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Cablegate: Brazil: Political Scientists Offer Gloomy Prognosis, See

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PP RUEHRG
DE RUEHSO #0834/01 2842002
ZNR UUUUU ZZH
P 112002Z OCT 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 7571
INFO RUEHBR/AMEMBASSY BRASILIA 8681
RUEHBU/AMEMBASSY BUENOS AIRES 2900
RUEHAC/AMEMBASSY ASUNCION 3135
RUEHCV/AMEMBASSY CARACAS 0572
RUEHMN/AMEMBASSY MONTEVIDEO 2464
RUEHLP/AMEMBASSY LA PAZ 3515
RUEHSG/AMEMBASSY SANTIAGO 2166
RUEHRI/AMCONSUL RIO DE JANEIRO 8386
RUEHRG/AMCONSUL RECIFE 3835
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 2925
RUEHC/DEPT OF LABOR WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 04 SAO PAULO 000834

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/BSC, INR/IAA, INR/R/AA
STATE PASS USTR FOR KATE DUCKWORTH
NSC FOR TOMASULO
TREASURY FOR 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 ECON BR
SUBJECT: BRAZIL: POLITICAL SCIENTISTS OFFER GLOOMY PROGNOSIS, SEE
LITTLE HOPE FOR REFORM

REF: (A) BRASILIA 1745; (B) SAO PAULO 749; (C) SAO PAULO 48
(D) SAO PAULO 777

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

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

1. (SBU) At a September 28 lunch with Emboffs, two prominent
political scientists offered a gloomy outlook on the current
political situation. According to them, chances for meaningful
political reform seem dead, and the ongoing scandals involving
Senate President Renan Calheiros (ref A) offer all too clear a
picture of how the incentives and rewards system works for
politicians. From the academics' perspective, opposition parties
are unable to mount a serious challenge to the governing coalition,
and the likelihood is that, with or without President Lula, the
forces currently in power will remain there indefinitely. The two
experts differed on whether Lula will seek a Constitutional
amendment to enable him to run for a third term in 2010. The
assessment presented by these two analysts reflects a growing
consensus among the political, media, and business elite in Brazil.
At this point, however, the growing sense of malaise among the elite
has not coalesced in any clear call for reform. End Summary.

2. (U) Emboffs lunched September 28 with political scientists
Bolivar Lamounier and Jose Augusto Guilhon de Albuquerque to discuss
the current political scene. Both academics have published widely
on Brazilian political issues; Lamounier taught for many years at
the University of Sao Paulo (USP) and the Catholic University (PUC)
and now has his own political consulting firm. Guilhon de
Albuquerque, also an USP Professor Emeritus who specialized in
international affairs, is an advisor to Vaz de Lima, President of
the Sao Paulo State Legislative Assembly (ALESP). Both are
associated with the opposition Social Democracy Party of Brazil
(PSDB).

----------
PSDB BLUES
----------

3. (SBU) Lamounier and Guilhon believe that the current situation,
in which President Lula's 13-party governing coalition dominates
Congress and receives little effective opposition from the PSDB and
its own coalition partner, the Democratic Party (DEM), is bad for
Brazilian democracy. The PSDB is in a difficult position for
various reasons, not the least of which is its inability to oppose
many of Lula's policies as he has taken many aspects of the PSDB's
center-left agenda and made it his own. Opposing Lula would
therefore be tantamount to renouncing the PSDB's own history and
record. The second reason is that the two most prominent PSDB
leaders, Governors Jose Serra of Sao Paulo and Aecio Neves of Minas
Gerais, both want to run for President in 2010. Consummate
politicians, they both understand the dangers of criticizing a very
popular sitting president and his administration. Furthermore,
political differences aside, both are on friendly terms with Lula
and don't want to confront or challenge him openly.

4. (SBU) Lamounier believes that Lula's two main pillars of support
- his own Workers' Party (PT) and the Brazilian Democratic Movement
Party (PMDB) - will remain in power for some time to come regardless
of the outcome of the 2010 presidential election. These parties
have entrenched themselves throughout the federal bureaucracy
through political appointments to various jobs. There are almost

SAO PAULO 00000834 002 OF 004


20,000 non-career "Cargos de Confianca" (positions filled by
political appointees) in the Executive Branch, including some 4,000
officials named directly by the President. In addition, the parties
are benefiting from a generally strong economy and the popularity of
social programs like "Bolsa Familia."

5. (SBU) Compounding the problem is that while most parties don't
have any viable presidential candidates, the PSDB has two and a half
- Serra, Neves, and 2006 nominee Geraldo Alckmin - and still no
democratic system for choosing among them. (When Serra and Alckmin
were competing for the party's 2006 presidential nomination, there
was widespread perception that three PSDB leaders - Neves, former
President Fernando Henrique Cardoso (FHC), and party president Tasso
Jereissati - were the sole arbiters of the nomination. While PSDB
officials insist that the triumvirate consulted extensively with
many state and local officials and other representatives of the
party's base before announcing the candidate, the image of the PSDB
as an undemocratic and elitist party, out of touch with the people,
has lingered.) Essentially, the party has too many candidates and
not enough new ideas, not a recipe for success.

6. (SBU) Even if the PSDB works through its problems and its
nominee wins the 2010 presidential election, the PMDB will still
hold the balance of power, Lamounier said. The new president will
have no choice but to seek an alliance with the PMDB, which will
likely require control over certain Ministries and a large amount of
pork and patronage. The PMDB, Lamounier cautioned, is always the
problem, never the solution, because it has no political identity or
ideology and exists for the sole purpose of advancing the personal
interests of its members.

