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Cablegate: Brazilian Support for Bolivia On Cn Issues

VZCZCXRO8739
RR RUEHRG
DE RUEHBR #1220/01 1791856
ZNR UUUUU ZZH
R 281856Z JUN 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 9370
INFO RUEHSO/AMCONSUL SAO PAULO 0257
RUEHRG/AMCONSUL RECIFE 6873
RUEHRI/AMCONSUL RIO DE JANEIRO 4692
RUEHBU/AMEMBASSY BUENOS AIRES 4890
RUEHAC/AMEMBASSY ASUNCION 6194
RUEHMN/AMEMBASSY MONTEVIDEO 6952
RUEHSG/AMEMBASSY SANTIAGO 6337
RUEHLP/AMEMBASSY LA PAZ 5486
RUEHPE/AMEMBASSY LIMA 3512
RUEHCV/AMEMBASSY CARACAS 3736
RUEHQT/AMEMBASSY QUITO 2251
RUEHBO/AMEMBASSY BOGOTA 4263

UNCLAS SECTION 01 OF 02 BRASILIA 001220

SIPDIS

DEPT PASS TO ONDCP
AID/W FOR LAC/AA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: SNAR PGOV ETRD ENRG BR BL
SUBJECT: BRAZILIAN SUPPORT FOR BOLIVIA ON CN ISSUES

REF: A) La Paz 1594, B) Brasilia 1025, C) Brasilia 1067

1. (SBU) Summary. Worried about the potential for increased
narco-trafficking to (and through) Brazil, the Lula administration
has sought to provide both economic and moral support to the Morales
government. Consistent with their perception of Brazil as the
(self-anointed) leader of South America, policymakers here have
endeavored to help out their western neighbors - as long as it does
not impinge upon Brazil's business interests. The Brazilian
government has also encouraged the USG to continue to extend ADPTEA
benefits to Bolivia, arguing that this would be an effective way to
encourage that country to cooperate on counter-narcotics and
otherwise moderate its behavior. All this concern for the Bolivian
government reflects not only Brazilian leaders' desire to bolster
fellow leftist travelers, but the fact that Brazil really doesn't
have a plan B should the narco-trafficking situation in Bolivia spin
out of control. End Summary.
----------------------------------
Alternative Development and ADPTEA
----------------------------------
2. (SBU) Within the Planalto (the Brazilian White House), one
initiative that Lula's advisors have considered to ease the
trafficking problem has been the idea that Brazil and the U.S. might
collaborate to help promote ethanol production in the western and
northern region of Bolivia. On at least two occasions, Lula Chief
of Staff Dilma Rousseff has raised this with high-level USG
interlocutors, although at no point has she actually provided USG
officials with a detailed program plan. To the extent that the
developing road network in the MAP region (Madre de Dios in Peru,
Acre state in Brazil, and the Pando in Bolivia) and other border
areas will only increase integration, reftel B, at the conceptual
level this idea makes a fair amount of sense. The same roads over
which cocaine products are smuggled could be used to transport sugar
cane - which when refined into ethanol could more efficiently supply
the local market than imports from distant coasts.

3. (SBU) Meanwhile, on several occasions it appears that the
Bolivians have requested that Brazil raise with the USG La Paz's
desire for the continuation of trade benefits under the APDTEA. In
turn, key policymakers here, such as ForMin Amorim, have touched
upon this issue in their contacts with USG counterparts.

--------------
Energy and Gas
--------------
4. (SBU) However, Brazil's solicitous attitude towards the
Bolivians has it limits. The year-long negotiations between
Petrobras and Bolivian energy authorities over the price of gas
exports to Brazil and the disposition of Petrobras refineries proved
to be quite contentious, with at various points La Paz threatening
to seize Brazilian facilities and Brazil threatening to cease
planned investment in Bolivia. While the mid-June 2007 payment by
the Bolivians to Petrobras in compensation for the refineries has
calmed the situation somewhat, given Brazil's continuing worries
regarding the reliability of natural gas supply this issue is bound
to flare up again at some point in the future. Meanwhile, the
construction of several contemplated bi-national hydroelectric
facilities along the border seems to be far off, probably more due
to environmental and community opposition, though, than any issues
involving bilateral Brazil-Bolivia relations. Reftel C.

-------------------------------
Cocaine Consumption on the Rise
-------------------------------
5. (SBU) For their part, the Brazilian Federal Police are very
concerned about Bolivian coca leaf production and
paste/base/hydrochloride trafficking. They are aware that increased
leaf production will eventually translate into more
smuggling/domestic consumption and are awaiting the fallout.
Indeed, by all accounts, the situation here is getting worse. A
recent UN report indicates that domestic drug consumption has risen
in Brazil, and that the country has consolidated its position as an
international distribution center for Colombian and Bolivian drugs.
According to the report, the percentage of the Brazilian population
that consumes cocaine has risen from 0.4% in 2001 to 0.7% in 2005,
while it remained stable for most of the world.


BRASILIA 00001220 002 OF 002


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Comment
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6. (SBU) In our view, Brazilian policymakers do not appear to
spend a great deal of time thinking about the impact increasing
narco-trafficking might have upon their country. And reflecting
this, there has not been any noticeable effort to increase
interdiction assets or provide greater funding for the Bolivian
border. Still, policymakers here clearly realize that a retreat by
La Paz with respect to the drug trade would adversely affect Brazil.
Notwithstanding assistance by the Mission's Narcotics Affairs
Section to Federal Police efforts aimed at the Bolivian frontier,
Brasilia's ability to control the border remains minimal at best.
In many ways, the Brazilian government's only option is to encourage
the Morales government to continue the fight against the traffickers
-- right now, it has no feasible alternative option.

Chicola

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