BRAZIL - SUSPENSION OF TITLE III OF THE LIBERTAD ACT

C O N F I D E N T I A L BRASILIA 000875

SIPDIS

SIPDIS

DEPT FOR WHA/CCA, WHA/EPSC AND WHA/BSC

E.O. 12958: DECL: 05/01/2016
TAGS: ETTC PREL ECON ETRD BR CU
SUBJECT: BRAZIL - SUSPENSION OF TITLE III OF THE LIBERTAD ACT

REF: A) SECSTATE 57782

B) 05 BRASILIA 3130
C) BRASILIA 786

Classified by Charge d'Affaires Phillip T. Chicola, Reasons 1.4
(b) and (d)


1. (C) Brazil has a close relationship with Cuba and the GoB
does not publicly criticize the Castro regime's human rights
policies. President Lula implied criticism of the state of
democracy in Cuba during an April 2005 interview in which he
told the press that "Brazil can help build a democratic process
in Cuba" and that "we have much to do for democracy in Cuba."
Neither Lula nor other senior figures in the GoB, however, have
repeated such criticisms during the last six months. The Lula
Administration argues that engagement, rather than isolation, is
more likely to change Cuba's behavior; it further states it has
been critical of the Castro regime's actions behind the scenes.
The GoB, however, has a general aversion to meddling in the
internal affairs of other countries and routinely opposes
"single country" resolutions at the United Nations, including
those aimed at Cuba. Brazilian media and NGOs are much less
hesitant to criticize the Castro regime pointedly and some have
taken the Lula administration to task for its close relationship
with Cuba.


2. (C) In 2005 Brazilian media published allegations that Lula's
Workers' Party (PT),some key members of which sought refuge in
Cuba from persecution during Brazil's military dictatorship,
allegedly received from the Cuban government a campaign
contribution during the 2002 presidential elections. The Cuban
cash contribution was variously reported to have ranged from
US$1.4 to US$3 million, depending on the source. At that time
the media interviewed several self-described witnesses to parts
of the transaction, but although the case has received
occasional media mention since then, no evidence substantiating
the claims emerged during the last six months.


3. (SBU) We know of no high level GoB diplomatic visits to Cuba
during the last six months. Cuban Vice Minister for Higher
Education Eduardo Cruz Gonzales reportedly visited Brasilia on
April 28 and met with the Brazilian education minister. Cruz's
visit reportedly included promotion of a scientific exchange
program with Brazilian academic institutions.


4. (SBU) On the trade front, Brazil supports a trade agreement
between Cuba and the Mercosul customs union, of which Brazil is
the largest member. The GoB does not expect Cuba to become a
full member of Mercosul. According to Foreign Ministry
contacts, the conclusion of the Cuba agreement is a priority for

2006. Work to consolidate existing trade agreements between
Cuba and the individual Mercosul members is already complete,
paving the way for discussions on how to expand them into a
full-fledged, goods-only, free-trade agreement with the bloc.


5. (SBU) Bilateral Brazilian trade with Cuba grew to US$ 284
million in 2005, up from US$177.2 million in 2004. Brazilian
2005 exports of US$245.5 million to Cuba were led by exports of
auto parts, soybean oil, soybeans, chicken parts, powdered milk,
ethyl alcohol and coffee. 2005 imports from Cuba of US$38.9
million were dominated by nickel, medical products, Portland
cement, aluminum scrap for recycling, insecticides, cigars and
vaccines. Brazil's National Development Bank (BNDES) provides
trade finance lines to Brazilian companies, including those
trading with Cuba. Over the period 2001-2003, the most recent
data available, BNDES provided US$52.3 million in export credits
to finance the export of automobiles and buses to Cuba. Local
accounts suggest that potential BNDES export credits for Cuba
are under-utilized.


6. (SBU) Post is unaware of significant new Brazilian
investments in Cuba over the last six months. The most recent
data Central Bank data available, for 2004, shows that Brazilian
companies held investments valued at US$19 million in Cuba.

CHICOLA