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FM AMEMBASSY BRASILIA
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INFO RUEHRG/AMCONSUL RECIFE 9661
RUEHRI/AMCONSUL RIO DE JANEIRO 7871
RUEHSO/AMCONSUL SAO PAULO 4216

UNCLAS SECTION 01 OF 07 BRASILIA 000766 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP SENV KGHG ENRG ECON ETRD EINV EFIN PREL BR
SUBJECT: BRAZIL SCENESETTER: DR. MICHAEL FROMAN, DEPUTY NATIONAL 
SECURITY ADVISOR FOR INTERNATIONAL ECONOMIC AFFAIRS, JUNE 18-19 
 
(U) This message is sensitive but unclassified, please treat 
accordingly. 
 
¶1.  (SBU) SUMMARY:  The relationship between the United States and 
Brazil is productive and broad-based, with growing economic ties. 
Through the financial crisis, Brazil has played a constructive role 
in the G20 and has also prioritized concluding the Doha round of 
World Trade Organization (WTO) negotiations.  Brazil remains 
committed to the CEO Forum and your visit provides an important 
opportunity to make progress on CEO Forum recommendations.  The 
country has the potential to play a major role in promoting global 
energy security.  The Brazilian government seeks to develop a global 
market for biofuels and also to bring into production its vast, new 
off-shore oil and gas discoveries.  In spite of its relatively clean 
energy matrix, Brazil is a major carbon dioxide emitter, largely as 
a result of deforestation.  The Ministry of Exterior Relations (MRE) 
has pursued a cautious, defensive approach in international climate 
change negotiations, steering clear of any explicit or implicit 
obligations to control or reduce emissions.  In June, President Lula 
suggested in a Reuters interview that Brazil might be willing to 
take on targets.  This more ambitious stance is something that 
Environment Minister Carlos Minc has been advocating for months and 
the MRE has been reluctant to adopt.  END SUMMARY. 
 
POLITICAL OVERVIEW 
 
¶2.  (SBU) With democracy re-established in 1988 after decades of 
military dictatorship, Brazil's democratic institutions are 
generally strong and stable.  President Luiz Inacio "Lula" da Silva 
remains a popular president - one of the most popular in Brazil's 
history and indeed in the world today, with recent approval ratings 
as high as 68% - as a result of his orthodox economic policies and 
expanded social programs.  In the Congress, ongoing public scandals 
involving the leadership of the Senate and various members of 
congress have led to low ratings for the institution among the 
Brazilian public.  Increasingly, the court system has taken steps to 
curb impunity among public officials.  These steps have been well 
received by a public accustomed to abuses by authorities. Much of 
the Brazilian political elite is already looking forward to the 
October 2010 Presidential election.  Lula is constitutionally barred 
from seeking a third term and has designated his Chief of Staff, 
Dilma Rouseff as his successor.  Lula's personal popularity has thus 
far not transferred, and at this point the race remains 
unpredictable.  Brazilian leaders, however, increasingly have an eye 
on the elections in their public statements. 
 
¶3.  (SBU) The United States and Brazil share the basic goals of 
fostering hemispheric stability and preventing terrorist and drug 
transit activity.  The attainment of a permanent seat on the UN 
Security Council has been a central goal of Brazil's foreign policy 
under President Lula's government.  Regionally, Lula has maintained 
Brazil's historic focus on stability, seeing dialogue and good 
relations with all parties as the best way to achieve this goal.  As 
a result, Brazil maintains an active dialogue with Venezuela and 
Cuba, has worked to foster good relations with Bolivia, has given 
its assistance in resolving the FARC hostage crisis in Colombia, and 
has stood firmly on the principle of respect for sovereignty in the 
region. 
 
ECONOMIC OVERVIEW 
 
¶4.  (SBU) Brazil is the tenth largest economy in the world and 
received investment grade from Standard and Poor's and Fitch in 
¶2008.  Annual Gross Domestic Product (GDP) grew 5.1 percent in 2008, 
and inflation was 5.8%. Prospects for 2009 have been dimmed by the 
global economic crisis, taking previous predictions for annual GDP 
growth from four per cent to an essentially flat or slight recession 
scenario for 2009.  Despite this decline in immediate prospects, 
Brazil has thus far weathered the crisis better than most major 
economies, due in large part to its conservative macroeconomic 
policies. 
 
