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### Viewing cable 06BRASILIA1960, NORTHEAST BRAZIL SOCIALIST LEADER SAYS LULA MUST IMPROVE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06BRASILIA1960 | 2006-09-15 18:16 | 2011-07-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Brasilia

`

    VZCZCXRO4867
    RR RUEHRG
    DE RUEHBR #1960/01 2581816
    ZNR UUUUU ZZH
    R 151816Z SEP 06
    FM AMEMBASSY BRASILIA
    TO RUEHC/SECSTATE WASHDC 6665
    INFO RHEHNSC/NSC WASHDC
    RUEHRG/AMCONSUL RECIFE 5445
    RUEHSO/AMCONSUL SAO PAULO 8045
    RUEHRI/AMCONSUL RIO DE JANEIRO 2874
    RUEHBU/AMEMBASSY BUENOS AIRES 4261
    RUEHMN/AMEMBASSY MONTEVIDEO 6457
    RUEHAC/AMEMBASSY ASUNCION 5656
    RUEHSG/AMEMBASSY SANTIAGO 5773

` `

    UNCLAS SECTION 01 OF 02 BRASILIA 001960

    SIPDIS

    SENSITIVE
    NOT FOR INTERNET
    SIPDIS

    E.O. 12958: N/A
    TAGS: PGOV PREL ECON BR
    SUBJECT:  NORTHEAST BRAZIL SOCIALIST LEADER SAYS LULA MUST IMPROVE
    ECONOMY

    ¶1.  (SBU) Summary.  The success or failure of President Luiz Inacio
    Lula da Silva's second term will depend on Lula's determination to
    appoint good people and to achieve a higher economic growth rate,
    according to Eduardo Campos (protect), national president of the
    Brazilian Socialist Party (PSB) and candidate for governor of
    Pernambuco.  Campos said Lula's re-election is a sure thing, and the
    Lula camp is already looking beyond it.  He said after this fall's
    election only six or seven parties will survive because of the new
    threshold law, under which parties failing to get a certain
    percentage of votes the will lose legal status as parties.  Campos
    expects that the PT (Workers Party) block in Congress will be only
    slightly reduced from its current 92 seats.  Campos also said he did
    not expect Lula to have any trouble governing during his second
    term.  This report was prepared by visiting Embassy Poloff in Recife
    and cleared with AmConsul Recife.  End summary.

    Lula's Challenges: Increase GDP and Get Good People
    ------------------------------------------

    ¶2.  (SBU) The success or failure of President Luiz Inacio Lula da
    Silva's second term will depend on Lula's determination to appoint
    good people and to achieve a higher economic growth rate, according
    to PSB president Eduardo Campos.  Campos, currently a federal
    deputy, and Minister of Science and Technology (2004-2006) in the
    Lula government, met with Recife Principal Officer and visiting
    Embassy Poloff on September 6 at Consulate Recife.  Campos said the
    growth rate in Brazil at present is so low that it is not only bad
    for Brazil but for the region and the world.

    ¶3.  (SBU) The other major challenge Campos sees facing Lula at the
    beginning of his second term is to ensure that he appoints the right
    people to top jobs.  This will require Lula to resist pressure from
    allied parties to appoint unqualified cronies in exchange for
    political support.  He said Lula is aware of the problem and has
    been discussing it with his staff.  Lula will look for good people
    he can rely on to help him reach his second term goals, he said, and
    they will not be from the PT.

    Lula Transcends the PT But Is Still the People's Choice
    --------------------------------------------- ----------

    ¶4. (SBU) When asked about the widespread perception that Lula is
    trying to distance himself from the PT, Campos offered the
    alternative explanation that Lula has now transcended his party.  It
    is not so much a deliberate distancing as a rising above the
    identification of a single party label. Still, the PT remains
    popular enough, he said, that it will win 75 to 80 seats in the next
    congress, only slightly fewer than its current 92 seats, Campos
    predicted.  He said his own PSB would get about 40 seats, up from
    ¶27.  He added that after this fall's election only six or seven
    parties will survive because of the new threshold law, under which
    parties failing to get a certain percentage of votes the will lose
    legal status as parties.  Campos said he did not expect Lula to have
    any trouble governing during his second term.  (Note: Some observers
    predict that the opposition will have a majority in the Senate, and
    that an anticipated reduction in government coalition seats in the
    Chamber of Deputies will make governing difficult for Lula in his
    second term. End note.)

    ¶5. (SBU) Campos also said that many voters believe Lula is honest,
    in spite of the corruption scandals that have abounded in his first
    term.  Other things are more important than corruption -- voters
    identify with Lula, he speaks their language, and has a personal
    appeal, Campos said.  These are the reasons for Lula's popularity.
    In comparison, Alckmin does not speak the language of the people,
    and doesn't know Brazil, he said.

    Ethical Questions About Campos
    ------------------------------

    ¶6. (SBU) Campos is running for governor in a three-way race against
    Jose Mendonca Filho of the PFL (Party of the Liberal Front) and
    Humberto Costa, of the PT.  Mendonca is currently polling in the
    high thirties, and the election is expected to go to a second round,
    in which case Campos is counting on receiving enough support from
    Lula to ensure his victory.  Campos is the grandson of Miguel
    Arraes, who was three times governor of Pernambuco.  Arraes,
    although identified with the left, won by forming alliances with the
    far right.  Campos is doing something similar: he has formed an
    alliance with federal deputy Inocencio Oliveira of the centrist PL
    (Liberal Party), who exercises influence over as many as fifty
    mayors in the interior of Pernambuco.

    BRASILIA 00001960  002 OF 002

    ¶7.  (SBU) But Campos has taken on some ethical baggage: Oliveira has
    been convicted of using slave labor practices on his properties,
    although the conviction was overturned on appeal.  In addition,
    Campos has an ethical cloud over him from the 1990s when he managed
    a disastrous state bond default and ensured payments only to
    political cronies, while others lost their investments.  Campos was
    an official in his grandfather's state government at the time.
    Moreover, four members of the PSB, the party Campos heads, were
    among the accused in a recent national scandal involving rigged
    ambulance sales and kickbacks for congressmen.

    ¶8. (SBU) Campos and Costa are both candidates of parties in Lula's
    ruling coalition, and Campos admitted that he and Humberto had made
    a sort of "non-aggression" pact for the gubernatorial campaign.
    They are aiming their political fire at Mendonca of the PFL.

    ¶9. (SBU) Comment: Eduardo Campos's diagnosis of what Lula needs to
    do may be sensible, but in our conversation he seemed all too
    willing to underestimate the damage the corruption scandals have
    done to institutional integrity and Lula's ability to govern.
    Campos spoke of the corruption scandals as if they happened to
    someone else, and were not related to his own party.  By comparison
    with his opponent Humberto Costa, Campos can sit comfortably: Costa
    has been indicted by the federal police for his alleged role in the
    ambulance scandal, a fact the Mendonca campaign is not letting
    anyone forget.

    SOBEL

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