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DE RUEHBR #0956 1451943
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P 251943Z MAY 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 9046
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L BRASILIA 000956 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CCA, WHA/EPSC AND WHA/BSC 
 
E.O. 12958: DECL: 05/23/2017 
TAGS: ETTC PREL ECON ETRD BR CU
SUBJECT: BRAZIL - SUSPENSION OF TITLE III OF THE LIBERTAD ACT 

REF: A) SECSTATE 65523 
B) 06 BRASILIA 875 

Classified by Charge d'Affaires Phillip T. Chicola, Reasons 1.4 (b) and (d). 

¶1. (C) Brazil has a close relationship with Cuba and the GoB does not publicly criticize the Castro regime's human rights policies. During the last six months, President Lula and Cuban President Fidel Castro have sparred publicly over Brazil's ethanol policy. Castro echoed Venezuelan President Chavez's criticism of the USG-Brazil MOU to promote cooperation on development of ethanol production and use, arguing that using corn and sugar for fuel production would drive up food prices and starve the poor. President Lula used the Isla Margarita Mercosul energy summit to rebut that criticism, albeit in a low-key fashion, pointing out that production of Brazilian sugar-cane based ethanol in Brazil has increased dramatically without raising food prices. Castro also questioned labor conditions on Brazilian sugar cane plantations. 

¶2. (SBU) We know of no high level GoB diplomatic visits to Cuba during the last six months. Cuban Vice Minister of Foreign Affairs Alejandro Gonzalez Galiano visited Brasilia in early March 2007 as part of a reportedly annual set of bilateral meetings between the ministries of foreign affairs. President Lula's Foreign Affairs Advisor, Marco Aurelio Garcia, plans to travel to Cuba the week of May 28. Separately, Cuba and Brazil maintain educational exchange programs and Cuba offers scholarships for the study of medicine in Cuba, although none of these programs has a particularly high profile. 

¶3. (SBU) On the trade front, on July 20, 2006, Cuba signed a free-trade agreement with the Mercosul customs union, of which Brazil is the largest member. The agreement makes multilateral all of Cuba's existing bilateral agreements with Mercosul members, thus applying any trade preference granted to any Mercosul member to all equally. The GoB supported the Mercosul agreement with Cuba, which does not contemplate full Mercosul membership for Cuba. 

¶4. (SBU) Bilateral Brazilian trade with Cuba grew to US$374.8 million in 2006, up from US$284 million in 2005. Brazilian 2006 exports of US$343.3 million to Cuba were led by exports of sugar, auto parts, beef, electrical equipment, chicken parts, and coffee. 2006 imports from Cuba of US$31.6 million (down from US$38.9 million in 2005) were dominated by medicines and medical products, Portland cement, insecticides, nickel, aluminum scrap, insecticides, cigars and vaccines. Brazil's National Development Bank (BNDES) provides trade finance lines to Brazilian companies, including those trading with Cuba. Over the period 2001-2003, the most recent data available, BNDES provided US$52.3 million in export credits to finance the export of automobiles and buses to Cuba. Local accounts suggest that potential BNDES export credits for Cuba are under-utilized. 5. (SBU) The most recent Central Bank data available on Brazilian investments, for 2005, show that Brazilian companies invested US$21 million in Cuba, up from US$19 million in 2004. Post does not have data on the make-up of these investments. 

CHICOLA