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FM AMEMBASSY BRASILIA
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INFO RUEHRG/AMCONSUL RECIFE 8574
RUEHRI/AMCONSUL RIO DE JANEIRO 6738
RUEHSO/AMCONSUL SAO PAULO 2896
RUEKJCS/SECDEF WASHDC
RUEHC/SECSTATE WASHDC 2637
RUEKJCS/JOINT STAFF WASHDC
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C O N F I D E N T I A L SECTION 01 OF 04 BRASILIA 001345 
 
SIPDIS 
 
E.O. 12958: DECL: 10/08/2018 
TAGS: PREL MARR MOPS ETTC BR
SUBJECT: SCENESETTER FOR THE VISIT OF ADM. STAVRIDIS TO 
BRAZIL 
 
Classified By: DCM Lisa Kubiske.  Reason: 1.5 (d) 
 
¶1.  SUMMARY.  Your visit comes at an important time for our 
strategic partnership with Brazil.  Overall, the U.S.-Brazil 
relationship is as productive as it has ever been, driven by 
strong cooperation between Presidents Bush and Lula, 
particularly in the area of biofuels.  As Brazil completes 
its new defense strategy, it will be making key decisions, 
notably on the purchase of new fighter aircraft, that will 
affect the nature of our relationship for years to come. 
While some Brazilian leaders still find it politically 
convenient to portray the U.S. as a potential adversary, most 
of the Brazilian military is well apprised of the potential 
benefits of partnership.  Your visit provides an opportunity 
to advance our partnership in key areas by highlighting the 
importance of our common interests and the opportunities to 
advance cooperation in mutually beneficial areas.  END 
SUMMARY. 
 
¶2.  The relationship between the United States and Brazil is 
as productive and broad-based as it has ever been, the result 
of the excellent relationship between President Bush and 
President Luiz Inacio Lula da Silva, new cooperation 
mechanisms on biofuels, business issues, and economic 
matters, and our shared goals of fostering hemispheric 
stability, promoting democracy, developing a consensus on 
next steps regarding climate change, and achieving a mutually 
satisfactory conclusion to the Doha round of WTO 
negotiations.  U.S.-Brazil cooperation on foreign policy 
issues is often limited by the GOB's unwillingness to speak 
out against anti-democratic actions in the hemisphere 
(Venezuela and Cuba), take key steps to address key issues 
such as nuclear proliferation and counterterrorist concerns, 
and expand its international leadership in meaningful ways. 
Operational cooperation on law enforcement issues, such as 
counternarcotics, container 
security, and intelligence sharing, are highlights of the 
bilateral relationship.  Brazil's ethanol program has made it 
a global model for alternative energy and offers potential 
for bilateral cooperation on an important strategic issue. 
 
¶3.  (SBU) With approval ratings hovering near 80 percent, 
President Lula is more popular than at any other point since 
he took office in 2003.  Continuity and legacy are the 
guiding lights of Lula's second term.  Lula continues to 
shape his legacy as a friend of the poor and builder of a 
foundation for prosperity for the lower and middle classes 
through broad social welfare programs and a vast, new 
economic growth program of public works and growth 
incentives.  At the same time, Lula has failed to promote 
needed reforms to abolish a political culture of corruption, 
clientelism, and spoils. 
 
¶4. (U) Despite a healthy economy and a slight drop in 
homicides registered over the past several years, public 
opinion polls consistently show that the top concerns for 
Brazilians continue to remain public security and lack of 
jobs.  These are normally followed by quality of health care 
and education, corruption, low wages, and lack of 
opportunities for youth.  These will likely remain issues 
heading into the 2010 presidential elections.  Although Lula 
has gotten high marks for economic management, particularly 
as other countries in the region struggle, economic fears are 
growing among Brazilians, and the effects of the global 
financial crisis may eventually have a negative impact on 
Brazil that affects Lula's popularity and the chances of his 
party's candidate for 2010. 
 
¶5. (U) Brazil is the tenth largest economy in the world. 
Annual GDP growth was 5.4% for 2007, and inflation 
approximately 4%.  The currency, the real, has appreciated 
strongly over the past two years, although it has seen an 
erosion of its strength in recent months as the global 
financial crisis unfolds.  While the export sector has been 
dampened, the strong currency (Strong until the current 
global financial crisis) permitted Brazilian companies to 
ramp up investment in capital equipment.  High tax rates and 
over regulation continue to retard economic growth, but the 
economy remains generally strong. 
 
