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### Viewing cable 04BRASILIA1018, BRAZIL: SCENESETTER FOR BILATERAL POL-MIL

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BRASILIA1018 | 2004-04-28 15:41 | 2011-07-11 00:00 | CONFIDENTIAL | Embassy Brasilia

`

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

` `

    C O N F I D E N T I A L SECTION 01 OF 04 BRASILIA 001018

    SIPDIS

    FOR PM A/S BLOOMFIELD

    E.O. 12958: DECL: 04/27/2009
    TAGS: MARR MASS MOPS PGOV PREL BR POL MIL
    SUBJECT: BRAZIL: SCENESETTER FOR BILATERAL POL-MIL
    MEETINGS, MAY 14, 2004

    Classified By: DCM Richard Virden, Reasons 1.4 b & d

    ¶1.  (C) Summary:  Mission warmly welcomes your visit to
    Brazil.  Much is changing in Brazil.  Under President Lula
    there has been renewed focus on social issues and structural
    reform; economic performance, meanwhile, has been mixed.
    Urban crime poses an increasing threat to public security.
    The military budget is severely constrained and this is
    having a negative impact on military readiness.  Brazil is
    poised to lead the UN peacekeeping effort in Haiti with the
    deployment within two months of a contingent of about 1400
    soldiers.  At such a level, this would be the largest PKO
    deployment by Brazil since Angola in the 1970s.  The USG
    imposed ASPA sanctions July 1, 2003, when Brazil declined to
    sign an Article 98 agreement; we see no prospect that the GOB
    will alter its decision.  The USG and GOB remain engaged in
    seeking a solution to the airbridge denial (shootdown) issue.
     Despite these challenges, many Brazilian officers want a
    strong relationship with the U.S. military and are looking
    for ideas and programs that reinforce our continued
    commitment to the partnership.  END SUMMARY

    OVERVIEW
    --------

    ¶2. (SBU)  Since January 1, 2003, when President Lula assumed
    office, much has changed in Brazil.  By making deals with
    many of Brazil,s political parties, Lula and his PT party
    crafted a working majority in the legislature.  Led by
    Finance Minister Antonio Palocci, the Lula government
    continued the prudent macroeconomic policies of former
    President Cardoso; financial markets and the IMF have
    generally reacted positively.  Since early 2003, the &Real8
    has remained stable against the dollar and the country's
    market risk factor declined to its lowest level in years.
    Interest rates have declined almost 40% since their peak in
    late 2003 but in real terms they still remain high due to
    inflationary fears.  High interest rates continue to depress
    investment and growth.  During 2003 GDP growth was slightly
    negative, although some rebound is expected for 2004. Job
    creation remains moribund and foreign investment stagnant.
    Meanwhile, in early 2004 a political scandal hit the PT party
    and cost the government political support.  Despite problems
    within his party, Lula personally remains popular among
    Brazilians.  But it will be his ability to deliver economic
    results for the masses that will determine whether he can
    retain his high popularity until the 2006 presidential
    elections.

    ¶3. (C)  Under President Lula, Brazil has become more involved
    on the world stage, including leadership of the Friends of
    Venezuela Group, greater engagement with Colombia, renewed
    ties with Africa and other "New Agenda8 countries, co-chair
    of the FTAA, and possible leadership of the follow-on force
    in Haiti. The President travels extensively and in the last
    year, in addition to South America, has been to the Middle
    East, South Asia, and Africa.  He will travel in mid-May to
    China as Brazil extends its foreign policy reach to
    non-traditional regions.  Yet, despite the administration's
    increased focus on bilateral foreign policy, the government
    strongly favors support for multilateral responses to world
    events.  Brazilian President Lula opposed U.S. policy in
    Iraq, a position that broadly reflected Brazilian public
    opinion, although he later muted his public comments.  Brazil
    reacted with shock to the 19 August 2003 attack on the UN
    headquarters in Baghdad, in which respected Brazilian
    diplomat and UN Iraq chief Sergio Vieira de Mello was killed.
     On January 1, 2004, Brazil assumed a two-year rotating seat
    on the UN Security Council.  Brazil continues to lobby to
    obtain a permanent UNSC seat and this topic is a key point
    raised by President Lula during his travels.  The GOB remains
    reluctant to criticize the Castro regime and recently
    abstained on a critical Cuba resolution at the UN Human
    Rights Commission.