¶6.  (SBU) Brazil is a major producer and exporter.  Agriculture 
makes up 36 percent of exports, and the agribusiness sector accounts 
for 25% of Brazil's GDP.  Brazil is a leading exporter of soybeans, 
beef, sugar, coffee, and orange juice.  Brazil also distinguishes 
itself as a major exporter of civilian aircraft, steel, and 
petrochemicals.  The United States is Brazil's top trading partner 
overall, and China has moved into first position as Brazil's primary 
export destination. 
 
¶7.  (SBU) Foreign direct investment in Brazil is increasing, with 
inflows of USD 44 billion in 2008; USD 6.9 billion came from the 
United States.  Brazilian investment in the United States almost 
tripled between 2001 (USD 1.4 billion) and 2006 (USD 3.9 billion). 
President Lula has been actively selling Brazil (including at a 
recent Wall Street Journal sponsored investment conference in 
Brazil) as a solid investment destination during the financial 
 
BRASILIA 00000766  002 OF 007 
 
 
crisis due to its sound macroeconomic policies and relatively strong 
economy. 
 
¶8.  (SBU) Despite progress in recent years, income distribution in 
Brazil remains grossly unequal, with 10 percent of the population 
holding over 50 percent of the nation's wealth.  Brazil is home to 
50 percent of the people who live in extreme poverty in Latin 
America.  President Lula's social programs, combined with formal 
sector job growth and real increases in the minimum wage, have 
reduced income inequalities each year since 2004. 
 
¶9.  (SBU) Millions of Brazilians have moved into the middle class 
over the last few years.  Nevertheless, roughly forty percent of the 
population lives in poverty, a problem that can only be addressed by 
sustained long-term growth.  Unfortunately, major structural 
challenges to long-term growth include a complicated and onerous tax 
structure, high interest rates, and cumbersome labor and business 
regulations.  As a result of its regulatory structure, Brazil ranks 
125th in the World Bank Group's Doing Business assessment of 
regulatory climate in 181 countries.  The informal sector (one of 
the largest among large developing economies) constitutes an 
estimated 40 percent of Brazil's economy, in large part in response 
to the onerous tax and regulatory requirements to participate in the 
formal economy.  President Lula has vigorously pursued a national 
Growth Acceleration Program (PAC) to increase infrastructure 
investment in energy, transportation, and sanitation/housing, a 
program that has received increased funding as a countercyclical 
measure in the face of the economic crisis. 
 
¶10.  (SBU) The global financial crisis has affected Brazilian 
companies' exports and access to credit. Brazil's Finance Minister 
continues to assert that Brazil is well-positioned to weather the 
crisis while he and Central Bank contacts confirm moves to try to 
mitigate the effects of the crisis.  President Lula, taking a 
leading role in the debt over how to handle the economic crisis 
including through the G20 process, has criticized actors in 
developed countries for sparking a crisis that affects developing 
countries. He has called for increased regulation of the global 
financial system, increased global access to trade finance, and an 
expanded role for large emerging countries like Brazil in 
international financial institutions such as the International 
Monetary Fund (IMF).  The government has reacted to the economic 
downturn thus far with a series of piecemeal announcements and 
actions aimed at increasing liquidity in the banking system, 
stimulating growth through a series of targeted tax cuts, and 
seeking to shore up exports. 
 
OVERVIEW ON BRAZILIAN MEDIA AND PUBLIC ATTITUDES TOWARDS THE USA 
 
¶11.  (SBU) In terms of general public opinion, the election of 
Barack Obama as president seems to have influenced views of the 
United States in a positive way.  An Office of Research Opinion 
Analysis released in March 2009 found that seven-in-10 Brazilians 
believe the Obama presidency will be positive for Brazil and the 
world.  Economically, Brazilians say their future lies with the 
United States and China.  Majorities held a favorable view of the 
United States (57%) and saw bilateral relations as being good (65%). 
 However, Brazilians have often seen the United States as an 
impediment to Brazil's aspirations for regional leadership. 
Pluralities said last year that politically and economically, the 
United States was as much a competitor as it was an ally and 
partner.  As of January, half lack confidence in the United States' 
ability to deal responsibly with world problems. 
 
