Cable Viewer

Currently released so far... 19594 / 251,287

### Articles

Brazil Sri Lanka United Kingdom Sweden 00. Editorial United States Latin America Egypt Jordan Yemen Thailand

### Browse latest releases

2010/11 2010/12 2011/01 2011/02 2011/03 2011/04 2011/05 2011/06 2011/07
2010/11/28 2010/11/29 2010/11/30
2010/12/01 2010/12/02 2010/12/03 2010/12/04 2010/12/05 2010/12/06 2010/12/07 2010/12/08 2010/12/09 2010/12/10 2010/12/11 2010/12/12 2010/12/13 2010/12/14 2010/12/15 2010/12/16 2010/12/17 2010/12/18 2010/12/19 2010/12/20 2010/12/21 2010/12/22 2010/12/23 2010/12/24 2010/12/25 2010/12/26 2010/12/27 2010/12/28 2010/12/29 2010/12/30
2011/01/01 2011/01/02 2011/01/04 2011/01/05 2011/01/07 2011/01/09 2011/01/11 2011/01/12 2011/01/13 2011/01/14 2011/01/15 2011/01/16 2011/01/17 2011/01/18 2011/01/19 2011/01/20 2011/01/21 2011/01/22 2011/01/23 2011/01/24 2011/01/25 2011/01/26 2011/01/27 2011/01/28 2011/01/29 2011/01/30 2011/01/31
2011/02/01 2011/02/02 2011/02/03 2011/02/04 2011/02/05 2011/02/06 2011/02/07 2011/02/08 2011/02/09 2011/02/10 2011/02/11 2011/02/12 2011/02/13 2011/02/14 2011/02/15 2011/02/16 2011/02/17 2011/02/18 2011/02/19 2011/02/20 2011/02/21 2011/02/22 2011/02/23 2011/02/24 2011/02/25 2011/02/26 2011/02/27 2011/02/28
2011/03/01 2011/03/02 2011/03/03 2011/03/04 2011/03/05 2011/03/06 2011/03/07 2011/03/08 2011/03/09 2011/03/10 2011/03/11 2011/03/13 2011/03/14 2011/03/15 2011/03/16 2011/03/17 2011/03/18 2011/03/19 2011/03/20 2011/03/21 2011/03/22 2011/03/23 2011/03/24 2011/03/25 2011/03/26 2011/03/27 2011/03/28 2011/03/29 2011/03/30 2011/03/31
2011/04/01 2011/04/02 2011/04/03 2011/04/04 2011/04/05 2011/04/06 2011/04/07 2011/04/08 2011/04/09 2011/04/10 2011/04/11 2011/04/12 2011/04/13 2011/04/14 2011/04/15 2011/04/16 2011/04/17 2011/04/18 2011/04/19 2011/04/20 2011/04/21 2011/04/22 2011/04/23 2011/04/24 2011/04/25 2011/04/26 2011/04/27 2011/04/28 2011/04/29 2011/04/30
2011/05/01 2011/05/02 2011/05/03 2011/05/04 2011/05/05 2011/05/06 2011/05/07 2011/05/08 2011/05/09 2011/05/10 2011/05/11 2011/05/12 2011/05/13 2011/05/14 2011/05/15 2011/05/16 2011/05/17 2011/05/18 2011/05/19 2011/05/20 2011/05/21 2011/05/22 2011/05/23 2011/05/24 2011/05/25 2011/05/26 2011/05/27 2011/05/28 2011/05/29 2011/05/30 2011/05/31
2011/06/01 2011/06/02 2011/06/03 2011/06/04 2011/06/05 2011/06/06 2011/06/07 2011/06/08 2011/06/09 2011/06/10 2011/06/11 2011/06/12 2011/06/13 2011/06/14 2011/06/15 2011/06/16 2011/06/17 2011/06/18 2011/06/19 2011/06/20 2011/06/21 2011/06/22 2011/06/23 2011/06/24 2011/06/25 2011/06/26 2011/06/27 2011/06/28 2011/06/29 2011/06/30
2011/07/01 2011/07/02 2011/07/04 2011/07/05 2011/07/06 2011/07/07 2011/07/08 2011/07/10 2011/07/11 2011/07/12 2011/07/13 2011/07/14 2011/07/15 2011/07/16 2011/07/17 2011/07/18 2011/07/19 2011/07/20 2011/07/21 2011/07/22 2011/07/23

