BRAZILIAN EMBASSY READOUT OF LULA VISIT TO CUBA

C O N F I D E N T I A L HAVANA 000077 SIPDIS SIPDIS E.O. 12958: DECL: 01/18/2013 TAGS: CU EAGR ECON ENRG EPET ETRD PREL SUBJECT: BRAZILIAN EMBASSY READOUT OF LULA VISIT TO CUBA REF: 2007 USINT HAVANA 1089 Classified By: COM Michael E. Parmly for Reasons 1.4 (b) and (d) ¶1. (C) PolCouns met with Brazilian Minister Counselor Vilmar Coutinho on January 18 to get a readout of President Lula's visit to Cuba. Coutinho described the visit as very successful, having achieved the goals of both sides. As had been reported in the press, Cuba and Brazil signed 10 bilateral accords during the visit, all technical accords dealing investment, Cuban biomedical exports to Brazil, and possible Brazilian (Petrobras) participation in drilling for oil in Cuba's north coast blocks. As reported reftel, the petroleum agreements are really just commitments to study the possibilities for Petrobras to drill rather than agreements to begin work. ¶2. (C) Coutinho said the much-publicized (in Cuba anyway) meeting with Castro had been anticipated all along, though it was not clear until minutes before when or where it would take place. He said there was no substantive discussion between the two, but thought it was noteworthy that, for the first time in recent memory, the Cubans released both video and sound of the Lula-Fidel meeting. Coutinho went on to state that the meeting between the two had been important for the GOC as a message to Venezuela that Cuba had other powerful friends in the region and was not fully dependent on Venezuelan largesse. ¶3. (C) Regarding the agreements signed during the visit, Coutinho said the agreements on food imports represented an effort by the GOC to expand their sources of things such as basic grains so that they are not so dependent on imports from the U.S. He noted that there also was an agreement that would bring Brazilian technical support in to help Cuba develop its own soybean industry, though he added that he thought Cuba's soil and climate would make it impossible to have a significant soybean crop. ¶4. (C) On economic matters in general, Coutinho showed PolCouns a powerpoint presentation that, inter alia, tracked bilateral trade. The bilateral trade graph showed an increase from about $150 million per year when Lula took office in 2003 to about $400 million per year by 2006, with the beginnings of a dropoff in 2007. He attributed the increase to the fact that Brazilian business interests had followed Lula's lead in working with Cuba, a market they previously had scorned as too small and unpredictable to be worth their while. Coutinho said he thought bilateral trade could increase to a maximum of $800 million given the size of the Cuban market. He point out that there was a huge deficit in favor of Brazil and that it is unlikely to be closed soon since Cuba had very little to sell to Brazil. Almost 60 percent on Cuban exports are biomedical products and the largest part of the remainder is scrap metal. Brazil's exports to Cuba are more diverse, but still almost half are of foodstuffs, with machinery representing another 15-20 percent. ¶5. (C) Coutinho said Lula's personal relationship with Fidel Castro was very important, dating to the 1990 election when Lula was defeated by Collor de Mello, and Castro came to visit him at home in the aftermath. He said public opinion in Brazil was now more favorable towards Cuba, but that the relationship was not seen as important. He commented that this trip had made the papers in Brazil on the day it occurred and then disappeared. Had it been a visit to Venezuela, there would have been several days worth of dueling op-eds in the press about the direction of Brazil's relations with Chavez and company. ¶6. (C) COMMENT: Coutinho is an economic officer who has been in Cuba for a little more than a year. With previous experience in the U.S. he speaks excellent English and understands us well. He is, however, inclined to bend over backwards to put Cuba in a positive light. His comments on the possibilities for future bilateral trade between Brazil and Cuba would make sense if Cuba had a normal economy. The likelihood of it being able to double trade with Brazil absent any radical structural changes is practically nil. Based on his discussion of the lead-up to the visit, it was clear that his comments on Cuba keeping one eye on Venezuela during the meeting said more about how Brazil views its northern neighbor than anything the Cubans may have been thinking. In fact, the concept of Venezuela as the biggest threat to Brazil's interests came through continually in the conversation. PARMLY