    SECURITY ISSUES

    ¶4. (C)  On counter-terrorism operational issues, cooperation
    between the USG and Brazilian law enforcement and security
    services is good.  Unfortunately, recent media reports
    following published interviews with the disgruntled former
    Embassy Brasilia Legatt have led to political queries in
    Congress.  The GOB is hypersensitive to &unsubstantiated8
    allegations that terrorist groups are active on Brazilian
    territory, particularly in the Tri-border region.  Senior GOB
    officials maintain that there is no evidence to support
    claims that terrorists operate on Brazilian territory and the
    GOB has repeatedly asked us for specific information to
    support such allegations.  GOB police and security officials
    acknowledge that fundraising, money laundering, and related
    criminal activities are likely ongoing, but again, they
    request solid intelligence that would link funding with
    terrorist groups.  Brazil has a sizable population with
    ethnic origins in the Middle East, including many Brazilians
    who are economically and politically influential.  The USG is
    concerned that these communities contain persons who
    financially support terrorist organizations.

    ¶5. (C)  Crime remains a severe problem in Brazil,s large
    cities.  In Rio, where violence has become endemic, a gang
    war in Rocinha, a favela notorious for crime and drugs,
    culminated with bloodshed and revealed the depth of criminal
    druglord control over the favelas. The police reacted by
    launching a highly publicized incursion into Rocinha.  In the
    countryside, the Landless Movement (MST) illegally occupies
    land, causing confrontations with landowners and the GOB.  In
    April the MST accelerated its occupations throughout Brazil,
    worsening an already tense situation in rural areas. A role
    for the Brazilian military in dealing with crime and public
    security is being reviewed, and President Lula appears to
    favor some increased military role. Many field-grade officers
    regard some armed forces involvement as inevitable; however,
    most senior officers are strongly opposed.  The military
    establishment is sensitive to the legal ramifications that
    could result from civilian casualties, increased corruption,
    and the residual legacy of 21 years of military rule.  Hence,
    it prefers not to take on police functions without prior
    adjustments in legislation and increased budgetary support.

    ¶6. (C) Brazil has found itself in an uncomfortable spotlight
    regarding its non-proliferation credentials of late.  IAEA
    officials expressed disappointment with the Brazilians over
    the institution of a suitable inspection regime for the new
    enrichment facility at Resende.  In addition, the IAEA, the
    U.S., and many other countries have asked Brazil to sign an
    Additional Protocol to the NPT, a measure the GOB has
    resisted so far.  Brazil,s main argument is that the nuclear
    weapons states need to accelerate their disarmament even as
    the nonweapons states consider additional compliance
    measures.  Meanwhile, Brazil is considering signing onto the
    International Code of Conduct for missile technology but
    remains unenthusiastic about the Proliferation Security
    Initiative and the Australia Group.

    THE ARMED FORCES IN BRAZIL
    --------------------------

    ¶7. (C)  Since the end of military rule in 1985, the armed
    services have steadfastly supported Brazil,s civilian
    leadership and adapted to their new apolitical status.
    Brazil,s military has subordinated itself to civilian rule,
    under a civilian Ministry of Defense.  The officer corps is
    professional and dedicated to defending Brazil,s
    constitution. In recent public opinion surveys the military
    tops all institutions in the level of public trust, even
    surpassing the Catholic Church.

    ¶8. (C)  Public esteem does not translate, however, into
    funds.  Military budgets have decreased steadily for 15
    years, with the severest cuts introduced over the last four
    years.  This has naturally had a negative impact on the
    readiness of the armed forces.  As President Lula stresses
    social priorities while working within tight fiscal
    constraints, the prognosis for the military's budget is for
    more of the same. The military grumbles that it is entitled
    to pay raises.  The lack of money dampens the force
    projection capability.  Procurement programs for new weapons
    systems to replace outmoded equipment are also starved for
    funds, while programs such as the development of a Brazilian
    nuclear-powered submarine and maintenance of antiquated
    vessels drain resources that could be better directed
    elsewhere.  One of President Lula,s first acts as president
    was to postpone a decision on the F-X jet fighter
    competition.  Minister of Defense Jose Viegas claims a
    decision on the F-X will be made &this year.8  Other key
    procurement decisions are also being held up.