### Browse by creation date

66 72 73 75 79 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
1966/12
1972/02 1972/08
1973/04
1975/03
1979/08
1985/03 1985/05 1985/06
1986/05 1986/08 1986/12
1987/06
1988/01 1988/03 1988/04 1988/07 1988/08 1988/12
1989/12
1990/01 1990/07 1990/08 1990/10
1991/05 1991/07 1991/11
1992/01 1992/03 1992/06 1992/09 1992/12
1993/01 1993/02 1993/10
1994/11 1994/12
1995/01 1995/04 1995/06 1995/11
1996/07 1996/09 1996/11
1997/02 1997/03 1997/05 1997/06 1997/08 1997/10 1997/12
1998/05 1998/12
1999/01 1999/09
2000/05 2000/06 2000/09 2000/11
2001/02 2001/03 2001/04 2001/05 2001/06 2001/07 2001/09 2001/10 2001/11 2001/12
2002/01 2002/02 2002/03 2002/04 2002/06 2002/07 2002/08 2002/09 2002/11 2002/12
2003/01 2003/02 2003/03 2003/04 2003/05 2003/06 2003/07 2003/08 2003/09 2003/10 2003/11 2003/12
2004/01 2004/02 2004/03 2004/04 2004/05 2004/06 2004/07 2004/08 2004/09 2004/10 2004/11 2004/12
2005/01 2005/02 2005/03 2005/04 2005/05 2005/06 2005/07 2005/08 2005/09 2005/10 2005/11 2005/12
2006/01 2006/02 2006/03 2006/04 2006/05 2006/06 2006/07 2006/08 2006/09 2006/10 2006/11 2006/12
2007/01 2007/02 2007/03 2007/04 2007/05 2007/06 2007/07 2007/08 2007/09 2007/10 2007/11 2007/12
2008/01 2008/02 2008/03 2008/04 2008/05 2008/06 2008/07 2008/08 2008/09 2008/10 2008/11 2008/12
2009/01 2009/02 2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12
2010/01 2010/02

### Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z
Embassy Athens Embassy Asuncion Embassy Astana Embassy Asmara Embassy Ashgabat Embassy Apia Embassy Ankara Embassy Amman Embassy Algiers Embassy Addis Ababa Embassy Accra Embassy Abuja Embassy Abu Dhabi Embassy Abidjan Consulate Auckland Consulate Amsterdam Consulate Adana American Institute Taiwan, Taipei
Embassy Bujumbura Embassy Buenos Aires Embassy Budapest Embassy Bucharest Embassy Brussels Embassy Bridgetown Embassy Bratislava Embassy Brasilia Embassy Bogota Embassy Bishkek Embassy Bern Embassy Berlin Embassy Belmopan Embassy Belgrade Embassy Beirut Embassy Beijing Embassy Banjul Embassy Bangkok Embassy Bandar Seri Begawan Embassy Bamako Embassy Baku Embassy Baghdad Consulate Belfast Consulate Barcelona
Embassy Copenhagen Embassy Conakry Embassy Colombo Embassy Chisinau Embassy Caracas Embassy Canberra Embassy Cairo Consulate Curacao Consulate Ciudad Juarez Consulate Chiang Mai Consulate Chennai Consulate Casablanca Consulate Cape Town Consulate Calgary
Embassy Dushanbe Embassy Dublin Embassy Doha Embassy Djibouti Embassy Dili Embassy Dhaka Embassy Dar Es Salaam Embassy Damascus Embassy Dakar Consulate Dubai Consulate Dhahran
Embassy Freetown Consulate Fukuoka
Embassy Guatemala Embassy Gaborone Consulate Guayaquil Consulate Guangzhou Consulate Guadalajara
Embassy Helsinki Embassy Harare Embassy Hanoi Consulate Hong Kong Consulate Ho Chi Minh City Consulate Hermosillo Consulate Hamilton Consulate Hamburg Consulate Halifax
Iran RPO Dubai Embassy Islamabad Consulate Istanbul
Embassy Jakarta Consulate Jerusalem Consulate Jeddah
Embassy Kyiv Embassy Kuwait Embassy Kuala Lumpur Embassy Kinshasa Embassy Kingston Embassy Kigali Embassy Khartoum Embassy Kathmandu Embassy Kampala Embassy Kabul Consulate Kolkata Consulate Karachi
Embassy Luxembourg Embassy Luanda Embassy London Embassy Ljubljana Embassy Lisbon Embassy Lima Embassy Lilongwe Embassy Libreville Embassy La Paz Consulate Lahore Consulate Lagos
Mission USOSCE Mission USNATO Mission UNESCO Mission Geneva Embassy Muscat Embassy Moscow Embassy Montevideo Embassy Monrovia Embassy Minsk Embassy Mexico Embassy Mbabane Embassy Maseru Embassy Maputo Embassy Manila Embassy Manama Embassy Managua Embassy Malabo Embassy Madrid Consulate Munich Consulate Mumbai Consulate Montreal Consulate Monterrey Consulate Milan Consulate Melbourne Consulate Matamoros
Embassy Nicosia Embassy Niamey Embassy New Delhi Embassy Ndjamena Embassy Nassau Embassy Nairobi Consulate Nuevo Laredo Consulate Naples Consulate Naha Consulate Nagoya
Embassy Ouagadougou Embassy Ottawa Embassy Oslo
Embassy Pristina Embassy Pretoria Embassy Prague Embassy Port Of Spain Embassy Port Louis Embassy Port Au Prince Embassy Phnom Penh Embassy Paris Embassy Paramaribo Embassy Panama Consulate Peshawar
Embassy Quito Consulate Quebec
REO Basrah Embassy Rome Embassy Riyadh Embassy Riga Embassy Reykjavik Embassy Rangoon Embassy Rabat Consulate Rio De Janeiro Consulate Recife
Secretary of State Embassy Suva Embassy Stockholm Embassy Sofia Embassy Skopje Embassy Singapore Embassy Seoul Embassy Sarajevo Embassy Santo Domingo Embassy Santiago Embassy Sanaa Embassy San Salvador Embassy San Jose Consulate Strasbourg Consulate St Petersburg Consulate Shenyang Consulate Shanghai Consulate Sapporo Consulate Sao Paulo
Embassy Tunis Embassy Tripoli Embassy Tokyo Embassy The Hague Embassy Tel Aviv Embassy Tehran Embassy Tegucigalpa Embassy Tbilisi Embassy Tashkent Embassy Tallinn Consulate Toronto Consulate Tijuana Consulate Thessaloniki
USUN New York USEU Brussels US Office Almaty US Mission Geneva US Interests Section Havana US Delegation, Secretary UNVIE UN Rome Embassy Ulaanbaatar
Embassy Vilnius Embassy Vientiane Embassy Vienna Embassy Vatican Embassy Valletta Consulate Vladivostok Consulate Vancouver
Embassy Windhoek Embassy Wellington Embassy Warsaw
Embassy Yerevan Embassy Yaounde
Embassy Zagreb

### Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ASEC AEMR AMGT AR APECO AU AORC AJ AF AFIN AS AM ABLD AFFAIRS AMB APER AA AG AE ATRN ADM ALOW ACOA AID AND ABUD ARF AY AMED ASPA AL APEC ADPM ADANA AFSI ARABL ADCO ANARCHISTS AZ ANET AMEDCASCKFLO AADP AO AGRICULTURE AGAO ASEAN APRC AFSN AFSA AORG ACABQ AINF AINR AODE APCS AROC ARCH ADB AX AMEX ASUP ARM AQ ATFN AMBASSADOR ARAS ACBAQ AC AOPR AREP ASIG ASEX AER AVERY ASCH AFU AMG ATPDEA ASECKFRDCVISKIRFPHUMSMIGEG AORL AN AIT AGMT ACS AGR AMCHAMS AECL AUC AFGHANISTAN ACAO
BR BB BG BEXP BY BA BRUSSELS BU BD BK BL BM BE BO BTIO BH BAIO BRPA BUSH BILAT BF BX BC BOL BMGT BP BIDEN BBG BBSR BT BWC BEXPC BN BTIU
CPAS CA CASC CS CBW CIDA CO CODEL CI CROS CU CH CWC CMGT CVIS CDG CG CF CHIEF CJAN CBSA CE CY CB CW CM CDC CONS CHR CD CT CR CAMBODIA CN COUNTRY CONDOLEEZZA CZ CARICOM COM CICTE CYPRUS CBE CACS COE CIVS CFED COPUOS COUNTER CAPC CTR CV CARSON CITES CKGR CVR CLINTON COUNTERTERRORISM CITEL CLEARANCE CSW CIC CITT CARIB CAFTA CACM CDB CJUS CTM CAN CAJC CONSULAR CLMT CBC CIA CNARC CIS CEUDA CHINA CAC CL
DR DJ DB DHS DAO DCM DO DEFENSE DA DE DK DOMESTIC DISENGAGEMENT DOD DOT DPRK DEPT DEA DOE DTRA DS DEAX
ECON ETTC EFIS ETRD EC EMIN EAGR EAID EU EFIN EUN ECIN EG EWWT EINV ENRG ELAB EPET EN EAIR EUMEM ECPS ELTN EIND EZ EI ER ET EINT ECONOMIC ENIV EFTA ES ECONOMY ENV EAG ENGR EET ELECTIONS ESTH ETRO EPEC ECIP EXIM ENERG EREL EK EDEV ERNG EPA ENGY ETRAD ELTNSNAR ETRC ELAP EUREM EEB EETC ENVI EXTERNAL ELN ETRDEINVECINPGOVCS EAIDS ECOSOC EDU EPREL ECA EIDN EFINECONCS EINVEFIN EINVKSCA ETC ENVR EAP EINN EXBS ECONOMICS EIAR EINDETRD ECONEFIN EURN ETRDEINVTINTCS EFIM EINVETC ECONCS EDRC ENRD EBRD ETRA ESA EAIG EUR EUC ERD ETRN EINVECONSENVCSJA EEPET EUNCH ESENV ENNP ECINECONCS ETRDECONWTOCS ECUN
FR FI FOREIGN FTAA FARC FREEDOM FAS FAO FINANCE FBI FCS FAA FJ FTA FK FT FAC FDA FM FINR FOR FOI FO FMLN FISO
GM GERARD GT GA GG GR GTIP GE GY GH GLOBAL GB GEORGE GCC GV GC GAZA GL GOV GOI GF GTMO GANGS GAERC GZ GUILLERMO GASPAR
HR HA HYMPSK HO HK HUMAN HN HUD HU HURI HILLARY HI HUM HSTC HEBRON HUMOR
IZ IN IAEA IS IMO ILO IR IC IT ITU IV IMF IBRD IWC IPR IRAQI IDB ISRAELI ITALY IADB ITPGOV ITALIAN ID ICAO ICRC INR IFAD ICJ IO IRAQ INL INMARSAT INRA INTERNAL INTELSAT INDO ILC IRS IIP IQ ITRA IEFIN ICTY ISCON IAHRC IA INTERPOL IEA INRB ISRAEL IZPREL IRAJ IF ITPHUM IL IACI IDA ISLAMISTS IGAD ITF INRO IBET IDP ICTR IRC
JA JO JM JP JOHN JUS JAMES JOSEPH JOHNNIE JML JIMENEZ
KOMC KNNP KFLO KDEM KSUM KIPR KFLU KPAO KE KCRM KJUS KAWC KZ KSCA KDRG KCOR KGHG KPAL KTIP KMCA KCRS KPKO KOLY KRVC KVPR KG KWBG KMDR KTER KSPR KV KTFN KWMN KFRD KSTH KS KN KISL KGIC KSEP KFIN KTEX KTIA KUNR KCMR KMOC KCIP KTDB KBIO KU KSAF KHIV KSTC KIRF KIRC KMPI KIDE KSEO KSCS KNNNP KGLB KNUC KICC KCFE KIVP KTDD KPWR KNUP KO KHLS KR KCOM KESS KCSY KWN KRFD KREC KBCT KICCPUR KGIT KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KOCI