1. (C) Summary: Former President and sitting Senator Jose
Sarney (PMDB, Brazilian Democratic Movement Party, governing
coalition; of Amapa) told WHA A/S Thomas Shannon on December
14 that President Lula is doing a good job and has maintained
the social calm necessary for growth and development. Sarney
recommended that U.S. avoid being drawn into provocative
situations in the region that would turn out to be "traps."
He reiterated his view that Hugo Chavez is bent on provoking
a war with Guyana over the disputed Essequibo territory (refs
A and B). Sarney asked Shannon for any information we could
provide about Venezuelan arms acquisitions. Sarney said
Brazil must help Bolivia, but called the new Bolivian
constitution "illegitimate." He said President Lula's
December 13 trip to Venezuela was mainly of commercial
significance, and implied Lula's defeat in Congress over the
renewal of the tax on financial transactions (CPMF) will not
be the fiscal disaster some fear. End summary.

Lula is Doing Well
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2. (C) Former president and sitting Senator Jose Sarney
told visiting A/S Shannon, accompanied by EEB A/S Daniel
Sullivan, Ambassador, and poloff (notetaker), that President
Lula is doing a good job, and his policies are providing
Brazil the social calm that foster good growth and
development. He added that "Lula has a lot of style in his
personal diplomacy." Speaking just 14 hours after President
Lula suffered a historic defeat at the hands of opposition
senators who rejected his proposal to renew the tax on
financial transactions, Sarney was sanguine and said the
government would find the money (i.e., some 40 billion reais,
about USD 22 billion, in lost annual revenues) one way or
another. He did not express any concern about political
damage to the Lula presidency or financial harm to the
national budget over the prospect of losing the funds next
year.

Bolivia's New Constitution is Illegitimate
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3. (C) Sarney reviewed some of the historical "episodes" and
reasons for which he believes Brazil must help Bolivia (ref
b), including territorial losses to Chile, Peru, Paraguay,
and Brazil, persistent poverty, and deep ethnic divisions.
Sarney described Bolivia as a "barely viable state." Asked
his views of the new Bolivian constitution, he replied that
one cannot speak of a constitution as such, since the new
constitution is "illegitimate, and just another episode in
Bolivian history."

Venezuela
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4. (C) Sarney said President Lula's December 13 trip to
Venezuela was chiefly of commercial significance, since Lula
is trying to increase trade with Venezuela to strengthen the
overall relationship. Otherwise, there was no greater
political significance to the trip. He said Lula is simply
trying to be practical, and like capitalists, Lula "goes
where there is money." He added that, with regard to
possible Venezuelan accession to Mercosul, the Democracy
Clause was "an important vaccine." Sarney remains convinced
that Venezuelan President Hugo Chavez is trying to provoke a
war with Guyana over the disputed Essequibo region (ref b),
which would be "bad for Brazil because Brazil had accepted
the treaty settling the matter, and it reopens the issue."
He said Brazil had built a road from Manaus to the Guyanese
border that he hopes might continue to Georgetown, but if
Chavez acts aggressively toward Guyana it "will create a
problem for all of us." He said Itamaraty, the Brazilian
Ministry of External Relations, is "calm, but we should
always be concerned about the matter." Obviously concerned

BRASILIA 00000006 002 OF 002


about Venezuela's capacity to destabilize the region, Sarney
asked A/S Shannon for any information the USG could provide
on Venezuelan arms acquisitions. Sarney also recommended
that the U.S. would do well to avoid being provoked into
policies and actions that could be counterproductive and
could benefit antagonists, saying "the U.S. must be careful
to avoid falling into traps."

No Brazilian Role with the FARC
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5. (C) Asked about a possible role for Brazil in
negotiations with the FARC, Sarney replied that Brazil does
not have enough experience in this area to do much more than
offer good will, and could not "improvise from one day to the
next."

CHICOLA