THE BRAZIL-RUSSIA PARTNERSHIP: COFFEE AND SYMPATHY

C O N F I D E N T I A L BRASILIA 001590

SIPDIS

DEPARTMENT FOR WHA/BSC

E.O. 12958: DECL: 12/10/2018
TAGS: PREL MASS ETRD EAGR ENGR BR RS
SUBJECT: THE BRAZIL-RUSSIA PARTNERSHIP: COFFEE AND SYMPATHY

REF: MOSCOW 3526

Classified By: DCM Lisa Kubiske. Reason 1.5(D)


1. (C) SUMMARY. The late November visit to Brazil by
Russian President Medvedev provided an opportunity for both
countries to express their interest in enhanced economic
ties, science and defense cooperation, energy and development
of the BRIC grouping as a more regular international forum.
Brazil and Russia used Medvedev,s visit and the meeting of
the Intergovernmental Commission on Economic Cooperation that
preceded it as a means of evaluating their current
relationship and exploring areas of potential for increased
partnership. Working with Russia, another large country with
an expanding economy, is politically attractive to Brazil,
which aspires to the sort of regional leadership (and
permanent UNSC seat) that Russia has. Russia also provides a
growing market for Brazilian exports, including meat and
coffee, as well as a source of technology for Brazilian
industry. Although Medvedev,s visit highlighted these
areas of potential, Russian-Brazil cooperation remains more
theoretical than actual. Brazilians cite the difficulty of
doing business with Russia, diverging interests in such areas
as alternative fuels and Russia,s backing of Hugo Chavez as
obstacles to progress. The Medvedev visit was widely seen by
Brazilians as successful in terms of the number of
declarations in principle that cooperation would be pursued,
rather than because of any concrete results. While Brazil,s
decision to purchase twelve Russian helicopters was heralded
as indicative of a new strategic partnership, Brazilian
officials have privately referred to the purchase as a
&token.8 Although the declaration of the Presidents made
much of areas for future collaboration, it was notably silent
on the current financial crisis, a key omission in light of
the importance of oil prices to Russia,s economy, the
effects already being experienced by Brazil's export sector,
and the role both aspire to play in resolving the crisis.
The relationship with Russia will continue to be politically
important to Brazil, but partnership will continue to feature
more joint declarations than concrete projects. END SUMMARY.


2. (C) During a recent discussion at the Ministry for
External Relations (MRE),the Director for Europe, Elizabeth
Mazzella, described Brazilian feelings toward Russia as
&sympathy.8 Brazilians believe that they and Russia have
much in common. Both are large, multi-ethnic states with
growing economies. In 2002, the two governments launched a
&strategic partnership8 that was reaffirmed during
President Medvedev,s November 2008 visit to Brazil. While
the visit yielded some substantive results, notably Brazil,s
decision to purchase combat helicopters, most of what emerged
was in the nature of resolutions to explore future
cooperation in such diverse areas as energy, the environment,
coffee exports and UN reform. Much like the coffee to be
exported, such broad declarations, though lacking substance,
are much to the Brazilian taste and illustrate Brazil,s
political interest in enhancing its sympathetic relationship.

POTENTIAL FOR TRADE
--------------

3. (C) When asked about results from the Lula-Medvedev
Summit, Brazilian officials cite commercial cooperation as of
greatest importance, however, the actual outcomes of the
meeting indicate that at present the potential for
cooperation greatly exceeds the reality. In 2007, bilateral
trade was worth approximately $5 billion, and the Presidents
called for its expansion and diversification. For Brazil,
the priority will be on exports from its agricultural sector,
especially meat products. Russia has restricted Brazil
exports, particularly of pork and chicken, based on supposed
concerns about food safety but has shown signs of relaxing
its restrictions. A Russian food inspection team recently
visited Sao Paulo and Brazilian meat packagers have signed
agreements to operate two plants in Kaliningrad. The MRE
also reports new agreements for the sale of Brazilian trucks
and coffee (&In Moscow, they drink too much tea.8) to
Russia. The Presidents also agreed to work on an agreement
to avoid &double taxation8 to promote business cooperation.


4. (SBU) Lula and Medvedev emphasized the energy sector as
having "significant potential for cooperation." Gazprom and
Lukoil have sent teams to Brazil to try to get a piece of
Brazil,s offshore oil action by offering alleged Russian
expertise from joint projects with the U.S. to help surmount
technical obstacles to exploitation of Brazil,s pre-salt oil
reserves. Rosatom has approach the Brazilian Ministry of
Energy about Brazil,s plan to build up to eight new nuclear
power plants, but the MRE believes Russia to be an unlikely
partner because of its unwillingness to transfer technology
and its insistence on providing the fuel for Russian built
plants. Brazil would prefer to make use of its own uranium
reserves and enrichment capabilities. MRE special advisor
Marcos Pinta Gama told poloff that Russia had offered
assistance with Brazil,s plans to build a nuclear powered
submarine, but Defense Minister Jobim considered France a
better partner. Brazil was unable to interest the Russians
in biofuels and believes Russia,s energy sector will remain
centered on oil.


