VZCZCXRO7294
RR RUEHRG
DE RUEHBR #1025/01 1571341
ZNR UUUUU ZZH
R 061341Z JUN 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 9127
INFO RUEHSO/AMCONSUL SAO PAULO 0034
RUEHRG/AMCONSUL RECIFE 6757
RUEHRI/AMCONSUL RIO DE JANEIRO 4537
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBU/AMEMBASSY BUENOS AIRES 4811
RUEHAC/AMEMBASSY ASUNCION 6119
RUEHMN/AMEMBASSY MONTEVIDEO 6916
RUEHSG/AMEMBASSY SANTIAGO 6267
RUEHLP/AMEMBASSY LA PAZ 5392
RUEHPE/AMEMBASSY LIMA 3476
RUEHCV/AMEMBASSY CARACAS 3694
RUEHQT/AMEMBASSY QUITO 2225
RUEHBO/AMEMBASSY BOGOTA 4225

UNCLAS SECTION 01 OF 04 BRASILIA 001025 
 
SIPDIS 
 
DEPT PLEASE PASS TO USTR SCRONIN 
USDOC FOR 3134/USFCS/OIO/WH 
USDOC FOR 4332/ITA/MAC/WH/OLAC/MCAMPOS 
AID/W FOR LAC/AA 
TREASURY FOR OASIA 
DOI FOR USFS LMAYHEW 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECIN PGOV SENV EAID PHUM ETRD SNAR BR PE
SUBJECT:  BRAZIL'S ACRE STATE:  GROUND ZERO FOR SOUTH AMERICAN 
INTEGRATION 
 
REF:   Brasilia 315 
 
¶1.  (SBU)  Summary.  One of President Lula's key objectives is the 
construction of an all-weather highway linking Brazil to the Pacific 
Ocean, and within a few years this dream will become reality.  The 
GOB has paved route BR 364/317 to the Peruvian border and paving of 
this highway on the Peruvian side is proceeding apace.  For the 
remote Brazilian state of Acre - nearly 4,000 kilometers distant 
from the Atlantic coast port of Santos - this will allow its exports 
a much closer outlet to Pacific ports and further link its insular 
economy to that of Peru's Madre de Dios region and Bolivia's Pando. 
At the same time, the heightened development engendered by the 
highway, along with possible oil/gas exploration, will further 
endanger the state's Amazonian forest.  Meanwhile, the better roads 
will make it easier for traffickers - engaged in both narcotics 
smuggling and TIP - to use the region as a transit zone.  Finally, 
increased migration to Acre could magnify growing urban problems 
(favelas, improper waste disposal, and crime) in Rio Branco, the 
capital, and intensify land disputes between rubber tappers and 
loggers in the interior of the state. 
 
¶2. (SBU)  Summary continued.  For the USG, Acre (as well as the rest 
of the Amazon) is important because of its potential effect on 
global climate change.  Scientists note that in the coming years 
drought will likely spark an increasing number of fires in the 
state's Amazon forest.  Such fires could release an immense amount 
of carbon into the atmosphere, destroy one of the world's most 
important carbon sinks, and hasten the savannahization of the 
Amazon.  One way to help forestall this would be to maintain funding 
for the USAID Mission's environmental program, which provides badly 
needed support for NGOs, university researchers, and governmental 
officials seeking to implement sustainable forestry management 
policies.  End Summary. 
 
¶3.  (U) This cable is the first of a two-part series looking at the 
Brazilian frontier states of Acre and Rondonia.  During his time in 
Rio Branco, Emboff met with state and municipal government 
officials, NGO representatives, researchers, and the press. 
Reporting on Rondonia will be sent septel. 
 
------------------------------- 
Acre - A Long Way from Anywhere 
------------------------------- 
¶4.  (U)  By air, three hours (and two time zones) away from 
Brasilia, more than half of Acre's 600,000 people reside in the 
capital, Rio Branco.  The only other point of access to the city is 
via an all-weather paved highway (BR 364) extending 510 km west from 
Porto Velho, Rondonia.  During the late 1880s, Rio Branco grew into 
a regional center as rubber tappers used it as a way-station to ship 
latex out via tributaries connecting to the Amazon River. 
Successive waves of migrants, poor laborers from Brazil's Northeast 
and Lebanese-Syrian merchants, helped swell the population until the 
end of World World I when Brazilian rubber plantations were 
supplanted by cheaper sources in Southeast Asia.  Many of the rubber 
tappers who lived in the interior of the state remained, however, 
eking out a living through farming and the harvest of Brazil nuts. 
State officials note that also within the interior live 
approximately 1,000 indigenous people who, as of yet, have had no 
contact with developed society. 
 
