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Cablegate: Sao Paulo's Mayoral Election and Its Implications for 2010

VZCZCXRO7511
RR RUEHRG
DE RUEHSO #0094/01 0571311
ZNR UUUUU ZZH
R 261311Z FEB 08 ZDK
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 7944
INFO RUEHBR/AMEMBASSY BRASILIA 9095
RUEHBU/AMEMBASSY BUENOS AIRES 3077
RUEHAC/AMEMBASSY ASUNCION 3325
RUEHCV/AMEMBASSY CARACAS 0687
RUEHMN/AMEMBASSY MONTEVIDEO 2630
RUEHLP/AMEMBASSY LA PAZ 3735
RUEHSG/AMEMBASSY SANTIAGO 2326
RUEHRI/AMCONSUL RIO DE JANEIRO 8608
RUEHRG/AMCONSUL RECIFE 4021
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 3039
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 03 SAO PAULO 000094

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 BR
SUBJECT: SAO PAULO'S MAYORAL ELECTION AND ITS IMPLICATIONS FOR 2010

REF: (A) 07 SAO PAULO 878; (B) 07 SAO PAULO 767;
(C) 07 SAO PAULO 882

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

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

1. (SBU) In October, Brazilians will go to the polls to elect the
Mayors and City Council members ("Vereadores") of the country's
5,064 municipalities. Political analysts and consultants, as well
as politicians from across the spectrum, agree on one thing: these
elections will set the stage for the 2010 national and state
elections. In Sao Paulo, incumbent Mayor Gilberto Kassab
(Democratic Party - DEM) will likely face off against two national
powerhouses - Minister of Tourism and former Mayor Marta Suplicy of
President Lula's Workers' Party (PT), and former state Governor and
2006 presidential candidate Geraldo Alckmin of the Social Democracy
Party of Brazil (PSDB). The conduct and results of this campaign
will have major implications for three of Brazil's four major
parties, for the political panorama in Brazil's largest state, and
for the 2010 presidential contest. End Summary.

--------------------------------------------
THE MAYOR, THE MINISTER, AND THE EX-GOVERNOR
--------------------------------------------

2. (U) Sao Paulo, with just over 11 million people, is South
America's largest city and among the five largest in the world. Due
to its size and prominence, the city offers unique opportunities and
challenges to ambitious politicians. Gilberto Kassab (DEM -
formerly Liberal Front Party or PFL) was elected Vice-Mayor of Sao
Paulo in 2004, and became Mayor in April 2006 when Jose Serra (PSDB)
resigned to run for Governor. The previously unknown Kassab has
surprised everyone with his performance in office. Hallmarks of his
administration include the "Cidade Limpa" (Clean City) program,
aimed at reducing visual pollution, and aggressive law enforcement
actions against illegal gaming establishments and street vendors, as
well as stores that sell contraband and pirated goods (ref A).
Though many problems remain, even the Mayor's opponents acknowledge
he has a good record on which to run. If he wins, the 47-year old
Kassab could have a bright national future, running for Governor or
Senator in 2010 or 2014. Prominent supporters of his re-election
include Governor Serra - himself a likely 2010 Presidential
candidate - and former President Fernando Henrique Cardoso (FHC).

3. (SBU) Marta Suplicy (Workers' Party - PT) served as Mayor of Sao
Paulo from 2001 through 2004. She ran for re-election but was
defeated by Jose Serra. In 2006, after losing the PT gubernatorial
primary to Senator Aloizio Mercadante, she coordinated President
Lula's re-election campaign in Sao Paulo. In March 2007, Lula named
her Minister of Tourism. Suplicy is popular among the poor, who
remember her introduction of Unified Educational Centers (CEUs) into
low-income neighborhoods. Her tenure, however, was also
controversial, especially in the area of financial management.
Suplicy, 62, is motivated by a desire to remove the bad taste left
by her 2004 defeat and to position herself to seek the Governorship
or the PT presidential nomination in 2010.

4. (SBU) The third and perhaps most important likely candidate is
Geraldo Alckmin, the former Sao Paulo state Governor (2001-06) who
was the PSDB's presidential candidate in 2006. Alckmin left the
Governor's office in April 2006 with a remarkable 69 percent
approval rating. Despite his mediocre performance as a presidential
candidate, he remains well-respected in the city and state and is
considered an excellent administrator.

