BRAZILIAN SERVICE CHIEFS PRAISE DEFENSE

1. (C) SUMMARY. On January 14, Ambassador Sobel hosted the
Chiefs of the three Brazilian Services, Gen. Enzo Peri, ADM
Julio Soares de Moura Neto and Brig. Juniti Saito for a
discussion of the U.S.-Brazil defense relationship and
possibilities for future cooperation. Each of the Chiefs
said cooperation with their counterpart U.S. service was
excellent and gave his priorities for upcoming cooperation.
Ambassador Sobel highlighted opportunities for defense
industrial cooperation citing Boeing's efforts to find
partners for the FX2 program as a model. The three stressed
the need for better transparency of U.S. export licensing,
with Saito saying that the perception in Brazil that slow
licensing times reflect a State Department policy aimed at
restricting Brazil's access to military technology was
creating "problems at the political level," a veiled
reference to high level resistance to the purchase of Boeing
Super Hornet fighters. The Chiefs all cited the new Defense
Strategy as an important step forward as it gave the issue of
national security greater prominence in the national
political scene. They were less positive on whether there
would be resources available to carry out the ambitious
strategy but felt the document would allow for a stronger
case for resources to be directed to defense. Regarding
future cooperation, Moura Neto underlined the importance of
in country construction of major projects, e.g. ships. END
SUMMARY.



2. (C) At a January 14 lunch, Ambassador Sobel invited the
service Chiefs to discuss U.S.-Brazil security cooperation,
in particular, their views on areas for enhancing the
relationship. All three began by saying that they enjoyed
close and productive relationships with their counterpart
U.S. services. Admiral Moura Neto cited personnel exchanges
as a success for the navy and hoped to
expand such exchanges, if approved, to include the U.S. Coast
Guard (the Brazilian navy performs the coast guard mission)
as well. Brigadeiro Saito stated that while the overall
relationship was strong with the U.S. as Brazil's most
important supplier, there was room for improvement in the
processing
of export licenses by the State Department. General Enzo
mentioned exchanges of army engineers as a fruitful area for
cooperation.

FUTURE EQUIPMENT - TO BE MADE IN BRAZIL


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3. (C) All three chiefs underlined the growing emphasis the
Brazilian government is placing on developing Brazilian
industry. Moura Neto said the Navy's highest priority was
coastal patrol craft, to be followed by a new generation of
frigates ("escort ships"), but the government would only
authorize acquisition of such ships if they were to be built
in Brazil. (NOTE: He did not mention the politically popular
submarine program as a priority. End note.) The other
Chiefs had similar views. Enzo noted that Brazil was seeking
to be able to perform maintenance of Black Hawk helicopters
in
country, rather than in the U.S. Saito and Moura Neto agreed
that future aircraft procurement for the navy and air force
would depend on building aircraft in country. Ambassador
Sobel cited AVIBRAS, whom he met with recently (ref e), as a
company intent on exploiting the potential for greater
cooperation between U.S. and Brazilian defense industries.

CHALLENGES - IT'S ALL THE STATE DEPARTMENT'S FAULT


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4. (C) The service chiefs each weighed in on what they
perceive as the major problem with the U.S.-Brazil security
relationship -- State Department export licensing. Each
service has examples of cases in which delays in the
licensing process have caused difficulties for the
Brazilians. Examples include gyroscopes for the air force,
Black Hawk parts for the army and a radar antenna. (Note:
While
these problems have most typically been due to exporter
error, the common denominator has been State Department
licensing. End note.) Saito said that he believes our

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system is "run by bureaucrats," adding that State policies
are based on an unwarranted view that Brazil cannot be
trusted to protect sensitive technologies. Enzo emphatically
stated that he believes State's actions to limit exports
reflect the lack of a "policy of state" in favor of advancing
the defense partnership with Brazil . Ambassador Sobel
pointed out that data indicate no worse a rate of denial and
RWA for Brazil than
most other major importers of ITAR controlled items and noted
that the recently convened Technology Security Dialogue can
help remove misunderstandings. With a clear view toward the
FX2 decision, Saito warned that the perceived State
Department opposition to technology transfer to Brazil was
creating "problems at a political level."

DEFENSE STRATEGY - POSITIVE FOR THE MILITARY


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5. (C) Responding to a question of how the ambitious plans
for military modernization would be resourced, Moura Neto
stated that while this was an economic (as opposed to
military) question, the advantage of the strategy document
(see ref a for discussion) was that it made the question of
defense resources a national one. By recognizing Brazil's
"strategic vulnerabilities," the strategy had put the
question of defense in the forefront of the national debate.
Enzo added that this would be a much more positive
development for the military as it put them "inside" of
national development instead of on the sidelines where they
have been since the end of military rule. While the strategy
document contains many demands on limited resources,
including equipment, support to inefficient industries and
training for national service, the military views it as
positive because it signifies a greater
understanding of the importance of the military.

COMMENT


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6. (C) The warning from Saito, whom post considers a key
ally in our FX2 bid, is the clearest indication yet that the
obstacles to the F18 sale cited in refs c and d are real and
that we still have considerable ground to cover in countering
the perception that the USG, and the State Department in
particular, cannot be counted on to approve the necessary
technology transfer. The service chiefs got the point that
the offer of the F18 signified an unprecedented willingness
to approve technology for Brazil that would pay dividends in
both military and defense industry cooperation in the future,
but the political problem cited by Saito remains acute.
SOBEL