¶12.  (SBU) Brazilian journalists, generally speaking, cannot be 
described as "pro-U.S."  Some may be favorably disposed toward the 
U.S. position on particular issues, such as free trade, and many are 
professional and evenhanded in their treatment of the United States, 
even if they do not personally agree with U.S. policies.  Some 
mainstream Brazilian opinion writers demonstrate biases against U.S. 
policies, though the trend has started to change with the election 
of President Obama.  A small segment of the Brazilian public accepts 
the notion that the United States has a campaign to subjugate Brazil 
economically, undermine it culturally, and occupy with troops at 
least part of its territory.  Such attitudes and beliefs have 
influenced Brazilian reporting and commentary on issues such as the 
reestablishment of the U.S. Navy's Fourth Fleet (which has been 
characterized as a threat to Brazil) and supposed U.S. nefarious 
intentions toward the Amazon.  That said, the Brazilian media have 
reported favorably on U.S. efforts at the recent meeting of the 
General Assembly of the Organization of American States and the 
Summit of the Americas, and the Obama Administration overall, 
portending a change in perspective with regards to U.S. intentions 
in Brazil and the region at large. 
 
SPECIFIC ISSUES:  THE CEO FORUM 
 
¶13.  In past Forum meetings, the CEOs prioritized conclusion of a 
 
BRASILIA 00000766  003 OF 007 
 
 
Bilateral Tax Treaty (BTT), progress toward a bilateral investment 
treaty, and conclusion of the Doha Round.  While some progress had 
been made in BTT negotiations, it is clear that conclusion of a 
treaty will require a strong push at the political level to achieve, 
for example, an OECD-standard transfer pricing system which U.S. 
BTTs require.  Dilma Rousseff will be key to a decision to invest 
the political capital necessary to make progress on such issues.  On 
investment, the USG and the Brazilian government have had productive 
consultations on Bilateral Investment Treaty (BIT) elements, 
although Brazil is still cautious about negotiating BITs given 
historical congressional opposition. 
 
SPECIFIC ISSUES:  TRADE 
 
¶14.  (SBU) In recognition of Brazil's growing importance as a world 
economy, the USG seeks opportunities for positive bilateral 
cooperation on economic issues.  After both countries agreed in June 
2008 to significantly expand civil aviation opportunities, two U.S. 
airlines were granted approval for 21 new frequencies.  Further 
frequency allocations for 2009 under the agreement have been 
allocated.  The Brazilian government has expressed interest in 
exploring expanded bilateral cooperation on trade issues, bearing in 
mind that tariffs can only be negotiated in 4+1 (Mercosul countries 
plus external partner) format.  Possible ideas Brazil may be 
interested to explore include joint Technical Barriers to Trade 
(TBT) and/or Sanitary-Phytosanitary (SPS) cooperation, particularly 
in developing approaches to third countries;  joint agricultural 
cooperation  to open third country markets;  services, which is an 
underdeveloped  sector;  trade facilitation, where Brazil and 
industry have expressed a great deal of interest which the Commerce 
Department-led Commercial Dialogue has been exploring; 
anti-dumping/trade enforcement, given that Brazil is now using this 
tool more intensively, there may be scope to explore bilateral 
dialogue/best practices.  While Brazilian industry has been very 
resistant to WTO sectorals such as the Information Technology 
Agreement (ITA) or chemicals, and are very focused on maintaining 
GSP benefits, there is some strategic thinking going on in the 
nationwide and Sao Paulo business associations (CNI and FIESP, 
respectively) regarding the need to engage more intensively with USG 
on trade, outside the constraints of Mercosul. 
 
SPECIFIC ISSUES:  DOHA ROUND 
 
¶15.  (SBU) Brazil has been a significant leader in the WTO's Doha 
Round negotiations and was active in trying to broker a deal between 
the United States and India.  Concluding Doha remains a high 
priority for Brazil.  However, it has not been receptive to moving 
to scheduling before modalities are agreed. 
 
SPECIFIC ISSUES:  THE ENVIRONMENT AND CLIMATE CHANGE 
 
¶16.  (SBU) Domestically, Brazil pursues two sometimes-conflicting 
goals with regard to the Amazon region.  On the one hand, it seeks 
to preserve the natural resources and biodiversity found there.  To 
that end, the law stipulates that landowners in the Amazon region 
are supposed to preserve eighty percent of forest on their lands, 
and the government has placed large amounts of the forest into 
protected areas, such as national parks and indigenous reserves.  At 
the same time, the national government, states and municipalities 
seek economic growth and employment for the approximately 25 million 
inhabitants of the region.  Thus, since the 1970s the national 
government has built a network of roads through the Amazon, which 
has opened the region to timber and agriculture (mainly cattle and 
soybean) interests. 
 
