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RUEHBS/USEU BRUSSELS

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 001837 
 
SIPDIS 
 
SIPDIS 
 
FOR WHA AND WHA/BSC FOR B.CHIANG AND D.SCHNIER 
 
E.O. 12958: DECL: 09/25/2017 
TAGS: PGOV PREL ENRG BR
SUBJECT: LULA'S TRIP TO EUROPE: CAN ITAMARATY FOLLOW 
THROUGH? 
 
Classified By: Deputy Chief of Mission, reasons 1.4 B and D 
 
¶1. (C) Summary.  Brazilian President Luis Inacio "Lula" da 
Silva,s mid-September tour of four Scandinavian countries 
and Spain to promote foreign investment, expand the use of 
biofuels in Europe, and press for the expansion of the United 
Nations Security Council (UNSC), represents a continuation of 
his efforts to enhance Brazil,s role as the key European 
partner in Latin America and a global player in its own 
right.  The trip can also be seen as a preview of what will 
motivate Lula,s diplomatic efforts on the European front 
during the remainder of his term; an ambitious agenda that, 
due to resource and staffing constraints, may overtax the 
Ministry of External Relations, (MRE, or Itamaraty) ability 
to follow through effectively.   End Summary. 
 
Selling Brazil to New Markets 
----------------------------- 
 
¶2. (C) During a wide-ranging discussion with PolCouns and 
Poloff, MRE Western Europe Division Chief Counselor Ricardo 
Guerra de Araujo said that Lula,s discussions in all Sweden, 
Norway, Finland, Denmark, and Spain focused heavily on 
expanding trade, particularly Brazilian exports of ethanol, 
increasing foreign investments as part of the Growth 
Acceleration Program (PAC), and selling Brazil as a model of 
steady growth, stability, and reliability in a region 
experiencing political turmoil. 
 
¶3. (C) The Scandinavian part of the visit, which represented 
a first for a Brazilian president and, in part, reciprocated 
similar visits to Brazil by Scandinavian leaders, such as 
Norway,s King Harald V and Queen Sonja in 2003, mainly 
focused on increasing investments in Brazil and access to 
markets for Brazilian ethanol.  Although trade with 
Scandinavian countries is not significant, Araujo said, it is 
growing.  Trade with Sweden in particular has grown more than 
40% since 2000 and more than 180 Swedish companies have a 
presence in Brazil.  In the area of biofuels, Sweden imports 
more than 80% of its ethanol needs from Brazil and boasts a 
growing flex-fuel fleet of more than 40,000 vehicles.  In 
what may have been the most significant, if largely symbolic, 
moment of his Scandinavian tour, the Swedish government 
eliminated its tariffs on ethanol, although that still leaves 
Brazilian ethanol subject to a 55% EU tariff.  During the 
visit Lula signed accords with Scandinavian countries to work 
together on climate change, cooperate on biofuel research and 
assist developing countries develop biofuel technology. 
 
Consolidating a Strategic Partnership 
------------------------------------- 
 
¶4. (U) President Lula also completed his second official 
visit to Spain, Brazil,s second largest foreign investor 
after the US.  Lula and top Brazilian officials made a full 
court press for economic leaders from Banco Santander, 
Telefonica, BBVA, and others to sell the PAC to Spain,s 
business elite and increase Spanish investments in 
infrastructure projects.  According to press reports, some of 
these projects include an estimated US$9 billion high-speed 
rail line from Sao Paulo to Rio de Janeiro and an estimated 
US$4.7 billion 25 year concession to double the capacity and 
maintain about 2,600 km of roads in five states in the south 
and southeast of Brazil. 
 
¶5. (U) Beyond the economic arena, the visit to Spain also 
served to build support for an enhanced role for Brazil in 
international institutions, a fact underscored by Spanish 
Premier Jose Luis Rodriguez Zapatero,s public statements in 
support of reforming and "democratizing" the UN Security 
Council.  Both Lula and Zapatero repeatedly asserted that the 
relationship between Spain and Brazil had expanded beyond 
 
BRASILIA 00001837  002 OF 003 
 
 
economic links and that both countries were now full 
strategic partners that shared a wide array of common 
interests. 
 
