AGREEMENT BETWEEN BRAZIL AND EXPORT DEVELOPMENT

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000847 SIPDIS STATE FOR WHA/BSC, NEA AND NP E.O. 12958: DECL: 06/30/2019 TAGS: MNUC PREL BR SUBJECT: AGREEMENT BETWEEN BRAZIL AND EXPORT DEVELOPMENT BANK OF IRAN REF: BRASILIA 477 Classified By: DCM Lisa Kubiske. Reason: 1.4(d) ¶1. (U) The June 30 edition of Isto e magazine carried a story titled "Secret Agreement between Brazil and Iran" which reported on a memorandum (text in paragraph 3 below) of agreement between the Brazilian Ministry of External Relations (MRE) and Iran aimed at promoting economic cooperation and trade. The agreement was made in March 2009 during preparations for President Ahmadinejad's potential May visit that was later cancelled. Iran was represented by the Export Development Bank, an institution named by the Treasury Department in 2008 as supporting proliferation activities. The article reports that the contact with Iran is seen by the MRE as purely commercial in response to demand from Brazilian business to work with Iran. MRE director for trade promotion Rodrigo de Azevedo Santos is quoted as saying that Brazil will uphold any UN sanctions. MRE Iran desk officer Azeredo Santos told Poloff that the text obtained by Isto e was genuine but that the document had no status because it had not yet been signed. ¶2. (C) Embassy Comment: This agreement is consistent with President Lula and Foreign Minister Amorim's approach to Iran of looking for engagement, supposedly as a means of gaining influence that could moderate Iranian behavior. Even though the GOB was embarrassed by the negative reaction to the invitation to President Ahmedinajad earlier this year, plans for commercial cooperation have proceeded. The MRE office responsible for the agreement was instructed to promote trade with Iran, not consider the political implications of the relationship. While the agreement itself contains little more than a promise to look into future cooperation, the fact that it was prepared with an entity of proliferation concern is significant. Because the Export Development Bank is not named by the UN sanctions, MRE could believe it has a green light to move forward. Other parts of the Brazilian government may not, however, share the eagerness to expand commercial contacts with Iran. As Isto e put it, quoting Salvador Raza of the Center for Hemispheric Defense Studies, "to have the right to make an agreement does not mean it's legitimate to do it." ¶3. (SBU) Text of Agreement as obtained from Isto e: Financial and Banking Committee Date: March 25, 2009 Place: Ministry of External Relations, Brasilia. During the meeting of high Excellency Iranian Minister of Foreign Affairs, Dr. Motaky, with the Brazilian Officials, the Committee on Financial and Banking relations between Brazil and Iran was held in Brasilia at the Ministry of External Relations. The focus of the meeting was on the development of mutual financial co-operation and on the discussion on how to overcome the main obstacles facing economic cooperation between Brazil and Iran. The meeting was directed from Brazilian party by Counsellor Rodrigo de Azeredo Santos, Head of the Trade Promotion Programmes Division of the Ministry of External Relations, and, from Iranian party, by Dr Kourosh Parvizian, Managing Director of Export Development Bank of Iran. Meanwhile, by presenting and exchanging of points of view of two parties the following topics were mutually agreed by the representatives of Brazilian and Iranian delegation: 1) To discuss the possibility of establishing financial mechanisms to facilitate export and import of goods and services by both countries, including re-exporting operations of Brazilian and Iranian goods and services to third countries. 2) To study investments in joint projects in both countries and the establishment of joint companies to expand the mutual BRASILIA 00000847 002 OF 002 economic co-operation. . 3) To sign a MOU between the Central Banks for exchanging information on regulatory issues of the financial systems of both countries. 4) To organise technical and banking committees to establish and facilitate banking cooperation between Brazil and Iran. 5) To determine a date for the banking delegations to visit both countries to finalise fundamental issues of banking co-operation. 6) To reach effective progress in the issues above mentioned before the Joint Economic Commission meeting. End text SOBEL