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RUEHC/SECSTATE WASHDC 6488
INFO RUEHBR/AMEMBASSY BRASILI 7592
RHEHNSC/NSC WASHDC
RUEHMN/AMEMBASSY MONTVIDEO 2288
RUEHBU/AMEMBASSY BUENOS AIRES 2655
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RUEHLP/AMEMBASSY L PAZ 3242
RUEHZP/AMEMBASSY PANAMA 0142
RUEHRG/AMCONSUL RECIFE 3404
RUEHRI/AMCONSUL RIO DE JANEIR 7844
RUEHAC/AMEMBASSY ASUNCION 2943
RUEATRS/DPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC

UNCLAS SECTION 01 OF 05 SAO PAULO 000161 
 
SIPDIS 
 
SNSITIVE 
SIPDIS 
 
DEPT FOR WHA/BSC, INL, AND EB/RA 
STATE PASS TO USTR FOR SCRONIN 
STATE PASS EIMBANK 
STATE PASS OPIC FOR MORONESE, RIVERA, MERENNE 
NSC FOR FEARS 
USDOC FOR 4332/ITA/MAC/OLAC 
USDOC FOR 3134/USFCS/OIO 
USDOC ALSO PASS PTO/OLA 
TREASURY FOR OASIA, DAS LEE AND JHOEK 
AID/W OR LAC/AA 
DHS FOR PLCY/OIA KEVIN O'REILLY 
 
E.O 12958:  N/A 
TAGS: EWWT EINV ETRD ECON ELTNSNAR SENV OEXP BR
SUBJECT:  CONSUL GENERAL VIIT TO THE PORT CITY OF SANTOS 
 
REF: A) 05 SAO PAUO 1106; B) 05 SAO PAULO 703; 
 
     C) 05 SAO PAUL 614 
 
SAO PAULO 00000161  001.3 OF 005 
 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECTACCORDINGLY 
 
SUMMARY 
------- 
 
¶1.  (U) ConsulGeneral (CG) and Econoff recently visited the port 
city of Santos, which lies 60 kilometers southwes of Sao Paulo 
across the Serra do Mar mountain rnge.  Santos serves the 
industrial and agricultual trade needs of Sao Paulo and neighboring 
stats and is the most active port by volume shipped inSouth 
America.  The visit offered an opportunity for the CG to tour the 
Department of Homeland Secrity (DHS) offices and obtain from the 
staff an ssessment of the Container Security Initiative (CS) 
program, which has been operating since Septemer 2005.  He also 
visited the U.S.-Brazil bi-national center to meet with students and 
a talented nd committed former Youth Ambassador; met with theMayor 
of Santos, who is focused on creating oppotunities for growth and 
investment in Santos; an toured the operations of Archer Daniels 
Midland (ADM), one of the four largest agricultural processrs in 
Brazil.  The day ended with a visit to DowChemical's Corporate 
Social Responsibility (CSR)Clean Mangrove Project, which has 
restored some f the sensitive mangrove ecosystems along the banks 
of the Santo Amaro River.  The visit offered a god opportunity to 
advance our public diplomacy aenda in the key city, as well as to 
recognize eforts of those involved in the highly successful jont 
U.S./Brazilian CSI program.  The CG also gave interviews to the 
local media.  End Summary. 
 
TE CITY OF SANTOS 
------------------ 
 
¶2.  (U) Sntos, a coastal city in Sao Paulo state founded in1546, 
is partially located on the island of Sao icente and partially on 
the mainland.  It is an attractive beach resort that hosts many 
tourists on weekends.  As of 2006, Santos had an estimated 
population of 418,375 people. Santos is also home to the soccer team 
made famous by the Brazilian sports superstar Pele.  It is the 
largest seaport in Latin America, having traded over 72 million tons 
of goods in 2006.  The city has large industrial complexes and 
shipping centers which handle a large portion of the world's coffee 
exports and a number of other Brazilian exports as well, including 
steel, oil, cars, oranges, bananas, cotton, and grains.  According 
to the Guinness Book of Records, the city features the world's 
largest beach-front garden at 5.335 kilometers in length. 
 