KREL KMCC KPRV KPRP KVIR KPAOPREL KAUST KIRP KLAB KCRIM KPAONZ KCRCM KHDP KHSA KNAR KICA KGHA KTRD KTAO KPAOY KINR KJUST KWAC KNPP KNDP KSCI KMRS KTBT KNNPMNUC KHUM KBTS KACT KPIR KERG KAID KENV KMFO KVRP KTLA KAWK KFSC KPOA KX KRCM KCFC KNEI KCHG KPLS KFTFN KTFM KLIG KDEMAF KRAD KBTR KGCC KSEC KPIN KDEV KWWMN KOM KWNM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KRGY KIFR KSAC KWMNCS KPAK KOMS KFPC KRIM KDDG KCGC KPAI KID KMIG KNSD KWMM
LY LE LABOR LO LH LAB LI LTTE LU LA LVPR LT LG LOG
MARR MX MASS MOPS MNUC MCAP MTCRE MRCRE MTRE MASC MY MK MO MCC MCA MAS MZ MIL MU ML MTCR MEPP MG MI MINUSTAH MA MP MD MAPP MR MAR MOPPS MTS MLS MILI MEPN MEPI MEETINGS MERCOSUR MW MT MIK MN MAPS MV MILITARY MARAD MDC MACEDONIA MASSMNUC MUCN MEDIA MQADHAFI MPOS MPS MC
NZ NATO NI NO NU NG NL NPT NS NSF NA NP NATIONAL NASA NC NDP NIH NIPP NSSP NK NEGROPONTE NE NAS NGO NATOIRAQ NAR NR NZUS NARC NH NSG NAFTA NEW NRR NT NOVO NATOPREL NEA NSC NV NPA NSFO NW NORAD NPG NOAA
OTRA OECD OVIP OREP OPRC ODC OIIP OPDC OAS OSCE OPIC OMS OEXC OPCW OSCI OIE OPAD ODIP OM OFDP OFFICIALS OEXP OPEC OVIPPRELUNGANU ODPC OSHA OHUM OSIC OTR OMIG OSAC OBSP OFDA OVP ON OCII OES OCS OIC
PGOV PREL PARM PINR PHUM PM PREF PTER PK PINS PBIO PHSA PE PBTS PL POL PAK POV POLITICS POLICY PA PNAT PCI PALESTINIAN PAS PO PH PROV PRELBR PERM PETR PROP PJUS POLITICAL PREZ PAO PRELPK PAIGH PROG PMAR PU PG PDOV PTE PGOVSOCI PY PMIL PGOR PBTSRU PRAM PREO PINO PARMS PERL PTERE PSI PGOF PPA PRGOV PORG PP PS PKFK PSOE PEPR PDEM PINT PRELP PREFA PNG PTBS PFOR PUNE PGOVLO PHUMBA POLINT PGOVE PHALANAGE PARTY PECON PLN PHUH PEDRO PF PHUS PETER PARTIES PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PHUMPREL POGOV PEL PINL PBT PINF PRL PSEPC POSTS PAHO PHUMPGOV PGOC PNR
QA
RS RP RU RW RFE RCMP RIGHTSPOLMIL RO ROBERT RM RICE REGION ROOD RELAM RSP RF RELATIONS RIGHTS RUPREL REMON RPEL REACTION REPORT RSO
SZ SENV SOCI SNAR SY SO SP SU SI SMIG SYR SA SCUL SW SR SYRIA SNARM SPECIALIST SG SENS SF SENVQGR SEN SENVEAGREAIDTBIOECONSOCIXR SN SC SNA SK SL SMIL SCRM SENVSXE SAARC SNARIZ STEINBERG SARS SWE SCRS SAN ST SIPDIS SSA SPCVIS SOFA SENVKGHG SANC SHI SEVN SHUM SH SNARCS SPCE SNARN SIPRS
TRGY TBIO TSPA TU TPHY TI TX TH TIP TSPL TNGD TS TW TRSY TZ TP TN TINT TC TR TIO TF TK TRAD TT TD TWI TERRORISM TL TV TO TURKEY TSPAM TREL TRT TFIN TAGS THPY TBID
UK UNSC UNGA UN US UZ USEU UG UP UNAUS UNMIK USTR UY UNRCR UNESCO UNHRC UNICEF USPS UNSCR UNHCR UNFICYP UNCSD UNEP USOAS USAID UNDP UV UNTAC USDA UNMIC USUN UNCHR UNCTAD UR USGS USNC UA UE UNVIE UAE UNO UNODC UNCHS UNDESCO UNC UNPUOS UNDC UNCHC UNFCYP UNIDROIT UNCND
VE VM VT VZ VEPREL VN VTEG VTIZ VTPREL VISIT VENZ VAT VC VI
WHTI WIPO WTRO WTO WHO WFP WS WA WZ WI WMD WBG WWARD WHA WITH WTRQ WEU WMO WB
XA XW XX XK XL XM XS XF XY XR XG XT XC XH XD XE XV XB XU XZ XQ XI XTAG
YI YM YE YL YMCS
ZU ZI ZOELLICK ZP ZR ZO ZK ZF ZL ZB ZN ZH ZT ZJ ZEALAND ZA ZANU