¶17.  (SBU) Massive and ongoing clearing of the Amazon Forest 
releases large quantities of carbon dioxide into the atmosphere. 
The Brazilian government estimates that about 75% of the country's 
green house gas emissions come from changes in land use and 
deforestation.  From 1970-2000, Brazil's ranked 6th in the world for 
cumulative carbon dioxide (CO2) emissions - the country emitted 
51,000 metric tons of CO2 (including land use), about six percent of 
the global total.  During the same time period, the United States 
emitted 137,000 metric tons of CO2 (including land use), about 
sixteen percent of the global total, and was ranked number one. 
 
¶18.  (SBU) The Brazilian government has taken a defensive position 
on deforestation, most of which is illegal and takes place primarily 
on public lands. The government has not been able to establish an 
effective presence in the vast Amazon, leaving ranchers and farmers 
free to clear government land with relative impunity.  Recently, the 
national government, some state and local governments, 
non-governmental organizations (NGOs), and the business community 
have developed initiatives to try to curb the deforestation rate. 
In October 2008, the national Amazon Fund received a pledge of up to 
one billion dollars from Norway through 2015 and since then Germany 
has agreed to contribute several million dollars.  To date, this 
fund has not approved any projects nor disbursed any funds.  The 
 
BRASILIA 00000766  004 OF 007 
 
 
State of Amazonas, which includes roughly half the Amazon forest, 
created the Foundation Sustainable Amazonas (FAS) to reduce 
deforestation by providing regular payments to residents in state 
reserves for protecting the forest.  The FAS has received pledges of 
nearly USD 30 million, including from Marriott Hotels and Coca-Cola. 
 Various NGOs, such as the Moore Foundation and The Nature 
Conservancy, have programs to encourage conservation and to prevent 
more of the Amazon from being turned into pastures and soybean 
fields. 
 
¶19.  (SBU) The government has stepped up enforcement efforts to stop 
illegal clearing and to deny financial credits to farmers and 
ranchers operating illegally in the Amazon.  These efforts, combined 
with a drop in agriculture commodity prices, are expected to result 
in a significant decrease in the deforestation rate this year.  In 
December 2008, the Brazilian government announced as part of its 
national climate change plan the domestic goal of reducing the 
deforestation rate by about half by 2017. 
 
¶20.  (SBU) Brazil is a relatively "green" country.  Hydropower 
provides around 85% of Brazil's electricity, and passenger cars now 
use more ethanol than gasoline.  However, in order to meet growing 
demands for electricity that cannot currently be met through 
hydropower, the Brazilian government may resort more often to fossil 
fuels (which currently provide less than nine percent of Brazil's 
electricity). 
 
¶21.  (SBU) In international climate change negotiations, Brazil has 
been far less bold and innovative, contending that only developed 
countries should be required to assume emission reduction targets. 
However, some within the Brazilian government want Brazil to take a 
position of leadership on climate change.  Although he has yet to 
persuade the Ministry of Exterior Relations (the lead on climate 
change negotiations), Environment Minister Carlos Minc has said 
Brazil and other developing countries should take on emissions 
reductions targets in return for financial assistance and technology 
transfer.  In early June, President Lula suggested in a Reuters 
interview that Brazil might be willing to take on emissions targets. 
 His predecessor, former President Fernando Henrique Cardoso, wrote 
an editorial in mid-June calling on Brazil to do just that.  While 
Minister Minc may have limited influence over shaping Brazil's 
negotiating position, President Lula and his closest advisor and 
presidential candidate, Minister Dilma Rousseff have much more. 
They could steer Brazil's international negotiating policy toward a 
more pro-active, ambitious course and away from the current cautious 
and defensive tack pursued by the Ministry of Exterior Relations. 
 
¶22.  (SBU) The tremendous international interest in the Amazon has 
made many Brazilian officials ultrasensitive on the topic.  Further, 
a myth has arisen that the United States is interested in militarily 
seizing the Amazon either to preserve it or to claim its vast 
natural resources. 
 