CSI: MAINTAINING SECURE CARGO 
------------------------------ 
 
¶3.  (U) The Department of Homeland Security (DHS) Container Security 
Initiative (CSI) is housed in the historic Customs Building in 
downtown Santos  The CG visited their offices to first receive an 
assessment of the project from both the DHS employees and their 
Brazilian counterparts.  On September 22, 2005 (ref A), CSI Santos 
became the first fully operational CSI port in South America, which 
enables cargo destined for the U.S. through the port to be 
pre-screened.  The primary mission of CSI is to enhance global 
container security from the threat posed by terrorism.  All involved 
in the project were happy with the results and described good 
cooperation between Brazilian port and Customs authorities and U.S. 
DHS agents.  They stated that the presence of CSI serves as a 
deterrent to fraud, both physically through the presence of the 
agents scanning the containers, and psychologically because of the 
mere knowledge of its existence at the port.  The efficiency of CSI 
has improved the export of containers and is both an economical and 
 
SAO PAULO 00000161  002 OF 005 
 
 
psychological benefit for companies exporting.  With 90 percent of 
Brazilian container cargo exiting out of Santos, it is important to 
maintain security in the shipments.  The main challenge facing the 
team today is to enhance the communications system that monitors the 
containers, allowing for a real-time online system (with restricted 
access) that facilitates inspection of the containers.  The general 
consensus after almost a year and a half is that CSI has been a good 
addition to port security, and has been a "win - win" situation for 
both Brazil and the U.S. 
 
¶4.  (U) The CG handed out awards to the 21 Brazilians associated 
with the CSI project, including the Superintendent of the Federal 
Revenue Service and the Chief Inspector and Deputy Inspector of 
Santos Port.  It was a good opportunity to recognize the valuable 
support of the Brazilians and to foster continued support, 
coordination and collaboration. 
 
 
MAYOR OF SANTOS:  STILL POPULAR AND PRODUCTIVE 
--------------------------------------------- - 
 
¶5.  (U) The CG met with the very popular Mayor of Santos Joao Paulo 
Tavares Papa (Brazilian Democratic Movement Party - PMDB), who was 
sworn in as mayor on January 1, 2005 following a close election that 
he won by a margin of just over half a percentage point.  Papa, an 
engineer who has served in several municipal positions and as Vice 
Mayor, highlighted his future plans for the growth of the city.  He 
emphasized the importance of the port, which is directly and 
indirectly responsible for 70 percent of the economic activity of 
the city.  He is currently involved in negotiations on two big 
projects (with outside partners) to enlarge the port, which would 
triple the actual capacity that is currently managed by the 
state-owned Sao Paulo State Docks Company (CODESP). He also outlined 
plans for the revitalization of the old port, making it a center for 
tourism, recreational and sports activities, and a boat marina.  The 
GoB has transferred authority of this area to the city, which plans 
to renovate old warehouses and fund new construction to create a 
second passenger terminal for arriving cruise ships.  Mayor Papa 
mentioned that the GoB's recently announced Growth Acceleration 
Program (PAC), which has a special section on ports, looks to 
provide incentives and investment opportunities for specific Santos 
port projects.  Finally, he mentioned the desire to operate a 
passenger train between Sao Paulo and Santos to transport tourists 
and workers rapidly between the two cities. 
 
¶6.  (U) According to Papa, the economy of the city is based on 1) 
the port, 2) services, 3) tourism, and 4) universities.  Thirty 
percent of the population is of retirement age, and with five 
universities, there is also a large student population.  As a 
result, health standards are a major priority for the community. 
Fortunately, Santos has a good health system and a safe environment. 
 The challenge he sees is to maintain the high quality of life, 
foster economic growth, and to find physical space for future 
business investment and port expansion.  Santos is limited by 
surrounding communities and the ocean, with little room for growth; 
hence the need for creative use of existing space for development. 
In October 2006, light crude oil was discovered off the coast, which 
has generated a USD 18 billion Petrobras investment in the region. 
Last year, a Santos delegation visited Long Beach, and his desire is 
that Santos form a sister city relationship with a U.S. city. 
(Note: PAS will work with this Mayor's office to facilitate contacts 
towards establishing a sister city relationship with an appropriate 
U.S. city.  End Note). 
 
THE BI-NATIONAL CENTER: PROMOTING LANGUAGE AND CULTURE 
--------------------------------------------- --------- 
 
 
SAO PAULO 00000161  003 OF 005 
 
 
¶7.  (U) At the U.S.-Brazil Bi-National Center (CCBEU), CG and 
Econoff toured the facility, talked with staff about the language 
and cultural programs offered by the Center, and solicited ideas 
regarding Consulate assistance for the Center.  Approximately 25 
English-language students met with the CG.  It was an opportunity to 
ask questions about the U.S., about the U.S. Consulate in Sao Paulo, 
and requirements for study in the U.S. - F1 and J1 visas.  We were 
joined by Alan Martino, who visited the United States as a Youth 
Ambassador in 2005.  Martino is currently teaching English to the 
elderly in a city-run program while applying for college in the U.S. 
under the auspices of the U.S. Achievers Program (USAP).  USAP 
provides college funding for bright, talented but economically 
disadvantaged youths who want to pursue academic excellence. 
 
