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C O N F I D E N T I A L BRASILIA 001411

SIPDIS
FOR ASSISTANT SECRETARY ARTURO VALENZUELA
FROM CHARGE D'AFFAIRES LISA KUBISKE

E.O. 12958: DECL: 2019/12/10
TAGS: PREL OVIP BR
SUBJECT: BRAZIL: SCENESETTER FOR THE DECEMBER 13-14 VISIT OF WHA
ASSISTANT SECRETARY ARTURO VALENZUELA

REF: BRASILIA 1412 (EPD SCENESETTER)

CLASSIFIED BY: Lisa Kubiske, Charge d'Affaires, a.i.; REASON: 1.4(D)

Introduction: New Impetus to a Growing Relationship

¶1. (C) Mission Brazil warmly welcomes your visit to Brasilia. It
is more than a courtesy to say that your trip comes at a
significant time for U.S.-Brazil relations. A promising start with
the new U.S. Administration is beginning to ebb as high-level
initiatives have been delayed and Brazil has staked out positions
at odds with USG views on such issues as Honduras,
Colombia/Venezuela, Iran, non-proliferation, and the Middle East
peace process. At the same time, as Brazil continues its rapid
transformation from a regional to a global power, USG engagement
with Brazil has continued to expand on a growing range of issues of
importance to the United States, including global trade and
finance, climate change, alternative fuels, regional energy
integration, food security, UN Security Council matters, and
trilateral cooperation in Haiti, Africa and elsewhere. The GOB
remains eager to deepen bilateral engagement, and the possibilities
to expand our productive economic engagement into other areas
remain ample. As the Lula Government heads into its final year,
your visit provides the opportunity to provide new impetus to the
still-considerable positive momentum in our relationship, and to
lay the groundwork for a more strategic partnership with a new
Brazilian government.

A Rapidly Emerging Global Power...

¶2. (SBU) Brazil's status as one of the world's top-ten economies
has received a boost over the past year from the continuation of
solid economic management and better-than-expected performance
through the global financial crisis and economic downturn.
Brazil's growing economic clout and potential for an estimated 5%
annual GDP growth during the next several years, combined with an
aggressive effort by the Lula government to increase the country's
international reach and the new prominence on the multilateral
agenda of issues such as climate change on which Brazil is a
necessary player, is encouraging this former global wallflower to
make its presence felt on the world stage in ways that would have
seemed unlikely only a decade ago.

¶3. (SBU) Brazil's ascendancy is being driven by a strong and still
strengthening democracy, a more open and stable economy, a
competitive inward- and outward-looking private sector, a deepening
S&T capability, and an ample natural resource base. Brazil is now
the world's third largest agricultural exporter after the United
States and the European Union and the second-largest issuer of ADRs
on the New York Stock Exchange. Already a global leader in
alternative fuels and self-sufficient in oil, recent discoveries of
offshore (so-called "pre-salt") oil, while difficult to exploit,
give Brazil the potential to become a major global oil producer and
exporter over the next decade. Over the past two years, Brazil has
played a critical role in shaping the international economic system
through its participation in the Doha Round and its leadership in
the G20. Brazil is making a transition from a recipient to a
provider of assistance, mostly through technical cooperation.
Brazil officially became an IMF "creditor" country this year and
has pledged to increase its contribution to the IMF. (For
additional background on Brazil's economy and economic positions,
see the scenesetter for the bilateral Economic Policy Dialogue,
reftel.)

¶4. (C) Under Lula, the GOB has dramatically increased its contacts
with and presence in Africa, Asia (including North Korea), and the
Middle East (especially Iran), opening some 48 posts abroad over
the last seven years and increasing its diplomatic corps by 50%.
While maintaining its focus on South American integration through
MERCOSUL and UNASUL-institutions largely of its making--and
preserving its longstanding multilateral encounters with the United
States through the Summit of the Americas, with the EU through both
regional and bilateral dialogues, and with Spain and Portugal
through the Ibero-American Summit, Brazil has been the driving
force behind a series of new multilateral gatherings, including the
BRIC (Brazil, Russia, India, China), IBSA (India, Brazil, South
Africa), ASSA (Southern Africa-South America), ASPA (South

America-Arab Countries), and CALC (Summit of Latin America and the
Caribbean). Brazil's top foreign policy priority remains obtaining
a seat on the UN Security Council and, as it takes its place in
January as a non-permanent UNSC member for the tenth time, it is
aware that its actions will be closely watched.

