US embassy cable - 03BRASILIA3069

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