VZCZCXRO2719
OO RUEHRG
DE RUEHBR #0388/01 0862320
ZNY CCCCC ZZH
O 272320Z MAR 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3916
INFO RHEHNSC/NSC WASHDC IMMEDIATE
RUEHAC/AMEMBASSY ASUNCION 7453
RUEHBO/AMEMBASSY BOGOTA 4886
RUEHBU/AMEMBASSY BUENOS AIRES 6158
RUEHCV/AMEMBASSY CARACAS 4362
RUEHLP/AMEMBASSY LA PAZ 6855
RUEHMN/AMEMBASSY MONTEVIDEO 7715
RUEHQT/AMEMBASSY QUITO 2719
RUEHSG/AMEMBASSY SANTIAGO 0899
RUEHRG/AMCONSUL RECIFE 9280
RUEHRI/AMCONSUL RIO DE JANEIRO 7475
RUEHSO/AMCONSUL SAO PAULO 3774
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHUB/USINT HAVANA 0062

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000388 
 
SIPDIS 
 
E.O. 12958: DECL: 03/27/2019 
TAGS: PREL ECON ENRG EFIN KSUM BR
SUBJECT: BRAZIL: PRESIDENTIAL FOREIGN POLICY ADVISOR SEES 
POSSIBILITIES FOR COOPERATION WITH THE U.S. 
 
Classified By: Ambassador Clifford M. Sobel, Reasons 1.4 (b) and (d) 
 
¶1. (C) Summary.  Brazilian Presidency (Planalto) Foreign 
Policy Advisor Ambassador Marcel Biato (protect) discussed 
energy cooperation, touched on G20 and Summit of the Americas 
(SOA) preparations, and offered views on managing challenges 
in both the hemisphere and within the GOB in a discussion 
with the Ambassador March 26.  Noting that bilateral energy 
cooperation often bogs down in bilateral political 
relationships, Biato saw potential for a regional initiative 
to help break free of this "rut."  Separately, he believes 
GOB is likely to create a new company to manage "pre-salt" 
resources.  Biato does not see Cuba dominating the SOA and 
suggested the GOB would be interested in USG views on how 
best to capitalize on positive momentum generated at the 
Summit.  Emphasizing that creative thinking on South America 
is coming out of Planalto rather than Itamaraty (the Foreign 
Ministry), Biato argued that GOB-managed South American 
mechanisms and positions will allow the region to engage the 
United States in a more coherent fashion and "on our (South 
America's) terms," but allowed for "parallel cooperation" 
with the United States as these mechanisms develop.  He 
stressed that the USG, like the GOB, needed to exercise 
"strategic patience" in managing relationships with 
problematic countries in the region.  Biato's remarks confirm 
what we have observed and hear from other senior GOB players, 
including for example Defense Minister Nelson Jobim, 
regarding the importance of working through Planalto on 
regional issues, among others, and of thinking through 
beforehand how and when to engage Itamaraty.  End summary. 
 
- - - Regional Energy Cooperation - - - 
 
¶2. (C) Commenting that energy cooperation in the hemisphere 
tends to happen bilaterally and has often bogged down in a 
"rut" of political relationship issues, Biato remarked that 
outside perspectives and broader cooperation could help 
"reframe" and move some energy cooperation issues forward. 
As an example of bilateral dialogue that is not working well, 
Biato cited Brazilian efforts to build an energy grid with 
Paraguay, which are being hampered by Paraguay insisting 
Brazil "pay 20 years in advance" for electricity.  As a 
specific example that might usefully fit into an eventual 
regional initiative, Biato offered that Peruvian gas out of 
Camisea might be a good candidate.  He also noted that 
Electrobras is beginning to look for expanded commercial 
opportunities and is exploring building 15 dams along the 
Peru border--another project, he suggested, that might fit 
well into a regional initiative.  He commented that such an 
initiative could help the region "break out of where we are 
-- a series of bilateral relations.  We need things that help 
us be seen outside as a region." 
 
- - - Model for Pre-Salt Oil - - - 
 
¶3. (C) Biato believes the GOB is likely to create a new 
company to manage the pre-salt oil reserves.  He commented 
that Petrobras, despite the GOB stake, is often impenetrable 
and the government often feels it is not fully aware of what 
the company is doing.  In addition, Petrobras is already an 
enormous company holding a significant percentage of overall 
GOB investment.  To fold "pre-salt" oil (i.e., Brazil's 
recently discovered off-shore deposits) into Petrobras would 
risk putting all the government,s investment eggs in one 
basket, which he believed the government would find too risky 
a strategy.   He reassured the Ambassador that multinational 
companies would find whatever model GOB ultimately selects to 
be transparent and workable. 
 
- - - Energy Politics within the GOB - - - 
 
¶4. (SBU) Biato noted that MME Minister Lobao is an extremely 
&political8 as opposed to technocrat Minister.  That is 
"fine," he commented--"he has good technical people under 
him" and he is able to focus on elevating the relative power 
and position of the Ministry in a way that his technocrat 
predecessor was unable to do.  Lobao is keenly aware of 
 
BRASILIA 00000388  002 OF 003 
 
 
domestic stakeholder interests in issues such as managing 
pre-salt resources.  At the same time, he is gaining 
understanding of the international implications of domestic 
action and is fully appreciative of the need to manage the 
international aspect effectively as well, according to Biato. 
 As such, his political importance on international energy 
issues as well as strictly domestic issues is higher than his 
predecessor could claim. 
 
