Cablegate: Rio de Janeiro Pol-Econ Round-Up April-May 2008

DE RUEHRI #0144/01 1641516
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E.O. 12958: N/A

SUBJECT: Rio de Janeiro Pol-Econ Round-Up April-May 2008


1. The following are highlights of Political/Economic activity in
Rio de Janeiro's reporting district during the months of April-May

- Rio's Former Governor Indicted, Former Police Chief Arrested
- Militias Torture Journalists
- Brazil Plans for More Nuclear Power Plants
- Rio Official Targets Police Weaknesses
- Rio de Janeiro State To Become Major Steel Export Center
- Police Operation Targets Sex Tourism in Rio de Janeiro
- Middle Class Crack Consumption On the Rise
- International Drug Traffickers Arrested in Minas Gerais
- U.S.-Brazil Continue Technical Cooperation on Global Positioning

Rio's Former Governor Indicted, Former Police Chief Arrested
2. Former Rio Governor and current President of the Brazilian
Democratic Movement Party (PMDB), Anthony Garotinho, was charged
with smuggling, passive corruption and money laundering by the
Federal Public Ministry in late May. His former Civil Police Chief
and current Rio de Janeiro State Deputy Alvaro Lins was arrested on
related charges, and released one day later after the Rio de Janeiro
Legislative Assembly (ALERJ) issued a decree ordering his release.
In a statement from the public prosecutor's office, Garotinho is
cited as being politically responsible for guaranteeing that a
"gang" led by Lins remained in charge of Rio's Civil Police. The
gang used the infrastructure of the State Public Security
Secretariat to support an illegal slot machine network and to
maintain a scheme of bribes. Prosecutors also ordered the arrest
of seven high-ranking police officers allegedly linked to the
slot-machine scandal. This latest episode has strengthened calls
for a crackdown on corruption within the state and local

Militias Torture Journalists
3. A news crew from O DIA newspaper claimed it had been detained
and tortured by local militia (off-duty law enforcement officers who
control poor areas of Rio de Janeiro) in mid-May, after it was
discovered living undercover inside one of Rio's slums for two weeks
while preparing an article about the militias. A journalist,
photographer, and their driver claim they were tortured for seven
hours, including asphyxia and electric shocks. Milictas started in
Rio de Janeiro in the 1980s as a part of a local community effort to
take back neighborhoods from drug traffickers. Over time, milicias
have themselves turned into increasingly corrupt and violent
organizations. The State Government is investigating this latest
incident; the Special Rapporteur for Reprehensible Criminal Actions
Dr. Claudio Ferraz announced that he would gather more information
and ask for support from U.S. authorities such as the FBI.

Brazil Plans for More Nuclear Power Plants

4. During a speech to the Brazilian Senate on May 8 about the GOB's
"Plan to Accelerate Growth" (PAC), Minister Chief of Civil House
Dilma Rousseff announced that construction of Angra 3 nuclear power
plant will move ahead and said that more nuclear plants will follow.
The GOB's National Energy Plan calls for completion of Angra 3 by
2014 and as many as eight additional nuclear plants by 2030. Angra
3 is expected to generate 1.350 megawatts and it construction will
cost USD 4.6 billion. Environmental licenses to resume construction
may be granted as early as June 2008.

Rio de Janeiro State To Become Major Steel Export Center

5. Companhia Siderurgica Nacional (CSN), a major Brazilian steel
company, announced plans to invest approximately US$ 3.5 billion in
the construction of a new steel mill and a private port in Itaguai,
Rio de Janeiro (70 kilometers west of Rio de Janeiro). CSN plans to
produce 5 million tons of steel per year at the Itaguai plant, which
would be built adjacent to another planned steel mill owned by the
Companhia Siderurgica do Atlantico (CSA) syndicate, a joint venture
between German multinational ThyssenKrupp and Brazilian Companhia
Vale do Rio Doce (Vale). CSA plans to invest approximately US$ 4.7
billion in a thermo-electric steel plant and a private port,
producing 5.4 million tons of steel plates per year. According to
Rio State Secretary of Economic Development, Julio Bueno, the
construction of these two plants, in addition to other investments
in the steel sector, will result in the creation of over 30,000

Police Operation Targets Sex Tourism in Rio de Janeiro

RIO DE JAN 00000144 002 OF 002

6. In a special operation called Castelo de Areia (Sand Castle) in
April, Rio de Janeiro police arrested two sand sculptors on
Copacabana beach for brokering sexual encounters between visiting
tourists and underage children. Local press reported that Michael
Joseph Clifford, an American DHS official from Rhode Island, while
in Rio, used the sand sculptors to arrange an encounter with an
11-year old boy in his Copacabana hotel room in March. Papers
reported that Clifford was placed on administrative leave, pending
an investigation.

Middle Class Crack Consumption On the Rise

7. According recent reports, crack consumption is increasing among
the homeless and the middle class. The Brazilian Center of
Information of Psychotropic Drugs (CEBRID) as well as the Center of
Studies and Research in Attention to Drug Users at the State
University of Rio de Janeiro (NEPAD-UERJ), reported that crack
addicts now account for 30 percent of their patients. Rio's
Military Police reported a 160 percent increase in crack seizures in
2007 over 2006. Another indicator of the drug's new popularity with
the middle class, according to the study, is the increase in
consumption despite its relatively high price. Its street price in
Rio is about 180 percent higher than it is in Sco Paulo. According
to Consulate contacts, middle and upper class drug consumers can
easily order drugs by phone for home delivery (much like ordering a

International Drug Traffickers Arrested in Minas Gerais

8. In an operation called "Operagco Muralha" (Operation Wall), the
Brazilian Federal Police dismantled an international drug
trafficking organization based in Governador Valadares, Minas
Gerais. After eighteen months of investigations, the police seized
almost 2 tons of cocaine and marijuana. The drugs came from
Bolvia, Colombia, Peru and Paraguay and were sent by the
organization to Europe and Africa through the Port of Santos.
Rodrigo Alves de Marco, the group's leader, created a fake travel
agency for the purpose of money laundering and facilitating travel
for traffickers. Some drug shipments sent from Brazil to Angola and
Nigeria, where the drugs are then re-exported to the U.S. in small
quantities by air.

U.S.-Brazil Technical Cooperation on Global Positioning Technology
9. .S. Federal Aviation Agency (FAA) and Brazil's Department of Air
Space (DECEA) officials met in Rio de Janeiro April 3-8, to review
the status of various projects related to the implementation of
Global Navigation Satellite Systems (GNSS) technology in Brazil.
They agreed to cooperate on future activities including the
promotion of an academic prize for Brazilian universities on the
scientific, economic, social, transport, environmental protection,
public security systems, and other related applications using GPS; a
workshop at two major universities in Rio de Janeiro to educate
about and promote GPS technology; and organizing a GPS/helicopter
safety workshop.


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