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Cablegate: Brazil: Green Light to Negotiate a Tropical Forest

VZCZCXRO5502
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHBR #0664/01 1361910
ZNR UUUUU ZZH
R 151910Z MAY 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 1679
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHSO/AMCONSUL SAO PAULO 2073
RUEHRI/AMCONSUL RIO DE JANEIRO 6165
RUEHRG/AMCONSUL RECIFE 8049
RHEHNSC/NSC WASHDC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 02 BRASILIA 000664

SENSITIVE

SIPDIS

DEPT FOR OES/ENRC - CHARITY DENNIS AND STEPHANIE CASWELL
DEPT FOR L/OES - KATY YOUEL-PAGE
DEPT PASS TO CEQ FOR DAVID BANKS
TREASURY FOR KATIE BERG
USAID FOR CONNIE CAMPBELL

E.O. 12958: N/A
TAGS: SENV KGHG EAID EFIN BR
SUBJECT: BRAZIL: GREEN LIGHT TO NEGOTIATE A TROPICAL FOREST
CONSERVATION ACT PROGRAM - SEEK TO CONCLUDE BY JULY


BRASILIA 00000664 001.2 OF 002


1. (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR
INTERNET DISTRIBUTION.

2. (SBU) SUMMARY. On May 5, the Ministry of External Relations'
(MRE) Director of the Environment Department, Min. Figueiredo
Machado, informed Post that the Government of Brazil wants to begin
negotiations to establish a debt-for-nature program under the
Tropical Forest Conservation Act (TFCA). Further, at a May 9
meeting between Chairman of the Council for Environmental Quality
Jim Connaughton and MRE's Under Secretary for Policy Everton Vargas,
the two agreed that both sides should seek to conclude TFCA
negotiations by the time of the July 9 Major Economies Summit in
Hokkaido. The aim would be for the two presidents to be able to
announce the creation of a Brazil TFCA program there. END SUMMARY.

A GREEN LIGHT TO LAUNCH TFCA NEGOTIATIONS

3. (SBU) On May 5, the Ministry of External Relations (MRE)
Director of the Environment Department, Minister Luiz Alberto
Figueiredo Machado, informed Post's Environment, Science and
Technology (EST) Counselor that the MRE had discussed with the
Ministry of Environment and the Finance Ministry the Government of
Brazil (GOB) the creation of a debt-for-nature program under the
Tropical Forest Conservation Act (TFCA). He stated that the GOB
wanted to establish a TFCA program and was ready to begin
negotiations on the two related instruments: a Debt Reduction
Agreement (DRA) and a Tropical Forest Agreement (TFA). On April 22,
EST Counselor had met with Figueiredo Machado once more to encourage
the GOB to make a decision on the offer made in a letter dated
February 29, 2008 by Treasury Department Assistant Secretary for
International Affairs Clay Lowery to Finance Minister Guido Mantega.
He explained that time was of the essence, and if the GOB did not
give the green light to begin negotiations with a view toward
concluding them before the end of Fiscal Year 2008 that it would be
at risk of losing a significant portion of the $30 million currently
being held for Brazil.

4. (SBU) In the same May 5 call, Figueiredo Machado agreed to a
proposal made earlier to hold a teleconference between the USG and
GOB to begin negotiations of the two instruments. The
teleconference has been set for May 16 at 10 a.m. (EST time). All
three ministries involved in the TFCA negotiations have copies of
drafts of the DRA and TRA. None of the three ministries has yet
opined whether or not the Brazilian congress would need to approve
either or both of the instruments.

CEQ CHAIRMAN CONNAUGHTON PRESSES FOR CONCLUSION BY JULY

5. (SBU) The topic of TFCA arose in a May 9 meeting in Brasilia
between the Chairman of the Council on Environmental Quality (CEQ)
Jim Connaughton and MRE Undersecretary for Policy, Amb. Everton
Vargas, and Figueiredo Machado. Connaughton applauded the GOB for
deciding to seek a TFCA program and urged them to conclude the
negotiations by the July 9 summit of the leaders of the Major
Economies in Hokkaido, Japan. He reinforced the point that there is
a risk that significant delay could mean that some of the funding
being held for Brazil would go to others. Vargas said, "I am
confident that we can solve this." He noted there was a strong
interest from the Environment Ministry in this program and that the
Environment Minister had spoken to him about it. He went on to say
there was good will on both sides and that Brazil wants to resolve
the issues the sooner the better. Vargas added, "Maybe both
Presidents can announce it at Hokkaido." As for the Brazilian
congressional approval issue, he assured Connaughton that they would
put their people on it.

6. (SBU) Figueiredo Machado commented that while there was not much
money in the program, it was politically important. "We want to do
it," he said. He did identify a concern about the role of NGOs in
the program, saying they would prefer the funding go to help
government projects. He added, "We would not like to see the money
going to pay the salaries of NGO directors." Connaughton agreed
that the money should go to activities on the ground. Figueiredo
Machado said that they had talked to officials from Panama about
their TFCA program, but stressed Brazil is different. Still, he
assured Connaugton that "we will sort this out."

7. (SBU) COMMENT. The MRE officials in the meeting with

BRASILIA 00000664 002.2 OF 002


Connaughton were the most positive they had ever been on the subject
of creating a TFCA program. It appears that the combination of a
deadline and interventions in Brasilia and Washington have succeeded
in convincing the MRE to come to the table. The Finance Ministry
and the Environment Ministry have been on board with a TFCA program
going back to July of 2007, however, MRE had been a holdout until
now. This new buy-in from MRE officials will be important as both
sides work against a clock to negotiate the two instruments.

8. (SBU) COMMENT CONTINUED. The recent developments are very
positive, though much remains to be done. MRE has demonstrated
again and again a propensity, both for bureaucratic and political
reasons, to move at a glacial pace when undertaking such
negotiations, even on issues it considers important. At the same
time, MRE has signaled repeatedly its discomfort with handing
control and money to NGOs--a view widely shared in the GOB--and we
will need to be prepared to address these concerns in the
negotiations. Moreover, Vargas has in the past told Post that MRE's
legal advisor has taken a position that almost every agreement with
a foreign government needs to be approved by the congress. If
Brazilian congressional approval is required, it will be difficult
to secure final approval of the agreement prior to the October 5,
2008 municipal elections. We anticipate that we will need to
continue to press MRE in order to conclude the agreement in a timely
fashion. END COMMENT.

CHICOLA

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