BRAZIL: U/S BURNS MEETING WITH PRESIDENTIAL CHIEF

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000371 SIPDIS SIPDIS E.O. 12958: DECL: 01/11/2017 TAGS: PREL BR SUBJECT: BRAZIL: U/S BURNS MEETING WITH PRESIDENTIAL CHIEF OF STAFF DILMA ROUSSEFF Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS: 1.4 (B)(D). ¶1. (C) Summary. U/S Burns met on 7 February with Dilma Rousseff, President Lula's Chief of Staff for Policy and, effectively, his senior cabinet official. The discussion focused on rapidly moving progress in the development of U.S.-Brazil cooperation in biofuels, and established the political context for successful technical negotiations on a Memorandum of Understanding that potentially could be signed by Presidents Bush and Lula in one of two scheduled Presidential meetings in March. Rousseff and U/S Burns also briefly discussed Brazilian proposals for cooperation on deforestation. End summary. ENERGY AND BIOFUELS -------------- ¶2. (C) U/S Burns outlined for Rousseff the emerging consensus in the United States on the urgent need to change energy consumption away from oil dependence and toward new fuels, including nuclear energy and biofuels. This is a matter of importance because of scarce oil resources, environmental concerns, and importantly, geo-politics. The political and security distortions that can be caused by excessive reliance on certain regimes that command oil resources must come to an end. This priority meshes with a shifting of the U.S. strategic focus away from the Euro-centric model of the post-World War II period and toward enhanced cooperation with key regional powers, including Brazil, U/S Burns said. ¶3. (C) Rousseff concurred with this assessment and reviewed the three-prong approach that the USG and GOB are currently pursuing in biofuels: bilateral cooperation in accelerating research and development, cooperative projects in third countries, and creation of a large global market through demand and establishment of uniform standards and codes. She agreed with U/S Burns on the transformational potential of U.S.-Brazilian cooperation in biofuels. Noting President Bush's stated goal of 20 percent utilization of biofuels in U.S. vehicles, Rousseff opined that only creation of a true world market can produce a supply sufficient for such a demand. The United States and Brazil, as the technological leaders and the current prime consumers, must work together to build such a global market. Biofuels represent the crucial "bridge" between the current oil economy and the hydrogen and nuclear energy economies of the future, she added. ¶4. (C) The GOB's preoccupation with the formulation of a new cabinet for Lula's second term and its elaboration of a new economic growth stimulation package (PAC) has slowed bureaucratic progress, but the GOB is now moving toward establishing a unified interagency program for biofuels that will be as important as the economic PAC for Lula's second term, Rousseff said. Formalizing an agreement on biofuels cooperation with the USG early this year is a key element in that program, Rousseff said, and the March meetings of Presidents Lula and Bush will provide a unique opportunity to realize that goal. U/S Burns indicated that the Secretary's Special Advisor on Energy, Greg Manuel, would remain in close contact with his Brazilian counterpart in an ongoing effort to produce a draft Memorandum of Understanding based on the Brazilian proposed text, with a view to trying to produce a document for the presidents to sign. (Note: See comment below. End note.) ¶5. (C) Manuel reviewed the state of play in negotiating the text, and noted that the salient difference to close between Brazilian and USG positions is the question of cooperation in third countries. The USG would prefer to develop a "platform" approach for development and assistance that could BRASILIA 00000371 002 OF 003 be applied in a number of countries and regions, including South America. The GOB continues to prefer a pilot program in Central America or the Caribbean. Rousseff reiterated the GOB view, saying that Central America or the Caribbean appeared to Brazil to offer the best immediate prospects for success in an initial joint effort and the GOB does not want to start projects in South American nations at this point. Moreover, in Rousseff's Estimation, African nations could be more logical second-stage candidates for U.S.-Brazil biofuels projects than countries in South America. (Note: See comment. End note.) Ambassador Sobel said the USG may be willing to start elsewhere, but does not want to put South America off limits. ¶6. (C) Responding to a criticism of U.S. surcharges that are hindering cooperation on biofuels, Ambassador Sobel said that Rousseff should consider making a presentation to key U.S. congressmen on the GOB's view of the potential for biofuels development, including plans for U.S.-Brazil cooperation in third countries and in global market development. Context of that kind could prove valuable for U.S. legislators as the biofuels issue takes center stage in the evolving U.S. debate on energy, he added. Rousseff, who is planning a visit to the United States early this year, indicated her receptivity. ¶7. (C) U/S Burns and Rousseff agreed to have Manuel and his GOB counterparts continue technical negotiations on the draft MOU text for the balance of the week following her meeting with U/S Burns. Rousseff indicated the GOB representatives would be empowered to negotiate authoritatively and had a political "green light" from her to do so. DEFORESTATION -------------- ¶8. (SBU) Noting the key nexus between biofuels, nuclear and other alternative energy sources and environmental concerns, U/S Burns indicated USG interest in further discussion of Brazilian proposals for international cooperation on deforestation. Rousseff said the GOB is making headway in community-based programs in the Amazon region, through a combination of education, incentives and sanctions. She claimed that deforested area in Amazonas state had fallen incrementally by 60 percent in recent years as a result of these programs, and the GOB has now focused on Para for a similar effort. ¶9. (C) Comment. Manuel and GOB representatives subsequently successfully negotiated a draft MOU text that agrees to the GOB preference to initiate third country cooperation initially in Central America and the Caribbean (leaving future options open, to include South America). The text is now in interagency clearance processes in both the USG and GOB. The emerging importance of U.S.-Brazil cooperation in biofuels has figured prominently and positively in media coverage of U/S Burns' visit and the upcoming visit to Brazil of President Bush, and is generating evident and increasing energy and good will for the bilateral relationship at senior levels of the GOB. ¶10. (U) U.S.: Under Secretary R. Nicholas Burns Ambassador Clifford Sobel Assistant Secretary Thomas A. Shannon Political Counselor Dennis Hearne Policy Planning Staff Officer William W. McIlhenny Secretary's Special Advisor on Bio-fuels Greg Manuel SIPDIS Heide Bronke, Assistant to Under Secretary Burns Brazil: Advisor for International Affairs Ambassador Raimundo Magno BRASILIA 00000371 003 OF 003 Advisor from "Casa Civil" Jurema Valenca Advisor from Governmental Matters Section Rodrigo Rodrigues President of Brazilian Agency for Industrial Development (ABDI) Alessandro Teixeira SOBEL