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RUEHPU/AMEMBASSY PORT AU PRINCE PRIORITY 0142
RUEHQT/AMEMBASSY QUITO PRIORITY 1969
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RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BRASILIA 001968 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
C O R R E C T E D COPY (DATE CHANGE - PARAGRAPH 2) 
 
E.O. 12958: N/A 
TAGS: PREL BR
SUBJECT: BRAZIL: AMBASSADOR'S COURTESY CALL ON MINISTER OF 
COMMUNICATIONS - CORRECTED COPY 
 
 
BRASILIA 00001968  001.2 OF 002 
 
 
¶1. (SBU) Summary.  In a wide-ranging and friendly meeting on 
14 September, Minister of Communications and leading PMDB 
party figure Helio Costa told the Ambassador that President 
Lula da Silva will likely win a first-round victory in 
October's election, and Lula's PT party, the PMDB and other 
small parties will form a working majority in congress that 
will facilitate governance. The PMDB expects to gain control 
of four or five ministries and a similar number of 
congressional committees in a second Lula government.  In 
foreign affairs, Costa expressed disdain for Venezuelan 
President Hugo Chavez, saying "You cannot trust that man," 
and "He betrayed Lula," -- clear references to Chavez's role 
in influencing recent nationalization of Petrobras assets in 
Bolivia by the Morales government.  On communication issues 
in his portfolio, Costa said Brazil seeks technological 
investments and partnerships, and this approach played a role 
in the victory in Brazil of the Japanese digital TV standard 
over the American standard.  But he added categorically that 
the U.S. digital radio system will be the one selected for 
Brazil. End summary. 
 
 
INTERNAL POLITICS 
----------------- 
 
¶2. (SBU) Costa said he believed it is very possible that Lula 
could win the presidential election in one round of voting on 
1 October, but even if a second round is required, Lula would 
ultimately be victorious.  (Note:  In the Brazilian electoral 
system, a candidate must obtain 51 percent of the valid votes 
(total votes minus nulls and voids) to be declared a clear 
winner.  If this does not occur, a second voting round 
between the two finalists is required.  The second round in 
this election would occur on 29 October. End note.)  Costa 
predicted his PMDB party would elect at least 90 congressmen, 
that the PT would "do much better than some are predicting," 
and that the PMDB, PT and some allied small parties should be 
able to construct a working majority of about 200 federal 
congressmen.  In such a coalition, the PMDB would expect to 
have control of four or five ministries, and selection of 
PMDB congressmen to head key committees, including 
infrastructure, planning, development, communications, and 
possibly education and foreign affairs. 
 
¶3. (SBU) Ambassador asked about predictions by some political 
commentators that a second Lula mandate could be 
characterized by legislative gridlock, with the PSDB-led 
opposition in no mood to meet the government half-way.  Costa 
discounted this scenario, arguing that he believes a 
consensus can be established across political and party lines 
on those issues that most Brazilians agree are important, 
including key institutional reforms in the political system, 
tax structure, judiciary and social security. 
 
FOREIGN POLICY 
-------------- 
 
¶4. (SBU) Turning to international issues, Costa recalled his 
many years living in the United States, in New York and 
Washington, as a journalist for the Globo television network 
and a translator for the Voice of America, and said he would 
like to see the U.S. and Brazil continue to strengthen their 
relationship.  Ambassador noted his awareness that foreign 
affairs seldom are a major factor in Brazilian elections, but 
asked whether Costa's PMDB party had specific priorities or 
influence in foreign policy in a second Lula mandate.  Costa 
replied that the PMDB, if it gains the chairmanship of the 
Senate's foreign affairs and defense committee in a second 
term, would certainly have a voice in foreign policy matters. 
 Costa, in speaking about whether Foreign Minister Amorim 
 
BRASILIA 00001968  002.2 OF 002 
 
 
would remain in his post in a second Lula term, said he 
expected either Amorim or another career diplomat would be 
minister.  In response to a query by Ambassador, Costa said 
he did not expect deputy minister Samuel Pinheiro Guimaraes 
to be promoted to minister, as he is "too controversial." 
(Comment: Pinheiro Guimaraes is widely seen as ideologically 
anti-American and anti-free trade, and has instituted 
management changes in the foreign ministry that have been 
extensively criticized.  End comment.) 
 
¶5. (SBU) Costa said it is the view of many Brazilians that 
Brazil should be "the natural leader of Latin America, or at 
least of South America," owing to its size, population and 
economy.  Furthermore, the emergence of Lula as a leader "who 
has moved clearly toward the center" and is a reliable, 
pragmatic and democratic partner for the United States and 
others places it in sharp contrast to some countries in the 
region, Costa added.  Asked about Bolivia, Costa said Lula is 
prudent to attempt negotiated settlements with the Morales 
government on the status of Petrobras' assets in Bolivia, 
despite Morales' "aggressive" provocations.  On Venezuela, 
Costa was much more combative: "You cannot trust that man," 
he said of Venezuelan President Hugo Chavez.  Alluding to 
Chavez's role in supporting Morales' decisions on Petrobras, 
Costa said flatly that "Chavez betrayed Lula." 
 
TRADE AND PARTNERSHIPS 
---------------------- 
 
¶6. (SBU) Turning to his portfolio as communications minister, 
Costa explained his ongoing efforts to bring wireless 
internet access to more and more areas in Brazil, using many 
American companies in the process.  He said the GOB decision 
to select the Japanese standard for digital television had 
been driven in part by the perception that the Japanese would 
bring investment and technology transfers directly into 
Brazilian industry, while the American standard's 
representatives had seemed less open to such cooperation, and 
less enthusiastic and organized overall in their approach to 
Brazil.  However, Costa was emphatic in saying that the U.S. 
IBOD digital radio system will be chosen for Brazil, as it 
offers clear advantages over the Korean, European and other 
competitors. 
 
¶7. (SBU) Comment.  Costa clearly expects to retain his 
ministerial portfolio in a second Lula government, and 
ultimately run for governor in four years.  He is a leading 
figure and interlocutor in the pro-Lula wing of the huge and 
fractious PMDB party.  We believe his assessments of 
congressional dominance by a PT-PMDB coalition are overly 
optimistic, given the rifts in the PMDB and uncertainty about 
PT election results.  We expect turbulence and continued 
corruption allegations in congress in a second Lula term, but 
even some opposition leaders agree with Costa's forecast that 
they will try to work with Lula on reforms and other key 
issues of national interest on which there is broad 
consensus.  Costa was generous with his time, and 
demonstrates an evident interest in maintaining an open 
channel of communication with the Ambassador.  In fact, he 
suggested numerous meetings and  dinners with leaders in the 
Senate and leaders within his own party.  We will leverage 
that disposition in gaining access to other PMBD leaders and 
in promoting and defending U.S. equities in communications 
and related areas. 
 
Chicola