CODEL MCCONNELL MEETS BRAZILIAN POLICYMAKERS

UNCLAS SECTION 01 OF 04 BRASILIA 000117

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TAGS: PGOV PREL ECON ETRD BR
SUBJECT: CODEL MCCONNELL MEETS BRAZILIAN POLICYMAKERS


1. (SBU) Introduction. During a January 9 stop in Brasilia,
a congressional delegation led by Senator Mitch McConnell met
with Brazilian government leaders. The meetings were
positive and covered a range of issues, including trade, the
MINUSTAH peacekeeping mission to Haiti, Venezuela's entry
into Mercosul, the outlook for a Morales presidency in
Bolivia, and general Brazilian security issues. Separate
summaries of the meetings follow. End Introduction.


2. (SBU) During a January 9 visit to Brasilia, a CODEL led by
Senator Mitch McConnell (KY),Majority Whip and Chairman of
the State, Foreign Operations and Related Agencies
Subcommittee of the Appropriations Committee, met with the
Acting Minister of Development, Industry and Trade Mario
Mugnaini, Minister for Institutional Security General Felix,
and Foreign Minister Celso Amorim. In addition to Senator
McConnell, the CODEL included:
- Senator Mel Martinez (FL);
- Senator Richard Burr (NC); and
- Senator John Thune (SD).

MINISTRY OF DEVELOPMENT, INDUSTRY AND TRADE


3. (SBU) The McConnell CODEL met with Acting Minister of
Development, Industry and Commerce (MDIC) Mario Mugnaini Jr.
and Special Assistant Aloisio Gomes Neto to discuss how
Brazil and the US might further their trade relationship.
Mugnaini was mostly in talking mode, wanting to explain the
current Brazil/US trade relationship and where he would like
to see it going. The GOB is currently unsatisfied with last
year's 12 percent increase in trade with the US (which is
well below Brazil's average increase with trading partners in
Latin America). Both sides agreed that the US is still
Brazil's single most important trading partner.

Looking to Increase Exports and Imports
--------------


4. (SBU) While currently exports make up 16 percent of
Brazilian GDP and exports and imports combined make up 25
Percent, MDIC would like for exports alone to make up 25
percent of the Brazilian GDP. Mugnaini said Brazil is
looking for a 5 percent increase in imports to, and exports
from, the US. When pressed, Mugnaini said the sectors the
Ministry sees the most room for growth are services (with a
caveat that more negotiations in the WTO are needed),capital
goods, electronics, mechanical equipment, and chemicals for
medicine manufacture and fertilizer production. High quality
fertilizer from the US would help Brazil increase
agricultural production and therefore exports, he said.

Agriculture, An Age Old Problem
--------------


5. (SBU) Brazil and US agricultural aims are often in
conflict and therefore complicate the import/export picture,
according to Mugnaini. When Senator Thune pointed out that
Brazil's agricultural exports to the US outweigh US
agricultural exports to Brazil by 10 to 1, Mugnaini
complained of a high effective tariff Brazil pays to export
sugar to the US (presumably referring to the over quota
tariff rate). Mugnaini also mentioned US cotton subsidies
and a lack of satisfactory movement by the USG to comply with
the WTO panel ruling. Senator Thune said the issue is in the
process of being resolved. Senator Martinez suggested that
joint marketing of ORANGE juice to Asia is one area that
would benefit both Brazil and US producers.

US FTAs Everywhere; How about With Mercosul?
--------------


6. (SBU) Mugnaini pointedly asked why the US has recently
completed so many free trade agreements with other countries
in the hemisphere while no movement has been seen on the FTAA
or a bilateral agreement with Mercosul. Brazil is willing,
he said, to move forward on bilateral agreements, but will
not abandon the FTAA. Senator McConnell said that in spite

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of its co-chairmanship of the FTAA, Brazil has not
demonstrated the same level of commitment to a trade
agreement that countries like Peru, etc. have shown. Senator
Martinez added that the recent inclusion of Venezuela (with
its open animosity towards the FTAA) into Mercosul further
complicates the equation. Mugnaini admitted that negotiating
a bilateral trade agreement would be difficult given Brazil's
Mercosul obligations. He opined that Venezuela will not be
easily integrated into Mercosul and he does not see full
inclusion for well over a year.


7. (SBU) The senators repeated their overall point: if Brazil
would like to continue FTAA negotiations, set a date for
talks, take a leadership role. The senators questioned the
political will of the current Brazilian administration to
continue with free trade negotiations -- bilateral or
multilateral -- given upcoming elections. Mugnaini expressed
similar concerns in light of the upcoming end of Trade
Promotion Authority and said that Brazil's leadership in
Latin America warrants a deepened relationship between our
two countries, especially in the area of trade. He suggested
that perhaps a deepening of private/public fora on free trade
in both countries would be a way to continue the discussions.

MINISTRY OF FOREIGN AFFAIRS


8. (U) In his meeting with the CODEL, Foreign Minister Amorim
was joined by Under Secretary for Political Affairs Antonio
de Aguiar Patriota, as well as Paulo Alvarenga from
Itamaraty's US Desk.

Brazil as Global Power
--------------


9. (SBU) Amorim greeted the CODEL with a comprehensive
presentation on Brazilian foreign policy, recapping Brazil's
priorities and accomplishments under the Lula administration.
Amorim described the current Brazilian vision of a
multi-polar world, taking exception to a statement that
described Brazil as a regional, rather than global, power.
Amorim described US-Brazil relations as good to great, noting
his friendship with Secretary of State Rice and between
Presidents Bush and Lula.

