US embassy cable - 04BRASILIA2698

UNCLAS BRASILIA 002698 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD/OMA 
STATE PASS EXIM 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PGOV, BR, IZ, Macroeconomics & Financial 
SUBJECT: BRAZIL ON IRAQ RECONSTRUCTION THROUGH EXPORT 
CREDIT AGENCY AGREEMENTS 
 
REF: STATE 228304 
 
1. (U) Econoffs delivered reftel points on reopening export 
agency credits to support Iraqi reconstruction to Piragibe 
Tarrago, Chief of the Foreign Ministry's Economic Department, 
in an October 27 meeting.  Tarrago said that Brazil would 
like to reestablish normal trade relations with Iraq, 
including reestablishing export credit lines, as soon as the 
political situation has stabilized.  While Brazil never broke 
diplomatic relations with Iraq, Tarrago noted, it does not 
envision reopening its Baghdad embassy until the security 
situation has improved.  The Brazilian Embassy in Amman will 
continue covering Iraq until then. 
 
2. (U) Brazil, Tarrago said, has been participating in Paris 
Club discussions of Iraqi debt.  He estimated Iraq's debt to 
Brazilian entities at $3 billion, about three quarters of 
which is owed to private creditors.  Much of this debt was 
trade finance or infrastructure project finance involving 
Brazilian firms.  Brazil's principal concern is that there be 
an "equitable" settlement, Tarrago affirmed.  It also was 
keeping an eye on the implications of any Paris Club 
treatment of Iraqi debt on the interests of private Brazilian 
holders of Iraqi debt. 
 
3. (SBU) Comment:  Tarrago did not link the reopening of 
export credit lines to Iraq to Paris Club treatment of 
outstanding Iraqi debt.  It was nevertheless clear that the 
GoB does not expect that the political situation in Iraq will 
be conducive to normalizing trade relations any time soon. 
End Comment. 
MINIMIZED CONSIDERED 
 
DANILOVICH