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
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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

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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

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Advisor from "Casa Civil" Jurema Valenca
Advisor from Governmental Matters Section Rodrigo Rodrigues
President of Brazilian Agency for Industrial Development
(ABDI) Alessandro Teixeira



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