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Cablegate: Leading Psdb Presidential Contenders Steer Away

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PP RUEHRG
DE RUEHSO #0551/01 2602011
ZNR UUUUU ZZH
P 172011Z SEP 09
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 9618
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 0032
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0755
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3647
RUEHCV/AMEMBASSY CARACAS PRIORITY 0836
RUEHLP/AMEMBASSY LA PAZ PRIORITY 4145
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 2965
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0032
RUEHRG/AMCONSUL RECIFE PRIORITY 4426
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 9252
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEAIIA/CIA WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 SAO PAULO 000551

SENSITIVE
SIPDIS

STATE FOR WHA/BSC

E.O. 12958: N/A
TAGS: PINR PGOV PREL KPAO BR
SUBJECT: LEADING PSDB PRESIDENTIAL CONTENDERS STEER AWAY
FROM PRIMARY SPLIT

1. (SBU) Summary: In the past week, potential candidate
for the Democratic Socialist Party of Brazil (PSDB)
presidential nomination and current Minas Gerais Governor
Aecio Neves -- though still a candidate for the PSDB
nomination
-- has backed off from his former insistence that
the party must hold a presidential nominating primary, a
key demand that had been the cornerstone of Neves'
challenge to PSDB nomination front-runner, Sao Paulo State
Governor Jose Serra. Neves' re-positioning is probably
driven in part by recent polling that shows Serra with a
commanding lead over likely PT nominee Dilma Roussef. His
sudden flexibility is good news for Serra and for the
PSDB. The party can now avoid a debilitating knock-down,
drag-out fight for the nomination and concentrate on honing
its emerging message, which would appear to be an appeal
for greater decentralization in the administration of the
country. End Summary.

No Primary Needed

2. (SBU) For the last year, Minas Gerais Governor Neves
has insisted that the PSDB had to hold a primary to pick
its presidential nominee. Such a mechanism represented
Neves' best and perhaps only hope to challenge PSDB
nomination front runner Jose Serra and, thereby, emerge as
the principal opposition candidate to ruling Workers' Party
(PT) candidate Dilma Rouseff. Serra is widely viewed a
taciturn technocrat who enjoys the support of the PSDB
leadership, while Neves, the young, charismatic governor of
one of Brazil's most economically and historically
significant
states, has demonstrated a great ability to excite the party
base and reach out to those outside the PSDB. The contest
between these two PSDB heavyweights worried some in the party
who feared a debilitating intra-party struggle that reminded
them of 2002, when then-candidate Jose Serra failed to pull
together all elements in the PSDB and subsequently lost the
election to President Lula. What's more, the PSDB has
never held a primary, and guidelines and standards for such
a national event would have had to be drawn up from
scratch. Finally, until recently, some had speculated that
Neves might bolt the PSDB entirely and seek the PMDB
nomination, splitting the anti-PT vote and significantly
damaging PSDB chances in the 2010 presidential contest.

Insiders Talk of a Deal

3. (SBU) In contrast to surface tensions, in recent weeks
political insiders have spoken of the growing possibility
of an agreement between Serra and Neves, where Serra would
get the PSDB presidential nod and Neves the Vice
Presidential spot. Journalist William Waack stated at a
lunch
with the CG on September 4 that Serra and Neves had already
sealed the deal, agreeing to run together with Serra at the
top of the ticket. A second participant at the event,
Fernando
Henrique Cardoso (FHC) Institute Director Sergio Fausto
expressed
surprise at Waack's assertion, but added that FHC would not
permit the Serra-Neves rivalry to split the party.
A Serra-Neves combination would unify the PSDB and could
prove
formidable. Both governors are highly popular in their
respective states (recent polls give Serra 77 percent
approval in SP and Neves has over 90 percent approval in
MG) and they have contrasting, but potentially
complementary political styles.

Neves Shifts Rhetoric

4. (U) In an interview in Belo Horizonte September 9,
Neves indicated that while he continues to prefer a PSDB
primary, other "instruments" for choosing a candidate
exist, including polls and other mechanisms for consulting
the party base. Since his interview, Neves has made

SAO PAULO 00000551 002 OF 002


several statements emphasizing his good relations with
Serra. In a joint appearance September 14 in Sao Paulo
with former President Fernando Henrique Cardoso, Serra and
Neves spoke of party unity and their willingness to offer
support to each other, whichever candidate wins the
eventual PSDB nomination. Neves reiterated his preference
for a party primary, but did not make it an absolute
demand. Both emphasized the importance of their respective
states in maintaining autonomy relative to a central
government that they said is too centralized and collects
too much in taxes.

Neves Looking to the Future?

5. (SBU) While the press buzzes about a "pact" between Serra
and Neves, local analysts point to a more subtle but still
significant understanding. Consultant Thiago d'Aragao told
Poloff that Neves had "no choice" but to become more
accommodating
to Serra and the PSDB. The PMDB is hurt by recent scandals
and
cannot provide an adequate platform for Neves' future
ambitions.
The Minas Governor has excellent chances of becoming Brazil's
President some day, but he must bide his time. Political
Scientist Rogerio Schmitt of the Center for Public Leadership
agreed, stating that he and other SP analysts regard Neves'
new
line as laying the groundwork for a graceful exit from his
campaign for the PSDB nomination, should his challenge not
prosper.

Comment: Not a Pact, But A Most Productive Understanding

6. (SBU) While it could be too much to call the new
relationship between Serra and Neves a pact, it would appear
that Neves has walked back from a potentially
party-splitting confrontation with the Sao Paulo Governor.
Neves' re-positioning comes on the heels of a late August
IBOPE poll that gave Serra a commanding lead over PT
leading candidate Dilma Roussef in a potential second round
run-off (57-23). This, plus the logistical challenges of
organizing a first-ever PSDB primary, probably
convinced the Minas Governor to moderate his position. As
things now stand, Neves can continue his quest for the
party's nomination, but do so within bounds that would not
foreclose reconciliation at the end of the process.
WHITE

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