BRAZIL: PRESIDENTIAL FOREIGN POLICY ADVISOR SEES

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000388

SIPDIS

E.O. 12958: DECL: 03/27/2019
TAGS: PREL ECON ENRG EFIN KSUM BR
SUBJECT: BRAZIL: PRESIDENTIAL FOREIGN POLICY ADVISOR SEES
POSSIBILITIES FOR COOPERATION WITH THE U.S.

Classified By: Ambassador Clifford M. Sobel, Reasons 1.4 (b) and (d)


1. (C) Summary. Brazilian Presidency (Planalto) Foreign
Policy Advisor Ambassador Marcel Biato (protect) discussed
energy cooperation, touched on G20 and Summit of the Americas
(SOA) preparations, and offered views on managing challenges
in both the hemisphere and within the GOB in a discussion
with the Ambassador March 26. Noting that bilateral energy
cooperation often bogs down in bilateral political
relationships, Biato saw potential for a regional initiative
to help break free of this "rut." Separately, he believes
GOB is likely to create a new company to manage "pre-salt"
resources. Biato does not see Cuba dominating the SOA and
suggested the GOB would be interested in USG views on how
best to capitalize on positive momentum generated at the
Summit. Emphasizing that creative thinking on South America
is coming out of Planalto rather than Itamaraty (the Foreign
Ministry),Biato argued that GOB-managed South American
mechanisms and positions will allow the region to engage the
United States in a more coherent fashion and "on our (South
America's) terms," but allowed for "parallel cooperation"
with the United States as these mechanisms develop. He
stressed that the USG, like the GOB, needed to exercise
"strategic patience" in managing relationships with
problematic countries in the region. Biato's remarks confirm
what we have observed and hear from other senior GOB players,
including for example Defense Minister Nelson Jobim,
regarding the importance of working through Planalto on
regional issues, among others, and of thinking through
beforehand how and when to engage Itamaraty. End summary.

- - - Regional Energy Cooperation - - -


2. (C) Commenting that energy cooperation in the hemisphere
tends to happen bilaterally and has often bogged down in a
"rut" of political relationship issues, Biato remarked that
outside perspectives and broader cooperation could help
"reframe" and move some energy cooperation issues forward.
As an example of bilateral dialogue that is not working well,
Biato cited Brazilian efforts to build an energy grid with
Paraguay, which are being hampered by Paraguay insisting
Brazil "pay 20 years in advance" for electricity. As a
specific example that might usefully fit into an eventual
regional initiative, Biato offered that Peruvian gas out of
Camisea might be a good candidate. He also noted that
Electrobras is beginning to look for expanded commercial
opportunities and is exploring building 15 dams along the
Peru border--another project, he suggested, that might fit
well into a regional initiative. He commented that such an
initiative could help the region "break out of where we are
-- a series of bilateral relations. We need things that help
us be seen outside as a region."

- - - Model for Pre-Salt Oil - - -


3. (C) Biato believes the GOB is likely to create a new
company to manage the pre-salt oil reserves. He commented
that Petrobras, despite the GOB stake, is often impenetrable
and the government often feels it is not fully aware of what
the company is doing. In addition, Petrobras is already an
enormous company holding a significant percentage of overall
GOB investment. To fold "pre-salt" oil (i.e., Brazil's
recently discovered off-shore deposits) into Petrobras would
risk putting all the government,s investment eggs in one
basket, which he believed the government would find too risky
a strategy. He reassured the Ambassador that multinational
companies would find whatever model GOB ultimately selects to
be transparent and workable.

- - - Energy Politics within the GOB - - -


4. (SBU) Biato noted that MME Minister Lobao is an extremely
&political8 as opposed to technocrat Minister. That is
"fine," he commented--"he has good technical people under
him" and he is able to focus on elevating the relative power
and position of the Ministry in a way that his technocrat
predecessor was unable to do. Lobao is keenly aware of

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domestic stakeholder interests in issues such as managing
pre-salt resources. At the same time, he is gaining
understanding of the international implications of domestic
action and is fully appreciative of the need to manage the
international aspect effectively as well, according to Biato.
As such, his political importance on international energy
issues as well as strictly domestic issues is higher than his
predecessor could claim.

- - - G20 Preparations - - -


5. (SBU) While not deeply engaged on the substance of G20
discussions on global crisis response, Biato mentioned his
frustration with the UK regarding preparations for the
Leaders, meeting itself. Responsible for President Lula,s
speech and his briefing book, Biato felt the UK had been
insufficiently forthcoming about meeting logistics--what the
speaking opportunities would be, how topics would be
organized, etc. (Note: UK PM Gordon Brown visited Brasilia
and met with President Lula later the same day. End note.)