¶6. (SBU) In fact, Araujo noted, the growth in ties with Spain 
has seeped into the cultural arena as well; Spain has opened, 
or is in the process of opening, nine Cervantes Institutes 
throughout Brazil, which is the most Spain has in any 
country.  The institute is charged with promoting Spanish 
culture and building cultural ties with the host country. 
The institutes play a key role in instructing Brazilian 
teachers of Spanish, which is now one of two languages (the 
other being English) besides Portuguese taught in middle 
schools. 
 
But not Forgetting Old Partners 
------------------------------- 
 
¶7. (C) According to Araujo, in addition to Spain, Brazil has 
strategic relationships with Portugal, Spain, France, and, as 
Brazil,s largest trade partner in Europe, Germany.    The 
European Commission is is also seen as a strategic partner in 
Europe. Portugal, with strong historical, economic, and 
cultural links is a strategic partner, although Portugal,s 
turn in the EU presidency has put high-level interactions, 
such as the annual meeting between the Brazilian president 
and Portuguese PM, on hold.  The two will not meet until next 
year.  Araujo indicated that recent moves in Portugal to more 
strictly monitor entry of illegal immigrants has caused 
friction in the bilateral relationship, as Portuguese 
authorities have been sending back Brazilians, who do not 
require a visa to travel to Portugal, when they arrive at 
Portuguese airports. 
 
¶8. (C) Araujo singled out France as an important partner 
because of its support for the G4 proposal on UNSC reform and 
partnership with Brazil on development projects in Africa. 
Araujo was clearly intrigued by President Sarkozy,s proposal 
to bring Brazil into the G8, although he understands that the 
G8 as a whole will need to consider France,s proposal. 
Araujo sees joint development projects with European 
countries in Lusophone Africa as a key part of Lula,s 
European agenda, although Araujo did not think plans for most 
of these projects were concrete at this stage.  According to 
Araujo, Lula intends to continue his outreach to European 
countries with trips to Italy and the Netherlands next year. 
 
From outreach to overreach? 
--------------------------- 
 
¶9. (C) A potential stumbling block in developing and 
expanding strategic links with Europe may be the lack of 
personnel at Itamaraty to follow through on Lula,s active 
travel schedule and set of initiatives.  Araujo was frank in 
discussing staffing problems that complicated implementation 
of agreements reached during the latest trip. His office, 
which handles bilateral relations with all of Western Europe 
and the EU, is staffed by two people and two part time 
interns completing their initial three-year training at the 
Rio Branco Institute (the equivalent of the Foreign Service 
Institute). 
 
Comment: 
-------- 
 
¶10. (C) It appears that Lula intends to dedicate a 
significant portion of his second term to intensifying his 
efforts to attract new investments, enhance Brazil,s role in 
international institutions, and exploit global concerns over 
climate change to tirelessly preach the ethanol gospel to the 
international community.  Whereas in the past Brazil may have 
lacked a sufficiently compelling set of reasons to convince 
 
BRASILIA 00001837  003 OF 003 
 
 
European leaders that it could punch in a weight class 
commensurate with its size, Brazil can now back up its claims 
by pointing at its sustained period of growth, democratic 
stability, positive influence through MINUSTAH and other 
efforts in a region experiencing political turmoil, and its 
role as an exporter of technologies that provide solutions to 
global problems.  The challenge to Lula will continue to be 
whether Brazil can overcome its own staffing shortages which 
could significantly limit, in practice, the implementation of 
Lula,s agenda.  Staffing levels in the Europe division 
probably reflect a failure to reconcile old staffing levels 
focused on more limited diplomatic activity aimed at niche 
regions than with Lula,s global international agenda.  This 
situation will only be exacerbated by a cut in Itamaraty 
personnel costs of about US$100 million planned for 2008 that 
was reported in the press this week.  End Comment. 
 
Sobel