¶8.  (U) CCBEU was founded in 1943 and today has a student body of 
1,500 students, with capacity for 5,000.  The President, Joao 
Borges, stressed that the purpose of CCBEU is to make a connection 
with the community by teaching English language and culture, which 
is a very different perspective from other language schools in the 
city.  Eighty percent of the students at CCBEU are on some type of 
scholarship; the Center also receives some support in the form of 
partnerships with U.S. companies in the region.  CCBEU has strong 
ties with the Rotary Club and receives all Rotary exchange students. 
 CCBEU has a strong counseling section and hopes through cultural 
and educational exchange programs and student involvement in 
administration tasks, to develop future leaders in the community. 
Borges pointed to Alan Martino as a good example of community youth, 
stating that since his return from the U.S., he continues to 
volunteer as a teacher, participate in community activities, and 
serve on the CCBEU Board.  CCBEU requested assistance from the U.S. 
Consulate with speakers or cultural events programming in order to 
attract a larger audience from the community.  CCBEU has 54 
employees, 25 of whom are teachers, in their large facility housing 
a 140-seat auditorium, a 21,000 volume library, a computer lab, and 
a large art gallery housing their permanent collection. At the end 
of the CCBEU event, the CG gave an interview to the local media, 
which covered various bilateral issues. 
 
ADM: GOOD NEWS FOR AGRICULTURE 
------------------------------ 
 
¶9.  (SBU) Archer Daniels Midland (ADM), one of the largest 
agricultural processors in the world, has facilities in the Santos 
port.  During the Ambassador's visit in 2005 (ref B), ADM's Director 
of Port Operations complained of infrastructure-related problems 
associated with the depth of the port; the slowness on the part of 
CODESP to complete a planned port-dredging operation; the lack of a 
sufficient parking area for vehicles; and insufficient train cars to 
load and unload grains.  The news this time around was much better. 
According to Bert Frost, ADM Director for 
Ports/Logistics/Fertilizer, the company is enjoying good operations 
and profits.  ADM presently has two supply points to the world: 
Brazil and the U.S.  According to Frost, Brazil is back in the 
market, is competitive and growing; thus, ADM will continue to 
invest in this region.  A bumper soy crop is projected for this year 
following the near-drought conditions of the last two years.  Frost 
estimated that ADM moves 10-12 million tons of soybeans per year 
through the Santos port.  ADM exports soybeans, soybean meal, sugar, 
corn and sorghum, and imports wheat and barley.  Of the company's 
26,000 employees worldwide, 2,000 are located in Brazil. 
 
¶10.  (SBU) ADM is not only one of the largest agricultural 
processors in Brazil, but is also a large transport company, with 
barges, rail cars, and trucks to move its product from the farm to 
the transport facility for export.  ADM transports grain from Mato 
Grosso, Goias, Parana, and Mato Grosso do Sul states, working 
closely with farmers in these regions and providing loans to farmers 
 
SAO PAULO 00000161  004 OF 005 
 
 
(with the farm as collateral) as needed.  ADM wants to be a 
responsible company in terms of sustainable development and the 
environment, and for that reason has chosen not to farm or accept 
grain from the Amazon.  Per Frost, ADM's business runs on logistics, 
and ADM has a strong transport chain in place to bring its 
agricultural products quickly from the farmer's fields to the port 
for shipment.  ADM owns two barge companies, rail cars, and has 
three rail receiving areas and four truck platforms for receiving 
cargo.  Four large sheds can accommodate up to 190,000 metric tons 
of grain. However, the one negative point is the rising cost of 
transporting their product from the field to the port.  The cost in 
Brazil of transporting product to port is double the cost in the 
United States for the same distance due to poor logistics and 
infrastructure.  Frost labeled this the "custo Brasil", or the cost 
of doing business in Brazil, and stated that this extra cost is 
borne by the farmer.  However, even with this added cost, ADM posted 
worldwide revenues of USD 35 billion in 2005; of that, 3 billion was 
generated by ADM South America, of which USD 2 billion came from 
Brazil. 
 
DOW CHEMICAL'S CLEAN MANGROVE PROJECT: 
------------------------------------- 
CLOSE COMMUNITY TIES 
-------------------- 
 
¶11.  (U) The final visit of the day took place at Dow Chemical's 
impressive Corporate Social Responsibility (CSR) project, the Clean 
Mangrove Program.  Since 2002, this program has developed various 
initiatives to protect the existing mangrove area inside the Dow 
property in Guaruja, the neighboring city and beach resort 
immediately across the harbor from Santos.  In coordination with the 
Responsible Care Community Advisory Panel (CAP) - a 28-member panel 
composed of concerned community members, teachers, NGOs, and the 
local Minister of Tourism - Dow has mobilized the surrounding 
communities to work together to increase  awareness of the mangrove 
area along the Santo Amaro River.  Dow occupies 360,000 square 
meters of their 800,000 square-meter property, of which 50 percent 
is mangroves.  The Clean Mangrove Project has encompassed various 
phases:  1) startup in 2002; 2) partnership with local university 
UNISANTA in 2003 for scientific research and study of the mangrove 
area; 3) cleanup and community awareness activities from 2003 - 
2006; 4) construction of the mangrove project from 2004 - 2007; and 
5) a proposed book on mangroves and partnership between CAP and 
UNISANTA in 2007.  The fourth phase of the mangrove project includes 
a museum, larviculture stations, a tree-breeding area, an 
auditorium, and a visitor platform. 
 