 
¶5. (SBU) The state's principal products remain rubber, lumber, 
cattle, and Brazil nuts.  Notwithstanding its ample Amazonian 
forest, tourism is practically non-existent as there is little or no 
infrastructure to host visitors; the best hotel in Rio Branco has a 
mere 40 rooms.  (Even so, Acreanos, pointing to their new 30,000 
seat soccer stadium, dream of being one of the country's host cities 
should Brazil be awarded the 2014 World Cup.)  Acre, much of whose 
territory was at one time part of either Bolivia or Peru, was thrust 
 
BRASILIA 00001025  002 OF 004 
 
 
into the international spotlight in the 1980s, when violent land 
disputes between tappers and loggers resulted in the assassination 
of two labor activists:  first Wilson Pinheiro in 1980 and then 
Chico Mendes in 1988. 
 
----------------------- 
The Jorge Viana Miracle 
----------------------- 
¶6.  (SBU) Only with the election of PT Governor Jorge Viana in 1999, 
did things get much better.  Faced with state workers owed four 
months back wages (and a ransacked governor's palace) upon assuming 
office, he turned the state around, both in financial, 
infrastructure and social welfare terms.  While in 1999 the state 
had ranked last among Brazil's 27 states in education, in 2007 it 
had risen to eleventh place.  Whereas before 85 percent of state 
revenues had come from the federal government, by 2007 the state tax 
base had increased to the point that 40 some percent (in practical 
terms, probably the maximum possible) came from local sources. 
Together, the state and city government (the latter which was also 
held by the PT), began long-range planning, investing in health, 
parks, and basic infrastructure.  For example, street lights, road 
paving, and technical assistance aimed at both rural and urban 
communities in need were all projects undertaken during this 
administration.  Meanwhile, for perhaps the first time a dialogue 
between civil society and government began, as the Viana 
administration welcomed advice from NGO   reps and even drew many of 
these officials into the government.  In 2006, Viana's lieutenant 
governor, Binho Marques, replaced him as governor, but continued the 
tradition established under Viana's leadership. 
 
------------------------------- --------- 
Development: Opportunities and Challenges 
---------------------------- ------------ 
¶7.  (SBU)  Notwithstanding all the positive achievements of the 
Viana/Marques governments, current trends raise questions as to 
whether Acre can remain on its winning streak. 
 
--  The Atlantic-Pacific Highway.  With the strong support of 
President Lula - eager to advance its goal of South American 
integration - Brazil and its neighbors are well along in their 
effort to put in place an all-weather, paved, Atlantic to Pacific 
Highway.  The Brazilian half of this effort, BR-364/317, is 
finished, with a four-lane bridge between Assis Brasil (several 
hours southwest of Rio Branco) and Inapari, Peru already 
operational.  While ex-governor Viana told Emboff that work on the 
Peruvian side might take another four years or so, given the 
engineering challenge involved in scaling the Andes, officials from 
Marques' cabinet stated that Lula and President Garcia planned to 
inaugurate the first 100 km on the Peruvian side of the border on 
July 4.  (Comment:  This ceremony could be postponed in view of the 
EU-Brazil summit scheduled in Brussels the same day.  End Comment.) 
Once the highway is completely finished, Acr's economy will get a 
jump start as farmers willbe able to export cattle and other goods 
to Peruand onward to Asian destinations.  Instead of sending their 
products 4,000 km eastward to Santos, Brzil and then through the 
Panama Canal, they willbe able to dispatch directly from the 
Peruvian prt at Ilo.  Meanwhile, the influx of fruits, vegetbles, 
and manufactured goods from Peru and Bolivia will lower prices for 
local consumers. 
 
--  Uban Problems.  The new access routes, however, wil likely 
draw more migrants to the state, accentuting Rio Branco's urban 
problems if the economy s not able to generate sufficient jobs for 
all the newcomers.  Rio Branco State Environment Secretar Artur 
Leite told Emboff that one of the city's iggest challenges was how 
to deal with trash.  Mgrants to the city from rural areas were 
accustoed to throwing refuse in local streams - which ended up 
causing flooding during the rainy season, wih the resultant 
standing water providing excellet breeding grounds for dengue 
 
BRASILIA 00001025  003 OF 004 
 
 
fever-bearing mosquitos.  Add to this the difficulty of constructing 
adequate housing and dealing with increasing crime and state/local 
officials will have their hands full. 
 
--  Petroleum Exploration.  Another important opportunity/challenge 
is the potential existence of oil and gas reserves in both Bolivia's 
Pando region as well possibly the Brazilian side of the border.  The 
presence of petroleum would boost the economy, but could generate 
distortions as Acre's poorly-educated rural rubber tappers and 
subsistence farmers would find themselves hard pressed to cash in on 
any oil/gas boom.  Moreover, Acre's energy needs could well be met 
through other means.  Ethanol and biodiesel refining projects are 
already underway, and both government officials and the business 
community hope to be able to tap some of the electricity that would 
be generated through the construction of two planned hydro-electric 
plants in Porto Velho (septel). 
 
