VZCZCXRO5502
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHBR #0664/01 1361910
ZNR UUUUU ZZH
R 151910Z MAY 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 1679
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHSO/AMCONSUL SAO PAULO 2073
RUEHRI/AMCONSUL RIO DE JANEIRO 6165
RUEHRG/AMCONSUL RECIFE 8049
RHEHNSC/NSC WASHDC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 02 BRASILIA 000664 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR OES/ENRC - CHARITY DENNIS AND STEPHANIE CASWELL 
DEPT FOR L/OES - KATY YOUEL-PAGE 
DEPT PASS TO CEQ FOR DAVID BANKS 
TREASURY FOR KATIE BERG 
USAID FOR CONNIE CAMPBELL 
 
E.O. 12958: N/A 
TAGS: SENV KGHG EAID EFIN BR
SUBJECT: BRAZIL:  GREEN LIGHT TO NEGOTIATE A TROPICAL FOREST 
CONSERVATION ACT PROGRAM - SEEK TO CONCLUDE BY JULY 
 
 
BRASILIA 00000664  001.2 OF 002 
 
 
¶1.  (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR 
INTERNET DISTRIBUTION. 
 
¶2.  (SBU) SUMMARY.  On May 5, the Ministry of External Relations' 
(MRE) Director of the Environment Department, Min. Figueiredo 
Machado, informed Post that the Government of Brazil wants to begin 
negotiations to establish a debt-for-nature program under the 
Tropical Forest Conservation Act (TFCA).  Further, at a May 9 
meeting between Chairman of the Council for Environmental Quality 
Jim Connaughton and MRE's Under Secretary for Policy Everton Vargas, 
the two agreed that both sides should seek to conclude TFCA 
negotiations by the time of the July 9 Major Economies Summit in 
Hokkaido.  The aim would be for the two presidents to be able to 
announce the creation of a Brazil TFCA program there.  END SUMMARY. 
 
A GREEN LIGHT TO LAUNCH TFCA NEGOTIATIONS 
 
¶3.  (SBU) On May 5, the Ministry of External Relations (MRE) 
Director of the Environment Department, Minister Luiz Alberto 
Figueiredo Machado, informed Post's Environment, Science and 
Technology (EST) Counselor that the MRE had discussed with the 
Ministry of Environment and the Finance Ministry the Government of 
Brazil (GOB) the creation of a debt-for-nature program under the 
Tropical Forest Conservation Act (TFCA).  He stated that the GOB 
wanted to establish a TFCA program and was ready to begin 
negotiations on the two related instruments: a Debt Reduction 
Agreement (DRA) and a Tropical Forest Agreement (TFA).  On April 22, 
EST Counselor had met with Figueiredo Machado once more to encourage 
the GOB to make a decision on the offer made in a letter dated 
February 29, 2008 by Treasury Department Assistant Secretary for 
International Affairs Clay Lowery to Finance Minister Guido Mantega. 
 He explained that time was of the essence, and if the GOB did not 
give the green light to begin negotiations with a view toward 
concluding them before the end of Fiscal Year 2008 that it would be 
at risk of losing a significant portion of the $30 million currently 
being held for Brazil. 
 
¶4.  (SBU) In the same May 5 call, Figueiredo Machado agreed to a 
proposal made earlier to hold a teleconference between the USG and 
GOB to begin negotiations of the two instruments.  The 
teleconference has been set for May 16 at 10 a.m. (EST time).  All 
three ministries involved in the TFCA negotiations have copies of 
drafts of the DRA and TRA.  None of the three ministries has yet 
opined whether or not the Brazilian congress would need to approve 
either or both of the instruments. 
 
CEQ CHAIRMAN CONNAUGHTON PRESSES FOR CONCLUSION BY JULY 
 
¶5.  (SBU) The topic of TFCA arose in a May 9 meeting in Brasilia 
between the Chairman of the Council on Environmental Quality (CEQ) 
Jim Connaughton and MRE Undersecretary for Policy, Amb. Everton 
Vargas, and Figueiredo Machado.  Connaughton applauded the GOB for 
deciding to seek a TFCA program and urged them to conclude the 
negotiations by the July 9 summit of the leaders of the Major 
Economies in Hokkaido, Japan.  He reinforced the point that there is 
a risk that significant delay could mean that some of the funding 
being held for Brazil would go to others.  Vargas said, "I am 
confident that we can solve this."  He noted there was a strong 
interest from the Environment Ministry in this program and that the 
Environment Minister had spoken to him about it.  He went on to say 
there was good will on both sides and that Brazil wants to resolve 
the issues the sooner the better.  Vargas added, "Maybe both 
Presidents can announce it at Hokkaido."  As for the Brazilian 
congressional approval issue, he assured Connaughton that they would 
put their people on it. 
 
¶6.  (SBU) Figueiredo Machado commented that while there was not much 
money in the program, it was politically important.  "We want to do 
it," he said.  He did identify a concern about the role of NGOs in 
the program, saying they would prefer the funding go to help 
government projects.  He added, "We would not like to see the money 
going to pay the salaries of NGO directors."  Connaughton agreed 
that the money should go to activities on the ground.  Figueiredo 
Machado said that they had talked to officials from Panama about 
their TFCA program, but stressed Brazil is different.  Still, he 
assured Connaugton that "we will sort this out." 
 
¶7.  (SBU) COMMENT.  The MRE officials in the meeting with 
 
BRASILIA 00000664  002.2 OF 002 
 
 
Connaughton were the most positive they had ever been on the subject 
of creating a TFCA program.  It appears that the combination of a 
deadline and interventions in Brasilia and Washington have succeeded 
in convincing the MRE to come to the table.  The Finance Ministry 
and the Environment Ministry have been on board with a TFCA program 
going back to July of 2007, however, MRE had been a holdout until 
now.  This new buy-in from MRE officials will be important as both 
sides work against a clock to negotiate the two instruments. 
 
¶8.  (SBU) COMMENT CONTINUED.  The recent developments are very 
positive, though much remains to be done.  MRE has demonstrated 
again and again a propensity, both for bureaucratic and political 
reasons, to move at a glacial pace when undertaking such 
negotiations, even on issues it considers important.  At the same 
time, MRE has signaled repeatedly its discomfort with handing 
control and money to NGOs--a view widely shared in the GOB--and we 
will need to be prepared to address these concerns in the 
negotiations.  Moreover, Vargas has in the past told Post that MRE's 
legal advisor has taken a position that almost every agreement with 
a foreign government needs to be approved by the congress.  If 
Brazilian congressional approval is required, it will be difficult 
to secure final approval of the agreement prior to the October 5, 
2008 municipal elections.  We anticipate that we will need to 
continue to press MRE in order to conclude the agreement in a timely 
fashion.  END COMMENT. 
 
CHICOLA