WORKING WITH BRAZIL ON CLIMATE CHANGE - AN

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000028

C O R R E C T E D COPY - PARAGRAPHS RENUMBERED

SIPDIS

DEPT FOR OES/EGC - T.TALLEY AND D.NELSON

E.O. 12958: DECL: 01/08/2019
TAGS: SENV ENRG KGHG EAID EFIN BR
SUBJECT: WORKING WITH BRAZIL ON CLIMATE CHANGE - AN
OPPORTUNITY

REF: (A) BRASILIA 1666 (B) BRASILIA 1159

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Classified By: Deputy Chief of Mission Lisa Kubiske, Reason 1.4 (b) and
(d)


1. (C) SUMMARY. Brazil has a central role in the climate
change arena, not only because it controls 70% of the Amazon
rainforest, but also because it plays a pivotal role in the
on-going UN Framework Convention on Climate Change (UNFCCC)
negotiations. USG efforts to have India and China assume
binding targets under the UNFCCC may hinge on the Government
of Brazil (GOB),s position in these talks. For this reason,
Mission Brazil suggests that the USG start an active campaign
to allay the GOB,s concern about the effect that any
eventual agreement will have on its ability to promote
economic growth or about the possibility that a post-Kyoto
agreement will expose them to potential trade sanctions or
other punitive measures. Allaying the GOB,s concerns on
this front will make it possible for the GOB to take a more
helpful position in these negotiations.


2. (C) Now is a propitious time and the USG has the tools to
shift the GOB toward a more helpful position in the UNFCCC
negotiations. These tools include working with forward
leaning state and local governments, facilitating technical
assistance in forest management, and creating opportunities
for more technology transfer. END SUMMARY.

BRAZIL IS KEY IN THE FIELD OF CLIMATE CHANGE


3. (SBU) Brazil has a dual importance in the field of
climate change. First, massive deforestation has made
Brazil, who has about 70 percent of the Amazon Forest in its
territory, the fifth largest carbon emitter since 1950.
For this reason, Brazil,s management of its tropical forests
will have a marked impact on the climate.


4. (SBU) Second, the GOB has honed to an art the ability to
block international negotiations when it disagrees with an
outcome. Brazil,s potential spoiler role could undermine
USG,s efforts to convince China and India (both non-Annex I
countries to the UNFCCC) to take on emissions reductions
targets. Brazil has strenuously opposed non-Annex I
countries assuming reduction targets, citing the &common but
differential responsibilities8 clause in the UNFCCC.

WHAT ARE BRAZIL,S PRIMARY INTERESTS?


5. (SBU) Growth, growth, growth. President Luiz Inacio Lula
da Silva and his team have made economic growth the
centerpiece of his second term (2006-2010). Lula wants to
bring a modicum of economic prosperity to his base: the
approximately 20 million people living in the Amazon region
and the over 100 million more living in or near poverty in
the rest of the country. A heightened emphasis on growth at
the expense of environmental concerns was led to the
departure in May 2008 of former Environment Minister Marina
Silva (considered an inflexible, absolutist on key
environmental issues) and her replacement by the more
pragmatic Carols Minc. The GOB does not consider climate
change an immediate threat to Brazil, and is not willing to
sacrifice other priorities to address the problem.


6. (SBU) The GOB sees several areas of concern in the
negotiations of the post-Kyoto framework. The GOB fears that
there will be trade sanctions imposed on those countries that
do not meet emissions reduction targets. They are worried
that the Europeans would like to use a punitive regime to
implement reductions. Moreover, they suspect that Europe
(and to a lesser extent the United States) would use such
trade sanctions as a non-tariff barrier to undermine Brazil
and third world competitors. Since approximately 80 percent
of Brazil,s emissions result from deforestation, Brazil
would need to have confidence that it could adequately
control the rate of clearing before it could agree to binding
international targets. The jump in deforestation figures for
the 2007/2008 period shows that the government,s grip over
the Amazon remains weak (REFTEL A).


7. (SBU) The GOB is also concerned by proposals for a
sectoral approach. GOB officials believe the sectoral
approach could lead to significant constraints on the
Brazilian economy. Here again the GOB sees the hidden hand
of competitors in the developed world, where the mature
industries are looking for ways to impede the rise of new
competitors in the developing world.


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8. (SBU) Brazil has looked favorably on other aspects of the
climate change discussions that either do not threaten or
could even boost economic growth. Thus, the GOB presses hard
for technology transfer and financial assistance to the
developing world. It also has promoted its Amazonas Fund,
where international contributors provide Brazil with funding
) but with no strings or oversight ) to help conserve the
Amazon Forest (REFTEL B).

