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P 251943Z MAY 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 9046
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L BRASILIA 000956 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CCA, WHA/EPSC AND WHA/BSC 
 
E.O. 12958: DECL: 05/23/2017 
TAGS: ETTC PREL ECON ETRD BR CU
SUBJECT: BRAZIL - SUSPENSION OF TITLE III OF THE LIBERTAD ACT 
 
REF: A) SECSTATE 65523 
      B) 06 BRASILIA 875 
 
Classified by Charge d'Affaires Phillip T. Chicola, Reasons 1.4 
(b) and (d). 
 
¶1. (C) Brazil has a close relationship with Cuba and the GoB 
does not publicly criticize the Castro regime's human rights 
policies.  During the last six months, President Lula and Cuban 
President Fidel Castro have sparred publicly over Brazil's 
ethanol policy.  Castro echoed Venezuelan President Chavez's 
criticism of the USG-Brazil MOU to promote cooperation on 
development of ethanol production and use, arguing that using 
corn and sugar for fuel production would drive up food prices 
and starve the poor.  President Lula used the Isla Margarita 
Mercosul energy summit to rebut that criticism, albeit in a 
low-key fashion, pointing out that production of Brazilian 
sugar-cane based ethanol in Brazil has increased dramatically 
without raising food prices.  Castro also questioned labor 
conditions on Brazilian sugar cane plantations. 
 
¶2. (SBU) We know of no high level GoB diplomatic visits to Cuba 
during the last six months.  Cuban Vice Minister of Foreign 
Affairs Alejandro Gonzalez Galiano visited Brasilia in early 
March 2007 as part of a reportedly annual set of bilateral 
meetings between the ministries of foreign affairs.  President 
Lula's Foreign Affairs Advisor, Marco Aurelio Garcia, plans to 
travel to Cuba the week of May 28.  Separately, Cuba and Brazil 
maintain educational exchange programs and Cuba offers 
scholarships for the study of medicine in Cuba, although none of 
these programs has a particularly high profile. 
 
¶3. (SBU) On the trade front, on July 20, 2006, Cuba signed a 
free-trade agreement with the Mercosul customs union, of which 
Brazil is the largest member.  The agreement makes multilateral 
all of Cuba's existing bilateral agreements with Mercosul 
members, thus applying any trade preference granted to any 
Mercosul member to all equally.  The GoB supported the Mercosul 
agreement with Cuba, which does not contemplate full Mercosul 
membership for Cuba. 
 
¶4. (SBU) Bilateral Brazilian trade with Cuba grew to US$374.8 
million in 2006, up from US$284 million in 2005.   Brazilian 
2006 exports of US$343.3 million to Cuba were led by exports of 
sugar, auto parts, beef, electrical equipment, chicken parts, 
and coffee.  2006 imports from Cuba of US$31.6 million (down 
from US$38.9 million in 2005) were dominated by medicines and 
medical products, Portland cement, insecticides, nickel, 
aluminum scrap, insecticides, cigars and vaccines.  Brazil's 
National Development Bank (BNDES) provides trade finance lines 
to Brazilian companies, including those trading with Cuba.  Over 
the period 2001-2003, the most recent data available, BNDES 
provided US$52.3 million in export credits to finance the export 
of automobiles and buses to Cuba.  Local accounts suggest that 
potential BNDES export credits for Cuba are under-utilized. 
 
¶5. (SBU) The most recent Central Bank data available on 
Brazilian investments, for 2005, show that Brazilian companies 
invested US$21 million in Cuba, up from US$19 million in 2004. 
Post does not have data on the make-up of these investments. 
 
CHICOLA