OPPOSITION ASSERTS CRISIS IN BRAZIL'S FOREIGN POLICY

UNCLAS SECTION 01 OF 02 SAO PAULO 000516

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STATE FOR WHA/BSC AND WHA/EPSC
STATE PASS USTR MSULLIVAN
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TREASURY FOR OASIA, DAS LEE AND FPARODI
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TAGS: PGOV PREL ETRD BR
SUBJECT: OPPOSITION ASSERTS CRISIS IN BRAZIL'S FOREIGN POLICY


SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

SUMMARY
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1. (U) Brazil's foreign policy is going through its worst crisis in
recent history, according to a number of leading diplomatic and
academic experts tied to the opposition. Consul General (CG)
attended a May 10 seminar on Brazil's foreign relations at the
Fernando Henrique Cardoso Institute (IFHC),during which panelists
highlighted a crisis pitting an ideologically-driven MFA with a
statist world view formed in the 1950's and 1960's against the
present realities of a globalized world where the MFA's framework no
longer applies and in which Brazil must defend its economic
interests. END SUMMARY.


2. (U) During a May 10 seminar on Brazil's foreign policy at the
IFHC, panel members contended that in a departure from Brazil's
traditional diplomacy, President Lula is the first president to use
foreign policy to strengthen his position in domestic politics.
Moderated by former President Cardoso (FHC),the panelists - former
Minister of Development, Industry and Foreign Trade Sergio Amaral;
former Ambassador to the United States Rubens Barbosa; and Marcelo
Paiva de Abreu, Economics Professor at the Pontifical Catholic
University (PUC) of Rio de Janeiro - stated that President Lula
takes deliberate measures to appease leftist foreign governments in
order to solidify his position within his own party. According to
the panelists, the new wave of South American populism has created a
dilemma for Brazil because, while the GoB has ideological sympathies
for some populist leaders, Venezuelan President Chavez's actions
undercut Brazil's drive to promote South American integration. It
is vital to distinguish between the "positive left," as exemplified
by Chile, and the "negative left," composed of Argentine President
Kirchner, Bolivian President Morales, and Venezuelan President
Chavez. The panelists also repeated the common criticism of the MFA
that Brazil sacrificed too much to China without getting any
deliverables in return.


3. (U) With respect to international and regional trade issues,
Brazil is also facing a host of problems, the panelists noted.
Mercosul is in crisis partly because Venezuela's membership, which
Brazil made the grave mistake of supporting, has created an
Argentina-Venezuela "axis" countering Brazil's Mercosul interests.
The GoB's proposal for Bolivia's entry into Mercosul has compounded
the crisis. The panelists criticized Brazil for not having a
back-up plan to the much-touted WTO Doha Round negotiations even
while the United States has been successfully negotiating bilateral
free trade agreements with a number of South American countries,
forcing Brazil into a commercial "checkmate." Outside Mercosul, in
2005 Brazil recognized China as a market economy, but the PRC
nonetheless took an active role in preventing Brazil from gaining a
permanent seat on the UN Security Council, the panelists added.

COMMENT
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4. (SBU) The IFHC is mainly a think tank of the opposition
Brazilian Social Democracy Party (PSDB); two of the panelists at the
May 10 event held important foreign policy positions in FHC's
administration, and the third is from PUC Rio, a PSDB academic
stronghold. In addition, the PSDB presidential nominee, Sao Paulo
ex-Governor Geraldo Alckmin, attended the seminar. That said, the
views expressed by the panel are not outside the mainstream
perspectives held by Brazil's elite. If Lula and his Workers Party
(PT) hope to draw support away from the opposition, they may wish to
heed the views expressed at the seminar. On the other hand, the
prevailing wisdom is that Brazilian voters do not pay attention to

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foreign policy, and that it will not be an election issue. In any
event, a change in the GoB's foreign policy orientation is unlikely
absent wholesale change in the upper ranks of Itamaraty (the MFA),
which is itself not likely to occur if Lula wins a second term. END
COMMENT.


5. (U) This cable was coordinated/cleared with Embassy Brasilia.

MCMULLEN