Identifier
Created
Classification
Origin
07HAVANA1089
2007-11-23 16:57:00
CONFIDENTIAL
US Interests Section Havana
Cable title:  

BRAZIL'S NEW ENGAGEMENT WITH CUBA

Tags:  ECON PGOV PINR PREL CU 
pdf how-to read a cable
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ZNY CCCCC ZZH
R 231657Z NOV 07
FM USINT HAVANA
TO RUEHC/SECSTATE WASHDC 2522
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEHBR/AMEMBASSY BRASILIA 0009
RUCOWCV/CCGDSEVEN MIAMI FL
RUEAIIA/CIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RHMFISS/JOINT STAFF WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 02 HAVANA 001089 

SIPDIS

SIPDIS

DEPT FOR WHA/CCA

E.O. 12958: DECL: 04/16/2017
TAGS: ECON PGOV PINR PREL CU
SUBJECT: BRAZIL'S NEW ENGAGEMENT WITH CUBA

Classified By: COM: Michael E. Parmly: For reasons 1.4 b/d

C O N F I D E N T I A L SECTION 01 OF 02 HAVANA 001089

SIPDIS

SIPDIS

DEPT FOR WHA/CCA

E.O. 12958: DECL: 04/16/2017
TAGS: ECON PGOV PINR PREL CU
SUBJECT: BRAZIL'S NEW ENGAGEMENT WITH CUBA

Classified By: COM: Michael E. Parmly: For reasons 1.4 b/d


1. (C) SUMMARY: Several recent developments point to
Brazil's interest in building stronger bilateral ties with
Cuba. The Brazilian government will increase export credits
for its companies and will push for an audience with Fidel
Castro during President Lula's upcoming visit. Petrobras has
already started discussions with the GOC. Brazil's view is
that changes in Cuba will be slow and gradual. End Summary.


2. (C) Acting P/E Counselor and POL officer met with
Brazilian DCM Vilmar Coutinho on 21 November to discuss
several developments that seem to indicate Brazil's interest
in building stronger bilateral ties: An upcoming visit to
Cuba by President Inacio Lula da Silva; Renewed interest from
Petrobras on oil exploration; Noticeably bigger presence at
this year's Havana International Trade Fair (FIHAV-07);
Last-minute Cuban request for more Brazilian exports.

President Lula's Visit
--------------


3. (C) Coutinho said that President Lula had intended to
make this visit for some time and confirmed that the
above-mentioned developments were not coincidental, but
rather part of the buildup for the visit. He explained that
President Lula, unlike other Latin American leaders who have
visited the island recently, was not interested in making a
"photo-op" trip. According to Coutinho, President Lula wants
a "substantive" visit, which would include concrete
deliverables. This was essentially the reason President Lula
used to explain the recent postponement of the visit to the
Brazilian press, saying that his government needed more time
to evaluate and fulfill the new Cuban requests -- made by
Vice President Carlos Lage during the Iberoamerican Summit in
Chile. However, Coutinho further explained, given that
President Lula has a fond relationship with Fidel Castro, the
Brazilian government is pushing for an audience with him as
part of the visit.


4. (C) We suggested to Coutinho other potential reasons for
the postponement of President Lula's visit: 1) Fidel

Castro's current state of health may not be strong enough for
an official, and public, visit; 2) Brazil could be concerned
about potentially negative political fallout of a visit on
the heels of the much-publicized spat between Hugo Chavez and
the King of Spain. Coutinho did not dismiss either reason as
a possibility. Coutinho predicted that the visit would
probably take place in the late December-early January
timeframe.

Increasing Trade
--------------


5. (C) According to Coutinho, Brazil's bilateral trade with
Cuba amounts to approximately USD 400 million, roughly 80% of
which are Brazilian exports. He said the fact that Brazil
won the "best pavilion" prize at FIHAV-07 is representative
of his country's intention to increase trade credits for
Brazilian companies to export to Cuba. He mentioned that the
vast majority of Brazilian exports to Cuba were branded
products -- which means they mostly go to Cuban hard currency
stores, which few Cubans can afford. Few Brazilian exports
to Cuba are in bulk, most notably sugar.


6. (C) Coutinho thought it appropriate to place some
perspective on the size of the bilateral trade relationship,
saying that "even if trade were to double (to USD 800
million),it would still be insignificant in terms of overall
Brazilian trade." To that end, Coutinho referred to the
Brazilian Trade Minister's remarks at FIHAV-07 regarding the
presence of 40 Cuban specialists from GOC biotec company
Labiofam, who are working on an anti-malarial drug program in
the Brazilian Amazon, as a "preemptive gesture of goodwill in
order to dissuade the Cubans from asking Brazil to import
more from Cuba." Coutinho admitted Cuba has very little to
offer that Brazilians are interested in.

Petrobras Coming to Cuba
--------------


HAVANA 00001089 002 OF 002



7. (C) Coutinho acknowledged press reports revealing that
Petrobras was showing renewed interest in Cuba, and commented
that a delegation came to Cuba in late September for
discussions. He further said that Petrobras would be sending
another group to the island, perhaps before the end of the
year, for additional talks on deep-water exploration. When
questioned as to why now, Coutinho admitted that, although
Petrobras has always been known to operate independently
despite being a state company, the government could be
exerting some pressure on Petrobras. However, he assessed
that the company would never go along with such pressures
unless there were viable economic interests in Cuba. In his
opinion, the mere fact that other major oil companies are
already involved in Cuba could, in itself, be a strong enough
incentive for Petrobras to come in.

Reflections on Ethanol
--------------


8. (C) Coutinho remarked that Cuba and Brazil had enjoyed a
cooperative relationship on the issue of ethanol until Fidel
Castro, in his late-April editorials, began to attack ethanol
production in general, particularly in the U.S. but also in
Brazil. Following the editorials, Coutinho commented that
his Cuban counterparts abruptly became unwilling to broach
the subject out of fear of contradicting Castro. He noted
that while Castro,s editorial raised some valid arguments,
those arguments were 30 years old in Brazil, as they were
exhaustively debated back when the country's ethanol policy
was initially formulated.
No Major Changes on the Horizon
--------------


9. (C) Coutinho acknowledged his government's lack of
involvement with dissidents in Cuba. He believes it is
extremely unlikely that they could effect any significant
changes. He thought a more plausible scenario that could
destabilize the GOC would be one in which a sudden turn of
events involving Hugo Chavez and Venezuela -- such as
election defeat, a coup or assassination -- were to threaten
Cuba's economic subsidies. Under the current situation,
Coutinho believed that changes in Cuba will continue to take
place at what he referred to as "the current pace --
extremely and almost unnoticeably gradual."

Notice the Little Things
--------------


10. (C) With regard to U.S. concerns for human rights and
political repression, Coutinho opined that the GOC is fully
aware of those sensitivities and, while not improving the
situation, is being overly cautious not to worsen it. He
used the recent example of the Cuban military recruits who
became fugitives and attempted to hijack a plane, killing a
Cuban military officer in the process. Coutinho said the GOC
was unusually lenient in not sentencing them to death,
precisely because they want to avoid being portrayed as more
repressive.


11. (C) Comment: Brazil is clearly ramping up its
relationship with Cuba. There seem to be a combination of
political and economic reasons. Politically, there is some
ideological solidarity between President Lula and the GOC,
but engagement with Cuba could also be part of a larger
strategy to counter some of Hugo Chavez's influence.
Economically, there is little corporate interest in the
present Cuban market or its products, but Brazil's government
seems to have concluded that the time has come to position
its companies for the -- long-term -- future.
PARMLY