Cablegate: Lula's Popularity Ticks Upward On Economic Optimism

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BRASILIA 002052

SIPDIS

DEPT FOR WHA/BSC

E.O. 12958: N/A
TAGS: PGOV ECON SOCI BR
SUBJECT: LULA'S POPULARITY TICKS UPWARD ON ECONOMIC OPTIMISM

REF: SAO PAULO 1138

1. SUMMARY. A CNT/Sensus poll released August 10 in Brazil
shows that President Lula da Silva's approval ratings have
ticked upwards to 58%, after slipping steadily since he took
office. Similarly, the GoB's approvals, which tend to run
lower than Lula's personal numbers, also showed signs of
recovery, jumping to 38%. The uptick seems to be based on
incipient signs of an economic recovery and an improved
political climate. If the trend continues in the coming
months, it could strengthen Lula's legislative hand in
Congress and improve the prospects for Workers' Party (PT)
candidates in October's nationwide municipal elections. END
SUMMARY.

2. A CNT/Sensus poll released in Brazil on August 10 shows
that President Lula's personal approval ratings improved by
four points, to 58%, since June. Still substantially lower
than the 84% approval he enjoyed when he took office in
January 2003, the increase suggests that Lula is recovering
from his administration's nadir in early 2004. Similarly,
the GoB's approvals improved by nine points to 38%.

APPROVAL RATINGS - CNT/SENSUS POLLING

1/03 8/03 2/04 6/04 8/04
----------------------------------------
Lula 84% 77% 65% 54% 58%
GoB 57% 48% 40% 29% 38%

3. The nadir of this administration began in February 2004
with the "Waldomiro scandal", which weakened the government
and led to a series of well-publicized defeats in Congress
and acrimonious debate over the minimum wage that continued
through June. At the same time, the economy --and
particularly employment figures-- were stubbornly sluggish
despite a year of fiscal austerity. But over the past
several weeks the economic news has begun to improve with
strengthening wage and employment figures. The poll revealed
that respondents' satisfaction with health and education has
also ticked up since June, and 46% of respondents believe the
economy's performance will improve their quality of life.

4. Paralleling Lula's improvement, Marta Suplicy, the
Workers' Party (PT) incumbent running a tough campaign to
keep her seat as Sao Paulo's Mayor, also saw her numbers
strengthen, according to Datafolha polling (reftel). Marta
was trailing challenger Jose Serra (PSDB) by fifteen points
in May but has taken the lead by 30%-25%, with Paulo Maluf
dropping to 19%. However, if no candidate wins a majority in
the October 3 voting, a second round will be held on October
31, and Serra still leads Marta in second-round projections
by 52-38%. Nationwide, the PT is running competitively in
the mayoral races in at least 12 of the 26 state capitals.

5. COMMENT. Lula and the GoB are surely breathing a sigh of
relief that they seem to have emerged from the slump of early
2004. This trend may be a based on a combination of factors:
the economy's finally responding to eighteen months of
fiscal austerity, the government's regaining its traction
after the Waldomiro scandal, or --as some pundits suggest--
now that Lula's honeymoon has ended, the public has reduced
its unrealistically high expectations for his administration.
Of course, this confidence is worth little unless it carries
some political agency. The true test of Lula's recovery is
whether it translates into victories in the October municipal
elections and whether it strengthens the administration's
hand when Congress gets back to business in November.
DANILOVICH

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