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

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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
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