VZCZCXRO2562
RR RUEHRG
DE RUEHSO #0372/01 1811445
ZNR UUUUU ZZH
R 301445Z JUN 09
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 9301
INFO RUEHBR/AMEMBASSY BRASILIA 0455
RUEHRG/AMCONSUL RECIFE 4387
RUEHRI/AMCONSUL RIO DE JANEIRO 9179
RUEHBU/AMEMBASSY BUENOS AIRES 3538
RUEHAC/AMEMBASSY ASUNCION 3785
RUEHMN/AMEMBASSY MONTEVIDEO 2929
RUEHSG/AMEMBASSY SANTIAGO 2785
RUEHLP/AMEMBASSY LA PAZ 4123
RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC

UNCLAS SECTION 01 OF 02 SAO PAULO 000372 
 
SIPDIS 
SENSITIVE 
 
STATE PASS DRL FOR MITTELHAUSER 
 
E.O. 12958: N/A 
TAGS: PGOV PINR PHUM EFIN BR
SUBJECT: Brazil: Pragmatism, Uncertainty Temper Theory at Leftist 
Conclave 
 
REF: A. Sao Paulo 0367 
 
SENSITIVE BUT UNCLASSIFIED--PLEASE PROTECT ACCORDINGLY 
 
¶1.  (U) Summary: The ongoing financial crisis is focused on the core 
countries of the world economy, and so opens opportunities for 
Brazil and other South American countries to assert themselves, 
according to participants in a June 20-21 international meeting of 
leftist organizations in Sao Paulo.  GOB International Advisor Marco 
Aurelio Garcia lauded leftist policies that stimulated local demand 
as providing a buffer against the economic crisis.  Aurelio Garcia 
urged South American unity and warned against giving in to 
protectionist pressures.  GOB Finance Ministry Secretary for 
Economic Policy Nelson Barbosa responded to criticisms of GOB 
policies by reminding the audience that responsible leadership 
differs from simple criticism.  He told the activists in attendance 
that the GOB needs to support the IMF, that the U.S. dollar will 
remain the world's reserve currency, and that GOB help to Brazilian 
companies was necessary to preserve jobs.  For an overtly leftist 
gathering, the tone of the discussion reflected a certain 
pragmatism, owing to the Workers Party's (PT) role as a governing 
force.  End Summary. 
 
¶2.  (U) A variety of leftist organizations -- including the ruling 
Workers Party (PT), the Communist Party of Brazil (PCdoB), the 
Perseu Abramo Foundation (a PT think tank), Mauricio Grabois 
Foundation (a PCdoB think tank), and Corint (French communist 
organization)-- sponsored a June 20-21 conference on the financial 
crisis in Sao Paulo.  Featured government guests were President 
Lula's International Advisor Marco Aurelio Garcia and Finance 
Ministry Secretary for Economic Policy Nelson Barbosa.  A number of 
speakers from other countries participated, including Jorge 
Beinstein, economist and professor of the Buenos Aires University; 
Avtar Sadiq, secretary of the Communist Indians of Great Britain; 
Sergio Ribeiro, member of the Portuguese Communist Party; 
Christopher Matlhako, member of the Communist Party of South Africa, 
and Gyula Th|rmer, political scientist from Budapest.  Several 
hundred people attended the conference. 
 
Crisis at the Core Creates Opportunity 
 
¶3.  (U) The meeting's main theme was that the present financial 
crisis mainly affects "the core" of the global economic system, the 
U.S. economy in particular.  Developing countries on the "periphery" 
have been far less affected.  In the view of the speakers, this 
opened up huge opportunities to advance socialist programs. 
 