SAO PAULO 00000094 002 OF 003

--------------------
THE ALLIANCE AT RISK
--------------------

5. (SBU) Mayor Kassab's DEM party is a junior partner in coalition
with the PSDB both nationally and in Sao Paulo state. Together they
form the main opposition to President Lula and the PT. Kassab was
elected on a PSDB ticket and presides over a PSDB administration
(see ref B), with 15 of 23 Municipal Secretaries and 22 of the 31
Assistant Mayors, as well as lower-level city officials, coming from
that party. Many in both the DEM and PSDB parties argue that an
Alckmin candidacy will destroy the long-standing but fragile
PSDB-DEM alliance and split the vote, leaving the door open to Marta
Suplicy in Sao Paulo and potentially hurting the PSDB's chances of
capturing the Presidency in 2010. However, Alckmin and his advisors
argue that Sao Paulo's City Hall is too important to leave to
another party, even an ally. More urgently, they stress the
importance of not letting the city fall into the hands of Suplicy
and the PT, and point to Alckmin's evident strength in the polls.

-------------
STATE OF PLAY
-------------

6. (SBU) The campaign does not formally begin until July, but is in
many respects already under way. Kassab's candidacy, at one time in
doubt (ref B), is now all but certain. Publicly, Marta Suplicy has
deferred questions about her intentions, perhaps waiting to see how
the Alckmin-Kassab situation sorts itself out. Others believe she
may be waiting for Lula's blessing to resign her Ministry (she has
until June 5), but few doubt she will be a candidate. Edinho Silva,
PT state chairman, told Poloff flatly that Suplicy will run with
Lula's support. State Deputy Rui Falcao, who served as Secretary of
Government under Mayor Suplicy, was less categorical but averred
that he had never known her to duck a challenge.

7. (SBU) Commentators agree that there is still time for the DEM
and PSDB to persuade Alckmin not to run, but that it is increasingly
unlikely. Already, both FHC - the PSDB's honorary president - and
DEM leader Jorge Bornhausen have offered Alckmin their support in a
gubernatorial campaign in 2010 - assuming Serra resigns to run for
President - if he agrees to sit this year out. However, Fernando
Braga, a long-time Alckmin economic advisor, told the CG that
Alckmin deems such an offer too uncertain, and Serra may end up
seeking re-election as Governor instead of running for President.
Braga said Alckmin faces a dilemma over whether or not to run for
Mayor, but people close to the ex-Governor seem fairly certain that
Alckmin will ultimately run. By all accounts, he wants both to be
Mayor and to position himself to compete for higher office -
Senator, Governor again, even President - in 2010 or 2014.

-----------------------------
POLLS SHOW ALCKMIN'S STRENGTH
-----------------------------

8. (U) A Datafolha poll published February 17 shows that in a
three-way race, Alckmin would get 29 percent to Suplicy's 25 and
Kassab's 12. If Alckmin doesn't run, Suplicy leads Kassab 32-19
percent. (Note: The polls presuppose the participation of two or
possibly three minor candidates who together may account for about
20 percent, so a second round is inevitable under any scenario,
since no candidate will get 50 percent of the first-round vote. End
Note.) If Kassab desists, Alckmin leads Suplicy, 34-28 percent. If
Suplicy decides not to run, Alckmin leads Kassab, 34-16 percent,
with the projected PT candidate, Chamber of Deputies President
Arlindo Chinaglia, garnering only 1 percent. In a second round,

SAO PAULO 00000094 003 OF 003


Alckmin would defeat either Suplicy or Kassab handily, whereas
Suplicy would defeat Kassab, 50-39 percent. Kassab remains the
least well-known of the three candidates and thus must be considered
the underdog in a race against two major national figures. However,
at this early date, the polls represent only a snapshot and are
subject to change as candidates enter the race and parties make and
break alliances. Given the advantages of incumbency, Kassab has a
good chance of rising in the polls as the race progresses.

9. (SBU) Even while recognizing Geraldo Alckmin's ability and
popularity with voters, many PSDB leaders view his candidacy as a
train wreck that they are powerless to prevent. The problem, from
their perspective, is that Alckmin is not a team player. His
putative candidacy exposes a recurring weakness that continues to
undermine the PSDB, where, as Braga put it, "everyone is a Chief and
nobody is willing to be an Indian." PSDB stars like Alckmin deem
themselves essential and refuse to yield. With so much talent and
ambition, there are inevitable fallings-out. The PSDB spends more
time and energy on infighting than on developing and implementing
strategies to challenge its opponents. This year would appear to be
no exception. Unless it can resolve this question, the party faces
a real problem in 2010. Post will report septel on the impact of an
Alckmin candidacy on the PSDB.

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

10. (SBU) The PT and the PSDB were both founded in Sao Paulo, and
many of the household names from both parties hail from the state.
Their rivalry here tends to have national repercussions. The
PSDB-DEM alliance is a key part of the equation. This year's race
for Mayor of Sao Paulo exposes all these elements. Whatever its
outcome, this election will have huge visibility as well as a major
impact on all three parties as they look to 2010 and the beginning
of Brazil's post-Lula future. End Comment.

11. (U) This cable was coordinated with and cleared by Embassy
Brasilia.

WHITE

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