US embassy cable - 05BRASILIA2724

UNCLAS BRASILIA 002724 
 
SIPDIS 
 
SENSITIVE 
 
NSC FOR CRONIN 
TREASURY FOR OASIA - DAS LEE AND FPARODI 
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON 
DOE FOR LADISLAW 
AID/W FOR LAC/SA 
 
E.O. 12958: N/A 
TAGS: EAID, EFIN, ENRG, Macroeconomics & Financial 
SUBJECT: BRAZIL LOOKS TO THE IDB FOR HELP ON INFRASTRUCTURE 
WOES 
 
 
1. (SBU) On October 11, EconCouns met with Ministry of 
Planning International Affairs Secretary Jose Carlos Miranda 
at the latter's request.  In that conversation, Miranda 
stated that the Brazilian government wanted to work closely 
with new IDB President Moreno so as to facilitate the flow 
of Bank financing to the GOB's portfolio of pending 
infrastructure projects.  While last spring the GOB had 
strongly supported its national candidate - Joao Sayad -- 
for the IDB presidency, Miranda made clear that his Ministry 
saw no reason that Brazil should not maintain its strong, 
historic ties to the Bank.  Particularly welcome, he 
declared, was the agreement to initiate an IDB Brazil 
Infrastructure Fund, which in the end could bring in up to 
US$800 million in low-cost financing.  Indeed, Miranda 
commented, what was urgently needed now was for the Bank and 
Brazil to get personnel issues settled so that 
implementation of already-identified infrastructure projects 
could begin in earnest. 
 
2. (SBU) To that end, Miranda asked that Embassy convey a 
private letter from his boss, i.e., Planning Minister Paulo 
Bernardo - Brazil's representative to the IDB - to Secretary 
Snow proposing several Brazilian candidates for positions 
within the Bank.  Miranda noted that similar correspondence 
had already been conveyed to IDB President Moreno.  The 
letter to Secretary Snow, he said, follows up on (separate) 
conversations the Secretary had with Minister Bernardo and 
Finance Minister Palocci in the wake of September's 
IMF/World Bank meetings.  (Embassy has forwarded Bernardo's 
letter to Secretary Snow via FEDEX.) 
 
3. (SBU) Key among the projects that Brazil wanted to move 
quickly, Miranda said, was its pending Public-Private 
Partnerships (PPPs).  While previously the PPPs had been 
stalled because of a dispute as to which GOB entity would 
manage the guarantee fund, this issue had now been resolved 
(in favor of Banco do Brasil) and all the necessary 
regulations had been promulgated two months ago.  Miranda 
observed that the first project to be bid would be 
extensions to the North-South Railway.  Andean Development 
Fund (CAF) financing was already in place, with Italy to 
provide assistance on bid issues. 
 
4. (SBU) Turning to the energy field, Miranda characterized 
the situation in Bolivia as "worrisome at best." He saw Evo 
Morales as the best of those on the left as he at least was 
willing to sit down and talk - something which could not be 
said of Morales' more radical compatriots.  Given the 
instability in Bolivia, Miranda said, Lula Chief of Staff 
Dilma Rousseff (formerly Energy Minister) had traveled to 
Washington in mid-September to meet with Moreno to seek his 
support for the proposed South American gas ring.  This 
project envisions the construction of gas pipelines linking 
Peru, Brazil, Chile, Paraguay, Uruguay, and Argentina. 
Rousseff wanted to move quickly on the gas ring to help 
mitigate Brazil's dependence on Bolivian gas exports. 
Miranda said that studies done by the GOB's energy 
parastatal (Petrobras) indicated that gas from the Brazil's 
plentiful Campos Basin would not be on line until 2007 or 
2008 - leaving the country vulnerable in the short-run. 
 
DANILOVICH