¶5. (C) Brazil has begun to take more visible and assertive
positions on a broader range of issues of interest to the United
States-sometimes helpfully, often not. Brazil's participation in
the Doha Round, G20 talks, and, more recently, the preparations for
the UNFCCC COP-15, has been serious and generally constructive.
Unlike the other two giant emerging economies, China and India,
Brazil is bringing to Copenhagen a goal to reduce its greenhouse
gas emissions: a reduction of between 36-39% by 2020 compared with
"business as usual," which translates to about a 25% decline
compared with 2005. (The USG is proposing a 17% decline for 2020
compared with 2005.) Brazil's own military and civilian nuclear
programs have made it more difficult to work with on
non-proliferation, and have led to the GOB's refusal to sign an
Additional Protocol and lop-sided advocacy of Iran's rights to
civilian nuclear technology. Even further from Brazil's historical
interests, high-level exchanges of visits with Iran and
increasingly intense engagement in the Middle East peace process
are among recent high-profile forays into new areas of global
import. Statements on North Korean missile tests, China's
crackdown in Tibet, and elections in Zimbabwe are other instances
where Brazil has stepped into new territory.

...With the Emphasis on "Emerging"

¶6. (C) If Brazil's rapid emergence on the global stage is
unquestionable, it is also true that it is very much still
emerging. Brazil's clear sense of purpose in South America, where
the overriding importance of maintaining stability on its poorly
protected borders has led to an emphasis on dialogue and
integration with its ten neighbors, is not in evidence on most
extra-regional issues. Brazil's objective in achieving a seat at
the table on many global issues seems to stop at the seat itself.
In part, this stems from a general Brazilian disposition to prefer
dialogue with other countries to confrontation or isolation. It is
also driven by Lula's determination to develop and maintain
friendly relations with all global players as Brazil seeks a
permanent seat on the UN Security Council. The end result is that
Brazil often remains reticent to take firm positions on key global
issues and generally seeks ways to avoid them. More often than
not, the GOB eschews positions of leadership that might require
overtly choosing sides. Its discomfort with the spotlight has been
on full display in the aftermath of the Honduras coup: thrust into
the center of the crisis when President Zelaya appeared on its
embassy doorstep, Brazil did very little to extricate itself or to
actively pursue a resolution, instead handing responsibility to the
United States.

¶7. (C) Less obviously, Brazil remains uncomfortable in its
leadership on MINUSTAH. To the constant refrain of "we cannot
continue this indefinitely," Brazil has been increasingly insistent
that international efforts to promote security must go hand in hand
with commitments to economic and social development-a theme it will
take to the UNSC in January. Brazil maintains a frustrating
double-standard on democracy and human rights. Although a founding
member of the Community of Democracies and Partnership for
Democratic Governance, Brazil rarely stands firm on these issues;
even its stubbornly rigid support of Zelaya (more so than
democracy) in Honduras stands in stark contrast to Lula's
unquestioning acceptance of Iranian President Ahmadinejad's
re-election. And in the wake of what it considered a
near-disastrous brush with election observation in Zimbabwe last
year, the GOB has opted to focus on technical cooperation related
to running elections, in lieu of observing them. In the UN, Brazil
generally chooses to abstain even on resolutions regarding the most
egregious human rights abuses-such as those in Iran, North Korea,
and Sudan-unless it considers evidence of non-cooperation with
international human rights bodies to be clear-cut (as in Burma, for
example).


¶8. (C) Where Brazil's policy is not hesitant, it is often
ill-informed or straight-jacketed by the policies of the past. As
it steps out on Middle East issues, the GOB does so with a lack of
expertise on the region. Inclined to take assertions from the
Syrians, Iranians, and Hizbullah at face value, it insists that
peace can be achieved only if all players are at the table, and
seeks to position itself as a neutral party, "the country who can
talk to everyone," over against what it perceives as the biased
U.S. and European efforts. This penchant for dialogue stands
together with respect for sovereignty and non-intervention in
internal affairs as the hallmarks of Brazilian foreign policy. But
as Brazil plays in a growing number of international arenas, it is
finding it more difficult to remain true to these principles, and
more difficult to hide its inconsistencies.

