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Cablegate: Parana State Governor Requiao and Finance

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

UNCLAS SECTION 01 OF 02 BRASILIA 003063

SIPDIS

SENSITIVE

STATE PLEASE PASS TO USTR AND OPIC
NSC FOR MIKE DEMPSEY
DEPT OF TREASURY FOR FPARODI
USDOC FOR 3134/USFCS/OIO/WH/EOLSON
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD

E.O. 12958: N/A
TAGS: EINV PGOV BR
SUBJECT: PARANA STATE GOVERNOR REQUIAO AND FINANCE
MINISTRY SQUARE OFF OVER CONTRACT STABILITY

REF: A) BRASILIA 2921, B) 2003 SAO PAULO 1404, C) 2003 SAO
PAULO 1302, D) 2003 RIO 321

1. (U) To highlight the differences between the GOB and
Parana Governor Requiao on investment issues, notably in
the SANEPAR case (reftel A), Post is transmitting a
December 11 article from the second largest circulation Sao
Paulo Daily "O Estado de Sao Paulo", which reports on a
recent public confrontation between Requiao and the
Executive Secretary (Vice-Minister equivalent) of the GoB's
Finance Ministry.

2. (U) UNOFFICIAL TRANSLATION

HEADLINE: FOR REQUIAO, RESPECTING CONTRACTS IS NONSENSE

SIDEBAR: The Governor presses the Executive Secretary of
Finance in public, terming a speech by the latter in
defense of respecting contracts between the public and
private sectors as "ladainha" (i.e., rambling talk,
tiresome recital, rigamarole).

ARTICLE TEXT: The Governor of Parana, Roberto Requiao
(PMDB), yesterday embarrassed the Executive Secretary of
the Finance Ministry, Bernard Appy, when he criticized
[GOB] economic policy and labeled Appy's speech
"rigamarole."

"The stability of these contracts is nonsense," affirmed
Requiao.

At the opening of the ordinary meeting of the National
Council of Tax Policy (Confaz) in Foz de Iguacu, Appy had
highlighted the good performance of the economy and the
consolidation of a more stable institutional framework for
private investment. Right afterwards, he was confronted
directly face to face by Requiao in front of the Finance
Secretaries.

SIPDIS

"I was surprised by the Executive Secretary's remarks. The
impression I have is that Parana isn't part of the country
described by Mr. Appy", he stated. "Growth in Brazil is
anything but sustainable. We are following the old neo-
liberal model". At this point, Requiao compared Appy's
speech in favor of the stability of contracts to the theory
developed by ex-president Fernando Henrique Cardoso during
the 60's, on the role of international capital in the
development of Latin America. "This is where we get the
rambling talk of security for investors with respect to
contracts," said Requiao, calling FHC's (Fernando Henrique
Cardoso) most famous academic text, written in partnership
with Enzo Faletto - "Dependency and Development in Latin
America" - an insignificant "little book".

He also complained about the editorials in "O Estado de Sao
Paulo" regarding his decisions to question and break
contracts signed by predecessors. "Here in Parana,
contracts that consecrate theft are questioned. If there
is a contract that should be respected, it is the contract
with the people."

Clearly bothered, Appy sought to respond, but Requiao
rapidly interrupted, preventing him from doing so. "If you
reply, I'll just rebut what you say." End Unofficial
Translation.

3. (SBU) Comment. Requiao's reported comments at the Confaz
meeting are consistent with other public and private
comments he has made regarding foreign investment and
respect for contracts since taking office in January 2003.
Requiao told Sao Paulo Consul General Duddy in April 2003
that it was his responsibility as Governor to suspend
contracts that were "clearly not in the interest of the
State or its consumers." He cited in particular the
suspension of payment by Copel, the Parana parastatal
energy company, to privately owned generating plants as an
example of a "corrupt" contract subject to suspension. In
other conversations with mission officials and in public
statements, Requiao has also made it clear that he opposes
in principle the privatization of most essential public
services, such as energy, sanitation, and roadways (reftels
B and C). Requiao's public criticism of Executive
Secretary Appy's remarks is also consistent with his style;

SIPDIS
our interlocutors across the political spectrum in Parana
universally describe him as intentionally polemical and
thriving on controversy. End Comment.

DANILOVICH

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