US embassy cable - 05BRASILIA2811

UNCLAS BRASILIA 002811 
 
SIPDIS 
 
NSC FOR CRONIN 
USTR FOR SULLIVAN 
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 
AID/W FOR LAC/SA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, SENV, KIPR, PGOV, EFIN, Bilateral Relations with the US 
SUBJECT: FINANCE MINISTRY QUERIES ON BILATERAL RELATIONS IN 
ADVANCE OF POTUS VISIT 
 
REF: Brasilia 2589 
 
1. (SBU) On October 18, Regional Treasury Attache Mat 
Haarsager, EconCouns, and Econ Assistant met with Finance 
Ministry U/S Joaquim Levy.  The wide-ranging conversation 
touched upon the issue of debt-for-nature swaps, the USG's 
democracy/development agenda, and U.S. industry's GSP 
petition on copyright piracy. 
 
-- Debt-for-Nature.  Levy conditioned GOB support of debt- 
for-nature swaps under the Tropical Forest Conservation Act 
on two conditions:  i.e., that the debt relief offered be 
for at least US$100 million (possibly spread over 4-5 years) 
and that it only deal with the Mata Atlantica (and not the 
Amazon).  With respect to the last condition, he said that 
any reference to the Amazon would only result in the 
Brazilian congress demanding that the USG ratify the Rio 
Summit Bio-diversity treaty - which could complicate matters 
immensely.  With respect to the first condition, Emboffs 
sought to provide him more detail about the USG budget 
process and the difficulty of ensuring a multi-year 
appropriation.  In the end, it was agreed to exchange 
further ideas (in advance of the POTUS visit) so as to move 
this issue forward. 
 
-- Democracy/Development. Levy further asked, in the wake of 
Deputy Secretary Zoellick's remarks on democracy/development 
during his October 6 visit, what did the USG want Brazil to 
do to advance this goal?  Possible GOB efforts might include 
work with the USG on IFI lending to minority and small 
businesses or cooperation on a democracy conference, he 
noted, adding that what the GOB really wanted to know was 
whether the USG had a specific Action Plan in mind. 
 
--  GSP Review. Finally, Levy mused that now that Brazil had 
come to a negotiated settlement with Abbott Laboratories on 
compulsory licensing, he wondered whether the USG was 
considering terminating its anti-piracy GSP review as a 
positive economic signal prior to the POTUS visit.  (Note: 
This is a theme which Foreign Ministry interlocutors have 
repeatedly raised with us on previous occasions as well.) 
 
2. (SBU) Recently, the Finance Ministry has been prone to 
taking a more activist tack on international economic 
policy, sometimes at odds with the positions espoused by the 
Foreign Ministry.  (See reftel.)  The mere fact that Levy is 
considering issues such as the hemispheric democracy may 
mean that in the future Itamaraty diplomats will have to 
cede a bit their hegemony on policy issues - as they 
increasingly face interagency competition from an 
expansionist-minded Finance Ministry. 
 
DANILOVICH