### Browse by classification

CONFIDENTIAL CONFIDENTIAL//NOFORN SECRET SECRET//NOFORN UNCLASSIFIED UNCLASSIFIED//FOR OFFICIAL USE ONLY

### Community resources

Follow us on Twitter Check our Reddit Twitter this Digg this page Contact us on IRC

courage is contagious

### Viewing cable 04BRASILIA2447, BRAZIL'S ECONOMIC HIGH POINT REINFORCES LULA'S HAND

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:

- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #04BRASILIA2447.

Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BRASILIA2447 | 2004-09-27 17:58 | 2011-07-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Brasilia

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 04 BRASILIA 002447

    SIPDIS

    SENSITIVE

    TREASURY FOR OASIA - DAS LEE AND FPARODI
    NSC FOR DEMPSEY
    STATE FOR EB/IFD/OMA - MOSS
    STATE PASS FED BOARD OF GOVERNORS FOR ROBITAILLE
    USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO
    USDOC FOR 4332/ITA/MAC/WH/OLAC/DMCDOUGALL/ADRISCOLL
    USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSON/WBASTIAN

    E.O. 12958: N/A
    TAGS: ECON EFIN EINV PREL BR
    SUBJECT: BRAZIL'S ECONOMIC HIGH POINT REINFORCES LULA'S HAND

    REF: A) Brasilia 2221

         B) Brasilia 463
         C) Sao Paulo 1328

    ¶1.   (U) Summary:  Brazil is living one of its best economic
    moments in recent memory.  GDP growth has averaged above 6%
    on an annualized basis for the last three quarters.  The
    external accounts remain healthy as exports continue to
    boom; Brazil should run a 1.5% of GDP current account
    surplus this year, its second in a row.  Unemployment, while
    still high, has begun to fall while real incomes are
    beginning to rise after several years of decline.
    Inflationary pressures are building, however, leading the
    Central Bank to raise interest rates (by a quarter point) to
    16.25% on September 15.  The inflationary trajectory already
    has shifted; expected inflation in 2004 is for 7.37%, within
    the plus/minus 2.5 points band around the 5.5% target.  Due
    to these dynamics, the Central Bank on September 23
    announced the revision of its 2005 inflation target from
    4.5% to 5.1%.

    ¶2.   (U) Strong revenue growth means the GoB is in the
    unfamiliar situation of having the option of tightening
    fiscal policy to take some of the burden off of monetary
    policy, without sacrificing expenditure.  The GoB announced
    on September 22 that it would increase the primary fiscal
    surplus target from 4.25% to 4.5% of GDP.  It hopes that
    formalizing the new target will help limit interest rate
    increases while allowing the GoB to continue to reduce the
    debt-GDP-ratio.  Already the debt-to-GDP ratio has fallen
    from 58.6% in December 2003 and may close out the year at
    about 55%, which would mark the first year-on-year decline
    in the debt-to-GDP ratio in a decade.

    ¶3.   (SBU) Brazil took advantage of the positive situation
    to tap international markets with an over-subscribed Euro
    750 million eight-year bond, at a spread of 477 basis points
    above the benchmark German Treasury note.  Standard and
    Poor's recognized the progress by upgrading Brazil's credit
    rating to BB-, the same level it had before the 2002 crisis.
    Current low, albeit growing, investment levels mean the
    economy should cool off in the near term from current growth
    rates.  But, the good economic news should strengthen
    President Lula's hand as he implements rigorously orthodox
    economic and fiscal policies and pursues structural reforms
    critical to boosting weak savings and investment to the
    levels necessary for faster economic growth.  The economic
    news may also help candidates from Lula's Workers' Party
    (PT) in the October 3 nationwide municipal elections.  End
    Summary.

