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Cablegate: Pt Prepares for National Congress

VZCZCXRO3534
PP RUEHRG
DE RUEHSO #0734/01 2411902
ZNR UUUUU ZZH
P 291902Z AUG 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 7401
INFO RUEHBR/AMEMBASSY BRASILIA 8515
RUEHBU/AMEMBASSY BUENOS AIRES 2841
RUEHAC/AMEMBASSY ASUNCION 3082
RUEHCV/AMEMBASSY CARACAS 0542
RUEHMN/AMEMBASSY MONTEVIDEO 2414
RUEHLP/AMEMBASSY LA PAZ 3459
RUEHSG/AMEMBASSY SANTIAGO 2116
RUEHRI/AMCONSUL RIO DE JANEIRO 8286
RUEHRG/AMCONSUL RECIFE 3744
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 2880
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 04 SAO PAULO 000734

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/BSC, INR/IAA, INR/R/AA
STATE PASS USTR FOR KATE DUCKWORTH
NSC FOR TOMASULO
TREASURY FOR OASIA, DAS LEE AND JHOEK
USDOC FOR 4332/ITA/MAC/WH/OLAC
USDOC ALSO FOR 3134/USFCS/OIO
DOL FOR ILAB
SOUTHCOM ALSO FOR POLAD
USAID FOR LAC/AA

E.O. 12958: N/A
TAGS: PGOV PINR PHUM ELAB ECON BR
SUBJECT: PT PREPARES FOR NATIONAL CONGRESS

REF: (A) SAO PAULO 496; (B) SAO PAULO 129;

(C) 06 SAO PAULO 1264; (D) 06 SAO PAULO 1105
(E) 05 BRASILIA 2951 AND PREVIOUS

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY.

-------
SUMMARY
-------

1. (SBU) In recent meetings with Poloff, leaders within the Workers
Party (PT) outlined the focus of the upcoming PT National Congress.
According to Renato Simoes and others, the Third National Congress
of the Workers' Party (PT) will not be a forum for great ideological
debates, but rather an opportunity for leaders and factions to
position themselves for upcoming electoral struggles such as the
municipal elections in 2008 and national elections in 2010. The
National Congress will also address the future leadership of the
party, seek to enhance the party's profile, and build a lasting
constituency in a post-Lula PT party. End Summary.

2. (U) The PT will hol its National Congress, only the third in
its 27year history, from August 31 through September 2 i Sao
Paulo. Some 1,500 delegates from Brazil's 6 states and the Federal
District will participae. The Congress comes at a difficult moment
in the party's history as the Lula administration has been rocked by
a number of scandals as well as internal dissension. After
weathering the trauma of a major corruption scandal in 2005 to elect
83 Federal Deputies, five Governors, and to re-elect President Lula,
the PT is plagued by disgruntlement and disillusion in its leftist
base. Serious internal divisions and rivalries, growing public
weariness over federal government policies, and the lack of a strong
national candidate to succeed Lula have all contributed to a lack of
focus within the PT.

3. (U) Over the past few weeks, Poloff and Political Assistant have
met with various party leaders, thinkers, and office-holders to
discuss the issues that are most likely to emerge during the PT
National Congress. These meetings included: Renato Simoes, acting
Secretary for Social Movements and a member of the PT's National

SIPDIS
Executive Committee; Rui Falcao, a Sao Paulo state legislator and
former party President who managed Lula's unsuccessful 1994
presidential campaign; and Ricardo Azevedo, president of the Perseu
Abramo Foundation (FPA), the PT's think tank. From varied
perspectives and with differing points of emphasis, each described
the state of play and the issues to watch for in the Third Congress
as well as the 2008 municipal elections, and the 2010 national and
state executive and legislative elections.

-----------------
THEMES AND THESES
-----------------

4. (U) Three broad themes have been identified for discussion at
the Congress: "The Brazil We Want," "PT Socialism," and "PT:
Conception and Functioning." Representatives of different schools
of thought within the party have published 12 "theses," which have
been debated and refined in local and state party congresses. The
first two are relatively uncontroversial - the PT wants a growing,
developing free Brazil with a strong dose of egalitarianism and
emphasis on social progress, including more rights and better access
for Afro-Brazilians, indigenous peoples, workers, and the poor, and
favors a vigorous democratic socialism - with only some priorities
and details to be worked out. However, the question of the party's
conception and functioning - how it operates in a multi-party system
- has stimulated a variety of responses and has the potential to be
an area of contention. NOTE: An in-depth look at the various power

SAO PAULO 00000734 002 OF 004


centers is forthcoming septel. END NOTE.

---------------
WHO SHALL LEAD?
---------------

5. (SBU) Due to the multi-faction nature of the PT, the question of
internal party elections figures to loom large at the National
Congress. In September 2005, the party elected its national
president, executive committee, and national, state, and local
directorates to three-year terms. The timeline calls for new
internal elections in September 2008, but most in the PT resist the
idea of holding internal elections so close to the October municipal
elections. A small portion of the PT's largest faction, the Campo
Majoritario (CM), favors postponing internal elections until early
2009, but most other parties prefer to move them forward to either
late 2007 or early 2008 (before the municipal races are in full
stride) to get new leadership in place sooner rather than later.

