BRAZILIAN SUPPORT FOR BOLIVIA ON CN ISSUES

UNCLAS SECTION 01 OF 02 BRASILIA 001220 SIPDIS DEPT PASS TO ONDCP AID/W FOR LAC/AA SENSITIVE SIPDIS E.O. 12958: N/A TAGS: SNAR PGOV ETRD ENRG BR BL SUBJECT: BRAZILIAN SUPPORT FOR BOLIVIA ON CN ISSUES REF: A) La Paz 1594, B) Brasilia 1025, C) Brasilia 1067 ¶1. (SBU) Summary. Worried about the potential for increased narco-trafficking to (and through) Brazil, the Lula administration has sought to provide both economic and moral support to the Morales government. Consistent with their perception of Brazil as the (self-anointed) leader of South America, policymakers here have endeavored to help out their western neighbors - as long as it does not impinge upon Brazil's business interests. The Brazilian government has also encouraged the USG to continue to extend ADPTEA benefits to Bolivia, arguing that this would be an effective way to encourage that country to cooperate on counter-narcotics and otherwise moderate its behavior. All this concern for the Bolivian government reflects not only Brazilian leaders' desire to bolster fellow leftist travelers, but the fact that Brazil really doesn't have a plan B should the narco-trafficking situation in Bolivia spin out of control. End Summary. -------------- Alternative Development and ADPTEA -------------- ¶2. (SBU) Within the Planalto (the Brazilian White House),one initiative that Lula's advisors have considered to ease the trafficking problem has been the idea that Brazil and the U.S. might collaborate to help promote ethanol production in the western and northern region of Bolivia. On at least two occasions, Lula Chief of Staff Dilma Rousseff has raised this with high-level USG interlocutors, although at no point has she actually provided USG officials with a detailed program plan. To the extent that the developing road network in the MAP region (Madre de Dios in Peru, Acre state in Brazil, and the Pando in Bolivia) and other border areas will only increase integration, reftel B, at the conceptual level this idea makes a fair amount of sense. The same roads over which cocaine products are smuggled could be used to transport sugar cane - which when refined into ethanol could more efficiently supply the local market than imports from distant coasts. ¶3. (SBU) Meanwhile, on several occasions it appears that the Bolivians have requested that Brazil raise with the USG La Paz's desire for the continuation of trade benefits under the APDTEA. In turn, key policymakers here, such as ForMin Amorim, have touched upon this issue in their contacts with USG counterparts. -------------- Energy and Gas -------------- ¶4. (SBU) However, Brazil's solicitous attitude towards the Bolivians has it limits. The year-long negotiations between Petrobras and Bolivian energy authorities over the price of gas exports to Brazil and the disposition of Petrobras refineries proved to be quite contentious, with at various points La Paz threatening to seize Brazilian facilities and Brazil threatening to cease planned investment in Bolivia. While the mid-June 2007 payment by the Bolivians to Petrobras in compensation for the refineries has calmed the situation somewhat, given Brazil's continuing worries regarding the reliability of natural gas supply this issue is bound to flare up again at some point in the future. Meanwhile, the construction of several contemplated bi-national hydroelectric facilities along the border seems to be far off, probably more due to environmental and community opposition, though, than any issues involving bilateral Brazil-Bolivia relations. Reftel C. -------------- Cocaine Consumption on the Rise -------------- ¶5. (SBU) For their part, the Brazilian Federal Police are very concerned about Bolivian coca leaf production and paste/base/hydrochloride trafficking. They are aware that increased leaf production will eventually translate into more smuggling/domestic consumption and are awaiting the fallout. Indeed, by all accounts, the situation here is getting worse. A recent UN report indicates that domestic drug consumption has risen in Brazil, and that the country has consolidated its position as an international distribution center for Colombian and Bolivian drugs. According to the report, the percentage of the Brazilian population that consumes cocaine has risen from 0.4% in 2001 to 0.7% in 2005, while it remained stable for most of the world. BRASILIA 00001220 002 OF 002 -------------- Comment -------------- ¶6. (SBU) In our view, Brazilian policymakers do not appear to spend a great deal of time thinking about the impact increasing narco-trafficking might have upon their country. And reflecting this, there has not been any noticeable effort to increase interdiction assets or provide greater funding for the Bolivian border. Still, policymakers here clearly realize that a retreat by La Paz with respect to the drug trade would adversely affect Brazil. Notwithstanding assistance by the Mission's Narcotics Affairs Section to Federal Police efforts aimed at the Bolivian frontier, Brasilia's ability to control the border remains minimal at best. In many ways, the Brazilian government's only option is to encourage the Morales government to continue the fight against the traffickers -- right now, it has no feasible alternative option. Chicola