Cablegate: Brazil: Loose Talk About Bndes Credit for Cuba

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BRASILIA 003069

SIPDIS

NSC FOR WALLACE
TREASURY FOR SSEGAL
PLS PASS FED BOARD OF GOVERNORS FOR ROBATAILLE

SENSITIVE

E.O. 12958: N/A
TAGS: PREL EAID EFIN ECON BR CU
SUBJECT: BRAZIL: LOOSE TALK ABOUT BNDES CREDIT FOR CUBA

REF: BRASILIA 2994

1. (U) Some local media late last week reported that
President Lula's upcoming call on Castro in Havana would
feature the announcement of a USD 400 million line of credit
from BNDES, Brazil's national development bank. Though
loosely headlined as GoB "aid," the money in question by all
appearances would merely consist of financing for Brazilian
exports of goods and services to Cuba.

2. (U) Saturday's `Estado do Sao Paulo' carried a dismissive
reaction from BNDES chief Carlos Lessa, denying knowledge of
any plan for BNDES to extend such credit to Cuba. Perhaps
lending Lessa's statement extra credence is the fact that he
has a long leftist ideological pedigree. After citing
Lessa's rebuttal, `Estado' recounted other, unidentified
sources' explanation that the $400 million initiative was
merely in the process of being proposed or explored by
Brazil's Foreign Ministry in the run-up to Lula's visit.

3. (SBU) Lula's GoB has formed the habit of demonstratively
committing BNDES to large volumes of new financing earmarks
at his various LatAm summits: a billion dollars each to
Argentina and Venezuela alone, plus lesser amounts for
Bolivia and Peru, already this year. While making a recent
unrelated demarche (Reftel), we were told by a senior Finance
Ministry official -- who remains technically a BNDES employee
even after spending his last professional decade elsewhere in
GoB Ministries and at the World Bank -- in effect not to take
these declarations seriously. BNDES's institutional charter,
means, and domestic priorities alike all stand in the way,
this official volunteered.

4. (U) Even if ultimately committed, the BNDES funds would
have little visible use in Cuba's case. Brazil's exports to
Cuba were just USD 120 million in 2001 and fell to USD 95
million in 2002. Main export items are chicken, shoes and
agricultural machinery. There are apparently aspirations for
new sales of spare parts for buses and trucks; a Brazilian
company called Busscar, based in Brazil's Santa Catarina
state, has been co-producing buses for sale in Cuba and
Central American countries for the past four years, according
to business daily `Valor Economico.' Brazil's annual
purchases from Cuba have hovered in the ten-million-dollar
range.

VIRDEN

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