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Cablegate: Lula May End Up Winner in Pmdb Party Crisis

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




E.O. 12958: N/A


1. (SBU) SUMMARY. The large PMDB party decided at a December
12 convention to defect from the governing coalition of
Brazilian President Lula da Silva. The decision exacerbated
the rift between the party's pro- and anti-government wings,
but as the dust settles it appears that Lula could benefit
from the crisis. Lula plans to keep the two PMDB members in
his cabinet and will continue to collaborate with the
pro-government PMDB members of Congress. This posture has
helped to solidify the party's pro-government wing, and Lula
can now reasonably count on most of the PMDB votes in both
houses. The crisis may not play out until February, but with
the administration and savvy PMDB Senator Jose Sarney working
against the withdrawal from the coalition (and the
anti-government wing making tactical blunders), Lula may well
turn the crisis in his favor. END SUMMARY.

2. (SBU) The Party of the Brazilian Democratic Movement
(PMDB) is being derided as the "Party of the Brazilian
Disorganized Mix-ups". The anti-government wing forced a
vote at a December 12 party convention to pull out of Lula's
coalition (reftel). By this, party leaders hoped to
establish themselves as "independent" of Lula's Workers'
Party (PT) so that they can run against Lula and the PT's
other candidates in the 2006 elections. However, those party
leaders are now on the defensive as the pro-government wing
has united in a counter-attack supported by the

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3. (SBU) In Congress, leading PMDB Senators Jose Sarney and
Renan Calheiros have finally buried the hatchet on their
dispute over who will be the next Senate President (it will
likely be Calheiros). Their reconciliation brought together
the PMDB caucus in the Senate so that 20 of the party's 23
Senators are now counted as pro-government. Sarney's
support, in particular, is key. His political instincts are
unrivalled, and he is a devoted government ally who can pull
innumerable strings on Lula's behalf (but on the few
occasions that he has been irritated with the administration,
he has caused it to lose key floor votes). In the lower
house, the picture is similar. The party's pro-government
faction in the Chamber showed its teeth December 15 in
collecting 47 votes (of the party's 78 Deputies) to retain
pro-government Deputy Jose Borba as party whip. Thus the
pro-Lula faction owns a solid majority of the party caucus in
both houses.

4. (SBU) As a key coalition member, the PMDB nominated two
cabinet ministers and several other senior administration
officials. In the wake of the party's withdrawal from the
coalition, PMDB president Michel Temer, who leads the party's
anti-government bloc, ordered these officials to quit their
posts. They refused, and Temer moved to expel them from the
party. Those threatened with expulsion are: Communications
Minister Eunicio Oliveira, Social Security Minister Amir
Lando, Director of the Social Security Agency (INSS) Carlos
Bezerra, Director of Petrobras's transportation unit
(Transpetro) Sergio Machado, and Director of the Postal
System (Correios) Joao Henrique de Almeida. But the battle
is also being waged in the courts, and Temer's move was
short-circuited by a judge's decision that declared the
entire PMDB convention void. Thus, the party members who
hold posts in Lula's administration will defy Temer and keep
their jobs. As a tactical matter, Temer's move to expel the
five was a failed show of strength that backfired and may
cost him dearly as events unfold.

5. (SBU) The day after the December 12 party convention, Lula
met with the PMDB's pro-government leaders and reportedly
offered them behind-the-scenes support to replace Temer with
Sarney as party president in mid-2005. In the meantime, Lula
will seek to exploit the party's divisions by working
exclusively with the pro-government faction, offering support
and pork spending to its congressional bloc, and keeping the
two PMDB cabinet ministers in place. Lula pointedly said
this week that he plans no cabinet shuffle until January at
the earliest.

6. (SBU) Senator Jose Sarney and the pro-government wing of
the PMDB are counter-attacking, and Sarney is a formidable
tactician who has already managed to forge a weighty support
bloc in Congress. Party President Michel Temer and the
anti-government wing have the support of the large party
delegations from Sao Paulo, Rio de Janeiro, and a handful of
other key states that have never been comfortable in Lula's
camp. Both sides will continue to maneuver, but in the
short-term, Lula will to treat the pro-government wing as a
coalition member (and will retain his PMDB cabinet
ministers). Congress will go out of session by December 30,
so the crisis may not play out until February or March.
Senator Jorge Bornhausen (president of the opposition PFL
party) notes with dismay that the crisis has had the effect
of clearly defining the PMDB's internal rift and making its
pro-government wing more committed to Lula. Thus, he
predicts, the work of the opposition may become more
difficult in the coming year because it will be harder to
pick off disaffected PMDB members during votes. On the other
hand, Rio Mayor Cesar Maia, also of the PFL, commented in the
press that "the PMDB is a rare case of a party that gets
stronger with disunity. As the sides become defined, the
government and opposition wings get stronger through
bargaining. When it is united, the party is weaker."

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