THREE POSSIBLE SCENARIOS


9. (C) Brazil could take one of three approaches to the
ongoing UNFCCC negotiations:

- The Spoiler: This is GOB,s current approach, which is to
seek to prevent developing countries from assuming binding
international obligations.

- The Passive Partner: The GOB is willing to have China and
India assume binding obligations, but does not use its
influence to accomplish this end.

- The Active Ally: The GOB works with the USG to establish
mechanisms to constrain emissions by developing countries.

While it would be ideal to have the GOB working side-by-side
with the USG in the international negotiations on a
post-Kyoto agreement, it is more important that the GOB does
not block a deal satisfactory to the USG.

FIRST A REASSURING CAMPAIGN


10. (C) A critical element for changing the GOB,s approach
to the negotiations is convincing them that the new regime,
whether through overall emissions targets or by sectoral
means, will not impede the GOB,s drive to expand the
economy. The USG and Europeans should launch a campaign in
Washington, Brasilia, and in European capitals (to the
Brazilians) to convince the GOB of this important point. The
USG should also reach out to other stakeholders such as state
and local governments, civil society groups, and opinion
makers who can help allay the fears of the federal
government.

THE TIME IS RIGHT FOR COOPERATION


11. (C) With adequate assurances over their prospective
economic growth, we are at a propitious time move the GOB to
a Passive Partner or even an Active Ally role in these
negotiations. Minister Minc has signaled willingness for
Brazil to take a more ambitious approach toward climate
change. Minc is close to the President,s powerful Chief of
Staff, Dilma Rousseff, which could enhance his ability to
influence the results of inter-ministerial debate. At the
same time, Under Secretary for Political Affairs Everton
Vargas (who has the lead within the Ministry of External
Relations (MRE) on climate change) is expected to leave in
February 2009 to become the Brazilian Ambassador in Germany.
Under Secretary Andre Amado is taking over climate change
negotiations for the MRE. This change may provide the USG
with a greater opportunity to influence the GOB position in
the upcoming UNFCCC negotiations. This opportunity is
particularly important because the MRE, rather than the
Ministry of the Environment (MMA),has retained the dominant
role within the GOB on these negotiations.


12. (C) Equally important is the divide between the more
forward leaning state governors of the Amazon region and the
federal government. The governors have been working on
climate change and environmental initiatives that are more
aggressive than those of the federal government. Their
efforts demonstrate a growing sentiment within Brazil that
more can be done to combat climate change. These governors
could be potential partners with the USG in efforts to
influence the GOB's position.

SUGGESTED ACTION PLAN


13. (C) USG and other developed nations have several tools
at their disposal to encourage the GOB to adopt a more
helpful approach in these negotiations. The USG should help
to the GOB to address its economic concerns by providing
technology transfers/sharing (such as with energy efficiency,
clean energy, or biofuels); and financial assistance. The
USG could start by building on existing mechanisms, such as
the 2007 biofuels MOU, but the USG should also look for new
opportunities to continue and expand these endeavors.

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14. (C) The USG should simultaneously take action to
persuade influential players in Brazil,s elite circles to
weigh in for a more constructive approach. These players
include state government leaders, national legislators, the
business community, Non-Governmental Organizations, opinion
leaders, and prominent scientists. This outreach could be
accomplished through existing ties (such as those that the
Mission has developed with the governors of the nine states
in the Amazon region); building relationships between
Brazilian legislators, scientists, and business leaders and
their US counterparts; promoting and facilitating exchanges
between Brazilian and US experts; and increasing contact and
communication with opinion leaders and Brazilian NGOs with a
focus on the compatibility of US and GOB interests in climate
change negotiations.


15. (C) The USG should also leverage its technical,
scientific, and economic resources to help the GOB tackle its
deforestation problem. This could be accomplished by
facilitating technical exchanges with the U.S. Forest
Service, the National Park Service, the U.S. Fish and
Wildlife Service, and the Bureau of Land Management with an
aim of helping strengthen Brazil,s ability at the national,
state and local levels to manage better its forests in a
sustainable manner. The US could also provide financial
assistance and scientific and economic analysis to help the
GOB better understand current trends in deforestation and the
likely impact of any policy changes.


16. (C) Finally, the USG should continue to promote state
and municipal activities to reduce deforestation. Helping
these governments could produce positive results that could
be replicated elsewhere in the region.

SOBEL