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Cablegate: Senator Hagel Meets Sao Paulo Business/Political Leaders

VZCZCXRO7369
RR RUEHRG
DE RUEHSO #0528/01 2761617
ZNR UUUUU ZZH
R 021617Z OCT 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 8566
INFO RUEHBR/AMEMBASSY BRASILIA 9698
RUEHRG/AMCONSUL RECIFE 4212
RUEHRI/AMCONSUL RIO DE JANEIRO 8874
RUEHBU/AMEMBASSY BUENOS AIRES 3263
RUEHAC/AMEMBASSY ASUNCION 3510
RUEHMN/AMEMBASSY MONTEVIDEO 2786
RUEHSG/AMEMBASSY SANTIAGO 2510
RUEHLP/AMEMBASSY LA PAZ 3923

UNCLAS SECTION 01 OF 02 SAO PAULO 000528

SIPDIS

SENSITIVE BUT UNCLASSIFIED

STATE for BSC

E.O. 12958: N/A
TAGS: PGOV PREL KPAO BR
SUBJECT: Senator Hagel Meets Sao Paulo Business/Political Leaders

1. Summary: Senator Chuck Hagel visited Sao Paulo September 2-3,
during which time he met with a variety of interlocutors, including
local business representatives as well as foreign policy experts and
the Sao Paulo State Governor (foreign policy and Serra discussions
Septel). Business contacts were excited about Brazil's potential as
an energy producer and expressed an eagerness to partner with the
U.S. They wanted trade conflicts managed carefully to avoid damage
to a fundamentally good bilateral relationship. They also hoped
that the U.S. would remove its tariff on imported ethanol. End
Summary.

Economic Breakfast: Business Leaders Laud Brazil's Potential

2. Senator Hagel met over breakfast with key representatives from
Brazil's private sector during his September 2 visit to Sao Paulo.
Guests in attendance were: Mrio Marconini (President, Manatt Jones
Marconini Global Strategies, representative of Brazil's private
sector in recent Doha free trade negotiations); Josu Gomes da
Silva, President Coteminas and Brazil Chair of the US-Brazil CEO
Forum; Keith Martin, General Manager for Institutional Relations and
Policy Analysis for mining giant Vale do Rio Doce; Maurcio Novis
Botelho, President EMBRAER; Jos Carlos Grubisich, President of ETH
Bioenergia; and Roberto Rodrigues, former Minister of Agriculture.

3. Former Agricultural Minister Rodrigues described how
"agro-energy" could transform developing countries, by turning many
poor, "third world" sugar cane producers into energy exporters
through ethanol. Jos Carlos Grubisich spoke optimistically about
"green plastics," the idea that future plastics could be fashioned
from agricultural inputs. Observers praised the present state of
the U.S.-Brazil relationship, which they said was closer than ever.


4. While the general discussion was highly positive, interlocutors
noted that there was still work to do, both in promoting development
in Brazil and U.S.-Brazilian relations. Former Agricultural
Minister Rodrigues lamented that Brazil lacked a strategy to
complement its potential. He indicated that agricultual output
could be doubled simply by reducing land dedicated to pasture.
Gomes da Silva added, to general agreement, that the Brazilian state
remains too big and aborbs capital that should go into investment.
Finally, while observers lauded Ambassador Sobel's success in
engaging Brazil at the highest levels, they observed that other
countries' trade with Brazil (most notably China) was growing faster
than that with the U.S.

Senator Hagel Meets with American Chamber of Commerce

5. The Sao Paulo American Chamber of Commerce (AmCham) held a
Roundtable on the Business Climate and Biofuels for Senator Chuck
Hagel on September 2, 2008. The following from the Brazilian
business world attended: Joseph Tutundjian, Managing Director,
Rodobens Comercio International and Winner/Comex; Mickey Peters,
President Duke Energy; Regina Nunes, President Standard and Poors;
Roberto Pasqualin, Partner, Pasqualin Advogados; Plinio Nastari,
President Datagro; Fernando Ribeiro, ETH Bioenergia ; Peter Dam,
Colgate-Palmolive; Ricardo Ramos, Colgate-Palmolive; Manfred Wefers,
Coimex; Joel Velasco, UNICA (the organization of Brazilian sugar
cane producers); Domingo Lasso, ADM; Gabriel Rico, President of the
AmCham.

6. Plinio Nastari identified energy and climate changes as the two
major issues facing humankind, and ethanol, he said, offers the U.S.
and Brazil a chance to work together on both these problems. Joseph
Tutundjian added that Brazil is going to be an important petroleum
producer. He recommended that the U.S. and Brazil form a bilateral
commission to look at both ethanol and oil together and to develop
ways in which the two countries can cooperate on energy. Ambassador
Sobel thought that the biofuels-oil joint discussion was a good
idea, but that any such effort had to include input from the US
Congress.

7. UNICA's Joel Velasco commented that the GOB's perspective on
economic and trade issues is starting to catch up with new global
realities. During the last Doha round, Brazil moved from its
traditional, inwardly-focused approach to trade to the recognition
that exports are critical to growth. Velasco said that President
Lula had recognized this reality well ahead of many members of his
government. Velasco criticized the subsidy on blending of 45 cents
for firms in the US, while the import tariff remained at 54 cents
for Brazilian ethanol.

SAO PAULO 00000528 002 OF 002

8. In this connection, Manfred Wefers, Joel Velasco, and Mickey
Peters all warned that Brazil and the U.S. had to manage carefully
their trade disputes. In Velasco's view, Brazil had won a moral
"victory" in its recent WTO case against the US on cotton subsidies,
but should not pursue cross-retaliation. Velasco noted that the GOB
had considered taking the U.S. to the WTO over U.S. ethanol
subsidies, but that UNICA preferred that the GOB seek a negotiated
settlement.

Comment: Brazil Business Leaders Positive on U.S. Relations

9. Senator Hagel's vision impressed his Brazilian interlocutors and
we have received a great deal of positive commentary since his
departure. Brazil's business leaders are enthusiastic about both
their country's prospects and the state of the U.S.-Brazil
relationship. They see recent experience in the Doha round as a
potential push for the GOB to become more pragmatic on trade. They
want trade conflicts to remain contained. Finally, they clearly
appreciated Washington's attention and hoped for its continuance.

10. This cable was coordinated/cleared by Senator Hagel's Staff and
by Embassy Brasilia.

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