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C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000128 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/11/2017 
TAGS: PREL BR
SUBJECT: BRAZIL:  AMBASSADOR'S MEETING WITH PRESIDENTIAL 
FOREIGN POLICY ADVISOR 
 
 
Classified By: AMBASSADOR CLIFFORD SOBEL. REASONS: 1.4 (B)(D). 
 
¶1. (C) Summary.  Ambassador Sobel, accompanied by PolCouns, 
met on 12 January with President Lula's Foreign Affairs 
Advisor, Marco Aurelio Garcia, for a tour d'horizon of 
regional and bilateral issues as Lula starts his second 
mandate.  Garcia is one of Lula's closest advisors and has 
frequently served as Lula's special envoy to Venezuela, 
Bolivia, Central America and Haiti. (He had just returned 
from representing Lula at Ortega's inauguration in 
Nicaragua.) This was the Ambassador's first, extended 
one-on-one meeting with Garcia, who offered assessments on 
Venezuela, Bolivia, the nature of populism in Latin America, 
and areas for discussion in a possible meeting this year 
between Presidents Lula and Bush.  Detailed discussion of 
these themes follow below.  End summary. 
 
VENEZUELA 
 
¶2. (C) Ambassador noted President Hugo Chavez's inauguration 
speech's references to "socialism or death," and indications 
Chavez will attempt to create conditions for his indefinite 
permanency in the presidency.  Observing that Venezuela and 
Brazil are recognized as regional giants, Ambassador asked 
Garcia, who has met frequently with Chavez, for his 
assessment of the direction Chavez's regime is taking. 
 
¶3. (C) Garcia observed that Chavez is in the process of 
making major changes, both in cabinet personnel and the 
substance of his government, and the impact of these changes 
on Brazil and the region remain to be seen.  On the 
substantive level, Garcia said emerging changes -- including 
the two sectoral nationalizations and undercutting of Central 
Bank independence -- appear to further consolidate Chavez's 
Venezuela as "an oil state."  Historically, Garcia said, the 
Venezuelan oil state distributed wealth upward, while 
Chavez's regime purports to distribute it downward.  In 
either scenario, the continuing collapse of other productive 
sectors of the economy (e.g., agriculture) -- to the point 
that Venezuela cannot even satisfy its own internal market -- 
bodes ill for Venezuela over the long term, Garcia added. 
Garcia said the GOB had repeatedly warned Chavez of the 
risks, telling him oil is "both an asset and a curse." 
 
¶4. (C) Garcia said it is very clear that Chavez will 
aggressively continue to seek the role of political and 
ideological leader in the region.  Expanding on this, Garcia 
opined that Chavez's ideology is diffuse: "It has a strong 
nationalistic component, is critical of liberal economic 
models in the region, has unorthodox socialistic features, 
and is fueled by social degradation in much of the Andean 
ridge."  Garcia said this is not necessarily traditional 
Latin American "populism" but rather "Chavezism" -- which is 
a Venezuelan phenomenon, born of specific conditions and 
history of which Chavez "is an effect, not a cause."  In that 
sense, Garcia believed the effects of Chavezism on the region 
vary. Colombia and Argentina are developed states, where 
social and political circumstances will limit Chavez's 
impact. In other states, the impact is significant but will 
still reflect local reality, and thus is not likely to 
replicate "Chavezismo" as seen in Venezuela, Garcia said. 
Ecuador is an example, Garcia opined, where president-elect 
Correa -- "a well-educated realist" -- may profess closeness 
to Chavez on some questions, but is also likely to pursue 
pragmatic ties with Brazil, other regional countries and the 
U.S. on many issues. 
 