    The Good News
    -------------

    ¶4.   (U) The good economic news has been rolling in
    recently, with the Brazilian economy posting its fourth
    consecutive quarter of growth and the third at an annualized
    rate of over 6% (ref A).  Analysts have been busily revising
    upwards their growth projections for the year:  according to
    Central Bank survey data, the market now expects growth of
    4.36% this year, and some respected analysts are predicting
    growth as high as 4.7%.  It is not clear whether the economy
    has begun to cool off since the end of the second quarter.
    One closely-watched leading indicator, sales of packaging
    products, dropped over 4% in August, albeit after a July
    increase of over 5%.  Some analysts suggest this data point
    meant the economy has reached an inflection point and begun
    to trend towards the expected 2005 growth rate of 3.5%.  But
    other indicators from the same time frame, such as steel
    production, show little sign of such a cooling.

    ¶5.   (U) Employment growth, which had lagged a bit, has now
    begun to pick up markedly.  While unemployment is still high
    and remains a political issue, new GoB data show record
    formal employment creation in January to August (677,900 net
    new jobs).  The recovery is broadening across sectors, with
    consumption spending picking up.  External accounts remain
    very favorable, with export growth leading to a predicted
    trade surplus of $30 billion and an overall current account
    surplus for the year of 1.2% of GDP.  The weakest part of
    the external accounts had been Foreign Direct Investment
    (FDI), but after a recent uptick the Central Bank has
    revised its prediction of total FDI for the year from $13
    billion to $17 billion.

    But, Inflationary Pressure Rears its Ugly Head
    --------------------------------------------- -

    ¶6.   (U) Inflationary expectations, however, also have been
    mounting.  Wholesale price pressures fed by high capacity
    utilization, particularly in the intermediate goods
    industries such as steel, have been feeding through to
    consumer prices.  Workers are beginning to increase wage
    demands (such as the currently-striking bank employees) to
    make up for years of sliding real incomes (ref C).
    Companies are often acceding to union pressure and granting
    wage increases above inflation.  Energy prices also have
    contributed to the mounting inflationary pressures.
    Accumulated inflation in the year through August clocked in
    at 5.14%.  The market consensus as of September 17 was for
    consumer price inflation of 7.37% this year, substantially
    above the official 5.5% target, but still within the band of
    plus or minus 2.5 percentage points.

    Balancing Monetary and Fiscal Policies
    --------------------------------------

    ¶7.   (U) Given these increasing inflationary pressures, the
    Central Bank on September 15 hiked the basic SELIC interest
    rate by a quarter percent to 16.25%.  Unlike some of the
    previous rate decisions this year, the Central Bank
    telegraphed its intentions well, using the minutes of the
    August monetary policy meeting to lay the groundwork with
    the market for an increase.  Public debate has shifted to
    how quickly and to what degree the Central Bank needs to
    increase interest rates to tamp down emerging inflation.
    The minutes of the September 14-15 Central Bank monetary
    policy meeting make clear that the Bank sees the September
    15 hike as the first in a "process of moderate adjustment"
    of monetary policy, implying further interest rate
    increases.  Increased inflationary expectations have
    actually reduced forward-looking real interest rates by
    about a percentage point since April, when the Central Bank
    last cut the nominal interest rate to 16%.  This process of
    nominal adjustment would reverse some or all of that slide
    in real interest rates.