--  Deforestation.  In Brazil, development is more or less a synonym 
for road-building, and roads often result in deforestation.  Only 10 
percent of Acre's Amazon tree coverage has been deforested, 
principally in the Southern portion of the state along the margins 
of BR 317.   A fully-paved transcontinental highway (as well as 
petroleum exploration) would be a powerful driver for increased 
deforestation.  The resulting conflicts between farmers/tappers in 
the interior and more powerful economic interests (loggers, 
prospectors, etc.) could well intensify the violent land disputes 
that marked the decade of the 1980s. 
 
--  Trafficking.  Better transport links will only increase the flow 
of narcotics and human trafficking through the state.  NGO reps 
state (and DEA confirms) that Acre sits on a major narco-crossroad. 
Smugglers bring cocaine through the park and Indian reserves in the 
western portion of the state to Cruzeiro do Sul, whereupon they move 
their product down the westernmost portion of BR 364 (soon to be 
fully paved) and on towards other destinations in Brazil.  But the 
bigger problem is in the south, where drugs flow across the bridge 
between Cobija, Bolivia, and Brasileia, Brazil - and directly onto 
what will be the transcontinental highway. And as coca production in 
Bolivia increases, the volume of drugs smuggled on this upgraded 
access route to the Pacific would likely only rise.  One local 
government official told Emboff that the problem was wider than 
narcotics as the authorities had recently discovered a container 
full of illegal Thai immigrants transiting the area. 
 
---------------- 
The MAP Movement 
---------------- 
¶8.  (SBU)  Recognizing that good neighbors make even better friends, 
one researcher at the Federal University of Acre has initiated a 
movement to strengthen regional integration in areas such as 
education, border-crossing formalities, customs clearance, and 
forest protection.  Called the MAP movement (Madre de Dios, Acre, 
Pando), on May 17 delegations from all three countries, including 
several Acre state deputies, signed their Magna Carta - the Pucallpa 
letter.  MAP hopes to make a difference on bread and butter issues. 
For instance, legal immigrant families are sometimes reluctant to 
move because differing school requirements mean that their children 
might lose credit for work already done.  MAP seeks to standardize 
teaching programs to prevent this from happening.  One factor that 
could well impede MAP's success, however, is the all too typical 
views of Acreanos towards their neighbors.  Few in Acre speak 
Spanish or care to learn, believing that their Peruvian and Bolivian 
neighbors are not equal to Brazilians.  Naturally, such attitudes 
breed resentment. 
 
-------------- 
Climate Change 
-------------- 
¶9.  (U) Perhaps the most important issue here affecting U.S. 
 
BRASILIA 00001025  004 OF 004 
 
 
interests is climate change.  In 2005, Acre was the scene of record, 
even "apocalyptic" as one contact described it, forest fires.  A 
prolonged dry season and human-initiated fires resulted in smoke 
pollution affecting more than 400,000 people and fire damage to over 
300,000 hectares of rain forest.  Unfortunately, an enduring legacy 
of this disaster is that the damaged forests are now even more 
susceptible to repeated burning as the increased tree mortality has 
produced more dead, dry material and reduced leaf coverage.  Some 
climate models predict that by 2013 the drought conditions that 
sparked these fires could return once every four years and by 2025 
they could return once every two years.  Such extensive and frequent 
burning would not only generate massive releases of carbon dioxide 
into the air, but destroy one of the world's most important carbon 
sinks and lead to turning this part of the Amazon into a large 
savannah which could trigger changes to the hydrological cycle as 
well. 
 
¶10.  (SBU)  One way to help forestall this would be to maintain 
funding for the USAID Mission's environmental program, which 
provides badly needed support for both NGO, university, and 
governmental officials seeking to implement sustainable forestry 
management policies.  Recipient NGOs work directly with rural 
populations, teaching them the principles of agro-forestry, i.e., 
managing their use of the forest (for cattle-raising and farming) in 
a sustainable manner.  As those who use the forest to maintain their 
livelihood learn better how to care for it, it will be easier to 
prevent the outbreak of human-initiated fires. 
 
----------------------------- 
Comment:  The Tri-border Area 
----------------------------- 
¶11.  (SBU)  Much is often made of the tri-border area in Southern 
Brazil, where the state of Parana meets Argentina and Paraguay and 
drug trafficking, terrorism finance, and trade in counterfeit goods 
are rampant.  Similarly, the tri-border area joining Brazil, 
Colombia, and Venezuela also gets its share of the spotlight because 
of the lawlessness there.  In the coming years, perhaps it should be 
the Brazil, Bolivia, Peru TBA that garners greater attention because 
of its significance in terms of the environment and climate change. 
 
 
Sobel