BOLIVIA 
 
¶5. (C) Segueing to Bolivia (where Garcia has traveled during 
crises as Lula's envoy), Garcia reiterated his view that 
 
BRASILIA 00000128  002 OF 003 
 
 
Bolivia is undergoing "a true revolution, wrought with votes 
instead of weapons," a revolution driven by internal dynamics 
that would be underway with or without Chavez's influence. 
All revolutions pass through phases of high instability, 
witness the current tumult in some parts of Bolivia, Garcia 
added.  Nonetheless, Garcia downplayed the potential for 
violent succession scenarios. and opined Bolivia's armed 
forces would support Evo Morales and unity in any such 
challenge.  Garcia said Brazil would also support the 
Bolivian government in any unity crisis.  Morales' challenge, 
Garcia said, is to takes steps and establish conditions that 
move Bolivia toward a modern industrial model that benefits 
its general population. Lula and the GOB have tried to be 
patient in viewing the May nationalization of energy assets 
and other strident or ill-conceived actions in that context. 
Slowly, Morales appears to be realizing that he needs 
international support and cooperation, and Brazil is trying 
to maintain a calm tone and productive engagement with 
Bolivia that reinforce stability and mitigate against 
anti-Brazil sentiments, Garcia said. 
 
¶6. (C) The GOB and Brazilian companies are disposed to try to 
continue with substantial investment and purchases of 
Bolivian products, if Morales understands that cooperation, 
stability and transparency are essential, Garcia said. 
Petrobras is prepared to return to substantial activity and 
investment, "if we can get a good agreement."  Chavez "is 
attempting to influence the ideological revolution in 
Bolivia, but Brazil wants to play a leading role in the 
economic revolution,"  Garcia said. 
 
POPULISM AND FOREIGN TRADE 
 
¶7. (C) In light of the above discussion, Ambassador asked 
whether Garcia could see emerging in Brazil -- especially in 
the poorest regions and among the most destitute -- a 
tendency toward political populism.  Garcia noted that, in 
his re-inauguration speech, Lula had distinguished between a 
government that is "populist, and a government that is of the 
people."  Brazil is the latter, and will remain so, Garcia 
said.  Government intervention in crisis circumstances or to 
boost the economy in intelligent fashion should not be seen 
as populist, Garcia said, and he alluded to FDR's New Deal as 
an example of intervention that was initially criticized as 
"populist" but which ultimately proved salutary.  "Bad 
populism redistributes wealth without creating wealth," 
Garcia said, and averred Lula's government would never fall 
into such a trap. 
 
¶8. (C) Ambassador then asked whether wealth creation and 
distribution were not best served by aggressive and open 
approaches to free trade -- especially with the U.S. and 
other developed markets -- and enhancing the climate for 
investment.  Garcia replied that Brazil desires robust 
foreign trade, but is not exclusively "an export economy, 
like Chile," and must take a careful and integrated approach 
to trade and industrial development.  In investment, Brazil's 
environment is stable and attractive; its problems are tax 
structure and bureaucracy, which require long-term solutions, 
Garcia said. 
 
AGENDA FOR PRESIDENTS 
 
¶9. (C) Responding to Ambassador's query about an agenda for a 
possible meeting later in 2007 between Presidents Bush and 
Lula, Garcia said he anticipates key areas of interest for 
Lula would include trade (Doha and bilateral) and regional 
issues. On the latter, Garcia said it was important that the 
meeting not appear to be a "strategy session" for common 
approaches at the expense of other countries in the region. 
In particular, Garcia said Brazil's "freedom of maneuver" in 
 
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trying to play a constructive role in Cuba's transition could 
be compromised by any perception in Cuba that the U.S. and 
Brazil are in cahoots. 
 
¶10. (C) Comment. We anticipate Garcia will continue on in the 
second term as Lula's foreign policy advisor and 
international "fireman,"  a role Garcia clearly relishes.  In 
the coming cabinet shuffle, only Chief of Staff for Policy or 
Minister of External Relations would likely tempt him away, 
and both those positions seem securely in the hands of their 
incumbents.  Hence, with FM Amorim and Garcia staying on, we 
anticipate the overall direction of Brazilian foreign policy 
-- notably the rather low-key and cautious approach to 
Venezuela and Bolivia seen in the first Lula mandate -- will 
persist.  That is not an approach that is in sync with 
increasingly concerned and negative assessments of Chavez and 
Morales in evidence in much of the Brazilian media, sectors 
of the armed forces and government, and the informed public. 
That tension is one of the most interesting foreign policy 
trends here heading into 2007 and the second Lula term, and 
one we will watch closely. 
 
Sobel