This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 001017 
 
SIPDIS 
 
DEPARTMENT FOR A/S NOREIGA, PDAS DERHAM AND WHA/BSC AND 
PLEASE PASS TO USTR; NSC FOR TOM SHANNON 
 
E.O. 12958: DECL: 04/13/2015 
TAGS: PREL PGOV ETRD BR FTAA
SUBJECT: AMBASSADOR'S MEETING WITH PRESIDENTIAL CHIEF OF 
STAFF JOSE DIRCEU, 12 APRIL 2005 
 
REF: A. (A) STATE 1149 
     ¶B. (B) LA PAZ 1149 
 
Classified By: AMBASSADOR JOHN DANILOVICH. REASONS: 1.4 (B)(D) 
 
¶1. (C) Summary/Action Request. On 12 April Ambassador and 
PolCouns met for a private lunch at the COM Residence with 
the Presidency's Civil Household Minister and Presidential 
Chief of Staff Jose Dirceu, who was accompanied by his 
international affairs advisor, Ambassador Americo 
Fontanelles.  Dirceu, who is President Lula da Silva's 
closest advisor, indicated he will travel to Caracas this 
week to meet President Chavez, carrying a strong message 
(cleared by Lula) that Chavez should stand down from his 
provocative rhetoric and focus on his country's internal 
problems. Dirceu also enthusiastically supported the idea of 
a meeting at the earliest opportunity between Presidents Bush 
and Lula to "clear the air" on Venezuela and seek a formula 
for breaking FTAA discussions out of the current "state of 
paralysis."  Ambassador and Dirceu discussed the possibility 
of a meeting on the margins of the G-8 in Scotland in July, 
and both said they would stay in touch on this or other 
options as they coordinated with their governments.  Action 
request:  Mission requests Department and NSC assess 
desirability and feasibility of a presidential bilateral on 
the margins of the G-8, or other options for a meeting 
between President Bush and Lula in the next two to three 
months.  End summary/request. 
 
VENEZUELA:  CARRYING A MESSAGE TO CHAVEZ 
 
¶2. (C) Ambassador said that in his meetings in recent days in 
Washington, it had been explained that the USG's approach to 
Chavez henceforth would be lower key, with Washington 
lowering its rhetorical signature so Chavez would have fewer 
targets or excuses for anti-U.S. rants.  Left in a vacuum, 
Chavez's own words and actions would reveal his true nature 
to others, and the USG is disposed to "let him hang himself" 
in the forum of world opinion, Ambassador added. 
 
¶3. (C) Dirceu said that he is traveling to Caracas in the 
next few days to meet Chavez, and is carrying a blunt message 
vetted by President Lula.  The key points of the message are: 
 
-- "Stop playing with fire..."  Chavez's provocations against 
the U.S. do not serve Venezuela's national interests and are 
an issue of concern to Brazil and his other neighbors. 
Drawing on his conversations and experiences during recent 
travel in the U.S., Dirceu will tell Chavez that not only the 
USG and U.S. elites are hostile toward him -- American 
business executives and even the "man in the street" now view 
Venezuela as a problem for the U.S.  Dirceu will stress to 
Chavez that such a tense situation with American society 
cannot possibly benefit him or his country; 
 
-- Focus on Venezuela's internal problems:  Dirceu will tell 
Chavez that in the GOB's estimation he should have his hands 
full dealing with his economic problems, social restiveness 
and development issues.  Those are Venezuela's internal 
concerns but they affect Brazilian assessments of commercial 
and integration prospects and Chavez should do his homework, 
Dirceu said. 
 
¶4. (C) Continuing on Venezuela, Dirceu said the GOB does not 
believe Chavez's arms purchase plans indicate external 
military designs.  A Colombia-Venezuela conflict would be 
catastrophic for both countries, Dirceu said.  Chavez's 
possible purchase of thousands of AK-47 assault rifles 
appears directed toward his arming of the local militias he 
is forming, Dirceu said, but he did not elaborate on why 
Chavez is forming militias except to observe that Chavez 
"feels threatened."   Dirceu seemed dismissive of the value 
of conventional arms in South America, asking Ambassador and 
PolCouns how long they thought Venezuelan F-16s or MIGs (if 
the GOV purchases them) could stay in the air against a 
modern foe (read USAF).  Unless a country chooses to have 
long-range missiles or nuclear devices it has no significant 
deterrent against a powerful national enemy, Dirceu opined, 
and hence most conventional weapons -- however flashy or 
costly -- are largely toys for appeasing the "artifacts of 
national militaries"  in developing countries, and not a 
serious threat to any other state. 
 
¶5. (C) Ambassador noted that the use of the term "strategic 
alliance" by Chavez and Lula, and the apparent reluctance of 
Lula and regional leaders to openly refute or criticize 
Chavez's most outrageous comments can lead some observers to 
assume that Brazil and others tacitly agree with Chavez's 
views and that Chavez is the alliance's de facto spokesman. 
Dirceu did not respond directly, but assured Ambassador that 
"there is not a single item of anti-American intent" in 
Brazil's regional policy matrix.  He said that the GOB is 
focused on integration and economic development, and wants to 
draw Chavez into "a practical agenda" that will shift his 
attention and energy in a more positive direction.  Dirceu 
said that Chavez exerts virtually no influence over national 
leadership in any South American state, and even in the 
places where his influence sometimes can be seen -- i.e., 
Bolivia and Ecuador -- Chavez's words and deeds have often 
backfired, as in the case of Bolivia's harsh public reaction 
to recent Chavez comments about Bolivian internal affairs 
(NFI, but see ref b).  Ambassador rejoined that Chavez's 
relative economic independence based on oil resources gives 
Brazil and other neighboring states less leverage than they 
might think in persuading Chavez to focus on positive and 
practical regional integration issues. 
 
