Cable Viewer

Currently released so far... 13036 / 251,287

### Articles

Brazil Sri Lanka United Kingdom Sweden 00. Editorial United States Latin America Egypt Jordan Yemen

### Browse latest releases

2010/11 2010/12 2011/01 2011/02 2011/03 2011/04 2011/05
2010/11/28 2010/11/29 2010/11/30
2010/12/01 2010/12/02 2010/12/03 2010/12/04 2010/12/05 2010/12/06 2010/12/07 2010/12/08 2010/12/09 2010/12/10 2010/12/11 2010/12/12 2010/12/13 2010/12/14 2010/12/15 2010/12/16 2010/12/17 2010/12/18 2010/12/19 2010/12/20 2010/12/21 2010/12/22 2010/12/23 2010/12/24 2010/12/25 2010/12/26 2010/12/27 2010/12/28 2010/12/29 2010/12/30
2011/01/01 2011/01/02 2011/01/04 2011/01/05 2011/01/07 2011/01/09 2011/01/10 2011/01/11 2011/01/12 2011/01/13 2011/01/14 2011/01/15 2011/01/16 2011/01/17 2011/01/18 2011/01/19 2011/01/20 2011/01/21 2011/01/22 2011/01/23 2011/01/24 2011/01/25 2011/01/26 2011/01/27 2011/01/28 2011/01/29 2011/01/30 2011/01/31
2011/02/01 2011/02/02 2011/02/03 2011/02/04 2011/02/05 2011/02/06 2011/02/07 2011/02/08 2011/02/09 2011/02/10 2011/02/11 2011/02/12 2011/02/13 2011/02/14 2011/02/15 2011/02/16 2011/02/17 2011/02/18 2011/02/19 2011/02/20 2011/02/21 2011/02/22 2011/02/23 2011/02/24 2011/02/25 2011/02/26 2011/02/27 2011/02/28
2011/03/01 2011/03/02 2011/03/03 2011/03/04 2011/03/05 2011/03/06 2011/03/07 2011/03/08 2011/03/09 2011/03/10 2011/03/11 2011/03/13 2011/03/14 2011/03/15 2011/03/16 2011/03/17 2011/03/18 2011/03/19 2011/03/20 2011/03/21 2011/03/22 2011/03/23 2011/03/24 2011/03/25 2011/03/26 2011/03/27 2011/03/28 2011/03/29 2011/03/30 2011/03/31
2011/04/01 2011/04/02 2011/04/03 2011/04/04 2011/04/05 2011/04/06 2011/04/07 2011/04/08 2011/04/09 2011/04/10 2011/04/11 2011/04/12 2011/04/13 2011/04/14 2011/04/15 2011/04/16 2011/04/17 2011/04/18 2011/04/19 2011/04/20 2011/04/21 2011/04/22 2011/04/23 2011/04/24 2011/04/25 2011/04/26 2011/04/27 2011/04/28 2011/04/29 2011/04/30
2011/05/01 2011/05/02 2011/05/03 2011/05/04 2011/05/05 2011/05/06 2011/05/07 2011/05/08 2011/05/09 2011/05/10 2011/05/11 2011/05/12 2011/05/13 2011/05/14 2011/05/15 2011/05/16 2011/05/17 2011/05/18 2011/05/19 2011/05/20 2011/05/21 2011/05/22 2011/05/23 2011/05/24 2011/05/25 2011/05/26 2011/05/27 2011/05/28