    ¶9. (C)  A major internal issue is the relationship between
    the armed services and the Ministry of Defense.  Defense
    Minister Viegas, an experienced diplomat with extensive
    service in political-military affairs, commands the respect
    of senior military leadership. However, as Viegas
    consolidated power within the Ministry, stress with the
    services was inevitable. The Minister created, for example, a
    four-star level secretariat of cooperative studies headed by
    a diplomat.  Many officers felt such senior civilian
    placements within the Ministry diminished the military's
    access and rendered it less effective in fighting important
    bureaucratic battles.  In addition, within the Ministry there
    are problems in the chain of command.  Although the Chief of
    Defense and the Secretary for Strategy, Policy and
    International Affairs are four-star generals with direct
    advisory roles to the Minister, their positions are
    unofficially subordinate to the service commanders.  Their
    ability to impose &jointness8 is compromised.  Morale among
    the senior military grades has been negatively affected,
    leading to transfers and some retirements.

    ¶10. (C)  The services maintain close ties with counterparts
    in neighboring countries and there are no identifiable
    trouble spots in these relations.  Each service conducts
    annual or more frequent dialogue at various levels of command
    with neighboring militaries.  Army-to-army relations with
    Brazil,s neighbors, for example, are conducted at the chief
    of staff, regional command, brigade, and battalion levels.
    Despite a troubled history, relations between the Argentine
    and Brazilian militaries have never been closer.  Brazil is
    also doing some regional intelligence sharing, and there is
    steady improvement in this field with Colombia and Peru.

    SPECIFIC ISSUES
    ---------------

    ¶11. (C)  Army Issues:  Brazil,s army has the lead in
    preparations for the 1400 man follow-on force for Haiti.
    While army leadership is confident in the ability of their
    taskforces to conduct such PKO missions, actual funding is a
    concern.  The army is attentive to Brazil,s borders,
    particularly in the Amazon Basin where it has relocated 5,000
    troops and established several new frontier platoons.  There
    is increased concern with the spillover effects of Plan
    Colombia and some skirmishes with the FARC have been
    reported.  While the army does not anticipate a direct
    confrontation with the FARC, there is recognition that FARC
    gunrunning and narcotics smuggling activities will eventually
    have to be challenged.  DAO has visited a number of frontier
    platoons throughout the Amazon.  They report that while the
    various commands may lack hardware and support, they are
    keenly aware of their mission and seem prepared to carry it
    out.

    ¶12. (C)  Navy Issues: In recent years, the navy procured 23
    A-4 Skyhawk attack aircraft from Kuwait and bought the former
    French aircraft carrier Foch, renamed the Sao Paulo.  Several
    pilots have already become carrier qualified in the U.S.  The
    Navy is sending on average two officers a year for flight
    training.  In March 2004, the navy signed an LOA for the FMS
    LINK 11 case to upgrade their secure communications.  In a
    program plagued by technological and design flaws, the
    navy,s nuclear submarine program has swallowed about $1
    billion in R&D costs.  The navy claims it is still 20 years,
    and $500 million, away from final development and delivery of
    a nuclear sub.  (We believe it would be much longer and cost
    much more.)   Meanwhile, the navy is in dire need of escort
    vessels, and is hard pressed to maintain its aging fleet.
    Navy command is interested in submarine rescue, diesel
    submarine, and UNITAS training and exercises.