SPECIFIC ISSUES:  G7/8, G20, AND BRICS 
 
¶23.  (SBU) President Lula has said publicly that "the G7 alone is no 
longer in a position to make decisions that require truly globally 
coordinated responses" and noting that richer countries must 
recognize the growing clout of the BRICs. In Paris just before this 
week's BRIC Summit in Yekaterinburg, FM Amorim said that the G-8 
group is no longer representative of global political and economic 
forces. "The G-8 is dead, I have no doubt. I don't know how the 
burial will be. Sometimes that happens slowly."   GOB remains 
sensitive that the G8 plus G5 format not be simply "inviting them in 
for coffee" to discuss decisions made by the G8 and has acknowledged 
that the format for the Italian Summit plans for broader G5 
participation that previous summits.   GOB prioritizes the G20 
mechanism, while conceding consensus-building can be cumbersome in 
this format.  As a top-10 GDP country, contacts across GOB believe 
Brazil should be at the table in economic decision-making and has a 
valuable contribution to make.  While the MRE coordinates G20 
participation through its Economic Under Secretary, Sherpa Pedro 
Mendonca, the G8/G5 process is tracked by its Political Under 
Secretary who covers North America/Europe, international 
organizations and environment, Vera Machado. 
 
SPECIFIC ISSUES:  DEVELOPMENT ASSISTANCE AND FOOD SECURITY 
 
¶24.  (SBU) Development assistance in Brazil is diminishing as 
Brazil's economy advances, notwithstanding areas of continued 
extreme poverty and sharp regional disparities.  Germany and the 
European Union lead assistance efforts, much of it dedicated to 
forest conservation and sustainable development, while the United 
Kingdom is devoting its assistance efforts almost entirely to 
climate change mitigation and carbon-free economic growth.  USAID 
has modest assistance programs in Brazil directed to health and 
youth employability in the poor Northeast and to sustainable 
development in the Amazon, channeled almost entirely through 
 
BRASILIA 00000766  005 OF 007 
 
 
non-governmental organizations.  But while the GOB accepts limited 
development aid, it does not actively seek assistance, even during 
periods of evident disaster assistance needs such as the recent 
flooding in the Northeast and in the Amazon.  Brazil clearly sees 
itself not as a development recipient but as a development partner 
in third world countries.  Together with Brazil's Ministry of 
Foreign Affairs, USAID is developing an MOU that will establish 
triangular development assistance relationships with Haiti and with 
Portuguese-speaking African countries in the areas of health and 
food security.  The GOB is confident that it is in an advantageous 
position to showcase its tropical agricultural expertise and 
experience in HIV/AIDS treatment and actively seeks a partnership of 
equals with the U.S. and other developed countries to extend this 
success to other countries. 
 
SPECIFIC ISSUES:  ENERGY 
 
-AREA FOR COOPERATION: BIOFUELS 
 
¶25.  (SBU) For Brazil, turning ethanol into a world commodity is a 
key aspect of increasing energy security.  Though Brazilian ethanol 
is produced from sugar cane, Brazil sees expansion of the global 
ethanol market, regardless of feed stock, as a key interest.  In 
March 2007, the United States and Brazil signed a Memorandum of 
Understanding (MOU) on biofuels cooperation.  As a result, 
scientists and laboratories from the two countries are 
collaboratively researching next generation biofuels technologies. 
We are also working together in various multilateral fora to develop 
international biofuels standards and sustainability criteria.  By 
making it easier to treat biofuels as a tradeable commodity, these 
standards should foster the emergence of a vibrant global biofuels 
market. 
 
¶26.  (SBU) The United States and Brazil are jointly assisting a 
group of developing countries in creating their own biofuels 
markets, with the goal of reducing their dependence on imported oil. 
 The joint cooperative effort initially targeted four countries: 
Haiti, St. Kitts, El Salvador, and the Dominican Republic.  In 
November 2008, five new countries joined the group:  Guatemala, 
Guinea-Bissau, Honduras, Jamaica, and Senegal.  Brazil would like to 
see the United States aggressively expand these cooperation efforts 
to include developing countries in Africa and Southeast Asia, both 
as a development tool and as a way to increase the commodity market 
for ethanol. 
 