### Browse by creation date

66 72 73 75 79 85 86 87 88 89 90 91 92 93 94 96 97 00 01 02 03 04 05 06 07 08 09 10
1966/12
1972/02 1972/08
1973/04
1975/03
1979/08
1985/03 1985/05 1985/06
1986/05
1987/06
1988/01 1988/03 1988/07
1989/12
1990/01 1990/07 1990/08 1990/10
1991/05
1992/01 1992/03 1992/06 1992/09 1992/12
1993/01 1993/10
1994/12
1996/07 1996/11
1997/06 1997/10 1997/12
2000/05 2000/06 2000/09 2000/11
2001/02 2001/03 2001/06 2001/07 2001/09 2001/10 2001/11
2002/01 2002/02 2002/03 2002/04 2002/07 2002/08 2002/09 2002/11 2002/12
2003/01 2003/02 2003/03 2003/04 2003/05 2003/06 2003/07 2003/08 2003/09 2003/10 2003/11 2003/12
2004/01 2004/02 2004/03 2004/04 2004/05 2004/06 2004/07 2004/08 2004/09 2004/10 2004/11 2004/12
2005/01 2005/02 2005/03 2005/04 2005/05 2005/06 2005/07 2005/08 2005/09 2005/10 2005/11 2005/12
2006/01 2006/02 2006/03 2006/04 2006/05 2006/06 2006/07 2006/08 2006/09 2006/10 2006/11 2006/12
2007/01 2007/02 2007/03 2007/04 2007/05 2007/06 2007/07 2007/08 2007/09 2007/10 2007/11 2007/12
2008/01 2008/02 2008/03 2008/04 2008/05 2008/06 2008/07 2008/08 2008/09 2008/10 2008/11 2008/12
2009/01 2009/02 2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12
2010/01 2010/02

### Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z
Embassy Athens Embassy Asuncion Embassy Astana Embassy Asmara Embassy Ashgabat Embassy Apia Embassy Ankara Embassy Amman Embassy Algiers Embassy Addis Ababa Embassy Accra Embassy Abuja Embassy Abu Dhabi Embassy Abidjan Consulate Auckland Consulate Amsterdam Consulate Adana American Institute Taiwan, Taipei
Embassy Bujumbura Embassy Buenos Aires Embassy Budapest Embassy Bucharest Embassy Brussels Embassy Bridgetown Embassy Bratislava Embassy Brasilia Embassy Bogota Embassy Bishkek Embassy Bern Embassy Berlin Embassy Belmopan Embassy Belgrade Embassy Beirut Embassy Beijing Embassy Banjul Embassy Bangkok Embassy Bandar Seri Begawan Embassy Bamako Embassy Baku Embassy Baghdad Consulate Barcelona
Embassy Copenhagen Embassy Conakry Embassy Colombo Embassy Chisinau Embassy Caracas Embassy Canberra Embassy Cairo Consulate Curacao Consulate Ciudad Juarez Consulate Chennai Consulate Casablanca Consulate Cape Town Consulate Calgary
Embassy Dushanbe Embassy Dublin Embassy Doha Embassy Djibouti Embassy Dili Embassy Dhaka Embassy Dar Es Salaam Embassy Damascus Embassy Dakar Consulate Dubai
Embassy Freetown Consulate Fukuoka
Embassy Guatemala Embassy Gaborone Consulate Guayaquil Consulate Guadalajara
Embassy Helsinki Embassy Harare Embassy Hanoi Consulate Ho Chi Minh City Consulate Hermosillo Consulate Hamilton Consulate Hamburg Consulate Halifax
Iran RPO Dubai Embassy Islamabad Consulate Istanbul
Embassy Jakarta Consulate Jerusalem Consulate Jeddah
Embassy Kyiv Embassy Kuwait Embassy Kuala Lumpur Embassy Kinshasa Embassy Kingston Embassy Kigali Embassy Khartoum Embassy Kathmandu Embassy Kampala Embassy Kabul Consulate Kolkata Consulate Karachi
Embassy Luxembourg Embassy Luanda Embassy London Embassy Ljubljana Embassy Lisbon Embassy Lima Embassy Lilongwe Embassy La Paz Consulate Lahore Consulate Lagos
Mission USOSCE Mission USNATO Mission UNESCO Embassy Muscat Embassy Moscow Embassy Montevideo Embassy Monrovia Embassy Minsk Embassy Mexico Embassy Mbabane Embassy Maputo Embassy Manila Embassy Manama Embassy Managua Embassy Malabo Embassy Madrid Consulate Munich Consulate Mumbai Consulate Montreal Consulate Monterrey Consulate Milan Consulate Melbourne
Embassy Nicosia Embassy Niamey Embassy New Delhi Embassy Ndjamena Embassy Nassau Embassy Nairobi Consulate Naples Consulate Naha
Embassy Ouagadougou Embassy Ottawa Embassy Oslo
Embassy Pristina Embassy Pretoria Embassy Prague Embassy Port Of Spain Embassy Port Louis Embassy Port Au Prince Embassy Phnom Penh Embassy Paris Embassy Paramaribo Embassy Panama Consulate Peshawar
Embassy Quito Consulate Quebec
REO Basrah Embassy Rome Embassy Riyadh Embassy Riga Embassy Reykjavik Embassy Rangoon Embassy Rabat Consulate Rio De Janeiro Consulate Recife
Secretary of State Embassy Suva Embassy Stockholm Embassy Sofia Embassy Skopje Embassy Singapore Embassy Seoul Embassy Sarajevo Embassy Santo Domingo Embassy Santiago Embassy Sanaa Embassy San Salvador Embassy San Jose Consulate Strasbourg Consulate St Petersburg Consulate Shenyang Consulate Shanghai Consulate Sapporo Consulate Sao Paulo
Embassy Tunis Embassy Tripoli Embassy Tokyo Embassy The Hague Embassy Tel Aviv Embassy Tehran Embassy Tegucigalpa Embassy Tbilisi Embassy Tashkent Embassy Tallinn Consulate Toronto Consulate Tijuana Consulate Thessaloniki
USUN New York USEU Brussels US Office Almaty US Mission Geneva US Interests Section Havana US Delegation, Secretary UNVIE Embassy Ulaanbaatar
Embassy Vilnius Embassy Vienna Embassy Vatican Embassy Valletta Consulate Vladivostok Consulate Vancouver
Embassy Windhoek Embassy Wellington Embassy Warsaw
Embassy Yerevan Embassy Yaounde
Embassy Zagreb

### Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ASEC AEMR AMGT AR APECO AU AORC AJ AF AFIN AS AM AID ADM ALOW ACOA AA AFFAIRS AND APER APEC ADPM ABLD AL AO ATRN ARF AG AMED ADANA ADCO AADP AY AORG ASEAN ABUD AROC AE AGAO APCS AINF AODE ACABQ AX AMEX AZ ASUP ARM AQ ATFN AMBASSADOR ACBAQ AFSI AFSN AC ASIG ASEX AER AVERY AGRICULTURE ASCH AFU AMG ATPDEA ASECKFRDCVISKIRFPHUMSMIGEG AORL AN AIT ANET AGMT ACS AGR AMCHAMS AECL AUC AFGHANISTAN ACAO
BR BB BG BEXP BY BA BRUSSELS BU BD BK BL BM BTIO BP BE BO BILAT BIDEN BH BC BX BF BBSR BT BMGT BWC BN BTIU
CPAS CA CASC CS CBW CIDA CO CODEL CI CROS CU CH CWC CMGT CVIS CDG CD CV CG CF CHIEF CJAN CBSA CE CM CONS CW CONDOLEEZZA CN CICTE CY CYPRUS COUNTRY CT CBE CDC CR COUNTER CARSON COPUOS CTR COM CFED CKGR CHR CVR CLINTON COUNTERTERRORISM CITEL CLEARANCE COE CARICOM CB CSW CIC CITT CAFTA CACM CDB CJUS CTM CAN CLMT CBC CIA CNARC CIS CEUDA CAC CL CACS CAPC
DR DJ DHS DAO DCM DEFENSE DOD DA DOMESTIC DO DK DE DPRK DEPT DEA DISENGAGEMENT DOE DTRA DS DEAX
ECON ETTC EFIS ETRD EC EMIN EAGR EAID EU EFIN EUN ECIN EG EWWT EINV ENRG ELAB EPET EN EAIR EUMEM ECPS ELTN EIND EZ EI ER ET EINT EXIM ENIV ES ECONOMY ERNG ELECTIONS ENERG EK EPA ENGR ETRC EXTERNAL EFTA ENVI ELN EAIDS ECA EFINECONCS ETRDEINVECINPGOVCS EUREM EINVEFIN ETC ENVR EAP EINN ECONOMIC EXBS ENGY ECONOMICS EIAR EINDETRD ECONEFIN EURN EDU ETRDEINVTINTCS ECIP EFIM EREL EINVETC ECONCS ETRA ESA EAIG EUR EUC ERD ETRN EINVECONSENVCSJA EEPET EUNCH ESENV ENNP ECINECONCS ETRO ETRDECONWTOCS ECUN
FI FR FINR FBI FTAA FREEDOM FINANCE FJ FTA FAO FM FARC FAC FDA FOREIGN FOR FOI FO FMLN FISO FAS
GM GG GERARD GT GA GR GTIP GLOBAL GTMO GV GH GOI GL GOV GF GANGS GCC GAERC GE GZ GAZA GY
HR HO HA HYMPSK HK HUMAN HU HILLARY HI HURI HSTC HEBRON HUMOR
IZ IN IAEA IS IMO ILO IR IC IT ITU IV IMF IBRD IRAQI ISRAELI ITALY ITPGOV ITALIAN IPR ICAO ITRA ICRC INMARSAT ID IO INTERNAL IIP IRS IWC ICJ IEFIN ICTY IQ ILC IA INTERPOL IEA INR INRB IAHRC ISRAEL IZPREL IRAJ IF ITPHUM IL IACI INDO IDA ISLAMISTS IGAD ITF INRA INRO IBET INTELSAT IDP ICTR IRC
JA JO JM JP JUS JOHN JOSEPH JAMES JOHNNIE
KNNP KFLO KDEM KOMC KSUM KIPR KFLU KPAO KE KCRM KJUS KAWC KZ KSCA KDRG KCOR KGHG KPAL KTIP KMCA KCRS KPKO KOLY KRVC KVPR KG KWBG KMDR KTER KSPR KV KTFN KWMN KFRD KSTH KS KN KISL KGIC KSEP KFIN KTEX KTIA KUNR KCMR KMOC KCIP KTDB KBIO KSTC KICC KCRCM KIRC KSEO KSAF KR KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KIRF KTBT KOCI KMPI KBCT KIDE KU KPAONZ KNUC KHLS KSCI