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Cablegate: Two Parties Bolt From Lula's Coalition

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

UNCLAS SECTION 01 OF 03 BRASILIA 003031

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL BR
SUBJECT: TWO PARTIES BOLT FROM LULA'S COALITION

REF: A. BRASILIA 2802

B. BRASILIA 2763

1. (SBU) SUMMARY. In the past few days, two political
parties --the large PMDB and medium-sized PPS-- have decided
to depart the governing coalition of President Lula da Silva.
In both cases, the decisions were taken at hotly-disputed
party meetings, and in both cases it appears that the parties
may fracture over the decision. These decisions are rooted
in internal party catfights and the need to create daylight
between the parties and Lula's PT party in order to run
against the PT in the 2006 elections. The effect on the
administration's legislative agenda is difficult to gauge
because pro-Lula members of both the PMDB and PPS are likely
to change parties in the coming days in order to remain in
the coalition or to continue to vote for administration bills
in some cases. The most likely outcome is that Lula will
lose a few supporters in both houses of Congress but will
continue to be able to put together narrow majorities on key
issues with a combination of arm-twisting and pork barrel.
The PMDB and PPS together hold three cabinet seats and have
insisted that their cabinet representatives step down or be
suspended from their party activities --but Lula is likely to
wait for the dust to settle before he shakes up his cabinet.
END SUMMARY.

PMDB FINALLY MAKES A MOVE
-------------------------
2. (SBU) The Party of the Brazilian Democratic Movement
(PMDB), a large and fractious member of President Lula's
governing coalition, decided at a party convention on
December 12 to pull out of the coalition (ref A). The
decision followed weeks of intense lobbying inside and
outside the party, including lawsuits to try to prevent the
convention and attempts by both sides to stack the vote. At
bottom, the decision reflected the wish by "oppositionist"
leaders --mostly in the large southern states (notably Rio,
Sao Paulo, and Parana)-- to create more daylight between
their party and President Lula's PT-led coalition. This will
allow them to run a PMDB presidential candidate against Lula
in the 2006 elections and also to position their
gubernatorial and congressional candidates against PT
opponents. The "oppositionists" are led by party president
Michel Temer, a Federal Deputy from Sao Paulo. Former-Rio
Governor Anthony Garotinho hopes to be the party's
presidential nominee in 2006.

3. (SBU) The party's pro-Lula "governist" faction includes
those delegations from states where the PMDB and PT work well
together, plus most of the PMDB's sitting Senators and
Federal Deputies (who benefit from being in the coalition by
getting federal pork spending for their constituents). The
PMDB's two cabinet ministers (at the Ministries of
Communications and Social Security) as well as powerful
Senate President Jose Sarney are all "governists".

4. (SBU) At the December 12 convention, the "oppositionists"
won the vote to pull out of the coalition and passed a
separate motion insisting that the party's political nominees
(including notably the two cabinet ministers) step down from
their posts or be suspended from party activities. However,
the convention split hairs by deciding to become
"independent" of the administration without actually moving
into the opposition. This means that the party will continue
to support Lula on the floor of Congress when "it is in the
party's interest". In fact, this may mean only a small
change from the past, when Lula could rarely count on more
than two-thirds of the party's votes on any given issue.
Further, while the PMDB is a uniquely malleable institution
in Brazilian politics, able to shelter both pro- and
anti-government factions, some in the party will want to
remain formally in the coalition and so will jump to other
parties in the coming months.

5. (SBU) Thus the math of the Congressional majority will be
an evolving dynamic. On paper, the governing coalition
previously held 381 of the 513 Chamber seats (74%), of which
78 were PMDB. If half of the PMDB Deputies continue to vote
with the administration, Lula can continue to cobble together
narrow majorities, depending on the issue. In the Senate,
the picture looks more difficult. The coalition held 47 of
81 Senate seats (58%), of which 23 were PMDB. But PMDB
Senators tend to be more "governist" and supportive of the
administration. Again, depending on the issue, Lula should
be able to find narrow majorities. It must be borne in mind
that the other coalition parties (including the PT) are also
fractious and do not fully support the administration on
every vote, which further erodes Lula's majority. Also, some
of the administration's legislative priorities require
constitutional amendments, meaning 60% votes in both houses,
and these bills will be in more danger than ordinary laws.