¶27.  (SBU) Modest tax breaks have stimulated the Brazilian domestic 
ethanol market and have led new car purchasers to opt overwhelmingly 
for "flex-fuel" cars that can run on gasoline, ethanol, or any 
combination of the two.  In 2008, ethanol surpassed gasoline as the 
dominant automotive fuel.  Domestic demand consumes 85 percent of 
all production.  The other 15 percent is exported, primarily to the 
United States, making our ethanol import surcharge a continuing 
irritant in bilateral relations.  The Brazilian government also uses 
mandates to promote greater use of biodiesel. 
 
-VAST OIL AND GAS DISCOVERIES 
 
¶28.  (SBU) The discovery in 2007 of potentially massive offshore 
("pre-salt") reserves of oil and gas estimated to contain between 
30-80 billion barrels of oil equivalent could put Brazil within the 
top ten oil countries by reserves.  Though the discoveries have 
generated a great deal of excitement, industry observers caution 
that developments will probably be slow in coming due to the 
expensive technological challenges involved with ultra-deepwater 
drilling, including a worldwide shortage of equipment such as 
drilling rigs. 
 
¶29.  (SBU) Petrobras appears to be overextended internationally and 
is hamstrung by limited equipment resources.  However, it has 
launched a multi-billion dollar procurement initiative and is 
reexamining its international priorities so that it can focus on 
domestic opportunities, though it remains to be seen how the global 
financial crisis will may affect those plans.  U.S. oil companies 
are poised and ready, in many cases, to take on more exploration 
opportunities.  Brazil had intended to unveil its long-awaited 
proposal for a new oil regime to administer its ultra deepwater 
(also known as "pre-salt") oil reserves this week, but reporting 
today indicates the proposal will once again be delayed.  According 
to the Minister of Energy, the new proposed structure will include a 
small state-owned company under the auspices of the Ministry of 
Mines and Energy, to manage the auctions for pre-salt blocks in the 
Santos and Campos Basins.  The proposed legislation will contain 
safeguards to maintain Petrobras' market position but will remain 
open to international oil companies. 
 
-FURTHER ENHANCING ENERGY COOPERATION 
 
¶30.  (SBU) Brazil and the United States have many other common areas 
 
BRASILIA 00000766  006 OF 007 
 
 
of interest in the energy sector.  The convergence of our interests 
offers opportunities to enhance both countries' national energy 
security.  Building on the success of the biofuels relationship, 
Brazil and the United States have identified three new areas of 
possible collaboration under a preexisting Memorandum of 
Understanding between the U.S. Department of Energy and Brazil's 
Ministry of Mines and Energy and established new working groups in 
the areas of energy efficiency, clean coal, and nuclear energy.  The 
United States also has commercial interests, particularly in nuclear 
energy, as Brazil looks to expand its civilian nuclear energy 
program.  For example, Westinghouse is in the running to build four 
to eight new nuclear reactors in Brazil over the next ten years. 
 
¶31.  (SBU) The United States would like to parlay these and other 
shared interests into support for a hemispheric energy cooperation. 
There are many opportunities for joint cooperation including 
research and development, energy efficiency, and green technologies. 
Brazil has expressed particular interest in exploring energy 
efficient housing for low-income citizens under the Energy and 
Climate Change Partnership of the Americas. 
 
SPECIFIC ISSUES:  THE SEAN GOLDMAN CASE 
 
¶32.  (SBU) American David Goldman is currently pursuing a Hague 
Abduction case, involving his son Sean, who was brought to Brazil by 
his mother and wrongfully retained here 5 years ago.  The case has a 
high profile in U.S. and Brazilian media and was raised by both 
Secretary Clinton and President Obama during their first meetings 
with their Brazilian counterparts.  The case is currently in 
Brazilian federal court after the maternal family appealed the June 
1 decision of the lower court to return Sean to the U.S.  Despite 
being a party to the Hague Convention on International Child 
Abduction, which includes an obligation to resolve all child 
abduction cases in a timely manner, the United States currently has 
51 open cases with Brazil involving more than 60 children.  A recent 
op-ed in the Wall Street Journal authored by former State Department 
Western Hemisphere Affairs Assistant Secretary Bernie Aronson was 
headlined "Brazil Helps Kidnap American Children".  Should 
interlocutors raise the case, we emphasize that Sean's best interest 
would be served by a rapid appeals process in Brazil, and we look 
forward to a prompt resolution granting Sean's expeditious return to 
the United States. 
 