- - - G20 Preparations - - - 
 
¶5. (SBU) While not deeply engaged on the substance of G20 
discussions on global crisis response, Biato mentioned his 
frustration with the UK regarding preparations for the 
Leaders, meeting itself.  Responsible for President Lula,s 
speech and his briefing book, Biato felt the UK had been 
insufficiently forthcoming about meeting logistics--what the 
speaking opportunities would be, how topics would be 
organized, etc.  (Note: UK PM Gordon Brown visited Brasilia 
and met with President Lula later the same day.  End note.) 
 
- - - Future POTUS-Lula Meeting - - - 
 
¶6. (C) The Ambassador asked what priorities Biato would 
recommend for an eventual future meeting between the 
presidents.  Biato listed making the G20 work as number one. 
Secondly, he suggested Lula would be interested in USG views 
on the outcomes from the SOA and specifics regarding USG 
plans to move forward based on whatever positive momentum is 
generated at the Summit.  He also noted that further 
discussions on regional energy as ideas evolve would be 
interesting. 
 
- - - No Worries on Cuba or Other "Difficult" Countries at 
SOA - - - 
 
¶7. (C) Biato, who served as Planalto's point person on Cuba 
for several years, said he did not expect Cuba to be a topic 
at the SOA.  However, he reiterated Brazil's view that it 
would be important for the United States to take the first 
steps in improving the relationship, and that these should be 
"unconditional."  In response to the Ambassador,s query, he 
affirmed that permitting financing for imports would be a 
good concrete step.  He said that Brazil's read of the recent 
cabinet changes in Cuba was that it both represented an 
effort by Cuban President Raul Castro to consolidate his 
control and was indicative of a real interest on the part of 
Raul to open the way for better relations with the United 
States.  He added that the move demonstrates the importance 
of the Communist Party and the military in Cuban governance, 
although he believes the Party has expanded to the point that 
it is unwieldy and therefore less effective than in the past. 
 
¶8. (C) Biato was optimistic that the SOA will go well, saying 
that the GOB believes all countries in the region want a good 
dialogue with the United States.  When the Ambassador noted 
the comments by Venezuelan President Hugo Chavez following 
Lula's meeting with President Obama March 14, Biato said that 
the GOB had told the GOV "at the highest levels" that his 
remarks were inappropriate.  (Note: In response to Chavez's 
comments, FM Amorim publicly denied his assertion that Lula 
had come away from the meeting with the President 
"disappointed," stating that in fact the opposite was true. 
End note.) 
 
- - - South America and the U.S.: "Parallel Cooperation" and 
"Strategic Patience" - - - 
 
¶9. (C) The Ambassador noted that Lula had, in his meeting 
with the President, raised and endorsed possible U.S. 
cooperation with Union of South American Nations (UNASUL) and 
the South American Defense Council (SADC) on counternarcotics 
efforts in the region.  This differed substantially from the 
message we were receiving from Itamaraty, which had ruled out 
such cooperation.  Biato took note of the issue, reiterating 
Planalto's support for exploring such cooperation. 
 
 
BRASILIA 00000388  003 OF 003 
 
 
¶10. (C) Biato explained that it is important for South 
America as a region to "get its act together" on issues such 
as counternarcotics and trade as a means of engaging the 
United States more coherently.  This would allow for "real 
partnership" between South America and the United States "on 
our terms" in approaching common issues.  The Ambassador 
warned that waiting for a perfect consensus in the region was 
not realistic.  Biato agreed, saying that development of 
cooperation within the region and between the region and the 
United States would have to happen in parallel.  He sees good 
possibilities for Brazil and the United States to work 
together in the region, reiterating that it might help get 
some relationships out of a rut.  He added, however, that 
Brazil and the United States both had to exercise "strategic 
patience" with some of the more difficult countries in the 
region and resist the urge to react to every provocation. 
 
¶11. (C) Biato made clear that regional initiatives like 
UNASUL and the SADC, as well as the initiative for energy 
cooperation with the United States, were not coming out of 
Itamaraty, but out of Planalto.  At the same time, as a 
career diplomat, Biato also was able to explain Itamaraty's 
caution with regard to international initiatives being 
launched out of other agencies.  Itamaraty sees itself as the 
"defender of Brazilian national interests," he said, ensuring 
coherence and reining in "free agents" acting on the basis of 
more narrow interests.  Although Itamaraty's role is 
inevitably changing, he said, it is still the most capable 
bureaucracy in the GOB and sees itself as providing necessary 
coordination.  He emphasized that Itamaraty "does not stop 
everything," and that it is often important eventually to 
gain Itamaraty "buy-in" for initiatives that germinate 
elsewhere in the government. 
 
- - - Comment: Planalto First, Itamaraty Later - - - 
 
¶12. (C) Biato was remarkably candid in his assessment of the 
dynamics between Planalto, Itamaraty, and other agencies.  On 
the one hand, he underlined that the creative thinking on 
South American issues is coming out of Planalto, not 
Itamaraty, and that on U.S.-Brazil cooperation in the region, 
Planalto will almost certainly be more favorably inclined 
than Itamaraty.  On the other hand, Biato's explanation of 
the rationale for the broader GOB effort to build 
Brazil-managed coalitions in South America confirms that it 
is principally in Itamaraty where this effort is seen as a 
means of excluding or creating a regional counter-weight to 
the United States.  We have seen repeatedly a willingness in 
Planalto, as well as other ministries, to go around Itamaraty 
in order to work with us on regional and other strategic 
issues.  Biato's comments confirm those we have heard from 
others, including for example Defense Minister Nelson Jobim, 
regarding the importance of working through Planalto first on 
such issues, and considering carefully a strategy with regard 
to how and when we engage Itamaraty. 
SOBEL