    ¶13. (C)  Air Force Issues:  The air force desperately wants
    to replace its aging Mirages.  Upon taking office in January
    2003, President Lula postponed a decision on a new generation
    fighter (F-X), an understandable decision given the cost
    involved, approximately $700 million. New Lockheed F-16 Block
    50 aircraft were previously offered in the competition.
    However, recognizing that other competitors might be
    preferred by FAB, Lockheed-Martin also decided to offer used
    F-16s in a deal that would provide the air force with capable
    aircraft at a fraction of the cost of new planes.  Recent
    soundings from the GOB suggest that in order to avoid the
    significant budgetary outlay, consideration is also being
    given to upgrade of the current Mirage fleet. However, FAB
    continues to focus on the procurement of new, not used,
    aircraft.  Regardless of the decision, GOB funding of the F-X
    will be difficult. FAB is also looking to replace its aging
    UH-1 helicopter fleet.  In February 2004, the FAB sent a
    delegation to Alabama to discuss possible modifications
    needed on the 6-10 Black Hawks they are interested in
    purchasing.

    ¶14. (C)  SIVAM (Amazon Surveillance System):  Now almost
    complete, the SIVAM system being built by Raytheon consists
    of ground, aerial, and space-based sensors, communications
    and patrol aircraft.  Raytheon has had contract differences
    with the GOB and has threatened to stop its support unless it
    receives payments the company insists are due. Brazil has
    indicated its willingness to share data with neighboring
    countries under certain conditions.

    ¶15. (C)  Article 98:  Brazil has not signed an Article 98
    agreement and is now subject to ASPA sanctions.  The GOB, in
    keeping with its long-standing &multilateralism,8 insisted
    it was committed to the International Criminal Court and that
    signing our Article 98 waiver would weaken this commitment.
    The Government also asserted that it could conceive of no
    circumstances under which it would subject U.S. citizens to
    extradition to The Hague. The GOB calculated that the
    projected loss under ASPA sanctions of $500,000 of IMET funds
    was tolerable.  However, the imposition of full FMS pricing
    for training, an unforeseen consequence of ASPA, caught the
    GOB by surprise and has caused additional frustration and
    friction.  Despite this additional blow, the loss of access
    to EDA grant funds, the withdrawal of the Spruance destroyer
    offer (combination sale and grant transfer), and the
    financial impact on the training portion of procurement
    offers such as the F-16, we do not expect Brazil to reverse
    its position on Article 98.  In fact, the MOD has indicated
    that it will continue training at the same level as pre-ASPA
    sanctions, just with other countries.  The armed services
    have already shifted training to Great Britain and France and
    may expand programs with Russia, China, and even Vietnam.

    ¶16. (C)  Airbridge Denial/Shootdown:  Due to international
    treaty obligations and USG laws threatening possible economic
    sanctions, Brazil has not implemented its law permitting the
    shootdown/forcedown of civil aircraft suspected of illicit
    trafficking. In the last few months, President Lula has
    become personally energized in seeking a way to challenge
    suspected narcotraffickers who flagrantly violate Brazilian
    airspace.  The GOB has had confidential contacts with the USG
    on the issue in search of a solution.

    ¶17. (SBU)  Despite Article 98 and other irritants in the
    relationship, we consider ties between the U.S. and Brazilian
    militaries good.  Brazil and the U.S. will continue to
    participate in joint exercises such as Cabanas and UNITAS.
    In June, the aircraft carrier Ronald Reagan is slated to make
    a port visit to Rio. The MOD still views the U.S. military
    relationship as important and the U.S. a dependable partner.
    Brazil, as a strategic partner, remains important to the U.S.
     Beyond ASPA, there remain many areas of defense cooperation
    and interaction, as well as areas of cooperation that remain
    untapped.  Many in the Brazilian Armed Forces recognize that
    they must expand their role in counter narcotics and counter
    terrorism.  As the MOD proceeds with the development of a
    National Military Strategy for Brazil, the U.S. can offer its
    perspectives on the process.

    ¶18. (C)  Maintaining the U.S.-Brazil pol-mil relationship
    requires constant attention and, perhaps, more effort than
    with any other bilateral relationship in the hemisphere.
    Within Brazil, there is no institutional propensity to curry
    favor with the U.S.  Given its size, Brazil views itself as a
    regional leader and global player, even if it sometimes
    appears to fall short of what is expected from a world power.
     The GOB will be eager for ways to enhance the bilateral
    relationship, overcoming the obstacles created by ASPA and
    Brazil,s rejection of an Article 98 agreement.  But the GOB
    will also remain sensitive that it not appear too eager to
    consummate deals with us that could backfire politically.

    Hrinak

`