SPECIFIC ISSUES:  DEFENSE COOPERATION 
 
¶33.  (SBU) 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 F-18 Super Hornet is a 
finalist along with the French Rafale and Swedish Gripen.  A 
decision will be made in June 2009, with a final contract award in 
October.  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.  Boeing will has made a strong case that its offset 
package offers greater economic benefits to Brazil than its 
competitors, but there is still a perception that the USG is not 
behind the sale, a perception heightened by the more active advocacy 
role taken by the leaderships of France and Sweden. 
 
SECURITY SITUATION IN BRAZIL 
 
¶34.  (SBU) Political and labor strikes and demonstrations occur 
sporadically in urban areas and may cause temporary disruption to 
public transportation.  Naturally, protests anywhere in the world 
have the potential to become violent.  In addition, criminal 
organizations, during 2006, staged several violent campaigns against 
public institutions in the Sao Paulo State leading to a large number 
of deaths. While it is unlikely that U.S. citizens would be targeted 
during such events, U.S. citizens traveling or residing in Brazil 
are advised to take common-sense precautions and avoid any large 
gatherings or any other event where crowds have congregated to 
demonstrate or protest. 
 
¶35.  (SBU) Crime throughout Brazil (especially Rio de Janeiro) has 
reached very high levels.  The Brazilian police and the Brazilian 
press report that the rate of crime continues to rise, especially in 
the major urban centers - though it is also spreading in rural 
areas.  Brazil's murder rate is more than four times higher than 
that of the United States.  Rates for other crimes are similarly 
high.  The majority of crimes are not solved. 
 
¶36.  (SBU) Street crime remains a problem for visitors and local 
residents alike, especially in the evenings and late at night. 
Foreign tourists are often targets of crime and Americans are not 
exempt. This targeting occurs in all tourist areas but is especially 
problematic in Rio de Janeiro, Salvador and Recife. 
 
 
BRASILIA 00000766  007 OF 007 
 
 
¶37.  (SBU) The incidence of crime against tourists is greater in 
areas surrounding beaches, hotels, discotheques, bars, nightclubs, 
and other similar establishments that cater to visitors.  This type 
of crime is especially prevalent during Carnaval (Brazilian Mardi 
Gras), but takes place throughout the year.  While the risk is 
greater at dusk and during the evening hours, street crime can occur 
both day and night, and even safer areas of cities are not immune. 
 
¶38.  (SBU) At airports, hotel lobbies, bus stations and other public 
places, incidents of pick pocketing, theft of hand carried luggage, 
and laptop computers are common.  Travelers should "dress down" when 
outside and avoid carrying valuables or wearing jewelry or expensive 
watches.  "Good Samaritan" scams are common.  If a tourist looks 
lost or seems to be having trouble communicating, a seemingly 
innocent bystander offering help may victimize them.  Care should be 
taken at and around banks and internationally connected automatic 
teller machines that take U.S. credit or debit cards.  Carjacking is 
on the increase in Sao Paulo, Recife and other cities. 
 
¶39.  (SBU) Travelers using personal ATMs or credit cards sometimes 
receive billing statements with non-authorized charges after 
returning from a visit to Brazil. The Embassy and Consulates have 
received numerous reports from both official Americans and tourists 
who have had their cards cloned or duplicated without their 
knowledge. Those using such payment methods should carefully monitor 
their banking online for the duration of their visit. 
 
¶40.  (SBU) While the ability of Brazilian police to help recover 
stolen property is limited, it is nevertheless strongly advised to 
obtain a "boletim de ocorrencia" (police report) at a "delegacia" 
(police station) whenever any possessions are lost or stolen.  This 
will facilitate the traveler's exit from Brazil and insurance 
claims. 
 
¶41.  (SBU) In many countries around the world, counterfeit and 
pirated goods are widely available.  Transactions involving such 
products may be illegal under local law.  In addition, bringing them 
back to the United States may result in forfeitures and/or fines. 
 
COMMENT 
 
¶42.  (SBU) With growing economic clout and increasing interest in 
engaging in global economic issues, Brazil has seen its importance 
on the world stage expand significantly.  It is a major player in 
the region and while the government is largely friendly and open to 
the United States, they do not and will not always see eye to eye 
with us.  Energy and climate change are promising areas for 
collaborating with Brazil.  Your visit offers the opportunity to 
highlight how important Brazil is in this effort and underline our 
strong interest in expanding our cooperation.  END COMMENT. 
 
SOBEL