VZCZCXRO9566
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM RUEHTRO
DE RUEHBR #0123/01 0301633
ZNR UUUUU ZZH
R 301633Z JAN 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 3436
INFO RUEHSO/AMCONSUL SAO PAULO 3456
RUEHRI/AMCONSUL RIO DE JANEIRO 7203
RUEHRG/AMCONSUL RECIFE 9019
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 02 BRASILIA 000123 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR OES/PCI - L.SPERLING 
DEPT FOR OES/ENCR - C.KARR-COLQUE 
 
E.O. 12958: N/A 
TAGS: SENV EFIN EAGR KSCA BR
SUBJECT: BRAZIL: INTERMINISTERIAL BATTLES LEAVE NEEDED REFORM OF 
FOREST REGIME STALLED 
 
BRASILIA 00000123  001.2 OF 002 
 
 
(U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR INTERNET 
DISTRIBUTION. 
 
¶1.  (SBU) SUMMARY.  A divided Brazilian cabinet was unable to 
resolve its differences in order to make urgently needed reforms of 
the Forest Code.  First, Agriculture Minister Reinhold Stephanes and 
Environment Minister Carlos Minc could not agree on a common 
approach for legislation to replace the current provisional measure 
on Amazon forest conservation.  Stephanes pressed for allowing up to 
50% per lot of land in the Amazon region to be cleared of its native 
vegetation, while Minc insisted that no more than 20 percent could 
be cleared.  In a related matter, Strategic Planning Minister 
Roberto Mangabeira Unger and Defense Minister Nelson Jobim could not 
overcome opposition from Agrarian Reform Minister Guilherme Cassel 
and Environment Minister Minc to persuade President Luiz Inacio Lula 
da Silva to transfer responsibility for Amazon land title registry 
to a new entity and away from Minister Cassel's National Institute 
for Land Settlement Agency (INCRA).  Lula, however, did require 
Cassel to move the land title registry responsibility to a new unit 
within his ministry and away from INCRA.  These unresolved conflicts 
mean that badly needed reforms - vital to addressing the serious 
problem of deforestation - will be delayed even longer.  END 
SUMMARY. 
 
THE FOREST CODE AND THE RESERVE REQUIREMENT 
 
¶2.  (SBU) In accordance with Brazilian Federal Law 4771 created in 
1965, also known as the Forest Code, rural properties in the Amazon 
Region must maintain 50% of the native forest (called the reserva 
legal or the legal reserve) on the property standing.  The Amazon 
Region (also called Amazonia Legal or Legal Amazon) covers 
approximately five million square kilometers or 60% of Brazil's 
territory, which includes nine states and roughly four million 
square kilometers contained forests.  In 2001, an 80% legal reserve 
limit was created through a provisional measure decreed by the 
President, but never enacted into law.  Ever since there has been 
heated debates over establishing, by legislation, a legal reserve 
requirement.  Influential rural politicians strongly oppose an 80% 
limit, wanting legislation to clarify that the requirement is 50%. 
(NOTE.  Few farmers in the Amazon region comply with the very high 
bar of 80% conservation.  END NOTE.)  At the same time, the 
environmental community seems wedded to an 80% reserve requirement, 
though they lack the votes to have this enacted by Congress. 
 
¶3.  (SBU) In October 2008, the Government of Brazil created a 
Working Group so that both sides could discuss draft legislation to 
resolve the reserve requirement.  The Group was composed of 
Environment Minister Minc and Agriculture Minister Stephanes, along 
with Agrarian Reform Minister Cassel, other government and 
non-government organization representatives.  Stephanes and Cassel 
pressed for more flexible legislation.  They would like the legal 
reserve requirement for the Amazon region to be set at 50%, and also 
support amnesty for agriculture producers who illegally occupied 
land or illegally cleared forests in protected areas prior to July 
¶2007. 
 