6. According to both Simoes and Falcao, the incumbent PT president,
Ricardo Berzoini (a Social Security Minister and later Labor
Minister in Lula's first term) of the CM is a strong candidate for
re-election, though not without opposition. However, Berzoini has
said both publicly and privately in the past week that he will not
run, and Azevedo thinks he should be believed. Comment: Elected in
the aftermath of the "Mensalao" vote-buying scandal (see ref E),
Berzoini has never been seen as a strong leader. He was forced to
step aside in October 2006 after being implicated in another scandal
involving a fake political "dossier" designed to undermine Sao Paulo
gubernatorial candidate Jose Serra. Though he later returned to the
job, he has never recovered his strength. End Comment.

7. (SBU) If Berzoini does not run, logical choices would include
two old-timers, Marco Aurelio Garcia (PT first vice president who
served as acting President in Berzoini's absence and is currently
President Lula's Foreign Affairs Advisor) and Luiz Dulci, the
Secretary General of the Presidency. Garcia, however, has said he

SIPDIS
doesn't want the job and is also suffering from an image problem
ever since he was captured on national television making obscene
gestures to "celebrate" the news that the July 17 crash of TAM 3054
at Congonhas airport in Sao Paulo, which killed 199 people, may have
been caused by mechanical problems and not by factors under the
government's purview such as the short, slippery runway. Luiz
Dulci, a founder of both the PT and the Unified Workers Center (CUT)
and a past President of the Perseu Abramo Foundation who remains one
of President Lula's oldest and closest friends, has also said he is
not interested, but may change his mind. As one of the few members
of the old guard to emerge untainted from the scandals and to remain
in the government, and reportedly one of the only people left in the
Presidential palace in whom Lula still confides, if forced to choose
between party and government, Dulci would probably want to stay in
the government.

8. (SBU) Other potential candidates have emerged, such as Olivio
Dutra, former Governor of Rio Grande do Sul and former Minister of
Cities and, most recently, Antonio Palocci, a Federal Deputy who
served as Finance Minister 2003-6 before resigning over a blatant
abuse of his office to escape incrimination in a sex scandal. Both
would likely generate opposition from either the CM, in the case of
Dutra, or the PT's left wing, in the case of Palocci. While
long-shots, both potential candidates are waiting in the wings in
the event that Berzoini, Garcia, or Dulci decide not to run.

---------------------------------------
WHAT TO DO ABOUT 2010 AND WHEN TO DO IT
---------------------------------------


SAO PAULO 00000734 003 OF 004


9. (SBU) The question about when to elect new party leadership, and
whom to elect, is extremely important because the new PT president
must lead the party into national elections three years from now.
Political observers agree that all parties are already focused on
2010, but none so much as the PT, which for the first time will
offer a candidate not named Lula. NOTE: Some observers believe that
Lula hopes to see a weak President elected so he can mount another
challenge in 2014 (the Constitution prohibits three consecutive
terms, but nothing precludes Lula from running in 2014, when he will
be 68) End note.

10. (SBU) The decision on when or if to field a leading candidate
either from the PT or any of the other coalition parties is also at
center stage for this National Congress. Azevedo predicted that if
left up to him, Lula would not decide whom to support until sometime
in 2009, after the municipal elections have clarified the picture.
Lula aspires to be the Great Elector and kingmaker, to perpetuate
his legacy, but many in the PT will insist on beginning now to work
on identifying a PT candidate. Comment: Many analysts agree that
fielding a candidate too soon would result in increasing dissension
within the PT ranks and would offer a target for the opposition to
attack. End Comment.

11. (SBU) Regarding the political/economic platform of the PT,
there is near unanimity that the political system needs to be
overhauled before any meaningful economic reforms or improvements in
governance can take place. The Lula administration put forward a
bill with four elements: 1) Voting for a closed party list; 2)
Public financing of election campaigns; 3) Party fidelity; and 4) An
end to coalitions in campaigns governed by proportional voting,
e.g., legislative campaigns. The PT generally supports the bill,
but numerous PT Federal Deputies oppose the closed party list (in
which voters are asked to choose a political party, whose slate of
candidates is selected by party leaders but not disclosed to
voters). Even though strong opposition to this reform agenda by the
opposition appears to have killed three of the four initiatives for
now, the PT is likely to maintain many of these areas as central
themes going into 2010. A party fidelity measure was approved in
committee in the Chamber of Deputies and is now awaiting a plenary
vote.

-------
COMMENT
-------

12. (SBU) Despite the challenges it faces, the PT remains strong in
many ways. Labor leaders such as the Unified Workers' Center
(CUT's) Joao Felicio, while taking issue with some of Lula's
policies, freely acknowledge that Brazil may never again see a
candidate so friendly to labor. In addition, the PT is closely
associated with public welfare campaigns such as the "Bolsa Familia"
from which roughly 25% of Brazilians receive financial support, and
thus remains strong with the economically disadvantaged of the
country. But there is no question that the burdens associated with
running the federal government, with its accompanying
coalition-building and compromising, has severely taxed the party's
political talent and tarnished its image. It is losing old friends;
a number of radicals left in 2005 to join Heloisa Helena's Socialism
and Liberty Party (PSOL); the MST (Landless Movement) is
increasingly alienated by what they perceive as a lack of commitment
to agrarian reform; and we hear increasingly that the Communist
Party of Brazil (PC do B) wants to leave the coalition and may even
launch a new labor central in competition with the CUT, a PT sister
organization. The question remains whether the support enjoyed by
the PT is support of Lula or of the party itself. How the PT will
meet this challenge and burnish its image is perhaps the most
important issue its Third Congress will have to address. End

SAO PAULO 00000734 004 OF 004


Comment.

13. (U) This cable was coordinated with Embassy Brasilia.

WHITE

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