WHAT TO DO ABOUT BOLIVIA? BRAZIL'S PRESIDENCY,

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 001226

SIPDIS

E.O. 12958: DECL: 09/12/2018
TAGS: PREL PGOV ECON ENGR EPET EINV BR BL
SUBJECT: WHAT TO DO ABOUT BOLIVIA? BRAZIL'S PRESIDENCY,
FOREIGN MINISTRY WONDER

REF: A. KUBISKE-MCMULLEN 9/11 TELCON

B. BRASILIA 01224

C. STATE 97316

Classified By: Deputy Chief of Mission Lisa Kubiske. Reasons: 1.4 (b)
and (d).

SUMMARY: Ambassador Marcel Biato, Chief of Staff to
Brazilian presidential foreign policy advisor Marco Aurelio
Garcia, told the DCM September 11 that Brazil is engaged in
seeking a solution to the latest crisis in Bolivia.
President Lula had offered to foster dialogue to help
stabilize the situation but had been rebuffed by Morales, as
had GOB overtures to the opposition. Biato said Brazil is
sympathetic to the Bolivian Government's legitimate attempts
to regain control over its territory and believes that it
wants to avoid bloodshed. The GOB hopes that the USG and
others will steer clear of actions and statements that harden
the postures of the players and their supporters in the
hemisphere. Ministry of External Relations (MRE) South
America Division head Joao Pereira Pinto reiterated September
12 the GOB's desire to facilitate dialogue, but indicated it
has not yet decided on the best mechanism for doing so.
Pereira noted Brazil's intent to send a high-level delegation
to Bolivia at the appropriate time, and said the GOB was
coordinating its response with Argentina and Colombia.
Pereira agreed that Venezuelan President Hugo Chavez, like
Bolivian President Evo Morales, was using the expulsion of
U.S. ambassadors and accusations of conspiracies as a
"tactic" to distract from domestic woes. He suggested that
the energy problems created by the temporary cut-off of some
gas to Brazil were not serious and would be resolved within
days. The GOB sees the situation as a domestic political
problem in which neither side is willing to negotiate, and
sees eventual dialogue as the key to a solution, but it has
yet to find a way forward toward achieving that goal.
Although worried by the situation, the GOB is for the time
being coordinating behind the scenes with other regional
actors. END SUMMARY.

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FROM THE OFFICE OF THE PRESIDENT
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2. (C) The DCM met with Amb. Biato on September 11 to discuss
the situation in Bolivia. Biato said that Brazil is concerned
about the situation and has engaged. Lula had called Evo
Morales that afternoon, offering to help foster dialogue to
help stabilize the situation. They did not discuss natural
gas during the conversation, Brazil,s main economic
interest, however. He said Lula had offered the help of the
Friends of Bolivia group (Brazil, Argentina, and Colombia),
but Morales did not accept. (NOTE: According to press
reports, Marco Aurelio Garcia and MRE Secretary General (Vice
Minister) are on standby and prepared to depart for Bolivia
as soon as Morales gives permission. END NOTE.) According
to Biato, the GOB has also tried to speak with the prefects
of the opposition departments, but to date they have
declined. The GOB has not offered any other kind of
assistance.



3. (C) Biato told the DCM that Brazil sees the problem as a
domestic political issue, in which neither side is willing to
negotiate with the other right now. The solution needs to be
political dialogue and restoration of the rule of law, not
use of force. The Brazilian government is sympathetic to the
Bolivian government's legitimate attempts to regain control
over its territory, he said. The GOB also believes that the
Bolivian government wants to avoid serious bloodshed; it did
not want a repeat of the Sanchez Lozada episode in which many
people were killed and the government was toppled. The GOB
does not presently predict a catastrophic scenario ahead, he

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added, but it worries that the Bolivian government may be
weakening and wonders if the military and police (especially
the police) will be up to the task of protecting public
institutions and energy facilities.


4. (C) The DCM laid out the USG's position, stating that we
saw serious implications for our bilateral relationship with
Bolivia, for the regional fight against narcotrafficking, and
for regional security. She noted also that Morales'
unwarranted action of declaring Ambassador Goldberg persona
non grata was a case of extremely poor timing, as it occurred
just ahead of our drug certification decision -- a decision
that had been controversial and difficult in recent years.
The outlook for ATPDEA could also be complicated by Morales'
action, she added. Biato appeared to take careful note of
this, asking when the certification decision would be made,
for example.


5. (C) The GOB hopes that USG and others will steer clear of
actions and statements that harden the postures of any of the
players or their supporters in the hemisphere, Biato stated.
He also noted that in its own public statements, the GOB has
avoided making accusations of "terrorist acts," instead
describing them as "acts of vandalism." (NOTE: The GOB's
public statement on the situation in Bolivia calls for
respect for constitutional government, condemnation of
actions of violence, and a call for dialogue towards a
negotiated and sustainable solution. Full text is available
at mre.gov.br. END NOTE.) The GOB urged us to continue
"strategic patience" while acknowledging that the Bolivian
government accusations against Ambassador Goldberg are
without foundation, Biato said. "False dichotomies" (South
American political alignments) could result from politicizing
the rhetoric, he warned.