- - - Future POTUS-Lula Meeting - - -


6. (C) The Ambassador asked what priorities Biato would
recommend for an eventual future meeting between the
presidents. Biato listed making the G20 work as number one.
Secondly, he suggested Lula would be interested in USG views
on the outcomes from the SOA and specifics regarding USG
plans to move forward based on whatever positive momentum is
generated at the Summit. He also noted that further
discussions on regional energy as ideas evolve would be
interesting.

- - - No Worries on Cuba or Other "Difficult" Countries at
SOA - - -


7. (C) Biato, who served as Planalto's point person on Cuba
for several years, said he did not expect Cuba to be a topic
at the SOA. However, he reiterated Brazil's view that it
would be important for the United States to take the first
steps in improving the relationship, and that these should be
"unconditional." In response to the Ambassador,s query, he
affirmed that permitting financing for imports would be a
good concrete step. He said that Brazil's read of the recent
cabinet changes in Cuba was that it both represented an
effort by Cuban President Raul Castro to consolidate his
control and was indicative of a real interest on the part of
Raul to open the way for better relations with the United
States. He added that the move demonstrates the importance
of the Communist Party and the military in Cuban governance,
although he believes the Party has expanded to the point that
it is unwieldy and therefore less effective than in the past.


8. (C) Biato was optimistic that the SOA will go well, saying
that the GOB believes all countries in the region want a good
dialogue with the United States. When the Ambassador noted
the comments by Venezuelan President Hugo Chavez following
Lula's meeting with President Obama March 14, Biato said that
the GOB had told the GOV "at the highest levels" that his
remarks were inappropriate. (Note: In response to Chavez's
comments, FM Amorim publicly denied his assertion that Lula
had come away from the meeting with the President
"disappointed," stating that in fact the opposite was true.
End note.)

- - - South America and the U.S.: "Parallel Cooperation" and
"Strategic Patience" - - -


9. (C) The Ambassador noted that Lula had, in his meeting
with the President, raised and endorsed possible U.S.
cooperation with Union of South American Nations (UNASUL) and
the South American Defense Council (SADC) on counternarcotics
efforts in the region. This differed substantially from the
message we were receiving from Itamaraty, which had ruled out
such cooperation. Biato took note of the issue, reiterating
Planalto's support for exploring such cooperation.


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10. (C) Biato explained that it is important for South
America as a region to "get its act together" on issues such
as counternarcotics and trade as a means of engaging the
United States more coherently. This would allow for "real
partnership" between South America and the United States "on
our terms" in approaching common issues. The Ambassador
warned that waiting for a perfect consensus in the region was
not realistic. Biato agreed, saying that development of
cooperation within the region and between the region and the
United States would have to happen in parallel. He sees good
possibilities for Brazil and the United States to work
together in the region, reiterating that it might help get
some relationships out of a rut. He added, however, that
Brazil and the United States both had to exercise "strategic
patience" with some of the more difficult countries in the
region and resist the urge to react to every provocation.


11. (C) Biato made clear that regional initiatives like
UNASUL and the SADC, as well as the initiative for energy
cooperation with the United States, were not coming out of
Itamaraty, but out of Planalto. At the same time, as a
career diplomat, Biato also was able to explain Itamaraty's
caution with regard to international initiatives being
launched out of other agencies. Itamaraty sees itself as the
"defender of Brazilian national interests," he said, ensuring
coherence and reining in "free agents" acting on the basis of
more narrow interests. Although Itamaraty's role is
inevitably changing, he said, it is still the most capable
bureaucracy in the GOB and sees itself as providing necessary
coordination. He emphasized that Itamaraty "does not stop
everything," and that it is often important eventually to
gain Itamaraty "buy-in" for initiatives that germinate
elsewhere in the government.

- - - Comment: Planalto First, Itamaraty Later - - -


12. (C) Biato was remarkably candid in his assessment of the
dynamics between Planalto, Itamaraty, and other agencies. On
the one hand, he underlined that the creative thinking on
South American issues is coming out of Planalto, not
Itamaraty, and that on U.S.-Brazil cooperation in the region,
Planalto will almost certainly be more favorably inclined
than Itamaraty. On the other hand, Biato's explanation of
the rationale for the broader GOB effort to build
Brazil-managed coalitions in South America confirms that it
is principally in Itamaraty where this effort is seen as a
means of excluding or creating a regional counter-weight to
the United States. We have seen repeatedly a willingness in
Planalto, as well as other ministries, to go around Itamaraty
in order to work with us on regional and other strategic
issues. Biato's comments confirm those we have heard from
others, including for example Defense Minister Nelson Jobim,
regarding the importance of working through Planalto first on
such issues, and considering carefully a strategy with regard
to how and when we engage Itamaraty.
SOBEL