VZCZCXRO8837
RR RUEHRG
DE RUEHBR #2090/01 3100925
ZNR UUUUU ZZH
R 060925Z NOV 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0358
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 5382
RUEHSO/AMCONSUL SAO PAULO 1120
RUEHRG/AMCONSUL RECIFE 7329

UNCLAS SECTION 01 OF 02 BRASILIA 002090 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958:N/A 
TAGS: ECON ETRD BR
SUBJECT: BRAZIL: NEC Hubbard and DOC Gutierrez Roundtable with 
Governors October 11, 2007 
 
 
¶1. (U) SUMMARY:  In an October 11 roundtable with Commerce Secretary 
Gutierrez and National Economic Council Director Hubbard on the 
margins of the CEO Forum and Commercial Dialogue, the governors of 
Bahia (Jacque Wagner), Rio Grande do Sul (Yeda Crusius), and Santa 
Catarina (Luis Henrique Silveira), as well as the vice-governor of 
the Federal District/Brasilia (Paulo Octavio) discoursed on the 
challenges and opportunities of their region with a view toward 
attracting American trade and investment.  Secretary Gutierrez 
explained that the American message was "we want to help." END 
SUMMARY. 
¶2. (U) Secretary Gutierrez opened the roundtable noting that the 
measure of success for the US and Brazil is creating jobs and growth 
for both sides.  He told the governors that the United States wants 
Brazil to attract more investment.  Regarding infrastructure, he 
said the US message was "We want to help," whether by sharing 
technology and technical capability, facilitating financing 
guarantee mechanisms like EXIM and OPIC, or by introducing large 
American companies that have been very successful in infrastructure 
projects.  He emphasized the importance of infrastructure 
development to the growth and competitiveness of Brazil.  Director 
Hubbard noted that Brazil is growing, but has the opportunity for 
even greater growth, and invited the governors' views regarding what 
Brazil needs to do and how the US can help to encourage Brazil to 
move from a 4 percent growth rate to a six or eight percent rate. 
RIO GRANDE DO SUL 
¶3. (U) Governor Yeda Crusius noted that as a frontier state, 
Mercosul is important to Rio Grande do Sul and the state exports 
every type of product it makes.  She said the state has the most 
favorable income distribution in the country and lauded the state's 
innovation culture and research hubs.  She underlined the need for 
federal tax reform, saying her state loses much under the current 
structure.  Rio Grande do Sul runs a fifteen percent deficit; if tax 
laws relieved the state's export tax burden, there would be no 
deficit, she stated.  She noted that fifty two percent of revenues 
go to pay retiree pensions.  The state ranks seventh in road 
coverage.  Crusius claimed any cooperation would have to be outside 
existing arrangements - her state wants tax, pension and labor 
reform.  At the state level, she cited the need for irrigation, the 
establishment of public-private partnerships for roads, help 
developing the port, and reforestation assistance.  Crusius proudly 
claimed that her state had the lowest corruption rate in the country 
and was focused on energy, bio-energy and pro-competitive 
infrastructure.  However, she said, the concentration of resources 
at the federal level constrains the state's ability to plan and 
legislation pits one state against another in competing for 
investments.  She urged quick establishment of an American Presence 
Post in Porto Alegre. 
BAHIA 
¶4. (U) Governor Jacque Wagner lamented that Japanese and European 
investors were in his state, but not American.  He noted a Bahia 
state-owned company was involved in building the Miami airport.  He 
noted Bahia requires much infrastructure investment and said he 
would soon sign a 120 m usd sanitation private-public partnership 
and intended eventually to fold a project to build a 1.3 bn usd 
highway west to the Atlantic into the PAC.  Wagner urged eliminating 
visa requirements in both directions and increasing study and travel 
exchanges between our countries.  He noted the need for improved 
airlinks between our countries, and opined that "ethnic tourism" was 
an area for strong potential growth.  He commented Bahia's growth 
had been uneven, sometimes as much as seven percent, sometimes much 
lower than four percent.  He cautioned against any temptation ever 
to compare Brazil to China, bristling that "we are not the same 
culture; you have to get used to the way we are and the way we 
grow." 
SANTA CATARINA 
¶5. (U) Governor Luis Henrique Silveira noted that while Santa 
Catarina covers only one percent of Brazil's territory, the state is 
the country's fifth largest food producer and fifth largest 
exporter.  He said two percent of the state's budget goes toward 
science/tech research and another two percent toward university 
scholarships.  Almost one hundred percent of 7-14 year olds are in 
school.  The governor noted the state has lowered infant mortality 
the most, has the highest life expectancy, and the lowest crime rate 
in Brazil.   Silveira felt that Santa Catarina's advantages included 
lack of a big metropolis, a decentralized state government based on 
36 separate districts, and its geographic location at the heart of 
the territory covered by Mercosul.  He said Santa Catarina is "about 
culture, innovation and software development," and highlighted the 
Ecopower conference in November that our Ambassador will attend. 
FEDERAL DISTRICT/BRASILIA 
¶6. (U) Vice-Governor Paulo Octavio highlighted Brasilia's relative 
youth as a city at 47 years old and the importance of the United 
States to its construction, from the lake designed by an American 
company to US steel technology used in Brasilia's buildings.  He 
portrayed Brasilia as a vibrant growing city with a constant influx 
of citizens moving in from other parts of the country.  The 
vice-governor noted that Brasilia has the highest per capita income 
in the country.  He hastily added that when his governor came in 
nine months ago, he let go a great many superfluous civil servants. 
The vice-governor noted his state had excellent relations with the 
 
BRASILIA 00002090  002 OF 002 
 
 
federal government, helped in part by the governor being the same 
party as the executive branch.  Octavio indicated plans to implement 
sanitation and other projects financed by the World Bank, but said 
the state needs further investment in infrastructure and in 
education to support its growth.  He mentioned full-day schooling 
will start next year.  Octavio said his state wants a 500 m usd gas 
pipeline,  a 150 m usd beltway, a new cargo airport, and development 
of five "thematic" parks/complexes (for example, one for the 
technology sector).  He stated his government wants five million 
dollars to make the city totally wireless and "would love an 
American company to do it."  He urged establishment of an 
international flight between Brasilia and the United States and 
noted the Brasilia/Lisbon flight is 80 percent full every day. 
Octavio wanted Brazil to abolish visas for Americans, believing more 
visitors would come in that case (drawing hearty agreement from the 
other governors).  He also wished the US visas process were easier. 
 
CONCLUSION 
¶7. (U) Secretary Gutierrez concluded the meeting by noting that he 
was considering sending an investment mission focused on 
infrastructure to Brazil. He urged the governors to let the 
Ambassador know their specific infrastructure priorities, in order 
to ensure that U.S. companies were aware of opportunities.  COMMENT: 
 The event provided a good opportunity for the delegation to obtain 
a sense of the challenges and opportunities faced at the state level 
in Brazil.  The governors were visibly pleased at the prospect of a 
DOC-led infrastructure mission in the near future.  END COMMENT. 
SOBEL