KHDP KCOM KAID KPRP KHIV KCSY KTRD KNAR KWAC KJUST KNUP KNPP KMFO KVIR KO KBTS KTLA KNNPMNUC KACT KPRV KVRP KNDP KAWK KHSA KPOA KENV KPWR KCFE KX KMRS KERG KRCM KCFC KNEI KCHG KPLS KREL KFTFN KTFM KLIG KDEMAF KRAD KBTR KGIT KGCC KICA KHUM KSEC KPIN KESS KDEV KPIR KWWMN KOM KWNM KRFD KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KRGY KREC KIFR KSAC KWMNCS KPAK KOMS KRIM KDDG KCGC KPAI KFSC KID KMIG KNSD KWMM
LY LE LABOR LI LTTE LG LH LAB LO LT LA LU LOG
MARR MX MASS MOPS MNUC MCAP MTCRE ML MR MRCRE MTRE MASC MY MK MO MIL MTCR MAPP MP MG MZ MAR MD MU MA MOPPS MTS MLS MILI MEPN MEPI MEETINGS MERCOSUR MW MAS MT MCC MIK MAPS MV MILITARY MARAD MDC MEPP MASSMNUC MUCN MEDIA MI MQADHAFI MPOS MPS MC
NZ NATO NI NO NG NL NU NPT NS NSSP NA NATIONAL NSF NDP NR NP NIPP NE NGO NZUS NH NSG NAFTA NC NEW NRR NT NASA NAR NK NATOPREL NSC NV NPA NSFO NW NORAD NPG
OTRA OECD OVIP OREP OPRC ODC OPDC OAS OSCE OPIC OIIP OPAD OEXC OPCW ODIP OFDP OIE OFFICIALS OHUM OSCI OTR OMIG OSAC OBSP OFDA OVP ON OCII OES OCS OIC
PGOV PREL PARM PINR PHUM PM PREF PTER PK PINS PBIO PHSA PE PBTS PL POL PAK POV PGOF PA PAS PCI PALESTINIAN POLITICS PTE PREO PROP PAIGH PO PROG POLITICAL PJUS PMIL PRAM PARMS PSI PAO PTERE PG PDOV POLICY PRGOV PORG PP PS PKFK PSOE PEPR PPA PINT PMAR PRELP PREFA PNG PFOR PUNE PGOVLO PHUMBA PNAT POLINT PGOVE PHALANAGE PARTY PDEM PECON PY PLN PHUH PF PHUS PTBS PU PARTIES PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PHUMPREL POGOV PEL PINL PBT PINF PRL PSEPC POSTS PAHO PHUMPGOV PGOC PNR PROV
QA
RS RP RU RW RFE RCMP RIGHTSPOLMIL ROBERT RICE RM REGION RO ROOD RSP RF RELATIONS RIGHTS RUPREL REACTION REPORT RSO
SZ SENV SOCI SNAR SY SO SP SU SI SMIG SYR SA SCUL SG SW SR SYRIA SEN SC SCRS SF SARS SL SAARC SNARIZ STEINBERG SWE SN SAN ST SIPDIS SSA SPCVIS SOFA SENVKGHG SANC SHI SEVN SHUM SK SH SNARCS SPCE SNARN SIPRS
TRGY TBIO TSPA TU TPHY TI TX TH TIP TSPL TNGD TF TN TC TW TL TV TS TT TK TD TERRORISM TP TO TRSY TURKEY TZ TINT TFIN TAGS TR TBID THPY
UNSC UK UNGA UN US USTR UZ USEU UV UG UP UNAUS UNMIK UNHRC UNESCO UY USUN USPS UNEP UNCHR USAID UNHCR USNC USOAS UE UNVIE UAE UNO UNDP UNODC UNCHS UNFICYP UNDESCO UNC UNPUOS UNDC UNICEF UNCHC UNCSD UNFCYP UNIDROIT UNCND
VE VM VT VZ VTEG VTIZ VTPREL VENZ VAT VC VI VN
WHTI WIPO WTRO WS WTO WHO WZ WI WBG WMD WWARD WHA WITH WTRQ WEU WMO WA WFP WB
XA XR XW XX XK XL XM XS XF XG XT XH XY XV XB XU XD XC XE XZ XQ XI XTAG
YI YM YMCS YE
ZU ZI ZP ZR ZOELLICK ZF ZL ZJ ZO ZB ZEALAND ZN ZA ZK ZANU