------------------
LULA TO RUN AGAIN?
------------------

7. (SBU) Guilhon believes Lula is willing to do whatever is
necessary to remain in power and may, despite his repeated denials,
be positioning himself to run for a third term. He said that in
light of the paucity of potential candidates of presidential
stature, the political climate after the 2008 municipal elections
might permit the PT to introduce the necessary proposal to amend the
Constitution, and that the PMDB could help garner the votes needed
for it to pass twice in each house before October 2009. (Note: Rule
changes introduced within one year of an election generally do not
enter into force until the following election. End Note.)
Lamounier disagreed, commenting that such a move would make Brazil
look like Venezuela and would thus be unacceptable to the people,
the political class, and Lula himself, who prides himself on his
democratic credentials. For Lamounier, the question is who will be
Lula's preferred candidate in 2010.

------------------------
...OR DESIGNATE AN HEIR?
------------------------

8. (SBU) Both commentators agreed, without debate, that the PT has
"nobody" to run as Lula's successor. They quickly ticked off the
weaknesses of various "petistas" whose names have been mentioned.
This led them to consider, as Lula is reportedly doing, possible
candidates from other parties in the governing coalition. Guilhon
mentioned federal deputy Ciro Gomes of the Brazilian Socialist Party
(PSB), who finished third with about 11% of the vote in 1998 and
fourth with about 12% in 2002 and went on to serve as Minister of
National Integration in Lula's first term. Lula is known to think
highly of him, and he might be able to win a lot of votes in the

SAO PAULO 00000834 003 OF 004


populous northeast. When the PT in early September issued a
resolution at its National Congress calling for a PT candidacy (ref
B), a bloc of left and center-left parties in the governing
coalition - the Communist Party of Brazil (PC do B), the PSB, the
Democratic Labor Party (PDT), and several smaller configurations -
organized themselves into a "Left Bloc" with a view to putting Gomes
forward as an alternative candidate.

9. (SBU) Lamounier agreed that Gomes might run but predicted he
would be "christianized". This is a term of art named after
Christiano Machado, nominated for president in 1951 by the Social
Democratic Party (PSD) but subsequently abandoned when his party
decided to throw its support to former dictator Getulio Vargas of
the Brazilian Labor Party (PTB). Likewise, in 1989 the Liberal
Front Party (PFL) and the PMDB nominated candidates but then
"christianized" them and supported Fernando Collor de Mello.
Lamounier thinks Lula may support a Gomes candidacy but then abandon
him to support the PSDB's Aecio Neves (who may or may not switch
parties) or somebody from the PMDB, which despite being Brazil's
largest party has not run a presidential candidate since 1994.

-----------------------
REFORM REMAINS UNLIKELY
-----------------------

10. (SBU) Neither Lamounier nor Guilhon expected much to come of
the PT's proposal to create a Constituent Assembly with limited
authority to design and enact political reform. They agreed that
the system needs to be reformed, citing the proportional vote in
legislative elections as a major weakness that isolates
office-holders from the voters and renders them unaccountable.
Lamounier expressed support for a direct representation bill
creating Congressional districts, such as the one proposed by
federal deputy Arnaldo Madeira (PSDB-SP) (ref C), but was not
optimistic about its chances. While everyone agrees the current
system encourages and rewards corruption and fecklessness, it is so
beneficial to the office-holders that they would never approve a
fundamental reform with teeth.

-----------------
ECONOMIC CONCERNS
-----------------

11. (SBU) The two experts' concern over the health of the political
system extends to the economic realm as well. They see government
expenditures increasing rapidly due to social programs such as
"Bolsa Familia," of which they were both critical. When the program
was introduced by Fernando Henrique Cardoso (FHC), Guilhon said,
recipients had to meet conditions to qualify, such as keeping their
children in schools and vaccinating them. Under Lula, it has grown
so large and inclusive (between 45 and 50 million beneficiaries)
that even if the requirements were still on the books, the
government would be unable to enforce them. In effect, he opined,
the program has become a cash giveaway. Lamounier believes the
government's lack of fiscal discipline will lead to a crisis within
the next ten years and speculates that this is the reason Lula
doesn't really want a third term.

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

12. (SBU) Though the PT was founded in Sao Paulo and still has
support among the working class, the business community and large
portions of the academic community favor the PSDB. Many of these

SAO PAULO 00000834 004 OF 004


"tucanos", as members of the PSDB are called, are frustrated with
their party's failure to articulate a credible alternative to the
Lula administration, and the statements from these political
commentators are in line with this sentiment. While a third
consecutive Lula Presidency is unlikely, and the PT appears to have
few viable candidates, the PSDB is similarly in disarray.

13. (SBU) The gloomy assessment presented by these two analysts
reflects a growing consensus among the political, media, and
business elite in Brazil-as evidenced, for example, by the creation
of the "Cansei" movement (ref D). Until recently, the general
sentiment among the elite has largely been one of relief that Lula
maintained orthodox economic policies and has been willing to work
within the political system. Now, many are focusing on the future.
More aware than most Brazilians of the pace at which the world is
changing, the elite are beginning to realize that the political and
economic systems that worked well for them prior to globalization
may well become a serious impediment to economic growth and
political modernization. At this point, however, the growing sense
of malaise among the elite has not coalesced in any clear call for
reform. Nor is it clear that the broader Brazilian population,
content with economic stability, appeased by government handouts,
and dismissive of corruption, sees any need for it. End Comment.


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

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