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