5. (C) Russia agreed in principle to assist Brazil,s
development of its Satellite Launch Vehicle as a &partner8
for next generation space launch development. In return, the
Brazilians expressed interest in partnership in Russia,s
satellite navigations system. MRE sources told us that the
Intergovernmental Commission had discussed possible Russian
use of Brazil,s future satellite launch facility, but that
the Russian side had little understanding of the difficulties
Brazil faced in building on the proposed site. When told
that the land belonged to a group of quilombos (descendents
of escaped slaves),the Russian rep had said, &What is the
problem? Just pack them up and move them somewhere else.8

DEFENSE COOPERATION
--------------

6. (C) Brazil regards Russia as an important potential
collaborator in the areas of defense and security, but, as in
other areas, &potential8 remains the key concept. Brazil
and Russia were able to sign a defense cooperation agreement
similar to the one with the U.S. that the MRE has refused to
clear on for almost a year. The two governments have also
agreed in principle on an information sharing agreement whose
negotiation was in the words of a MRE source &surprisingly
easy.8


7. (C) In Brazilian reporting on the Summit, the headline
result was Brazil,s agreement to purchase twelve Mi-35
attack helicopters for &defense of the Amazon.8 While the
efficacy of a dozen relatively short range aircraft for such
a job is open to debate, the purchase appears to be no more
than a political sop to the Russians. Officially, the
decision to buy from Russia is portrayed as bringing the
benefit of &diversified8 sources of military equipment, but
MRE Europe Director Mazzella referred to it as a &token.8
Brazilian military sources have told the Defense Attache
Office that the only reason for buying some Russian equipment
would be to demonstrate its poor quality in order to have a
strong case for not buying more.

THE FELLOW &BRIC8 ROAD
--------------

8. (C) One other major result of the Medvedev-Lula meeting
from Brazil,s point of view was Russia,s agreement to host
a major Summit of the BRIC (Brazil, Russia, India, China)
countries in Yekaterinburg in May or June of next year. At
this time, the MRE has no specifics regarding the agenda but
regards the meeting as an important step in the development
of the BRIC group as a regular international grouping.
According to Mazzella, the Russians share Brazil,s interest
in enhancing the BRIC group and have been most active in
promoting greater group unity. This was reflected in the
statement released by the BRIC Ministerial in May 2008 which
largely reflected Russian international priorities. Mazzella
admitted that the statement was a Russian draft but noted
that Brazil contributed the language calling for reform of
the UN Security Council. India and China, although they
attend the meetings, have not taken as great a role and have
shown less interest in going down the road of expanding joint
BRIC activity.

UN REFORM
--------------

9. (SBU) The Brazilian press showed some disappointment
with what was seen as a lack of agreement with Russia on the
importance of UN reform -- a term in Brazil understood to
mean only inclusion of Brazil as a permanent member of the
Security Council. The MRE takes a &glass half full8 view
of the Summit, noting that Russia did agree that the UNSC
should be enlarged and progress should be rapid. This
language is viewed by the GOB as a step forward from the
Russians, who have been seen as among the least sympathetic
toward Brazil,s aspirations. As one Brazilian diplomat who
has served in Moscow put it: &Russia has lots of land and a
falling population. Their Security Council seat is what
keeps them important.8

STRATEGIC PARTNERS -- OR NOT
-------------- --

10. (C) For many Brazilian leaders, a strategic partnership
with Russia makes sense. As are many Russians, Brazilians
are fond of rhetoric espousing &multipolarity,8 UN primacy
and territorial integrity. Minister for Strategic Planning
Roberto Mangabeira Unger has stated repeatedly that Russia is
a natural partner and has championed enhancing defense
cooperation as a means of lessening presumed dependence on
the U.S. Despite the political attraction, the strategic
partnership has, much like initiatives to enhance trade, been
more in terms of potential than concrete projects.


11. (C) From the Brazilian point of view, there are several
reasons for caution in the partnership with Russia. The
Brazilian military has told Defense Attaches that they
believe Russian equipment to be inferior and prone to
maintenance problems. The Sukhoi 35 was dropped from the FX2
fighter competition in October because Russia was unwilling
to transfer technology. Furthermore, Brazilian Air Force
members who participated in discussions with Russia
considered their counterparts to be &uninterested in
reaching a mutually advantageous deal8 but focused on
&winning8 the negotiations. There is also little common
ground with Russia on such key issues for Brazil as biofuels
and environmental initiatives. Also, Brazilians are wary
about what they view as excessive Russian arms sales to
Venezuela. With the Chavez government known to be supplying
weapons to the FARC, Pinta Gama expressed concern that Chavez
is buying more rifles than there are members of the
Venezuelan military. Concerned about the lack of control
over their extensive borders, many Brazilians regard
Russia,s pretext of protecting citizens with recently issued
passports as justification for invading Georgia as an
unwelcome precedent.


12. (C) Comment: Despite the difficulties, the
Brazil-Russia relationship offers attractions for both sides.
In some ways, Russia is much of what Brazil aspires to be: a
major power with a UNSC seat that is the heavyweight among
its region,s economies. In Brazil, Russia has a sympathetic
government with strong democratic credentials in Latin
America that tends to avoid criticism of Russia,s human
rights record and heavy handed policies toward its neighbors.
The Medvedev visit afforded an opportunity to reaffirm the
partnership and announce intentions to pursue cooperation in
commerce, defense, energy and science. These announcements
serve their political purpose of signaling the importance
each country attaches to the relationship but do not
necessarily carry much promise of follow through. Lost in
the impressive rhetoric on increasing trade and scientific
cooperation is the reality of the global financial crisis and
its likely affects on both countries and their ability to
undertake major new cooperative projects. Brazil and Russia
will continue to have sympathy for each other in areas where
it is politically advantageous, but substantial cooperation
will probably remain on a slower track.
SOBEL