### Browse by classification

CONFIDENTIAL CONFIDENTIAL//NOFORN SECRET SECRET//NOFORN UNCLASSIFIED UNCLASSIFIED//FOR OFFICIAL USE ONLY

### Community resources

Follow us on Twitter Check our Reddit Twitter this Digg this page Contact us on IRC

courage is contagious

### Viewing cable 06SAOPAULO229,

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:

- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06SAOPAULO229.

Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06SAOPAULO229 | 2006-03-03 12:29 | 2011-03-05 00:00 | UNCLASSIFIED | Consulate Sao Paulo

`

    VZCZCXRO0555
    PP RUEHRG
    DE RUEHSO #0229/01 0621229
    ZNR UUUUU ZZH ZDK
    P 031229Z MAR 06
    FM AMCONSUL SAO PAULO
    TO RUEHC/SECSTATE WASHDC PRIORITY 4588
    INFO RUEHBR/AMEMBASSY BRASILIA 5741
    RUEHBU/AMEMBASSY BUENOS AIRES 2061
    RUEHAC/AMEMBASSY ASUNCION 2413
    RUEHCV/AMEMBASSY CARACAS 0193
    RUEHMN/AMEMBASSY MONTEVIDEO 1829
    RUEHLP/AMEMBASSY LA PAZ 2604
    RUEHSG/AMEMBASSY SANTIAGO 1576
    RUEHRI/AMCONSUL RIO DE JANEIRO 6854
    RUEHRG/AMCONSUL RECIFE 2729
    RHEHNSC/NSC WASHDC
    RHMFISS/CDR USSOUTHCOM MIAMI FL
    RUEATRS/DEPT OF TREASURY WASHDC
    RUCPDOC/USDOC WASHDC 2289

