RUSSIA DOWNPLAYS MILITARY SALES IN BRAZIL BUT

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000132 SIPDIS SIPDIS E.O. 12958: DECL: 01/11/2017 TAGS: PREL ECON ENRG BR RU SUBJECT: RUSSIA DOWNPLAYS MILITARY SALES IN BRAZIL BUT LOOKS TO TRIPLE TRADE REF: A. BRASILIA 02692 ¶B. BRASILIA 00053 Classified By: AMBASSADOR CLIFFORD SOBEL FOR REASONS: 1.4 (B)(D). ¶1. (C) Summary. The Ambassador met with his Russian counterpart, Ambassador Vladimir L. Tyurdenev, on January 12, 2007 at the Russian Embassy. Tyurdenev spoke candidly about bilateral relations, trade, Russian hopes to furnish equipment and exprtise to the potential regional gas pipeline proect, a proposed military helicopter sale (reftel ),and Russia,s trade presence in Latin America ingeneral. Tyurdenev downplayed the proposed helicpter sale as simply a way that Russia could offst the trade imbalance. End Summary. -------------- The Russian Ambassador -------------- ¶2. (C) Tyurdenev has served in Brazil ince before President Putin,s visit in November 004. Previously, he served as Ambassador to Argetina from 2000-2004. Prior to that he worked in any of the Newly Independent States and joked that Latin America was his reward for that service. Heworked in Brasilia previously many years ago as younger officer under the Soviet Union. -------------- Investmen and Trade, including Helicopters -------------- ¶3. (C) Tyurdenev sad Russian investments in Brazil were not large, nly about USD 300,000. He mentioned that Brazilian investment in Russia was much more significant bt still modest by global standards, particularly usinesses in Kaliningrad amounting to somewhere etween USD 10-15 million. He said investments byRussian entrepreneurs have always been a problem noting that some businessmen were interested inBrazil,s bauxite, but found Guyana to be easier to eal with. Tyurdenev also reported that some Russans were interested in developing an irrigation ystem in Bahia, but the incompatibility of the Rssian and Brazilian banking systems was irreconclable. Tyurdenev continued, saying he has hope th coming years may improve the situation, but at resent two hands are enough to count the Russian ivestors in Brazil. ¶4. (C) Turning to militarysales, Tyurdenev said that trade with Brazil is nbalanced. Russia is importing meat, coffee, and ugar from Brazil, but only supplying a limited amont of fertilizers. Although trade went up about 5% in 2006, the relationship is 4 to 1 ($3 billin in Brazilian exports versus $1 billion in Russan exports). He pointed out Brazilians are aggresive, in the positive sense, when it comes to comerce. He said he sees technology as an area wher trade can improve and a recent helicopter deal (rftel A) was an attempt to help balance the Brazilian-Russian relationship. He also stated that the primary use for these helicopters would be to accommodate Brazilian transportation needs in remote areas. ¶5. (U) When the Ambassador noted great opportunities in spite of the many complications faced in Brazil, Tyurdenev replied relations between big countries are always complicated. ¶6. (U) Tyurdenev expressed his solidarity with the US over the rocket attack in Athens and said that any attack on a diplomatic mission is barbarism. -------------- BRASILIA 00000132 002 OF 002 Regional Gas Pipeline -------------- ¶7. (C) Tyurdenev mentioned that the proposed regional gas pipeline stretching from Venezuela to Argentina was not really an opportunity for Russian investment, but the Russians would be interested in offering to share technical expertise and sell pipeline equipment should the project advance. The work in the Brazilian portion, however, would be done by Brazilians -- as he said the Brazilians prefer. ¶8. (C) Tyurdenev said that the Russian mission to Venezuela is not large but noted that the Russian oil company Gazprom is represented there. -------------- Russian Priorities in Brazil -------------- ¶9. (C) Tyurdenev noted that his priorities as Ambassador to Brazil are: ¶A. (C) The economic area: noting that only Cuba, Argentina, and Brazil have permanent Russian commercial missions. Tyurdenev said his ambitious goal is to increase trade to USD 10 billion by 2010 from the 2006 total of just over USD 4 billion. ¶B. (C) Technology: saying that in the 1980,s Brazil invited several Russian scientists to Brazil. He specifically mentioned the space agency agreement recently signed (reftel B). He said this area is promising, but that he does not expect &extraordinary8 results. ¶C. (C) Political relations: although he said there are no political problems, Brazil often engages with the Russians in intense political dialogue. He noted during his term there has been one Putin visit to Brasilia and two Lula visits to Moscow. ¶10. (C) Tyurdenev continued saying that he does not expect any change in the Brazilian foreign policy agenda because the same players are still there. He expressed a wish that Brazil would be more pragmatic because Russia needs a reliable economic partner. ¶11. (C) Comment: Tyurdenev was forthcoming regarding Russia,s economic goals in Brazil. However, twice he downplayed Russia,s role, specifically when discussing military helicopter sales and Russia,s economic interests in Venezuela; he seemed to be side-stepping these issues. Perhaps this was simply his effort to be diplomatic, but post suspects that Russia has a broader agenda than Tyurdenev suggests, especially when projecting a 250 percent increase in trade with Brazil in three years. Given the low private investment levels between the two countries, military sales seem to be the likely component of this significantly increased trade plan. End comment. SOBEL