According to Brazilian president's international affairs advisor, Marco Aurélio Garcia, differences between Brazil and Paraguay over the world's largest operational hydroelectric dam, Itaipu, are a "political problem" and not an energy issue.
Garcia said the Itaipu treaty which regulates the shared dam and Paraguay would like to review, in spite of Brazil's resistance, was born under "specific historical circumstances" and now "we must determine whether it is possible to modify it or not."
Brazilian president Luiz Inácio Lula da Silva's advisor pointed out that the Paraguayan leader, Fernando Lugo "was elected with certain promises (such as the review of the Itaipu treaty) and must now deliver something" to his electorate, but he also recalled that the conditions of the document which Paraguay is demanding to modify "were created" by governments quite back in history.
The Itaipu treaty was signed 35 years ago by the two military dictatorships ruling Brazil and Paraguay at the time. Lugo argues some of the clauses contained are "leonine" and harm his country and is requesting a review of prices paid for power generated at Itaipu, as well as the pending debt from the time the dam was constructed. It is also demanding the right to trade its surplus share to third countries at spot market values.
Garcia added that it was his personal view that presidents Lula and Lugo get along very well, and that "makes us believe that it's possible to find a common denominator" to differences. It's a question of time "but I think they will reach common ground."
May 8, Lula and Lugo discussed the Itaipu issue in Brazilian capital Brasília for several hours, but arrived to no accord and walked out of the meeting without signing 15 bilateral cooperation agreements in other areas, leaving the ceremony and staff in blank. The only thing agreed was to hold another round of talks next July, this time in Asuncion, Paraguay.
However, the Brazilian presidency spokesperson Marcelo Baumbach said that another bilateral meeting "could probably take place" next Monday when both presidents meet in San Salvador for the taking office ceremony of El Salvador president Mauricio Funes.
Meantime in São Paulo, local politicians, industry and business representatives listened to the two sides of the Itaipu controversy at a forum hosted by Brazil's all powerful São Paulo Federation of Industries, FIESP.
Delegates Carlos Mateo from Paraguay and Jorge Samek from Brazil set their cases but apparently arrived nowhere and the prevailing opinion following the meeting was that is had been a "non productive" debate.
Samek during a brief press conference said that Paraguay's claim regarding the surplus power is "impracticable" and can only be reviewed in 2023, as established in the treaty.
"Articles XIII and XIV of the treaty are quite clear in so far that any surplus must be sold to the other partner in need," underlined Samek.
Mateo argued that the treaty does not say that only Eletrobrás (government owned power corporation) can sell the surplus energy in Brazil and does not impede other companies from being involved.
Anyhow it was "a positive debate," because only the Itaipu staff talked, "we have to wait to see what the real actors of Brazil's political and business establishments have to say. Meantime prudence and calm," said Mateo.