Marco Aurelio Garcia: Multi-polarity/South American Solidarity 
 
¶4.  (U) Of the two GOB speakers, Marco Aurelio Garcia most closely 
followed the conference's overall ideological line.  In his view, 
the crisis affects "the heart" of the capitalist world, but, thanks 
to leftists in places like Venezuela and Brazil, some countries are 
relatively insulated.  "We, the leftists, stopped the previous 
government (Fernando Henrique Cardoso) from privatizing the Bank of 
Brazil, Caixa Econtmica Federal, Petrobras, and the Brazilian 
National Development Bank (BNDES)," he said. "We must be very proud 
of ourselves because these institutions proved to be fundamental for 
the government in dealing with the financial crisis. If they had 
been privatized, Brazil would be in a much more difficult situation 
today." 
 
¶5.  (U) Aurelio Garcia maintained that leaders like Hugo Chavez and 
Evo Morales bring stability to Latin America by promoting social 
inclusion.  He urged Brazil to deepen economic, cultural, and 
political ties across the continent so that South America could have 
regional unified voice in an increasingly multi-polar world.  In 
this connection, he said that relations with the United States 
should have priority, in contrast, as he put it, "to what some 
retired diplomats" are saying.  (Note: The last comment was a 
not-so-veiled reference to comments from three retired Brazilian 
ambassadors--Ricardo Abdenur, Rubens Barbosa, and Sergio Amaral--who 
have long argued that Brazil's Ministry of External Relations pays 
too little attention to the United States.  End Note.) 
 
¶6.  (U) Aurelio Garcia concluded his remarks on a moderating note, 
stating that all countries in the region must avoid protectionism 
because it could "destroy us." 
 
Nelson Barbosa: Lessons in Pragmatism 
 
SAO PAULO 00000372  002 OF 002 
 
 
 
¶7.  (U) Secretary for Economic Policy for the Finance Ministry 
Barbosa received some tough questions from the audience, which 
revolved around the following themes: 
 
-Why did Brazil agree at a recent BRIC meeting in Russia to lend the 
IMF USD 10 billion?  The IMF is just a "capitalist instrument" that 
has hurt poor countries. 
 
-When will there be a new global currency to replace the dollar? 
 
-Why has the GOB moved to help Embraer, a company that has laid off 
workers? 
 
¶8.  (U) Barbosa noted that since there is no replacement yet for the 
IMF, it makes sense for Brazil to contribute to the organization and 
shape its policies.  In a similar way, there is no replacement yet 
for the dollar.  No one has designed a mechanism for establishing 
the exchange rate between the dollar and a new global currency. 
Barbosa also said that failing to help a local industry like Embraer 
would only cost more jobs. 
 
Uncertainty Ahead 
 
¶9.  (U) While conference participants were generally optimistic 
about the prospects for leftist advance - they cited a number of 
left-wing governments that have recently taken power in Latin 
America, including Venezuela, Chile, Argentina, Uruguay, Bolivia, 
Paraguay, and Ecuador - there were also notes of anxiety.  Some 
participants warned that an economic crisis could drive politics to 
the right as well as the left, citing recent trends in Europe. 
Professor Luis Fernandez of the Catholic University of Rio de 
Janeiro expressed concerns that the "decline of U.S. leadership" 
(hegemony) could open spaces for instbility. 
 
¶10.  (SBU) Comment: The most striking elment of the conference was 
the relatively subdue, pragmatic tone to the discussions.  Despite 
th ongoing economic crisis, important GOB participans defended 
Brazil's contribution to the IMF, the U.S. dollar, state help for 
job-creation, export-oriented companies, and urged resistance to 
protetionism.  The PT's time in power has moderated at east some 
elements in the party by saddling them with the responsibility for 
governing.  Moreover, Brazil's prosperity and desire to be a global 
player made it more difficult for PT supporters to adopt a 
simplistic, contrarian approach to international economic questions. 
 The attacks on the Cardoso government should be seen in the context 
of Brazil's 2010 Presidential election in which the PT is polling 
behind the anticipated candidate from Cardoso's party, Sao Paulo 
governor Jose Serra.  End Comment. 
 
¶11.  (U) This cable was coordinated/cleared by Embassy Brasilia. 
 
WHITE