Haiti - Brazil in for the Long-Haul
--------------


10. (SBU) The CODEL opened a discussion on Haiti by extending
condolences for the January 7 death of General Urano Teixeira
da Matta Bacellar, the Brazilian general who had led the
MINUSTAH peacekeeping mission in Haiti since August 2005.
Amorim avoided discussing the specifics surrounding General
Bacellar's death, but reiterated public statements he had
made indicating that Brazil is committed to continuing the
mission in Haiti. While noting that preserving law and order
is essential, Amorim voiced concern that without jobs,
improved infrastructure, and industrial development, it will
be difficult to make fundamental changes in Haiti's situation.

Bolivia - Urging Moderation
--------------


11. (SBU) In response to a question by Senator Martinez,
Amorim shared his view that Bolivian president-elect Evo
Morales had rightly chosen to work through the democratic
process. Amorim recounted that he and President Lula had met
with Morales on a number of occasions since 2002, always
encouraging him to work for change following a democratic
course. Amorim expressed surprise that Morales had been
successful so quickly on the electoral front. Despite his
general support for Morales, Amorim acknowledged that
unchecked nationalism on the part of Morales could be
problematic; noting substantial Brazilian investments in
Bolivia and the countries' 3200 kilometer shared border.
Amorim emphasized the need for Morales to govern in a
moderate manner that encourages investment and trade.


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Another Pitch for Mercosul-US Negotiations
--------------


12. (SBU) In the upteenth time within the last couple years,
Amorim made a pitch that the US negotiate a bilateral free
trade agreement with the Mercosul trade bloc. Amorim drew a
distinction between Mercosul and other US FTA partners,
claiming the levels of industrial development in Brazil and
Argentina denote interests which require negotiation of a
different type of agreement than that which the US has
pursued with other countries, such as El Salvador. He stated
that the US position on agricultural subsidies in the WTO
Doha negotiations was helpful, both in terms of the Doha
round and for possible bilateral negotiations. Providing some
insight into Mercosul dynamics, Amorim at one point said that
on many issues, he doesn't even need to consult his Mercosul
colleagues, because "he knows what they think."


13. (SBU) Visibly uncomfortable when Senator Martinez
wondered how such a bilateral deal would be possible with
Venezuela in Mercosul, Minister Amorim responded that many
questions "remain unanswered" regarding Venezuela's Mercosul
membership, adding that "at this stage, Venezuela in Mercosul
is more of a political desire than a reality."

THE PLANALTO


14. (SBU) The Presidency's Minister for Institutional
Security, General Jorge Armando Felix, opened his meeting
with the CODEL with a briefing on the functions of his
office, the Institutional Security Cabinet (GSI) of the
Presidency. He explained the GSI's roles in overseeing
Brazil's intelligence service (ABIN),interfacing with the
armed forces, coordinating the national drug prevention
program and planning for and facilitating interagency
management of a range of crises, from natural disasters to
major land invasions. Felix was accompanied by senior GSI
officials with responsibilities in these areas.

The Tri-Border Area
--------------


15. (SBU) Senator Burr asked Felix for his views on US-Brazil
cooperation in intelligence and security, and whether changes
in the US intelligence community (IC) had impacted Brazil.
Felix responded that bilateral cooperation is very good, with
long-standing and successful operational cooperation between
Brazilian security services and US counterparts, including in
monitoring activities in the Tri-Border Area (TBA). He
indicated changes in the US IC had not negatively affected
cooperation, praised his reception during a recent working
visit to US agencies, and said it was imperative that nations
work closely together in facing threats that cross borders.
Elaborating on the TBA question, Felix noted that the region
is a fulcrum for a range of illegal activities, including
smuggling, narcotrafficking, product piracy and money
laundering, but that there is "no evidence" currently of
operational activities by terrorist cells. But Brazil, he
continued, is "attentive" to any potential terrorist threats,
and has also mounted a major interagency enforcement effort
in the TBA over the past year aimed at interdicting smuggling
and other illegal cross-border activities.


16. (SBU) Senator McConnell pressed Felix on his assertion
that there is no indication of terrorist activities in the
TBA. Felix stressed the use of the term "evidence" and
hastened to add that the GOB understands and concerned that
cells are present in the area, and is actively monitoring
them. He went onto explain changes in the last two-plus
decades in Middle Eastern immigration into Brazil, noting the
traditional majority of Christians from Syria and Lebanon
settled in greater Sao Paulo, followed in recent years by an
increase in Muslims from Lebanon moving especially into the
TBA. But the GOB is resistant to characterizations that
could "stigmatize" entire ethnic groups, and hence is careful
in its assessments and statements regarding terrorism, he
added.

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Bolivia
--------------


17. (SBU) In response to questions from Senator Thune and
Martinez, Felix noted that other threats from the TBA and
other frontier areas with Bolivia include arms trafficking
(he noted the preponderance of weapons are of U.S. and
Eastern European origin) and, especially, narcotrafficking.
With regard to the recent electoral victory in Bolivia of Evo
Morales, Felix noted that Morales is making a rhetorical
distinction between growth of coca leaf for traditional
applications, which Morales supports, and narcotrafficking,
which Morales says he will combat. The GOB is watching this
closely and has outlined its concern to Morales, including in
a recent meeting between Morales and Lula. The length of
Brazil's border with Bolivia and the influx of cocaine
products into Brazil make this a crucial issue, Felix said,
but Brazil is approaching the question calmly. There is
focus within the GOB on finding ideas and channels for
investment and development in Bolivia that can ameliorate the
extreme poverty that makes cocaine trafficking so attractive
to many growers, Felix added.


18. (U) This cable was cleared by CODEL McConnell prior to
transmission.

CHICOLA