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Cablegate: Bolivia: Brazil's Lula Backs Morales For

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P 262106Z AUG 09
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C O N F I D E N T I A L LA PAZ 001233

SIPDIS

E.O. 12958: DECL: 08/24/2019
TAGS: PREL PHUM PGOV ETRD ENRG PINR BR BL
SUBJECT: BOLIVIA: BRAZIL'S LULA BACKS MORALES FOR
RE-ELECTION

Classified By: Charge d'Affaires John Creamer, reasons 1.4 b,d

1. (C) Summary: At an open-air event August 22 in one of
Bolivia's principal coca-growing regions, Brazilian President
Lula da Silva delivered a public endorsement of Bolivian
President Evo Morales, reflecting Brazil's conclusion that
Morales' re-election is all but inevitable. Lula and Morales
signed several bilateral agreements, including over 300
million dollars in Brazilian financing for Bolivian road
construction, and began discussions to revise their gas
contract to reflect lower Brazilian demand. Lula offered to
eliminate tariffs on up to 21 million dollars of Bolivian
textile exports, a move hailed by both sides as compensation
for export losses stemming from removal of U.S. ATPDEA trade
preferences. Lula and Morales discussed counter-narcotics
cooperation, including the pending transfer of Bell-UH
helicopters to Bolivia, and the upcoming Unasur summit review
of the U.S.-Colombian defense agreement (with Morales more
worked up about the issue than ever, despite Lula's emphasis
on dialogue). The Brazilian president queried Morales
privately about his relations with the U.S., which prompted a
lengthy anti-American diatribe. End summary.

2. (C) Presidents Lula and Morales met August 22 amid a
festive atmosphere in Bolivia's Chapare region, a major
coca-growing center and Morales' home base. With at least
10,000 cocaleros and other Morales supporters in attendance,
the two presidents took turns lavishing praise on each other;
Morales hailed Lula as a fellow man of the people, while Lula
compared Morales to Nelson Mandela. At the stadium event,
which resembled a campaign rally as much as a summit meeting,
the Brazilian president declared that Morales had begun a new
era, confronting the anger of the "powerful," but also
counseled his counterpart to govern on behalf of all
Bolivians and to favor dialogue.

3. (C) Those gathered at the event witnessed the signing of
four bilateral agreements, among them one establishing over
300 million dollars in Brazilian financing for a 300 km
highway extending north from the meeting site (which will be
constructed by the Brazilian firm OAS). The other agreements
concerned enhanced cooperation in humanitarian
assistance/disaster relief, professional education, and
scientific research aimed at developing lithium reserves in
Bolivia's Uyuni salt plain (with an explicit provision that
industrial development will be "100 percent Bolivian").

4. (C) The Bolivians highlighted their interest in amending
their current gas contract with Brazil, hoping to revise the
minimum purchase quantities (currently at 24 million cubic
meters per day) given reduced Brazilian demand. According to
the Bolivian state gas entity YPFB and the Brazilian embassy
here. Bolivia prefers an arrangement that better reflects
Brazil's actual requirements, which would free up gas for
domestic needs and possible additional sales to Argentina.
Presidents Lula and Morales reached no conclusions on gas
(the Brazilians did not include their energy representatives
in the August 22 meetings), but agreed to hold another
bilateral summit in the next two-to-three weeks in Brazil,
dedicated entirely to the energy issue.

5. (C) President Lula announced that Brazil will eliminate
tariffs on up to 21 million dollars of Bolivian textile
exports, which both he and Morales characterized as making up
for the losses suffered by withdrawal of ATPDEA (Morales
welcomed the offer as an "ATPDEA without conditions").
Although Lula claimed that the amount was exactly what was
lost in U.S. trade, textile trade associations here quickly
noted that their exports under ATPDEA were several times
greater than that (65 million dollars was the most
commonly-cited estimate, which tracks roughly with our
figures), and that there's no Brazilian market for heavy wool
alpaca textiles. Nevertheless, the offer made big headlines
here, allowing both presidents to draw a contrast between the
treatment Bolivia receives from us and the "unconditional"
friendship Bolivia enjoys with fellow South American states
such as Brazil.


6. (C) We spoke with Brazilian embassy officials here in
advance of the visit to encourage some helpful signal of
caution from President Lula to Morales regarding the
Bolivian's approach to the United States. These officials
said that Brazil sees an improved relationship between
Bolivia and the U.S. as in its own interest, and pledged to
do what they could to encourage more constructive Bolivian
behavior. Still, they noted that Brazil wants to maintain
stability on its borders, and has concluded that Morales is
here to stay. They said Brazil wants to provide Morales with
alternatives to the radical advice he is receiving from
Venezuela and Cuba, but clarified that Brazil does not see
itself in "direct competition" with Venezuela. The
Brazilians added that while they engage the Bolivians on
democracy issues, they do not consider Bolivia's human rights
or democracy record to be outside hemispheric norms.

7. (C) Brazilian embassy Minister Counselor Julio Bitelli
confirmed for us that President Lula did raise with Morales
the issue of Bolivian-U.S. relations (in the 40-minute car
ride on the way to the public event), but that this prompted
the "usual" extended rant against alleged U.S. crimes.
Morales recalled his own personal victimization at the hands
of DEA agents, railed against American hegemony in Latin
America and appeared unreceptive to hearing any counsel,
according to Bitelli. Morales expanded on these now-familiar
themes in his public remarks. The Colombian defense
agreement was another subject on which Lula appeared to make
little headway; the Brazilian president emphasized the need
for dialogue and a "frank exchange" on the issue at the
upcoming Unasur summit, while Morales publicly declared that
any government that allows military forces into their country
are "traitors to the liberation of the people of Latin
America."

8. (C) Bitelli reported that the presidents did discuss
counter-narcotics cooperation, another area in which we had
encouraged greater Brazilian engagement with the Bolivians,
but that the talks were limited to equipment issues. Lula
explained to Morales that the Bell-UH helicopter transfer was
proceeding apace, but that delivery is pending Brazilian
parliamentary approval. Bitelli said that Morales asked for
Brazilian Tucano aircraft as well, surprising the Brazilians
by suggesting that "the international community" should pay
for the planes, as counter-narcotics is "a global problem."
Bitelli allowed that the Brazilians did not think much of
that suggestion.

9. (C) Comment: Brazilian President Lula's visit was widely
seen here as an endorsement of Evo Morales for reelection
December 6, reflecting Brazil's conclusion that Morales is
all but certain to win in any case. We believe, however,
that this embrace of Morales is tempered by a clear-eyed
recognition of the Morales government's many shortcomings
(the Brazilians indicated that they share a great deal of our
frustration with the Bolivians, from counter-narcotics to
economic policy). We will continue to encourage Brazil to
follow through on its expressed interest in helping to
moderate Morales, despite the evident limits of such
approaches.
CREAMER

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