¶12.  (U) For this year, Dow, the Community Advisory Panel and the 
Ocean Future Society (Jean-Michel Cousteau's organization) have 
created the Ambassadors of the Environment program, which will bring 
60 students from fifth to eighth grade to Guaruja for one week of 
training and working with the Clean Mangrove Program.  (Comment: It 
is impressive that not only the community and Dow are involved, but 
have received international recognition from a world-renowned 
organization.  CG suggested that the Smithsonian Tropical Research 
Institute (STRI) in Panama, which has done extensive research on 
mangroves, might be able to provide research materials and/or 
speakers to assist with this project.  ECON will facilitate contact 
with STRI to assist with further mangrove research, possible future 
contacts, and guest speakers.  End Comment.) 
 
¶13.  (U) Dow Chemical has been in the Guaruja area since 1971, with 
a total of 368 employees located in two locations.  There are six 
specialized production plants, manufacturing epoxy, polyol & 
polyglycol, latex, wire & cable, polystyrene and polyethylene. 
Forty-five percent of Dow Brazil's revenue is invoiced through the 
Guaruja facility.  Total sales for Dow worldwide were USD 50 
 
SAO PAULO 00000161  005 OF 005 
 
 
billion, with Brazil accounting for USD 5 billion.  The Guaruja 
facility boasts one of the best safety records for Dow worldwide. 
In a subsequent interview a week later at the Consulate General, 
Neil Hawkins, VP for Global Advocacy & Public Policy, voiced Dow's 
commitment to remain here in Brazil, and added that Dow is poised to 
begin manufacturing products from renewable feed stocks.  Dow has 
the technological expertise to produce commercially viable products 
using renewable materials.  For example, Dow presently processes soy 
beans to make foam for car seats and mattresses.  Per Hawkins, with 
the climate changes in the next 50 years, Brazil has the potential 
to be a "heartland of biomaterials," providing the raw renewable 
materials for Dow's future production needs. 
 
¶14.  (U) The one concern Hawkins voiced is the rising taxation 
(federal, state) on the price consumers pay for electricity (in this 
case, industrial electricity), which has tripled in the last 5 
years.  If these tax increases continue, Dow will convert from a 
cost advantage status to a cost disadvantage status for certain 
products, which would impact on Dow's competitiveness and create 
disincentives to future investment.  Dow has formed a coalition with 
other similarly affected associations (steel, aluminum, chemical) to 
talk with GoB officials (most recently, Chief of Staff Dilma 
Rouseff) in an attempt to stave off further tax increases.  He 
stated that if their attempts do not provide any relief in the near 
future, he will contact the Consulate for possible assistance on 
their behalf.  (Note: Mr. Lucelio de Moraes, Government Affairs 
Director for Dow Brazil was contacted by Econoff on February 16, and 
stated that he would shortly request the Consulate's assistance in 
convening a meeting with ABRACE, the Brazilian Association of Energy 
Consumers, to discuss the issue.  End Note.) 
 
SANTOS: OPPORTUNITIES FOR U.S.- BRAZIL COOPERATION 
--------------------------------------------- ----- 
 
¶15.  (U) Comment:  The city of Santos is home to the most 
significant port in South America, one of two CSI locations in South 
America, and an active bi-national center that teaches 1500 
students.  It is a thriving community to which tourists flock on 
weekends, has a large student population with five universities, and 
is economically stable with retirees making up approximately 30 
percent of the population.  Pele, the internationally known 
superstar, put the name Santos on the map when he played for the 
local soccer team during the 1960s.  The Mayor is focused on 
generating investment in the city and is pushing several major 
infrastructure projects.   The city and its port have attracted 
large multinational companies such as ADM and Dow Chemicals, which 
besides generating local jobs are concerned about and active in the 
community.  Dow's Clean Mangrove Program by Dow is a great example 
of a CSR program that involves and motivates the surrounding 
community.  In addition to striving for growth and investment in the 
region, the local government is also actively engaged in improving 
the quality of life of its citizens and residents.  Santos is a 
community the U.S can and should work with more; to this end, the 
Consulate plans to enhance its public diplomacy and commercial 
outreach with key partners in Santos.  End Comment. 
 
¶16. (U) This cable was coordinated with Embassy Brasilia. 
 
MCMULLEN