Rio Radar - December 3

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SUBJECT: Rio Radar - December 3

REF: BRASILIA 1383; BRASILIA 1099; RIO DE JANEIRO 369
RIO DE JANEIRO 329; RIO DE JANEIRO 365


1. (U) Rio Radar is a regular compilation of key economic,
political, commercial, and other developments in the states of Rio
de Janeiro, Bahia, Minas Gerais, Espirito Santo, and Sergipe. This
week's subjects:



BLACKOUTS HIT RIO DE JANEIRO...AGAIN AND AGAIN




2. (U) Beginning the afternoon of November 23, a power outage hit
major parts of the affluent Zona Sul area of Rio de Janeiro,
affecting approximately 40,000 residents. Some neighborhoods well
north of Zona Sul were also affected. This blackout, which lasted
almost 24 hours in some areas, was less widespread, but longer in
duration than the country-wide blackout that also struck Rio de
Janeiro on November 10 (reftel A). Roberto Alcoforado, Vice
President of the Rio de Janeiro's utilities company, "Light",
provided three possible causes for the outage: Theft of underground
electric cables; a spike in energy consumption due to
higher-than-average temperatures; or, an overall increase in
consumption due to an increase in domestic electronic appliances
thanks to a reduction in the IPI (Industrialized Products Tax).
Helder Queiroz, Professor of the Energy Group of the Economics
Institute at the Federal University of Rio de Janeiro (UFRJ),
however, placed the blame on poor infrastructure, noting Light
spent 10 percent less on capital investments in 2009 than it did in

2008. On November 30, yet another blackout hit the Zona Sul area,
lasting approximately three hours. According to utility provider
"Light," problems involving underground electric cables caused the
power outage.



PRE-SALT ROYALTIES DEBATE POSTPONES KEY VOTE IN CONGRESS




3. (SBU) On November 26, Brazil's President Lula promised Rio de
Janeiro Governor Cabral (PMDB) that he would ask the House of
Deputies to postpone voting on the principal bill of the regulatory
framework for the pre-salt oil deposits, due to the ongoing debate
over the distribution of royalties, in areas already licensed under
the concession model. Four bills make up the proposed framework,
and the House of Deputies has already passed one bill (reftels B
and D). This heated debate over the distribution of royalties
under the framework has pitted Rio Governor Cabral and Espirito
Santo Governor Paulo Hartung (PMDB) against Deputies and Governors
from non-oil producing states, mainly in the Northeast, as well as
the Federal government, with major disagreements even among members
of the same party. Since the framework was announced on August 31,
non-oil producing states have demanded a greater share of royalties
from Pre-salt blocks to be licensed going forward. Beginning last
month, however, they also began demanding royalties on pre-salt
blocks already licensed under the existing concession model,
causing staunch opposition from Cabral and Hartung. The State of
Rio de Janeiro alone stands to lose billions of dollars annually
under the proposals. The PMDB's leader in the House of Deputies
Henrique Eduardo Alves promised to present a new proposal on
royalties distribution during the first week of December. Major
international and independent oil companies that oppose the
framework tell us the ongoing debate on royalties, and associated
delays, can ultimately help their lobbying efforts against the
bill, by holding up full Congressional passage.



RIO EXTENDS FAVELA PACIFICATION, DRUG GROUPS FIGHT BACK




4. (SBU) On November 30, some 300 Military Police officers -
supported by armored helicopters - launched operations to enter two
favelas in Rio's affluent Zona Sul area, in order to expel drug
trafficking elements and prepare the community for "pacification,"
i.e. a sustained police and state presence (reftel D). The two
favela communities, "Pavao-Pavaozinho" and "Cantagalo" border the
Copacabana and Ipanema neighborhoods, and are home to some 28,000
residents. Both communities have been under the control of the Red

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Command, the same group responsible for downing a police helicopter
in October (reported in Rio 346). Press reports indicate police
killed one drug gang member and apprehended two during initial
firefights. The office of the State Secretary for Public Security
told us on December 1 the police had successfully entered the
favelas and were patrolling the community.