` `

    UNCLAS SECTION 01 OF 04 SAO PAULO 000229

    SIPDIS

    SIPDIS

    NSC FOR SCRONIN
    STATE PASS USTR FOR SULLIVAN/LEZNY
    USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
    USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO/DANDERSON
    AID/W FOR LAC/AA

    E.O. 12958: N/A TAGS: ECON PGOV PINR ETRD BR

    REF: RECIFE 29

    SAO PAULO 00000229 001.4 OF 004

    ¶1. Summary: An informal survey of business leaders from Sao Paulo shows support for Finance Minister Antonio Palocci's macroeconomic policies and a general sense of relief that Lula's presidency has not destroyed the economy as originally feared. Although Lula is no longer seen as a threat to the economy, he still makes many businessmen nervous. If re-elected, they believe he is unlikely to make significant changes to the direction of the economy, as he will have to govern in alliance with such centrist and center-right parties such as the Brazilian Labor Party (PTB), the Liberal Party (PL), and the Brazilian Democratic Movement Party (PMDB). The private sector has developed an agenda of issues it would like the next government to address, including tax reform, labor reform, reduction of public expenditures, and simplification of the regulatory environment. The business community would prefer to see a candidate from the opposition Brazilian Social Democracy Party (PSDB) elected in the October presidential election, and many favor Sao Paulo state Governor Geraldo Alckmin, believing that he would be more capable than Sao Paulo Mayor Jose Serra of advancing their economic agenda. End summary.

    -------------------- 2006 ECONOMIC AGENDA --------------------

    ¶2. The National Confederation of Industries (CNI), a business umbrella organization which represents state Federations of Industries (of which the most influential is the Sao Paulo State Federation of Industries - FIESP), is poised to publish its economic agenda for the post-election period, a guide for whomever is elected the next President. The agenda reportedly has the concurrence of other business organizations. Its main recommendations are: -- Cutting interest rates. While business supports the Lula administration's macroeconomic policy, including its efforts to combat inflation, it believes that a speedier pace of interest rate reductions is possible. -- Control of public expenditures. The Lula government has devoted more resources to social programs while withholding funds for investment. The business community would like to see these priorities reversed. -- Greater public investment in infrastructure and implementation of public-private partnerships (PPPs). The PPP idea was introduced during the government of Fernando Henrique Cardoso (FHC) to spur infrastructure investment. Although the Lula government obtained Congressional approval of enabling legislation, currently the program exists mostly on paper. -- A clear regulatory framework for energy, telecommunications, transportation, and natural gas. -- A framework for environmental regulation that clearly defines the roles of responsible agencies in developing and enforcing the rules. -- Tax reform -- Labor law reform -- Public investment in technology (R&D)

    ¶3. Of the items listed above, investment in infrastructure is considered the most urgent by many in the business community. As the economy grows, so does demand for energy, roads, railroads, and port facilities. FIESP believes the country's infrastructure is in such a critical state of obsolescence that it is adversely affecting the efficiency and global competitiveness of Brazilian companies.

    --------------------- BUSINESS PERSPECTIVES ---------------------

    ¶4. In 2002, Lula was generally seen by the private sector as a dangerous candidate. With his labor union background and leftist orientation, he seemed to many to pose a threat to foreign investment and private enterprise in Brazil. A turning point in his campaign was his "Letter to the Brazilians," in which he promised to

    SAO PAULO 00000229 002.3 OF 004

    respect international contracts and commitments and pay Brazil's debts, thus easing private sector fears.

    ¶5. Four years later, his performance is viewed with amazement. The business community had such low expectations for his presidency that now, though it may not approve of some of his policies, it considers his performance surprisingly good. Nonetheless, some are still nervous, noting that Lula has not been tested by an international crisis and it is impossible to know how he would react under such pressure.

    ¶6. Another concern among business leaders is what Lula might do if it appears he might lose the election. Would he undertake populist measures in an attempt to turn the tide? Would he be tempted to follow the example of Venezuelan President Hugo Chavez and stifle democratic opposition? Would he abandon fiscal and monetary discipline, possibly re-igniting inflationary pressures? No one is quite sure, which causes unease in the business community.