¶6.  (SBU)  The United States and Brazil share the basic goals 
of fostering hemispheric stability, promoting democracy, 
preventing terrorist and drug transit activity, supporting 
international non-proliferation regimes, and have been 
working together to try to achieve a mutually satisfactory 
 
BRASILIA 00001345  002 OF 004 
 
 
conclusion to the Doha round of WTO negotiations. U.S.-Brazil 
cooperation is often limited by the GOB's unwillingness to 
take action regarding threats to democracy in specific 
countries and to support aggressive action in multilateral 
forums on such issues as non-proliferation, human rights, and 
democracy.  Many Brazilian leaders also take a cautious 
approach to relations with the United States, sometimes 
falling back on shopworn Latin American leftist rhetoric 
about excessive U.S. influence. Brazil maintains an active 
dialogue with Venezuela and Cuba, has worked hard to restore 
relations with Bolivia, and has stood firmly on the principle 
of respect for sovereignty in responding to the dispute 
between Colombia and Ecuador, preferring to work through the 
Organization of American States.  The attainment of a 
permanent seat on the UN Security Council has been a central 
goal of Brazil's foreign policy. 
 
¶7.  (SBU)  The Brazilian public has a mixed view of the 
United States.  Seventy-five percent say relations between 
Brazil and the United States are very good or fairly good, 
and Brazilians by a wide margin consider the United States 
the most important country in the region for Brazil.  Those 
who follow the news know that U.S.-Brazil cooperation on 
trade issues has global importance and new areas of 
cooperation such as biofuels are potentially significant. 
There has been a much more positive view of U.S.-Brazil 
cooperation since the signing of the biofuels MOU last year. 
On the other hand, there is a good deal of skepticism about 
U.S. foreign policy, particularly on issues such as Iraq and 
Cuba.  U.S.-Brazil cooperation in law enforcement has been 
productive and is a highlight of the bilateral relationship. 
 
¶8.  (U)  Brazilians have a high degree of interest in events 
in the U.S.  The Presidential election has generated almost 
as much press coverage here as Brazil,s local elections. 
When asked for your views on the election and its outcome, 
you can emphasize the similarity in approach to key foreign 
policy issues and the continuity of the fundamental interests 
-- regional stability, promotion of democracy -- that Brazil 
shares with the United States. 
 
SECURITY ISSUES 
------------------------- 
 
¶9.  (C)  At President Lula,s direction, Brazil is now 
completing a new defense strategy document to set an overall 
course on security issues.  While not yet published (due to 
interagency disagreements on several points), it is widely 
reported that the strategy will have three main elements: 
modernization of the armed forces, revitalization of defense 
industries and implementation of a new regime of national 
service.  We expect that an important result of the new 
strategy will be an increase in funding devoted to national 
defense, which has been under-resourced since the end of the 
military government over twenty years ago.  The resurgence of 
importance of the Brazilian military presents a unique 
opportunity to increase our bilateral cooperation and defense 
partnership.  Several issues will be key in determining the 
degree to which we will succeed in enhancing our partnership. 
 
¶10.  (C)  The first potential watershed in achieving a more 
robust defense relationship with Brazil will be the decision 
on a next generation fighter aircraft.  Boeing,s F18 Super 
Hornet is a finalist along with the French Rafale and Swedish 
Gripen.  A decision will be made in March 2009, with a final 
contract award in October of next year.  It would be 
difficult to overstate the significance of Brazil,s Air 
Force committing to a U.S. aircraft as its primary fighter 
for the next generation.  Boeing,s proposal combines cutting 
edge technology with a strong package of industrial 
cooperation.  While the Super Hornet is clearly Brazil,s 
best option both because of its capabilities and the 
advantages that interoperability with the U.S. military will 
bring, it is currently perceived as an underdog in the 
competition.  This is because of an effective disinformation 
campaign from a few members of the Brazilian press with an 
anti-U.S. agenda that has led most Brazilian decision makers 
to believe that the United States will not transfer superior 
military technology to Brazil.  Several Cold War era denials 
of military items (e.g. Harpoon missiles) and recent 
headaches with commercial exporters of military items 
(Honeywell gyros) seem to reinforce this perception.  We want 
to use the opportunity of your visit to drive home the point 
that the United States is offering the best product, the best 
prospects for long term cooperation and support and is 
 
BRASILIA 00001345  003 OF 004 
 
 
committed to transfer of the applicable technologies. 
 
