US embassy cable - 05BRASILIA3130

C O N F I D E N T I A L BRASILIA 003130 
 
SIPDIS 
 
DEPT FOR WHA/CCA AND WHA/BSC 
 
E.O. 12958: DECL: 11/29/2015 
TAGS: ETRD, ETTC, PREL, BR, CU 
SUBJECT: SUSPENSION OF TITLE III OF THE LIBERTAD ACT - 
BRAZIL 
 
REF: A. STATE 207359 
     B. BRASILIA 1522 
 
Classified By: Charge d'Affaires Patrick Linehan, reasons 1.4 
(b) and ( 
d). 
 
1. (C) Brazil enjoys a close relationship with Cuba and the 
GoB has refused to criticize directly the Castro regime's 
human rights policies.  In a rare public statement on Cuba in 
April 2005, President Lula implied criticism of Castro when 
he told the press that "Brazil can help build a democratic 
process in Cuba" and that "we have much to do for democracy 
in Cuba."  The Lula Administration argues that engagement, 
rather than isolation, is more likely to change Cuba's 
behavior; it states it has been critical of the Castro 
regime's actions behind the scenes.  The GoB, however, has a 
general aversion to meddling in the internal affairs of other 
countries and routinely opposes "single country" resolutions 
at the United Nations, including those aimed at Cuba. 
Brazilian media and NGOs are much less hesitant to criticize 
the Castro regime pointedly. 
 
2. (C) In the past, the Lula Administration has pushed 
unsuccessfully to allow Cuba entry into the Rio Group. 
Lula's Workers' Party (PT), some key members of which sought 
refuge in Cuba from persecution during Brazil's military 
dictatorship, allegedly received from the Cuban government a 
campaign contribution (ranging from US$1.4 to US$3 million) 
during the 2002 presidential elections.  Beyond allegations 
made in the media by various self-described witnesses to the 
transaction, thus far no concrete evidence of such payment 
has emerged. 
 
3. (SBU) On the economic front, the GoB has welcomed contacts 
between Cuba and the Mercosul common market, of which Brazil 
is the largest member.  Brazil supports Mercosul's plans to 
conclude a trade pact with Cuba, although it appears the 
island's relationship with Mercosul would fall short of full 
membership.  Bilateral Brazilian trade with Cuba grew to 
US$177.2 million in 2004, over $91.8 million in 2003. 
Brazilian exports of US$131.9 million in 2004 to Cuba 
consisted primarily of chicken, shoes, agricultural machinery 
and buses.  2004 imports from Cuba of US$22.3 million were 
dominated by medicines and vaccines.  Over the period 
2001-2003, Brazil's National Development Bank (BNDES) 
provided US$52.3 million in export credits to finance the 
export of automobiles and buses to Cuba.  Local accounts 
suggest that potential BNDES export credits for Cuba are 
under-utilized. 
 
4. (SBU) There has been a trickle of Brazilian investment to 
Cuba.  According to Central Bank data, Brazilian companies 
held investments valued at US$19 million in Cuba in 2004. 
Petrobras holds rights to an offshore oil exploration block, 
the potential of which it is evaluating.  Petrobras formed in 
2004 a lubricants joint venture in Cuba with Venezuela's 
PDVSA and a local partner. (Note: local media accounts 
suggest that differences over ownership and controlling 
interests have delayed this investment, as Cuban law 
reportedly limits foreign ownership to 49% of joint ventures.) 
 
LINEHAN