    ¶7. Lula has some, albeit not many, supporters among businessmen. One is CNI president Armando Monteiro Neto, a PTB federal deputy from the northeastern state of Pernambuco. Monteiro owns a sugar factory and is extremely dependent on government loans and benefits. Similarly, CNI and other such business organizations are highly dependent on the government for funding, which comes from business taxes paid by companies. If the government were to suspend these mandatory contributions, it would force these organizations to find other sources of funds.

    ¶8. Other business supporters of Lula include Antoninho Marmo Trevisan (Trevisan Auditores e Consultores), Oded Grajew (founder and former CEO of Troll, a toy company), and Laurence Phi (owner of a large wheat mill), all of whom are progressive businessmen strongly tied to social causes. They believe Brazil is a country lacking in social justice and that Lula is going to change this. Another businessman, Vice-president Jose Alencar - owner of Coteminas, Brazil's largest textile firm - entered into an alliance with Lula more out of political opportunism than commitment to Lula's social agenda. More generally, the banking sector has supported Lula and has contributed generously to the PT; recently released figures show the banks earning record profits.

    ¶9. Although Lula has succeeded in obtaining the support of traditional elites that generally represent the Brazilian right, on many issues his government has not promoted the core interests of these constituencies. These groups do not agree with the importance he accords to the landless movement and other social movements. They particularly deplore his administration's closeness to the Cuban, Venezuelan, and other left-leaning governments in Latin America, and a foreign policy which appears motivated more by ideology than by economic and commercial interests. The left, for its part, is frustrated with the government's failure to deliver on its promise of new ideas. Where they hoped to see more jobs and income for the poorest classes, Lula abandoned his party's platform to follow the pro-market economic policies of his predecessor.

    ¶10. Ultimately, while Lula is not, and never will be, a favorite of the business community, he is no longer seen as the threat to economic stability that he once was. If his poll numbers continue to improve as the electoral season progresses, he will likely attract more business interests (and contributions) to his side. The more likely it appears that he will win, the more companies will want to jump on his bandwagon, and the less onerous his fund-raising challenge will be.

    ----------------------------------- EXPECTATIONS FOR A LULA SECOND TERM -----------------------------------

    ¶11. During the last several months of 2005, polls showed that Lula could lose the election, and many speculated he might even decide not to run. There was deep concern that, even if re-elected, he would face an extremely difficult second term. His party was

    SAO PAULO 00000229 003.3 OF 004

    expected to be punished for corruption with a loss of Congressional seats, and there was general disillusion with his government. More recent polls, however, show him recovering his popular support, and his government's approval ratings are returning to pre-scandal levels. In part, this is due to recent positive economic figures. The GoB is also heavily investing in advertising: the President is announcing new social programs and investments (and trumpeting the success of existing ones) almost every day, and appearing on major network television every night (reftel).

    ¶12. Expectations for a Lula second term, should he win one, depends how he wins the elections. There are three scenarios: -- Lula could win but still find himself in a weak position, with no strong political allies and a small cadre of PT deputies and senators. In addition, he would face many difficulties, with little maneuvering room in Congress and a hard time getting legislation passed. He would be unable to attract high-quality people to his cabinet. In such a situation, he could turn to the social movements for support and begin to employ leftist rhetoric and populist measures. Although unlikely, this is considered the most dangerous scenario. -- Lula could win by a large margin, with a working majority in the Congress, mainly from centrist small parties and the large PMDB. Since the PT isn't expected to do well in the congressional elections, Lula would be dependent on other parties in his electoral alliance. Still, the large margin could provide him with some political capital and an ability to set an agenda and press for some important reforms. One result would be a more centrist economic policy, without large or disruptive changes. -- Finally, there is a middle scenario, in which Lula wins but without enough support to guarantee a comfortable majority in Congress. In this case, his second term would be very similar to his first one. Without a consistent majority, Lula would have to negotiate the vote for each piece of legislation sent to the Congress and deal with difficult deputies from his own party and allied groups. Under this scenario, a change in economic course is unlikely, as is a reform agenda. The business community fears this eventuality, as it could lead to drift, deadlock, and stagnation. Many observers believe this is the most likely scenario.