 
PRESIDENTIAL MEETING 
 
¶6. (C) Following up on comments made by the Ambassador about 
the usefulness of a possible meeting between Presidents Bush 
and Lula in the next few months if a suitable time and venue 
could be found, Dirceu stressed that Lula believes it is 
becoming important to have such a meeting before the November 
Summit of the Americas.  Dirceu said it is crucial that the 
two Presidents talk candidly with each other, especially on 
two issues:  Venezuela and the direction of FTAA.  Beyond 
"clearing the air" on Venezuela, the USG and GOB need to 
develop "a common approach" toward the whole Andean Ridge and 
its various problems, as stability is strongly in the 
interest of both countries, Dirceu said. 
 
¶7. (C) On FTAA, Dirceu voiced strong concern about "the state 
of paralysis"  and said the presidents could discuss finding 
a way to move ahead.  Dirceu said the GOB cannot afford to 
create the impression that it lacks interest in the FTAA.  In 
Dirceu's view, Brazil needs to increase its commercial 
activities with the U.S. "one hundred fold" and FTAA is an 
invaluable vehicle.  He opined that in five to ten years 
South America will be "one market" led by Brazil, where 
hundreds of U.S. firms based in Brazil will have the 
opportunity to export goods and services across the 
continent.  This "partnership" is key and needs to be 
strengthened;  FTAA can help do this, and trade disputes 
should be relegated to "routine handling" in the WTO and not 
allowed to slow cooperation, Dirceu said. 
 
¶8. (C) Ambassador and Dirceu discussed the possibility of a 
bilateral meeting on the margins of the July G-8 summit in 
Scotland (PM Blair has invited Lula) and both said they would 
explore this and other options with their administrations, 
staying in touch on the issue. 
 
BILATERAL RELATIONS 
 
¶9. (C) Early in the lunch meeting, Dirceu declared that 
U.S.-Brazil relations are at their best level "since World 
War II."  Ambassador demurred on agreeing with this 
completely, but said the two countries cooperate well on a 
range of issue (e.g., counternarcotics), and that both 
Secretary Rice and Deputy Secretary Zoellick have a strong 
 
SIPDIS 
interest in Brazil and enhancing bilateral relations. 
Ambassador and PolCouns reviewed two pending bilateral issues 
-- i.e., conclusion of a bilateral safeguards agreement for 
U.S. participation in commercial launches at Brazil's 
Alcantara spaceport and the possibility of negotiating a 
defense cooperation agreement -- but Ambassador said he would 
like to see new initiatives for bilateral cooperation.  He 
asked Dirceu to provide a list of areas in which the GOB 
would like to expand its cooperation with the U.S., with a 
view to working on some of these questions prior to a 
possible POTUS visit later in the year.  Dirceu undertook to 
provide suggestions. 
 
¶10. (C) Ambassador also broached with Dirceu the ongoing 
problem for the U.S. Mission in selling its excess properties 
in Brazil, owing to past issues with Brazil's social security 
system.  Dirceu expressed a willingness to help and directed 
his international affairs advisor to work with the Embassy on 
the question. 
 
CUBA 
 
¶11. (C) Turning briefly to Cuba, Dirceu said that, despite 
the relationship between Castro and Chavez, it is not in 
Cuba's interest to "have the waters roiled" by Chavez's 
provocations.  On the contrary, Cuba's internal problems are 
so profound and its economy so fragile that Castro's regime 
desperately needs a calm regional environment to attempt to 
deal with these issues and to try to attract more foreign 
investment.  He reiterated statements he had made in his 
Washington meetings, i.e., that if the USG allowed more 
direct American commercial involvement and private sector 
contacts with Cuba, the country would "be transformed beyond 
recognition in five years." 
 
¶12. (C) Comment and action request.  Jose Dirceu remains 
Lula's most important advisor, despite some waning of his 
influence.  He retains Lula's complete confidence, has a 
broad policy coordination role, and we assume that most of 
what he says closely reflects Lula's own opinions and 
priorities.  In that regard, Dirceu's upcoming mission to 
Venezuela and his expressed support for the FTAA are 
intriguing.  We will follow up with Dirceu's office for a 
backbrief on the Chavez meeting, continue to probe for 
daylight between the internal positions of Dirceu/Lula and 
others in the GOB vice the foreign ministry on FTAA, and we 
ask Washington to weigh seriously the option of a meeting 
between President Lula and President Bush on the margins of 
the G-8  -- or some other option -- in the next two to three 
months.  It appears that the top level of the GOB wants to 
reach out to us -- perhaps even reaching around their own 
foreign ministry -- and we should try to find ways to reach 
back. 
 
DANILOVICH