¶9. (C) Brazil's uneven foreign policy is mirrored by continued
growing pains at home. Impressive strides over the last twenty
years in establishing stable democratic institutions are tarnished
by a dysfunctional judicial system, lack of enforcement capability,
and persistent and widespread corruption. Even as Brazil's middle
class continues to grow, the income gap remains significant and the
country is still home to the largest number of poor in the
hemisphere, with some 50 million concentrated in the northeast.
Brazil's successful multinationals and vibrant entrepreneurial
class are constrained by an inhospitable business climate, a costly
and intrusive but inefficient government bureaucracy, R&D spending
that focuses on producing articles for publications rather than
innovation, and inadequate national transportation, communications,
and energy infrastructure networks. Although it is heading to
Copenhagen with an ambitious proposal to reduce greenhouse gas
emissions and the lowest rates of deforestation on record, the GOB
has made very little headway in straightening out the land
ownership issues in the Amazon (where only about four percent of
the land is clearly titled) or in providing sustainable economic
activities for the more than 25 million people living in the
region. Without resolving those issues, the pressure to clear the
Amazon to support one's family will remain as great as ever.
Though proud of its status as a "melting pot" in which different
cultures and races exist side-by-side, racism remains a real and
largely unacknowledged problem, and Brazil's indigenous population
of some 700,000 individuals, scattered across the country in 225
different societies, continues to suffer from prejudice, violence,
and marginalization.

¶10. (C) Nonetheless, Brazil continues to make progress across the
board. Although the average Brazilian remains inward-looking and
often ignorant of world developments, a burgeoning public interest
in the United States has made Brazil one of the four largest
visa-issuing and -adjudicating U.S. missions worldwide. Brazil
continues to struggle with unresolved military dictatorship-era
human rights violations, but is nonetheless moving successfully to
reintegrate the military into the mainstream of national policy.
Organized crime, urban murder rates often ten times those in the
most violent U.S. cities, and the second largest consumption of
cocaine in the world are in need of urgent attention, but Brazil's
professional, well-trained Federal Police works as an effective
partner with USG law enforcement agencies. Public education
remains sub-standard, the Landless Movement (MST) continues to
attract the rural disenfranchised, and the government is largely
absent from the favelas of Sao Paulo, Rio de Janeiro, and other
major cities, whose millions of residents are often caught between
criminal gangs and corrupt civil and military (uniformed) police.
But Brazil has developed innovative social programs, and its Bolsa
Familia conditional-transfer program is considered an international
example.

Relations with the United States: Can Brazil Overcome Its
Inferiority Complex?

¶11. (SBU) This Mission has been saying in its scenesetters that
bilateral relations are as good as they have ever been-certainly in
decades. This is true, and the evidence is ample: a burgeoning set
of government-to-government dialogues covering economic,
commercial, scientific, defense, and foreign policy has led to
rapidly expanding cooperation: an MOU on biofuels cooperation,

increased numbers of joint exercises between our militaries,
trilateral cooperation in Africa and Haiti on such issues as
health, food security, and institutional strengthening, and an
innovative agreement to fight racial and ethnic discrimination.

¶12. (C) At the same time, we face significant historical baggage in
the way Brazil's foreign policy establishment views the United
States, which slows our ability to build a fully cooperative
relationship with Brazil. Much of Brazil's foreign policy
establishment remains cautious and mistrustful toward the United
States. Bilaterally, a growing and pragmatic interest in
cooperating with the United States on a range of technical and
practical issues is often caught up in fears that Brazil will lose
sovereign control or will find itself a junior partner on its own
soil to better funded, staffed, and organized USG partners. This
has led to persistent problems with visas for U.S. law enforcement
agencies (particularly, but not exclusively, on counterterrorism
issues), refusal to accept USG assistance, and seemingly
unreasonable demands and strictures on various types of
cooperation. More concerted Mission efforts to reach out to
non-traditional executive branch agencies and non-executive branch
partners-state and municipal governments, the judiciary,
prosecutors, legislators, the private sector, and civil
society-have sometimes been greeted with concern, suspicion, and
occasional opposition by a Foreign Ministry jealous of its
historical lead on all international issues and self-designated
role as both definer and protector of Brazil's national interests
vis-C -vis the world.