PPS PARTY ALSO BOLTS
--------------------
6. (SBU) The Popular Socialist Party (PPS) is the vestige of
the old Communist Party and is still run with an iron hand by
Roberto Freire, a bellicose Federal Deputy from Pernambuco
who clings to radical leftist positions developed over thirty
years ago. In 2002, the party attracted Ciro Gomes to its
banner. Gomes, from Ceara, has a national profile and was
looking for a party to launch what turned out to be a failed
presidential bid. In the wake of the elections, the PPS
joined the governing coalition and Gomes accepted Lula's
offer to become Minister of National Integration, where he
has been a pleasant surprise as one of the administration's
steadiest cabinet ministers. Meanwhile, Freire chafed at
having been eclipsed by Gomes within his own party and the
coalition. For over a year, he has instigated a series of
bitter fights with Gomes and has repeatedly threatened to
take the PPS out of the coalition. On December 11, Freire
forced a vote of the PPS governing board and finally made
good on that threat. Afterward he delivered a blunt message
to Ciro Gomes, "Either leave the cabinet or leave the party".

7. (SBU) Gomes may do both. He has put his cabinet seat "at
Lula's disposal", which is somewhat less assertive than
actually resigning. It seems likely that he will leave the
PPS and move either to the coalition's centrist PTB or to
Lula's PT. Gomes's current close association with the
administration means he is unlikely to run another
presidential campaign against Lula in 2006. If Gomes departs
the PPS, he will take his faction with him --variously
estimated at both of the PPS's Senators and one-third of its
20 Federal Deputies. Freire will remain in charge of the
rump PPS and is feverishly looking for an alliance with the
leftist PDT (or even the newly independent PMDB) and may be
successful in luring PT Senator Cristovam Buarque to the
party to run as its 2006 presidential candidate.

LULA'S CABINET SHUFFLE HANGING FIRE
-----------------------------------
8. (SBU) The impact on Lula's cabinet remains to be seen. In
the wake of the October municipal elections and last month's
resignation by DefMin Jose Viegas and his replacement by Vice
President Alencar (ref B), it was assumed that Lula would
make a few cabinet changes in January or February. Lula was
reportedly willing to offer the PMDB a third cabinet post and
may be looking to reward outgoing Chamber Speaker Joao Paulo
Cunha with a promotion. The splits in the PMDB and PPS have
moved the cabinet shuffle to the back burner for the time
being. For example, Lula may want the two PMDB cabinet slots
back so he can offer them to other allies, or he may leave
those ministers in place as a way to continue to appeal to
the PMDB's "governist" wing --which would also be a way to
exacerbate the PMDB's internal rifts. Similarly, Lula may
leave Ciro Gomes in place because of his competence, in spite
of his divorce from the PPS. Thus the cabinet shuffle will
wait until the administration can assess how best to salvage
maximum political advantage from this week's events.

COMMENT
-------
9. (SBU) It is too early to assess the damage to Lula's
administration from the actions of the PMDB and PPS. It is
unlikely to be crippling, but will range from minimal to
significant. While the PMDB and PPS formally withdrew from
the governing coalition, we cannot simply subtract their
combined 98 Deputies and 25 Senators from Lula's column,
because many of these congresspersons never reliably voted
for Lula in the past, while many who did vote for Lula before
will continue to do so in the future. Thus, it is more
accurate to say that the majority wings of these two parties
formalized their opposition to the administration, leaving
the minority wings to search for their own futures. The
story will continue to unfold through the holidays and into
February, when Congress returns to session and elects new
leadership in both houses and in all its committees.
DANILOVICH

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