¶11.  (SBU)  There are a number of areas with prospects for 
immediate cooperation.  Brazil is considering stationing 
police and navy officers at JIATF South.  The Brazilian 
military has participated in several major exercises, 
including UNITAS and PANAMEX with several more in prospect. 
Brazil has invited U.S. personnel to train at its jungle 
warfare school in Manaus, however, the high demands on U.S. 
special forces have prevented acceptance.  The Brazilian navy 
has shown interest in vessels for coastal patrol and in 
improving their maritime situational awareness capabilities. 
Your visit provides an opening for exploring further 
prospects for such activities. 
 
¶12.  (C)  We are in the process of pursuing information 
sharing agreements with Brazilian services -- potentially 
leading to a GSOIA.  Progress has been slow because of 
bureaucratic concerns, but Brazil is interested in 
continuing.  We should take the opportunity of your visit to 
underline the importance of information sharing and its 
benefits for both sides. 
 
¶13.  (C) We have been stalled on our Defense Cooperation 
Agreement (DCA) for almost a year because of the Ministry for 
External Affairs, failure to take action and the MOD,s 
unwillingness to burn political capital to push this.  While 
this situation is unlikely to change, we should remind the 
Brazilians that the DCA is important for future partnership, 
especially as it can shorten the process of approval for 
various future cooperative activities.  Brazil has signed a 
large number of similar agreements this year, so ours will 
not be a precedent and could be seen in the context of normal 
friendly mil-mil relations. 
 
¶14.  (SBU)  The April announcement of the reactivation of the 
Fourth Fleet caught Brazil by surprise and provoked much 
negative commentary.  Even some normally rational Brazilians 
believe that the announcement, coming as it did almost 
simultaneously with the discovery of more oil off the 
Brazilian coast, could not have been a coincidence but was 
somehow mysteriously related to the security of Brazil,s 
oil.  While Brazilian military leaders have said they 
understand the reasons for the Fourth Fleet,s standup, 
President Lula has recently stated again that it poses some 
threat to Brazil.  While Lula,s statement was pure domestic 
politics and his advisors have assured us that he understands 
the true nature and purpose of the Fourth Fleet, we need to 
continue to remind Brazilian leaders that spreading such 
inaccuracies is counter productive in terms of the 
cooperative relationship we are trying to build.  While the 
Fourth Fleet controversy seemed to have died down, senior 
Brazilians have recently raised it again, expressing concern 
that the reactivation could somehow threaten Brazil's 
assertion of its Exclusive Economic Zone. 
 
¶15.  (SBU)  In a similar vein, discoveries of oil off 
Brazil,s coast have been cited as justifications for 
increasing Brazil,s navy.  While the oil finds will almost 
certainly increase Brazil,s future prosperity, we should 
seek to turn the strategic dialogue in Brazil away from 
fantasies that another country--potentially the United 
States--would try to seize the oil fields to a productive 
discussion of energy security and the importance of 
maintaining freedom of the seas. 
 
¶16.  (C)  You will be visiting Manaus as the Brazilian Army 
looks for a way to implement a recent Presidential Decree to 
station troops in Brazil,s far flung indigenous regions as a 
means to provide better control of Brazil,s vast borders. 
The Army lacks the resources to do so effectively, and 
Lula,s instruction is seen as a response to Army criticism 
that local autonomy of indigenous areas is a threat to 
Brazilian sovereignty.  Behind this concern is a 
long-standing fear among Brazilians that the sparsely 
populated Amazon region could be seized by foreign forces. 
Brazil,s more sensationalist press routinely covers 
statements from environmentalists on preserving the 
rainforest as though they were calls for invasion (presumably 
by the United States).  In any public statements, you will 
need to be aware that Brazilians will evaluate your words in 
the context of what they believe is a real concern that the 
United States could be planning to take control of the 
Amazon, or assist an internationalization.  You should look 
for opportunities to reaffirm that the U.S. supports 
 
BRASILIA 00001345  004 OF 004 
 
 
Brazilian sovereignty unconditionally. 
SOBEL