    --------------------------------------------- THE PRIVATE SECTOR AND THE OPPOSITION TO LULA ---------------------------------------------

    ¶13. The majority of the private sector feels comfortable with the opposition PSDB because of its "neo-liberal" economic program. However, there is no consensus about which PSDB candidate should replace Lula. Sao Paulo governor Geraldo Alckmin is by far the favorite among companies within the state. One major supporter is Antonio Ermirio de Moraes, CEO of Votorantim Group, which owns banks, cement firms, and other enterprises. FIESP President Paulo Skaf has also expressed support for Alckmin as the PSDB's "natural candidate." During his administration, Alckmin has worked closely with the private sector and implemented some business-friendly policies, including tax cuts. Accordingly, the local business community knows and trusts him.

    ¶14. Sao Paulo Mayor Jose Serra, on the other hand, still carries the stigma of being considered unpredictable and strong-willed. He made enemies in the private sector while Health Minister under FHC. Serra opened the market for generic medicines, harming traditional pharmaceutical companies, and asserted Brazil's right to break patents on some HIV medications. He also fought the tobacco industry.

    ¶15. In the economic arena, Serra seems to be more to the left than Alckmin - even more than Lula, say his opponents. During the FHC administration, Serra was part of the so- called "developmentalist" group of advisers in opposition to the "monetarist" group of Finance Minister Pedro Malan and Central Bank President Arminio Fraga.

    SAO PAULO 00000229 004.2 OF 004

    Thus, he faces some opposition from the financial sector and from some parts of industry, such as pharmaceuticals. At the same time, he's considered very bright, well-educated, and determined. What remains uncertain, and therefore a source of concern, is his economic management and the direction of his policies.

    ------------------------------- THE PRIVATE SECTOR AND THE PMDB -------------------------------

    ¶16. The centrist PMDB is well-connected to the private sector. Most of its members in Congress were elected with help from one or another industry. With no strong ideology, the PMDB could provide the political balance for either Lula or Serra, if one of them were to prevail in October.

    ¶17. The PMDB has two pre-candidates running for President - Anthony Garotinho, former Governor of Rio de Janeiro, and Germano Rigotto, Governor of Rio Grande do Sul. Garotinho is considered by many business leaders to be a dangerous, populist candidate with strong ties to evangelical churches, and a relative newcomer to the PMDB. Rigotto is more mainstream but is unknown outside his own southern state. However, if polls show Garotinho to be a viable candidate, Rigotto could become the party's alternative to the former Rio governor. The PMDB is expected to participate in the next government one way or another, either with its own candidate or via an alliance with either the PT or the PSDB. Even if the PMDB does not make an alliance to enter the next government, the party is expected to win enough seats in Congress to influence government policy through its parliamentary power. Its presence in key Cabinet posts would give the private sector confidence that radical changes in financial and economic policy are unlikely. Historically, the PMDB has kept the government in the center of the political spectrum, reassuring the economic players. That's why both the PT and the PSDB are willing to negotiate alliances for the second round with the PMDB.

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

    ¶18. Though we are still seven months from the election, the campaign has in some respects already begun and is generating attention. What is striking, however, is how little the opposition pre-candidates have talked about policy - economic or any other - and, when they do, how little their proposals differ from each other. Everyone wants lower interest rates and more growth. Since Lula's macroeconomic policy has been a continuation of FHC's policies, the PSDB candidates haven't explained how they would change or improve it, only that they would implement it better and do a better job of fighting corruption. In the meantime, the PMDB, which hopes to offer the voters a third way, an alternative to the two main contending parties, has yet to say anything new. While there is a consensus in the business community that the next government needs to tackle long-standing and vexing problems - tax, labor, and regulatory reform - there is little confidence in the private sector that any new government (PT or PSDB) will have the political will and clout to push through the necessary legislation. End comment.

    ¶19. This cable was cleared/coordinated with Embassy Brasilia.

    McMullen

`