¶13. (C) Within South America, Brazil sees the United States as a
competitor and remains deeply suspicious of our motives and
intentions. Although the notion that the United States harbors
plans to invade or internationalize the Amazon or to seize Brazil's
offshore oil may seem preposterous to Americans, concerns about
such plans surface regularly among senior Brazilian officials,
academics, and journalists, and are only the most outlandish
manifestation of generalized mistrust and insecurity with regard to
the United States presence in the region. Brazil's reaction to the
U.S. base agreement with Colombia reflected, in large measure, just
such concerns, as have its veiled efforts to scuttle the 3+1
Security Dialogue with Paraguay and Argentina. The United States
is not the only one subject to the Brazilian mistrust; The GOB now
requires all NGOs operating in the Amazon region to be registered
and has tightened controls related to land ownership by foreigners
in the area.

¶14. (C) Outside South America, Brazil's discomfort with the United
States is less in evidence, but it is careful to avoid any
suggestion that it is toeing a U.S. line, is intent on avoiding
situations in which it might be perceived as a junior partner, and
tends to see an "independent" position-i.e., independent of the
United States in the first instance, and wealthy countries more
generally-as the preferred default. Nor does Brazil want to be
lumped in with the mass of developing countries. In multilateral
settings, Brazil prefers to position itself as a "bridge" between
the wealthy and developing nations. In cooperating with us in
Africa, it has been careful to limit cooperation to those areas
where it can act plausibly as an equal partner. Across the board,
engagement with the United States has been pragmatic, rather than
strategic. As it looks for strategic partners, Brazil is showing a
clear preference for other "independent" emerging powers-South
Africa, Turkey, Ukraine, Iran, China, India-and for one
"independent" world power: France. This (long-standing) affinity
for the French, which has been amply reciprocated by President
Sarkozy and his government, has been most evident in the FX-2
fighter competition, in which both Lula and Defense Minister Nelson
Jobim have expressed a clear preference for the French aircraft
despite Brazilian Air Force evaluations that show the clear
superiority and cheaper price of the U.S. fighter.

An Eager Brazil Gives Us the Opportunity to Invest for the
Long-Term

¶15. (SBU) In spite of their reticence, Brazilians continue to show
a genuine interest in deepening relations with the United States.

Economic issues are proving to be the easiest pathway to more
productive engagement with the GOB, both because, as a large
emerging economy, Brazil is beginning to have a natural seat at the
table and because the GOB sees most easily how global economic
issues directly impact its own well-being and national security.
The GOB has shown itself a willing partner in efforts on bilateral
investment and trade issues that will increase business
opportunities, job growth, and economic development. At the same
time, we are cooperating with Brazil to address the regulatory,
legal and infrastructure challenges that constrain Brazil's growth
and social inclusion goals and hurt U.S. exporters and investors.

¶16. (C) We are also building these partnerships with the goal of
promote regional and global economic and social inclusion
goals--among them, addressing the global financial crisis, opening
trade, and stimulating cooperation on economic development.
Brazil's interest in taking on a mantle of global economic
leadership offers numerous opportunities for engagement, as we
encourage Brazil to take on increasingly responsible roles
globally. As always, it is important to frame approaches to the GOB
as a partner, and not a junior partner. However, constructive
engagement in the G20 has given Brazil increased confidence that it
can and should engage in issues outside its own borders, and the
GOB takes deserved pride in having overcome many experiences
(previous financial crises, addressing GINI inequalities,
infrastructure impact on growth, etc) common to developing country,
and sees itself as uniquely placed to use its "lessons learned" to
help other developing countries tackle their own challenges. The
GOB has been receptive to partnering with us on development
cooperation, including a newly developing initiative in Mozambique
and Haiti on agriculture, health and infrastructure development.
We continue to work with Brazil to build consensus for WTO trade
liberalization; to promote enhanced cooperation in fora such as
OECD, WHO, and ICAO; and to create the conditions for global
development and prosperity.