ENVIRONMENTALISTS SAY NO 
 
¶4.  (SBU) The Working Group met a total of three times in order to 
try to reach a consensus.  The first meeting took place in November, 
2008 when Minc, expectedly, said:  "The Forest Code is over forty 
years old and needs changes.  Today is a historical day where both 
the agriculture and environment representatives talk and try to 
reach an agreement." 
 
¶5.  (SBU) Unfortunately, Minc's optimism did not last very long.  In 
another meeting in December, Agriculture Minister Stephanes 
explained his proposals.  NGO representatives decided not to 
negotiate under such terms and left the Working Group.  After a 
month without any talks or progress, Stephanes decided to terminate 
the working group.  Paulo Adario, Director of Amazon Project for 
Greenpeace in Brazil, said that NGOs are not against changes in the 
Forest Code, as long as the changes take into consideration the 
biodiversity and the effects climate change have on agriculture. 
 
¶6.  (SBU) Minc responded to Stephanes' decision by saying that he 
had no power to terminate the group and that he believed that good 
common sense would restore the negotiations.  The final act of this 
dispute was Stephanes responding to Minc: "There is a big difference 
between a technical discussion and a passionate one and the Ministry 
of Agriculture has the country's best technical staff in its 
Agricultural Research Corporation (Embrapa)."  "The way the Code is 
being proposed [to be amended by Minc], one million small producers 
 
BRASILIA 00000123  002.2 OF 002 
 
 
would no longer produce," Stephanes warned.  Senator Katia Abreu, 
who is also the head the Brazilian Farm Bureau (CNA), echoed 
Stephanes' arguments by declaring that the 80% limit was set not 
based upon any scientific analysis.  "The rules are cannibalistic 
and were set through some kind of magic number and Brazil is the 
only country where there is no compensation for the farmer not to 
use part of the land he owns." 
 
¶7.  (SBU) COMMENT.  As a result of this impasse between the 
agriculture lobby and the environmental lobby, the status of the 
Forest Code remains in the air and many farmers in the Amazon region 
could be subject to charges of operating illegally.  There is 
widespread agreement that a long-term solution to the massive 
deforestation problem requires regularizing legal title and the 
status of the millions of farmers in the region.  The uncompromising 
stances of the interested lobbies mean that this doesn't look likely 
to happen soon.  END COMMENT. 
 
DISPUTE OVER LAND TITLE REGISTRY 
 
¶8.  (SBU) While the environmental camp stopped efforts to reform the 
Forest Code, the agriculture camp successfully blocked efforts to 
reduce its role in land title registry.  Recently, President Lula 
decided that land licensing and settlement disputes in the Amazon 
will continue to be handled by the Agrarian Reform Ministry led by 
Minister Cassel.  Strategic Planning Minister Mangabeira Unger and 
Defense Minister Jobim wanted to create a new agency to handle land 
titles in the Amazon, stripping Cassel of his role.  President Lula 
sided with Cassel, though he did dictate that a new unit be created 
within the Ministry to be held responsible for all the land 
settlement issues in the Amazon region.  The Ministry's National 
Institute for Land Settlement Agency (INCRA) is no longer 
responsible for the region. 
 
¶9.  (SBU) COMMENT:  Land titles in the Amazon are murky.  Cassel's 
Ministry and INCRA have brought in hundreds of thousands of settlers 
to the Amazon, yet in most cases have failed to provide clear title. 
 Virtually everyone within and outside the government agrees that a 
critical first step to controlling deforestation is determining who 
has title to the land.  INCRA has done a poor job in this respect. 
One can only hope that transfer of this titling responsibility 
within the Agrarian Reform Ministry will make a positive difference. 
 While there may not have been a need for a new entity as envisioned 
by Minister Unger and Minister Jobim, it is clear that a concerted 
effort to clean up the land ownership questions is urgently needed. 
The setbacks with the reform of the Forest Code and resolving 
responsibility for land title registry make for an inauspicious 
beginning to 2009 for Amazon forest conservation.  END COMMENT 
 
SOBEL