance to Chavez
that Brazil can leverage him into rational behavior. End
summary.


2. (SBU) Lula's one-day state visit to Caracas on 14 February
produced verbal declarations from both Lula and Chavez and a
formal joint statement that announced the formation of a
"strategic alliance." The prologue of the statement noted
the shared frontiers, huge resources and common history of
the two neighbors, and pledged common commitment to dealing
with poverty, protecting the Amazon, and overcoming other
challenges. The statement detailed negotiation and/or
conclusion of agreements in 12 areas, including energy,
mining, tax and customs regimes, financing, trade, technical
and military (i.e., bilateral consultations and joint patrol
efforts in the Amazon, per the statement text) cooperation.
(Note: A copy of the official joint statement in Spanish will
be faxed to Department WHA/BSC. End note.) According to press
reports, specific agreements established a binational petrol
refinery in northern Brazil, joint construction in Cuba of a
lubricant factory, a joint venture in coal mining, and nearly
USD 200 million in Brazilian financing of infrastructure
projects.


2. (SBU) Brazilian and international media reported
extensively on discussions of possible Venezuelan purchase of
Embraer military aircraft -- reportedly 12 AMX-T jet
attack/trainer aircraft and/or 24 ALX Super Tucano turboprop
attack planes. Agreements on the purchases are not noted in
the joint statement, and it is unclear whether contracts were
actually signed during the visit. (Note: Venezuela already
operates older models of the Tucano, and has been considering
purchases of Super Tucanos for some time, but financing
issues have been problematic. The Super Tucano uses
substantial U.S.-origin content, including Pratt and Whitney
engines. End note.) Some editorial comment here questioned
concluding weapons agreements with Venezuela in light of
tensions between that country and Colombia, and concerns in
Washington and elsewhere about a regional arms race.


3. (SBU) In speeches during the day, Lula stressed the
importance of regional integration to establishing trade and
development options beyond North-South patterns, a theme
warmed to by Chavez, and reflected in writing in the joint
statement's allusion to creation of "a new political,
economic and commercial geography." Lula's comments on
Venezuela seemed limited and circumspect. On one hand, he
praised the referendum process that assured Chavez's
continuation in office, calling it the "most important moment
for democracy in the country," and said the Venezuelan people
are "the owners of their noses" (Brazilian colloquial
expression equating to "masters of their destinies." But on
the other hand, Lula is quoted as observing that "divergences
only exist in democracies" -- a comment interpreted by some
Brazilian media as a criticism of Chavez in the face of
reports of his use of repressive measures.


4. (C) PolCounselor spoke on 14 February with Marcel Biato,
deputy foreign affairs advisor to Lula, about the intent and
significance of Lula's visit to Venezuela. Biato made the
following observations:

--The GOB continues to see intensified regional integration
with Venezuela and other neighbors as logical and salutary on
many levels, Biato said, adding that the geographic and
economic dimensions of Brazil and Venezuela, along with
shared frontiers and Amazon areas, make a partnership natural
and desirable.

--On a political level, Biato noted Lula's frequent
exasperation with Chavez, but said the GOB sees little
potential for "tutoring" him. "He has money, he has a
mandate, and he has shown he can mobilize a lot of society
behind him," Biato observed. That said, Biato was candid in
describing the GOB's intention to engage Chavez and Venezuela
in a bilateral relationship of such depth and economic
importance that the GOB "will have an increasing range of
instruments of pressure to curb any meglomaniacal tendencies"
on Chavez's part. Lula's visit to Caracas should be seen in
that context, Biato said.

--On the resolution of the crisis between Colombia and
Venezuela, Biato said it was the GOB"s assessment that Chavez
had finally decided he had exploited the problem to its
maximum political potential, and decided to bring the issue
to a close.

--Biato demurred on the question of military aircraft sales,
noting only that Venezuela had been considering purchase of
Super Tucanos for some time, and that questions remain about
financing. On the issue of reports of Venezuela's plans to
purchase several thousand AK-47 assault rifles, Biato
acknowledged that there is speculation and concern about
Chavez's intentions, but offered no other comment.


5. (C) Comment. We cannot know, but it is easy to imagine
that the choice of the phrase "strategic alliance" was to
Chavez's liking, with its resonance of military pacts. This
week's undertakings may, in fact, be strategic for the
Brazilians' focus on building up mechanisms for integration
and development that increase regional prosperity and ability
to take on traditional economic powers on more equal terms.
Those are stated GOB goals since the outset of Lula's
administration, and to the extent that Chavez thinks they fit
into his Bolivarian zeitgeist, the GOB seems happy enough to
make common cause. However, any other "strategic" intentions
on Brazil's part in this week's deals would appear to be
about enhancement of Brazilian means for leveraging Chavez
into behaving rationally. We will seek a debrief from Lula's
senior foreign affairs advisor, Marco Aurelio Garcia, on his
return from Caracas. We also will be watching whether a
debate takes hold here about the sale of Brazilian military
equipment to Venezuela. Although the GOB has stated its
intention to reinforce and expand Brazil's share of the
international arms market and we think it likely Brazil will
follow through with sales to Venezuela, recent editorial
comment here on Chavez has been increasingly negative and
questions may persist about Brazil's playing a role in his
weapons-buying spree.

DANILOVICH