¶17. (C) Our economic engagement provides a bridge to building our
relationship with the GOB on other issues. Although they generally
require more careful groundwork and legwork to ensure success, the
possibilities to do so remain ample. In a country that seeks
nothing so much as recognition of its "rightful" place on the
international stage, there is widespread understanding that no
other country can legitimize Brazil's aspirations in so meaningful
a way as the United States. More immediately, the prospect for
advancing beyond a pragmatic partnership received a significant
boost with the election of President Obama. Although Brazilians
generally admire the United States and maintain a strong interest
in our culture and politics, from President Lula to the man on the
street they see in the President a kindred spirit whom they are
eager to engage. The Administration's early statements and actions
with regard to Latin America-the President's meeting with UNASUL
and efforts to reach out at the Summit of the Americas, the spirit
of negotiation at the OAS General Assembly, efforts to reinitiate
dialogue with Cuba, Venezuela, and Bolivia-were all well received
in Brazil, and heightened expectations of an even closer
relationship. Brazilian officials were impressed by what they
heard from General Jones, Under Secretary Tauscher, and other
senior officials during their visit in August.

¶18. (C) In the intervening months, both official and non-official
Brazilians have become increasingly disappointed with what they
perceive as a lack of attention from the United States. While
acknowledging that the United States has pressing domestic and
international priorities, Brazilians feel more than ever that their
successes-their performance through the financial crisis,
constructive engagement in the WTO and Copenhagen, creative social
programs, and even their successful bids for the 2014 World Cup and
the 2016 Summer Olympics-have earned them a more prominent place on
the U.S. agenda. With regard to the GOB in particular, the
Colombia bases problem seemed to be evidence of a lack on the part
of the USG both of transparency in our dealings in the region and
of consideration regarding matters that have a direct impact on
Brazil's security. Although initially pleased with the USG
response to the coup in Honduras, and despite having publicly
insisted the problem was ours to resolve, the GOB saw our position

in support of Honduran democratic process (rather than a firm
insistence on Zelaya's restoration) as a step away from
consensus-building in the region.

¶19. (C) Despite this frustration, the GOB remains eager to engage,
and holds out continued hope that Brazil will receive a visit from
President Obama in the coming months. The Foreign Ministry is in
the process of creating and increasing staffing for a higher level
department (equivalent to a Department of State bureau) to handle
United States, Canada, and Inter-American Affairs.
Uncharacteristically, the Foreign Ministry has extended a series of
new offers and taken up others it has long delayed: it is eager to
launch the proposed high-level dialogue, has sought to replicate
the success of the Joint Action Plan to Fight Racial Discrimination
by proposing an MOU on gender issues, is moving forward on a
Defense Cooperation Agreement, Pol-Mil talks, trilateral
cooperation in Haiti and Africa, and a Tropical Forest Conservation
Act agreement, has offered an MOU on climate change, and has
expressed repeated interest in establishing joint counternarcotics
cooperation with Bolivia. While getting to yes on these
initiatives will undoubtedly require the same patience and care to
avoid Brazilian sensitivities that mark almost all of our daily
interactions with the GOB, the evident interest at senior levels of
the presidency and foreign ministry in building up the relationship
should help smooth the way over the next months.

¶20. (C) As keen as they are to cultivate the Obama Administration,
GOB officials are also driven by the knowledge that their timeframe
for making meaningful progress is short. There is little more than
a year left of the Lula government; only ten months until elections
for president, all 27 governors, two-thirds of the senate, and all
federal and state deputies; just over six months before official
campaigning begins; and less than four months until ministers who
intend to run for office-perhaps as many as half of Lula's
cabinet-must resign. This election-year calendar will be further
complicated by the traditional slowdown during Brazil's extended
summer/Christmas/Carnival break. Nonetheless, the continuity
provided by Brazil's influential diplomatic corps and the
likelihood of broad continuity on both foreign and domestic policy
under either of the two strongest contenders to succeed Lula on
January 1, 2011 means that initiatives put into place now will lay
the groundwork for the new Brazilian government.

¶21. (C) The GOB will be looking for signs in your visit that USG
interest in engaging Brazil as a global partner has not waned.
While GOB officials are unlikely to give on the issues that have
proved contentious over the last months, they will value the
opportunity to explain their views, will want to hear the
Administration's perspective and aspirations with regard to Brazil,
and will seriously entertain suggestions for additional engagement.
Your visit provides the opportunity to forge a durable working
relationship over the next year and to lay the foundation for a
strategic bilateral relationship with the next Brazilian government
that will also be essential to influencing the direction of
Brazil's development as a maturing global actor.
KUBISKE