VZCZCXRO8739
RR RUEHRG
DE RUEHBR #1220/01 1791856
ZNR UUUUU ZZH
R 281856Z JUN 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 9370
INFO RUEHSO/AMCONSUL SAO PAULO 0257
RUEHRG/AMCONSUL RECIFE 6873
RUEHRI/AMCONSUL RIO DE JANEIRO 4692
RUEHBU/AMEMBASSY BUENOS AIRES 4890
RUEHAC/AMEMBASSY ASUNCION 6194
RUEHMN/AMEMBASSY MONTEVIDEO 6952
RUEHSG/AMEMBASSY SANTIAGO 6337
RUEHLP/AMEMBASSY LA PAZ 5486
RUEHPE/AMEMBASSY LIMA 3512
RUEHCV/AMEMBASSY CARACAS 3736
RUEHQT/AMEMBASSY QUITO 2251
RUEHBO/AMEMBASSY BOGOTA 4263

UNCLAS SECTION 01 OF 02 BRASILIA 001220 
 
SIPDIS 
 
DEPT PASS TO ONDCP 
AID/W FOR LAC/AA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SNAR PGOV ETRD ENRG BR BL
SUBJECT:  BRAZILIAN SUPPORT FOR BOLIVIA ON CN ISSUES 
 
REF:   A) La Paz 1594, B) Brasilia 1025, C) Brasilia 1067 
 
¶1.  (SBU) Summary.  Worried about the potential for increased 
narco-trafficking to (and through) Brazil, the Lula administration 
has sought to provide both economic and moral support to the Morales 
government.  Consistent with their perception of Brazil as the 
(self-anointed) leader of South America, policymakers here have 
endeavored to help out their western neighbors - as long as it does 
not impinge upon Brazil's business interests.  The Brazilian 
government has also encouraged the USG to continue to extend ADPTEA 
benefits to Bolivia, arguing that this would be an effective way to 
encourage that country to cooperate on counter-narcotics and 
otherwise moderate its behavior.  All this concern for the Bolivian 
government reflects not only Brazilian leaders' desire to bolster 
fellow leftist travelers, but the fact that Brazil really doesn't 
have a plan B should the narco-trafficking situation in Bolivia spin 
out of control.  End Summary. 
---------------------------------- 
Alternative Development and ADPTEA 
---------------------------------- 
¶2.  (SBU)  Within the Planalto (the Brazilian White House), one 
initiative that Lula's advisors have considered to ease the 
trafficking problem has been the idea that Brazil and the U.S. might 
collaborate to help promote ethanol production in the western and 
northern region of Bolivia.  On at least two occasions, Lula Chief 
of Staff Dilma Rousseff has raised this with high-level USG 
interlocutors, although at no point has she actually provided USG 
officials with a detailed program plan.  To the extent that the 
developing road network in the MAP region (Madre de Dios in Peru, 
Acre state in Brazil, and the Pando in Bolivia) and other border 
areas will only increase integration, reftel B, at the conceptual 
level this idea makes a fair amount of sense.  The same roads over 
which cocaine products are smuggled could be used to transport sugar 
cane - which when refined into ethanol could more efficiently supply 
the local market than imports from distant coasts. 
 
¶3.  (SBU) Meanwhile, on several occasions it appears that the 
Bolivians have requested that Brazil raise with the USG La Paz's 
desire for the continuation of trade benefits under the APDTEA.  In 
turn, key policymakers here, such as ForMin Amorim, have touched 
upon this issue in their contacts with USG counterparts. 
 
-------------- 
Energy and Gas 
-------------- 
¶4.  (SBU)  However, Brazil's solicitous attitude towards the 
Bolivians has it limits.  The year-long negotiations between 
Petrobras and Bolivian energy authorities over the price of gas 
exports to Brazil and the disposition of Petrobras refineries proved 
to be quite contentious, with at various points La Paz threatening 
to seize Brazilian facilities and Brazil threatening to cease 
planned investment in Bolivia.  While the mid-June 2007 payment by 
the Bolivians to Petrobras in compensation for the refineries has 
calmed the situation somewhat, given Brazil's continuing worries 
regarding the reliability of natural gas supply this issue is bound 
to flare up again at some point in the future.  Meanwhile, the 
construction of several contemplated bi-national hydroelectric 
facilities along the border seems to be far off, probably more due 
to environmental and community opposition, though, than any issues 
involving bilateral Brazil-Bolivia relations.  Reftel C. 
 
------------------------------- 
Cocaine Consumption on the Rise 
------------------------------- 
¶5. (SBU)  For their part, the Brazilian Federal Police are very 
concerned about Bolivian coca leaf production and 
paste/base/hydrochloride trafficking.  They are aware that increased 
leaf production will eventually translate into more 
smuggling/domestic consumption and are awaiting the fallout. 
Indeed, by all accounts, the situation here is getting worse.  A 
recent UN report indicates that domestic drug consumption has risen 
in Brazil, and that the country has consolidated its position as an 
international distribution center for Colombian and Bolivian drugs. 
According to the report, the percentage of the Brazilian population 
that consumes cocaine has risen from 0.4% in 2001 to 0.7% in 2005, 
while it remained stable for most of the world. 
 
 
BRASILIA 00001220  002 OF 002 
 
 
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Comment 
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¶6.  (SBU)  In our view, Brazilian policymakers do not appear to 
spend a great deal of time thinking about the impact increasing 
narco-trafficking might have upon their country.  And reflecting 
this, there has not been any noticeable effort to increase 
interdiction assets or provide greater funding for the Bolivian 
border. Still, policymakers here clearly realize that a retreat by 
La Paz with respect to the drug trade would adversely affect Brazil. 
 Notwithstanding assistance by the Mission's Narcotics Affairs 
Section to Federal Police efforts aimed at the Bolivian frontier, 
Brasilia's ability to control the border remains minimal at best. 
In many ways, the Brazilian government's only option is to encourage 
the Morales government to continue the fight against the traffickers 
-- right now, it has no feasible alternative option. 
 
Chicola