    ¶8.   (U) Strong revenue growth this year has given the GoB a
    realistic fiscal policy option to help head off increased
    interest rates.  On September 22 the GoB announced it had
    increased its primary surplus target for 2004 from 4.25% of
    GDP to 4.5% of GDP.  Analysts argue that this should help
    ease the burden on monetary policy in managing inflationary
    expectations, allowing the Central Bank to limit the
    necessary interest rate increases.  Notwithstanding feelings
    by some in President Lula's inner circle (notably Chief of
    Staff Jose Dirceu) that the GoB needed to dedicate part of
    its windfall to social and investment programs, Lula took to
    the airwaves September 23 to justify the decision, arguing
    it was better to pay down debt with the extra revenue than
    simply spend it.  The debt-to-GDP ratio at end-year may be
    as low as 55%, according to some analyses, down 4.6 points
    on the year.
    ¶9.   (SBU) One analyst with the Institute for Applied
    Economic Research (IPEA) told Econoff that the GoB really
    had no choice but to exceed the original 4.25% target, since
    revenues are running so far ahead of predictions while
    expenditures are ultimately capped by the 2004 budget law.
    (For example, last year's revisions to COFINS, a social tax
    paid on revenues, have brought in additional percentage
    point of GDP in revenues, according to the IMF ResRep;
    revenues also have been buoyed by the strong GDP growth.
    Note:  The official prediction now is a total federal
    government revenue increase of 1.1% of GDP.)  The IPEA
    economist opined that while the GoB might have considered
    trying to spend more, it would have had to obtain
    Congressional approval for a supplemental budgetary
    authorization.  This, however, would put the GoB in the
    uncomfortable position of acknowledging that the Congress's
    growth and revenue predictions, which the Executive
    criticized in January as inflated during a sometimes
    acrimonious debate over cautionary spending freezes, were in
    fact closer to the mark than the GoB's (Ref B).

    ¶10.  (U) Looking forward to next year, the Central Bank
    acknowledged in the minutes of its September 14-15 monetary
    policy meeting, published on September 23, that the
    trajectory of inflation has made unrealistic, without a
    sharper monetary response, the achievement of the 2005
    inflation target of 4.5%.  It decided to accommodate
    partially that inflationary inertia and announced a new 2005
    inflation target of 5.1%.  Subsequent to the Central Bank
    decision, the September IPCA-15 (a version of Brazil's
    consumer price index calculated on the 15th of each month,
    one of Brazil's rich heritage of inflation indices) clocked
    in at 0.49%, lower than had been anticipated.

    International Markets
    ---------------------

    ¶11.   (U) The GoB took advantage of a favorable
    international market to launch on September 8 a Euro 750
    million 8-year fixed-rate bond at a spread of 477 basis
    points over the benchmark German treasury note.  The issue
    was oversubscribed, which allowed the GoB to increase the
    amount from Euro 500 million.  The GoB then reopened the
    placement and issued a further Euro 250 million on September
    22, for a total placement of Euro 1 billion.   With this
    bond, the GoB has completed its borrowing program for the
    year on international markets, though some speculate the GoB
    will seek yet another Eurobond placement prior to year's end
    to increase international reserves and/or get a head start
    on 2005 borrowing.  At both the September 8 and September 22
    auctions, spreads were down markedly from the GoB's June and
    July issues, which were launched strategically after May and
    early June financial market turbulence to pave the way for
    private Brazilian borrowers to re-access international
    markets.  Standard and Poor's (S&P) recognized the progress
    by upgrading Brazil's credit rating to BB-, the same level
    it had before the 2002 crisis.  The move by S&P came eight
    days after Moody's had raised its Brazil rating to B1.

    Comment
    -------

    ¶12.  (SBU) The GoB had only the most fleeting of instants to
    sit back and enjoy the positive macroeconomic moment before
    shifting focus to combat new threats.  While inflation is
    not out of hand and remains the lesser concern, investment,
    expected to hit 19% of GDP by end-year, will not bring on-
    stream enough capacity quickly enough to sustain growth at
    the current rates.  Sustaining growth even at more moderate
    rates (3.5% to 4.5% range) will require implementation of
    more of the GoB structural reform agenda, including the
    Public-Private Partnership (PPP) legislation, bankruptcy law
    and reform of the judiciary.  These still are pending
    congressional approval, with the PPP law (slated for a
    Senate vote after the upcoming October municipal elections)
    the closest to passage.  Investors also would like to see a
    lower tax burden and more predictable (and less
    bureaucratic) regulatory environment, items on which it will
    be difficult for the GoB to make substantial progress in the
    short term.  Still, the recession-weary public is beginning
    to breathe a collective sigh of relief.  And, as the old
    adage goes, "nothing succeeds like success."  Both factors
    should give Lula and his macroeconomic guru, FinMin Palocci,
    greater space to pursue their orthodox fiscal and monetary
    policies and the structural reform agenda.

    DANILOVICH

`