6. (C) Addressing industry concerns about the disruption in
gas supplies caused by damage to the pipeline in Bolivia,
Biato characterized the current situation as "worrisome but
not grave for Brazil." Subsequent discussions with energy
sector contacts indicate that Brazil can continue for some
time (many weeks) with the 10 percent shortfall in Bolivian
supply of natural gas to Brazil through a variety of
contingency plans (Ref B),including use of alternative types
of energy. A shortfall of 50 percent in Bolivian supply of
natural gas to Brazil would be serious; at this level of
shortfall, the main cost for Brazil would be economic higher
energy costs raising prices more broadly in the economy.

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THE VIEW FROM ITAMARATY
--------------


7. (C) The Political Counselor and Deputy Political Counselor
met September 12 with MRE (AKA "Itamaraty") Director of South
American Department I, Minister Joao Pereira Pinto. Pereira,
whose section is responsible for bilateral relations with the
MERCOSUL countries and Bolivia, said that Brazil was trying
to promote dialogue between the government and the opposition
prefects, but lamented that at the moment both sides "lack
the ability and the willingness to engage in dialogue." He
said that although the GOB had tried to talk to the
opposition, the Morales government wanted Brazil to talk to
it only. Both sides had come out of the August 10 referendum
with indications of popular support for their respective
positions and considered themselves "winners." This only
hardened their positions and made them less willing to talk,
he added. He also mentioned that dialogue was made more
difficult by the underlying racial divisions between the two
parties and possible linguistic difficulties which could
contribute to misunderstandings.


8. (C) Pereira said the GOB saw the need to lower the level
of confrontation between the two sides, and speculated that

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to do so it needed to "speak frankly" with the politicians on
both sides. He said the GOB was coordinating with Argentina
and Colombia but, in response to the PolCounselor's statement
that the USG was considering the possibility of addressing
the situation at an OAS meeting and would be looking to
Brazil for possible assistance should that occur, Pereira
said that Brazil did not "know about the OAS yet." He added
that, "It's always a possibility as a way to facilitate
dialogue," but noted that former Argentine Foreign Minister
Dante Caputo wanted to go to Bolivia with a group but had
been told by the Morales government not to come. (NOTE:
According to press reports, President Lula has spoken with
Cristina Kirchner and Hugo Chavez about the situation, and
the GOB is coordinating with its Friends of Bolivia partners,
Colombia and Argentina. END NOTE.)


9. (C) PolCounselor noted that Venezuelan President Chavez
had announced the expulsion of the U.S. Ambassador. Pereira
indicated he gave no credence to either Chavez's or Morales'
accusations, but saw them as tactics aimed at distracting
from internal problems. Pereira likened Chavez to an unruly
schoolboy who is popular only because his antics create
problems for the teacher. Commenting on Venezuela's
involvement in Bolivia, Pereira said that "Morales has to
deal with Chavez carefully," as there is a great deal of
anti-Chavez sentiment in Bolivia. The PolCounselor took the
opportunity to inform Pereira that the USG would be publicly
announcing the addition of three high ranking Venezuelan
officials to its list of drug kingpins (ref C). Pereira said
that would definitely complicate matters and wondered if
there were not some way to adjust or postpone the
announcement. The PolCounselor told him there was not, but
assured him that the timing of the announcement was purely
coincidental as it had been in the works well before the
current situation flared up. Pereira said he would pass the
information on to his colleague responsible for relations
with Venezuela.


10. (C) Discussing the events of the last few days in
Bolivia, Pereira downplayed the significance of the gas
pipeline cut-off. He echoed official GOB statements that the
first incident involving damage to the pipeline had been an
act of vandalism. He said the second incident was still
being investigated, and speculated that it may have been
caused by Petrobras increasing the level of pressure in the
pipeline to push a greater volume of gas through to make up
for the previous interruption in supply. Whatever the cause
of the problem, he noted the second problem had been fixed by
3 PM on September 11 and that the first should be repaired
within the next few days.



11. (C) COMMENT: The GOB recognizes the potential for the
situation in Bolivia to deteriorate into a grave political
crisis, which could have extremely negative consequences for
Brazil (including emigration to Brazil, lost investments, and
ruptured political relations). However, the GOB sees the
current situation in Bolivia as a domestic political problem
resulting from the fact that neither side is willing to
negotiate, and appears to be at a loss for the moment on how
best to proceed. The GOB firmly believes that the best way
to deal with the crisis is through dialogue between the
Morales Government and the opposition prefects. The GOB is
willing to help facilitate such dialogue, but its offers have
been rebuffed. At present, the GOB does not believe the
situation will degenerate into a grave political crisis. So,
although worried by the situation and eager to facilitate a
solution, the GOB is for the time being coordinating behind
the scenes with other regional actors. END COMMENT.
SOBEL