USG PRESENTS ETHANOL COOPERATION STRATEGY TO BRAZIL’S MFA

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06BRASILIA1933 13 September 2006 Solo uso oficial Embassy Brasilia

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SUBJECT: USG PRESENTS ETHANOL COOPERATION STRATEGY TO BRAZIL’S MFA

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1. (U) Greg Manuel of the Department of State and Sarah Ladislaw
from the Department of Energy (DoE), accompanied by Matthew Golden
and Morgan Perkins from Mission Brazil, met with the MFA’s U/S
Patriota and Minister Antonio Simoes, on September 5, to discuss
bilateral, biofuel cooperation. The meeting provided Manuel and
Ladislaw an opportunity to lay out the USG’s global three-tiered
biofuel strategy and to present options for future high-level
meetings between the USG and GoB. On the flip side, the meeting
revealed that the MFA is no longer responsible for the GoB’s
international biofuel policy and, moreover, that the GoB is
reorganizing the government’s biofuel hierarchy. The meeting was
held on the margins of the Ethanol Forum meeting on September 5
(reported septel). End Summary

2. (U) Manuel opened the meeting by articulating the USG’s plan for
bilateral biofuel cooperation. The program is three-pronged and
involves science and technology collaboration, third-market
development (to catalyze production and scale) and the Global
Ethanol Forum. He proceeded to identify third-market development
targets in the Western Hemisphere, including Haiti, the Dominican
Republic and St. Kitts in the Caribbean; Guatemala and El Salvador
in Central America; and Colombia and Bolivia in South America. St.
Kitts, he emphasized, due to the island’s size, geography and
existing infrastructure make it an ideal choice to create a
successful pilot on which to base other third-market interventions.
Following on this rationale, the Department, according to Manuel,
split the choices regionally to maintain an independent focus and to
keep from pinning success on any one region or any one country. In
closing, Manuel underscored the urgency of the matter for the USG
and noted the importance of obtaining a sense of commitment from
Brazil at the earliest possible opportunity.

3. (U) Ladislaw then provided the background for the partnership’s
proposed S&T element. She explained that the DoE is one of the
principal USG organizations in terms of biofuel R&D, and described
the USG’s desire to compare how the U.S. and Brazil approach both
biofuel research and resource allocation. Ladislaw suggested
utilizing the DoE-MME (Ministry of Mines and Energy) Energy Working
Group to begin sharing technical data and further espoused the
crossover with the NIST-INMETRO partnership to develop biofuel
standards. Ladislaw noted that the DoE had already contacted the
MME’s Rubens Barbosa to find an appropriate date for the Energy
Working Group to meet.

4. (SBU) Patriota responded noncommittally stating that the GoB
would take these ideas under consideration. He also noted,
revealing a certain degree of caution, that the MFA would have to
vet the proposals through the Casa Civil, which would affect the
response. He clarified that the GoB’s own interagency working group
had met for the first time the previous Friday and was only just
beginning to detail its list of activities. Patriota also let slip
that Lula’s Chief of Staff, Dilma Rousseff, is planning to
reorganize the structure of the biofuel policy-making apparatus and
would create a new Biofuel Council; although, the exact make-up was
yet to be determined. Although this will affect the MFA’s agenda,
Patriota surmised that the GoB agrees, at least in concept, to the
USG’s proposed ideas; he emphasized the GoB’s current ethanol
development initiatives in Jamaica and Barbados.

5. (SBU) In terms of the countries Manuel identified, Patriota
confirmed that Haiti is a huge priority for the GoB and, being open
and frank, noted that Brazil would find it much easier to cooperate
in Central America and the Caribbean than in South America. He
explained that the myriad of South American regional integration
activities and the resultant sensitivities involved would make it
extremely difficult for Brazil to partner with the U.S. in the
region. However, he proclaimed that Guatemala and St. Kitts would
be well received, and believed that while El Salvador was not a GoB
priority it was geopolitically benign. Simoes summed up that
Brazil, like the U.S., would need to determine the countries it was
interested in geopolitically, run feasibility studies to assess
individual situations and then coordinate with the USG to determine
what assets each country could bring to the table.

6. (U) In addition to the aforementioned themes, discussions also
touched on high-level meeting opportunities. Both sides took note
of the Rice-Amorim meeting scheduled for September 23 at UNGA.
Manuel also presented U/S Shiner’s desire to meet with Patriota
sometime in October or November. The discussion also highlighted
the need for the GoB to deconflict the Ethanol Forum with Italy’s
GBEP (Global Bioenergy Partnership). Patriota agreed that the GoB
and GoI should work together to ensure that the Ethanol Forum and
GBEP did not have competing agendas. He promised that the GoB would

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raise the issue with Italy at the earliest opportunity. (Note:
Earlier in the day, Simoes stated that Brazil had not been invited
to join GBEP)

7. (SBU) Comment: The meeting provided two definitive outcomes. It
clearly illustrated the MFA’s interest in pursuing a coopertive,
bilateral relationship with the USG to promote biofuels.
Simultaneously, it demonstrated that Itamaraty is not in charge of
Brazil’s domestic or international biofuel policy. That
responsibility lies with the Casa Civil and Dilma Rousseff. Future
entreaties to cooperation and attempts to influence policy should
include the Casa Civil. In the interim, despite pleas for an
expeditious answer, it is extremely unlikely that the GoB will
assent to cooperate prior to its October elections and, after these,
until its biofuel policy matrix is organized. End Comment

SOBEL