US embassy cable - 05BRASILIA415

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000415 
 
SIPDIS 
 
E.O. 12958: DECL: 02/16/2015 
TAGS: PREL, MARR, BR, External Relations 
SUBJECT: LULA IN CARACAS -- PARSING A "STRATEGIC ALLIANCE" 
 
 
Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS: 1.4 
(B)(D). 
 
1. (C) Summary: President Lula da Silva's state visit to 
Venezuela this week saw declarations and a formal statement 
by Lula and President Chavez announcing formation of a 
"strategic alliance."  In practice, this seems to translate 
to enhanced cooperation in integration and development aimed 
at increased regional prosperity and bargaining strength in 
taking on traditional economic powers.  While Chavez may have 
liked the sound of "strategic alliance" for other reasons, 
and Brazilian media expressed some concern about reports of 
possible Brazilian arms sales to Venezuela, any additional 
GOB "strategic" thinking seems focused on creating a 
bilateral relationship of such practical importance to Chavez 
that Brazil can leverage him into rational behavior. End 
summary. 
 
2. (SBU) Lula's one-day state visit to Caracas on 14 February 
produced verbal declarations from both Lula and Chavez and a 
formal joint statement that announced the formation of a 
"strategic alliance."  The prologue of the statement noted 
the shared frontiers, huge resources and common history of 
the two neighbors, and pledged common commitment to dealing 
with poverty, protecting the Amazon, and overcoming other 
challenges.  The statement detailed negotiation and/or 
conclusion of agreements in 12 areas, including energy, 
mining, tax and customs regimes, financing, trade, technical 
and military (i.e., bilateral consultations and joint patrol 
efforts in the Amazon, per the statement text) cooperation. 
(Note: A copy of the official joint statement in Spanish will 
be faxed to Department WHA/BSC. End note.) According to press 
reports, specific agreements established a binational petrol 
refinery in northern Brazil, joint construction in Cuba of a 
lubricant factory, a joint venture in coal mining, and nearly 
USD 200 million in Brazilian financing of infrastructure 
projects. 
 
2. (SBU) Brazilian and international media reported 
extensively on discussions of possible Venezuelan purchase of 
Embraer military aircraft -- reportedly 12 AMX-T jet 
attack/trainer aircraft and/or 24 ALX Super Tucano turboprop 
attack planes.  Agreements on the purchases are not noted in 
the joint statement, and it is unclear whether contracts were 
actually signed during the visit.  (Note: Venezuela already 
operates older models of the Tucano, and has been considering 
purchases of Super Tucanos for some time, but financing 
issues have been problematic. The Super Tucano uses 
substantial U.S.-origin content, including Pratt and Whitney 
engines. End note.)  Some editorial comment here questioned 
concluding weapons agreements with Venezuela in light of 
tensions between that country and Colombia, and concerns in 
Washington and elsewhere about a regional arms race. 
 
3. (SBU) In speeches during the day, Lula stressed the 
importance of regional integration to establishing trade and 
development options beyond North-South patterns, a theme 
warmed to by Chavez, and reflected in writing in the joint 
statement's allusion to creation of "a new political, 
economic and commercial geography."  Lula's comments on 
Venezuela seemed limited and circumspect.  On one hand, he 
praised the referendum process that assured Chavez's 
continuation in office, calling it the "most important moment 
for democracy in the country," and said the Venezuelan people 
are "the owners of their noses" (Brazilian colloquial 
expression equating to "masters of their destinies."  But on 
the other hand, Lula is quoted as observing that "divergences 
only exist in democracies"  -- a comment interpreted by some 
Brazilian media as a criticism of Chavez in the face of 
reports of his use of repressive measures. 
 
4. (C) PolCounselor spoke on 14 February with Marcel Biato, 
deputy foreign affairs advisor to Lula, about the intent and 
significance of Lula's visit to Venezuela.  Biato made the 
following observations: 
 
--The GOB continues to see intensified regional integration 
with Venezuela and other neighbors as logical and salutary on 
many levels, Biato said, adding that the geographic and 
economic dimensions of Brazil and Venezuela, along with 
shared frontiers and Amazon areas, make a partnership natural 
and desirable. 
 
--On a political level, Biato noted Lula's frequent 
exasperation with Chavez, but said the GOB sees little 
potential for "tutoring" him.  "He has money, he has a 
mandate, and he has shown he can mobilize a lot of society 
behind him," Biato observed.  That said, Biato was candid in 
describing the GOB's intention to engage Chavez and Venezuela 
in a bilateral relationship of such depth and economic 
importance that the GOB "will have an increasing range of 
instruments of pressure to curb any meglomaniacal tendencies" 
on Chavez's part. Lula's visit to Caracas should be seen in 
that context, Biato said. 
 
--On the resolution of the crisis between Colombia and 
Venezuela, Biato said it was the GOB"s assessment that Chavez 
had finally decided he had exploited the problem to its 
maximum political potential, and decided to bring the issue 
to a close. 
 
--Biato demurred on the question of military aircraft sales, 
noting only that Venezuela had been considering purchase of 
Super Tucanos for some time, and that questions remain about 
financing.  On the issue of reports of Venezuela's plans to 
purchase several thousand AK-47 assault rifles, Biato 
acknowledged that there is speculation and concern about 
Chavez's intentions, but offered no other comment. 
 
5. (C) Comment.  We cannot know, but it is easy to imagine 
that the choice of the phrase "strategic alliance" was to 
Chavez's liking, with its resonance of military pacts.  This 
week's undertakings may, in fact, be strategic for the 
Brazilians' focus on building up mechanisms for integration 
and development that increase regional prosperity and ability 
to take on traditional economic powers on more equal terms. 
Those are stated GOB goals since the outset of Lula's 
administration, and to the extent that Chavez thinks they fit 
into his Bolivarian zeitgeist, the GOB seems happy enough to 
make common cause.  However, any other "strategic" intentions 
on Brazil's part in this week's deals would appear to be 
about enhancement of Brazilian means for leveraging Chavez 
into behaving rationally.  We will seek a debrief from Lula's 
senior foreign affairs advisor, Marco Aurelio Garcia, on his 
return from Caracas.  We also will be watching whether a 
debate takes hold here about the sale of Brazilian military 
equipment to Venezuela.  Although the GOB has stated its 
intention to reinforce and expand Brazil's share of the 
international arms market and we think it likely Brazil will 
follow through with sales to Venezuela, recent editorial 
comment here on Chavez has been increasingly negative and 
questions may persist about Brazil's playing a role in his 
weapons-buying spree. 
 
DANILOVICH