5. (SBU) On December 1 and 2, however, suspected drug traffickers
struck back in Copacabana neighborhoods. On December 1, they set
ablaze a bus and threw a grenade at a shop, in what appeared to be
retaliation against the operations. The fire set by the suspects
completely destroyed the bus, which was empty at the time, and
spread to an adjacent store front. In a nearby area, a suspected
drug gang member also threw a grenade, which then exploded,
damaging a storefront and some proximate vehicles, although it was
not immediately clear if the two events were coordinated or
directly related. Some press reports stated the incidents were
diversionary tactics so drug gang members could escape from a
firefight with police in the favelas, but MP contacts could not
corroborate these reports. Prior to the bus fire, a group of
minors warned stores in the area to shut down, to demonstrate
solidarity "with the traffickers." The Copacabana MP battalion
told us they arrested two adults in the bus fire incident, three
minors in the grenade incident, and 11 minors that ordered
shopkeepers to close. There were no reports of deaths or injuries.
The location where the bus fire took place is only one block away
from a major internationally recognized hotel where many visiting
USG officials stay. On December 2, another explosive device -
containing nails - was thrown at a bus in Copacabana, according to
local press, but no injuries were reported. Rio authorities have
successfully brought four other communities into the "Favela
Pacification Program" (FPP),and the November 30 operation fits in
with the program's overall strategy, timeline, and geographical
prioritization (reftel E).



ICAO CONFERENCE ADVANCES AVIATION BIOFUELS DEVELOPMENT




6. (U) On November 16-18, the Brazilian government hosted the
International Civil Aviation Organization's (ICAO) Conference on
Aviation and Alternative Fuels in Rio de Janeiro. During the three
day event, member states - with input from airline industry
representatives - debated language that went into an ICAO
Declaration on the development of alternative aviation fuels. The
Declaration endorsed the use of sustainable alternative aviation
fuel, particularly fuels compatible with existing jet engine
technology, as a way to reduce CO2 emissions from aircraft. ICAO
will present the declaration at the United Nations 2009 Climate
Change Conference in Copenhagen later this month. Member states
also established the Global Framework on Aviation and Alternative
Fuels, an information-sharing platform for ICAO member states and
the air transportation industry. ICAO Secretary General Raymond
Benjamin declared that as much as 10 percent of all aviation fuel
could come from alternative sources within the next 10 years.




7. (U) On the margins of the Conference, Brazilian aircraft
manufacturer Embraer, Brazilian air carrier Azul, General Electric,
and California-based Amyris announced a partnership to develop a
bioengineered alternative aviation fuel. The process for this
fuel will involve a sugarcane feedstock, processed through
fermentation, and bioengineered to become a "drop-in" kerosene spec
fuel, i.e. a fuel that has advantageous elements of diesel, with
the GHG-reducing benefits of sugarcane-based ethanol, and
compatible with existing commercial jet engines.



DENGUE FEVER OUTBREAK IN RIO?




8. (U) On November 24, Brazilian Minister of Health Jose Gomes
Temporao alerted Rio de Janeiro Health Authorities over the
possibility of a new dengue fever out-break during the Brazilian
summer months. A total of 102 municipalities throughout the
country, including seven in Rio de Janeiro state, are under a state
of alert.

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SALVADOR RESIDENTS PROTEST FOR MENINGITIS VACCINE




9. (U) On November 24, Salvador, Bahia residents staged a protest
demanding free vaccinations against meningitis. The protest
blocked traffic for a few hours. According to the Bahia State
Secretariat of Health, there have been 128 deaths from meningitis
this year. However, the Secretariat claims only the Federal
Ministry of Health can make changes to the list of vaccines
included in the free vaccination program. A meningitis vaccine
currently costs 120 Brazilian Reals (70 USD).
HEARNE