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C O N F I D E N T I A L LA PAZ 001233 
 
SIPDIS 
 
E.O. 12958: DECL: 08/24/2019 
TAGS: PREL PHUM PGOV ETRD ENRG PINR BR BL
SUBJECT: BOLIVIA: BRAZIL'S LULA BACKS MORALES FOR 
RE-ELECTION 
 
Classified By: Charge d'Affaires John Creamer, reasons 1.4 b,d 
 
¶1. (C) Summary:  At an open-air event August 22 in one of 
Bolivia's principal coca-growing regions, Brazilian President 
Lula da Silva delivered a public endorsement of Bolivian 
President Evo Morales, reflecting Brazil's conclusion that 
Morales' re-election is all but inevitable.  Lula and Morales 
signed several bilateral agreements, including over 300 
million dollars in Brazilian financing for Bolivian road 
construction, and began discussions to revise their gas 
contract to reflect lower Brazilian demand.  Lula offered to 
eliminate tariffs on up to 21 million dollars of Bolivian 
textile exports, a move hailed by both sides as compensation 
for export losses stemming from removal of U.S. ATPDEA trade 
preferences.  Lula and Morales discussed counter-narcotics 
cooperation, including the pending transfer of Bell-UH 
helicopters to Bolivia, and the upcoming Unasur summit review 
of the U.S.-Colombian defense agreement (with Morales more 
worked up about the issue than ever, despite Lula's emphasis 
on dialogue).  The Brazilian president queried Morales 
privately about his relations with the U.S., which prompted a 
lengthy anti-American diatribe.  End summary. 
 
¶2. (C) Presidents Lula and Morales met August 22 amid a 
festive atmosphere in Bolivia's Chapare region, a major 
coca-growing center and Morales' home base.  With at least 
10,000 cocaleros and other Morales supporters in attendance, 
the two presidents took turns lavishing praise on each other; 
Morales hailed Lula as a fellow man of the people, while Lula 
compared Morales to Nelson Mandela.  At the stadium event, 
which resembled a campaign rally as much as a summit meeting, 
the Brazilian president declared that Morales had begun a new 
era, confronting the anger of the "powerful," but also 
counseled his counterpart to govern on behalf of all 
Bolivians and to favor dialogue. 
 
¶3. (C) Those gathered at the event witnessed the signing of 
four bilateral agreements, among them one establishing over 
300 million dollars in Brazilian financing for a 300 km 
highway extending north from the meeting site (which will be 
constructed by the Brazilian firm OAS).  The other agreements 
concerned enhanced cooperation in humanitarian 
assistance/disaster relief, professional education, and 
scientific research aimed at developing lithium reserves in 
Bolivia's Uyuni salt plain (with an explicit provision that 
industrial development will be "100 percent Bolivian"). 
 
¶4. (C) The Bolivians highlighted their interest in amending 
their current gas contract with Brazil, hoping to revise the 
minimum purchase quantities (currently at 24 million cubic 
meters per day) given reduced Brazilian demand.  According to 
the Bolivian state gas entity YPFB and the Brazilian embassy 
here.  Bolivia prefers an arrangement that better reflects 
Brazil's actual requirements, which would free up gas for 
domestic needs and possible additional sales to Argentina. 
Presidents Lula and Morales reached no conclusions on gas 
(the Brazilians did not include their energy representatives 
in the August 22 meetings), but agreed to hold another 
bilateral summit in the next two-to-three weeks in Brazil, 
dedicated entirely to the energy issue. 
 
¶5. (C) President Lula announced that Brazil will eliminate 
tariffs on up to 21 million dollars of Bolivian textile 
exports, which both he and Morales characterized as making up 
for the losses suffered by withdrawal of ATPDEA (Morales 
welcomed the offer as an "ATPDEA without conditions"). 
Although Lula claimed that the amount was exactly what was 
lost in U.S. trade, textile trade associations here quickly 
noted that their exports under ATPDEA were several times 
greater than that (65 million dollars was the most 
commonly-cited estimate, which tracks roughly with our 
figures), and that there's no Brazilian market for heavy wool 
alpaca textiles.  Nevertheless, the offer made big headlines 
here, allowing both presidents to draw a contrast between the 
treatment Bolivia receives from us and the "unconditional" 
friendship Bolivia enjoys with fellow South American states 
such as Brazil. 
 
 
¶6. (C) We spoke with Brazilian embassy officials here in 
advance of the visit to encourage some helpful signal of 
caution from President Lula to Morales regarding the 
Bolivian's approach to the United States.  These officials 
said that Brazil sees an improved relationship between 
Bolivia and the U.S. as in its own interest, and pledged to 
do what they could to encourage more constructive Bolivian 
behavior.  Still, they noted that Brazil wants to maintain 
stability on its borders, and has concluded that Morales is 
here to stay.  They said Brazil wants to provide Morales with 
alternatives to the radical advice he is receiving from 
Venezuela and Cuba, but clarified that Brazil does not see 
itself in "direct competition" with Venezuela.  The 
Brazilians added that while they engage the Bolivians on 
democracy issues, they do not consider Bolivia's human rights 
or democracy record to be outside hemispheric norms. 
 
¶7. (C) Brazilian embassy Minister Counselor Julio Bitelli 
confirmed for us that President Lula did raise with Morales 
the issue of Bolivian-U.S. relations (in the 40-minute car 
ride on the way to the public event), but that this prompted 
the "usual" extended rant against alleged U.S. crimes. 
Morales recalled his own personal victimization at the hands 
of DEA agents, railed against American hegemony in Latin 
America and appeared unreceptive to hearing any counsel, 
according to Bitelli.  Morales expanded on these now-familiar 
themes in his public remarks.  The Colombian defense 
agreement was another subject on which Lula appeared to make 
little headway; the Brazilian president emphasized the need 
for dialogue and a "frank exchange" on the issue at the 
upcoming Unasur summit, while Morales publicly declared that 
any government that allows military forces into their country 
are "traitors to the liberation of the people of Latin 
America." 
 
¶8. (C) Bitelli reported that the presidents did discuss 
counter-narcotics cooperation, another area in which we had 
encouraged greater Brazilian engagement with the Bolivians, 
but that the talks were limited to equipment issues.  Lula 
explained to Morales that the Bell-UH helicopter transfer was 
proceeding apace, but that delivery is pending Brazilian 
parliamentary approval.  Bitelli said that Morales asked for 
Brazilian Tucano aircraft as well, surprising the Brazilians 
by suggesting that "the international community" should pay 
for the planes, as counter-narcotics is "a global problem." 
Bitelli allowed that the Brazilians did not think much of 
that suggestion. 
 
¶9. (C) Comment: Brazilian President Lula's visit was widely 
seen here as an endorsement of Evo Morales for reelection 
December 6, reflecting Brazil's conclusion that Morales is 
all but certain to win in any case.  We believe, however, 
that this embrace of Morales is tempered by a clear-eyed 
recognition of the Morales government's many shortcomings 
(the Brazilians indicated that they share a great deal of our 
frustration with the Bolivians, from counter-narcotics to 
economic policy).  We will continue to encourage Brazil to 
follow through on its expressed interest in helping to 
moderate Morales, despite the evident limits of such 
approaches. 
CREAMER