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### Viewing cable 07BRASILIA598, OPPOSITION DEPUTY BLAMES LULA FOR AIR TRAFFIC

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07BRASILIA598 | 2007-04-05 18:59 | 2011-07-11 00:00 | CONFIDENTIAL | Embassy Brasilia

`

    VZCZCXRO6517
    RR RUEHRG
    DE RUEHBR #0598/01 0951859
    ZNY CCCCC ZZH
    R 051859Z APR 07
    FM AMEMBASSY BRASILIA
    TO RUEHC/SECSTATE WASHDC 8583
    INFO RUEHAC/AMEMBASSY ASUNCION 6039
    RUEHBU/AMEMBASSY BUENOS AIRES 4700
    RUEHMN/AMEMBASSY MONTEVIDEO 6836
    RUEHSG/AMEMBASSY SANTIAGO 6177
    RUEHRG/AMCONSUL RECIFE 6477
    RUEHRI/AMCONSUL RIO DE JANEIRO 4166
    RUEHSO/AMCONSUL SAO PAULO 9568
    RHEHNSC/NSC WASHDC
    RUEAIIA/CIA WASHDC
    RUEANHA/FAA NATIONAL HQ WASHDC
    RUEAYVF/FAA MIAMI ARTCC MIAMI FL
    RUEWMFU/TSA HQ WASHINGTON DC
    RHMFISS/HQ USSOUTHCOM MIAMI FL

` `

    C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000598

    SIPDIS

    SIPDIS

    E.O. 12958: DECL: 04/05/2017
    TAGS: PGOV EAIR BR
    SUBJECT: OPPOSITION DEPUTY BLAMES LULA FOR AIR TRAFFIC
    CRISIS

    REF: A. BRASILIA 485

         ¶B. BRASILIA 564 (NOTAL)
         ¶C. 06 BRASILIA 2564 (NOTAL)
         ¶D. 06 SECSTATE 198917 (NOTAL)

    Classified By: POLITICAL COUNSELOR DENNIS W. HEARNE FOR REASONS 1.4 B/D

    ¶1.  (C) Summary.  Federal Deputy Antonio Carlos Magalhaes
    Neto ("ACM Neto"), of the Democrats party ("DEM," formerly
    called the Liberal Front Party, PFL), of Bahia believes
    President Luiz Inacio Lula da Silva defused a ticking bomb in
    the military this week by reversing his decision not to
    punish insubordinate air traffic controllers who shut down
    air traffic on March 30.  ACM Neto (protect) told poloff on
    April 4 there are other such "bombs" in the military because
    some in the lower ranks -- corporals, sergeants, and even
    lieutenants -- are unhappy about a number of things, starting
    with salaries.  ACM Neto, a staunch opponent of Lula's
    administration, said opposition figures have obtained
    documents going back four years, to the time Lula took
    office, that proving the Lula administration knew of problems
    in the Brazilian air traffic control system.  He said he
    believes a congressional investigation into the air traffic
    crisis will reveal serious corruption and incompetence in
    Infraero, the government body that runs the country's
    airports, under the management of Carlos Wilson, a Lula
    appointee.  He said rumors are circulating that government
    officials took bribes to favor two major airlines and
    channeled the funds into political campaigns.  End summary.

    Lula "Contained" the Problem in the Military, For Now
    --------------------------------------------- --------

    ¶2.  (C) ACM Neto condemned the Lula administration's
    "complete lack of leadership" on the air traffic crisis.  He
    told poloff on April 4 that opposition politicians have
    obtained documents going back four years ) the time frame
    covering Lula's first term ) showing that the Lula
    administration was aware of serious deficiencies in air
    traffic.  ACM Neto harshly criticized Lula's handling of the
    March 30 strike by air traffic controllers.  He said Lula's
    decision to reverse himself and support punishment and even
    prosecution of rebellious sergeants "contained" the problem
    ) for now - and defused a "bomb."  But, he stressed, the
    "lack of hierarchy is dangerous," and there are pockets of
    unhappiness; "other bombs," ARE out there among the lower
    enlisted ranks, and even among lieutenants, and they could go
    off.  ACM Neto said he was not suggesting a revolt by the
    armed forces, but rather that some in the lower military
    ranks are unhappy with salaries, long hours (in the case of
    air traffic controllers), and other conditions.  This,
    coupled with uncorrected disobedience, is a dangerous
    formula, he said.  ACM Neto said the air traffic strike on
    March 30 was the most serious revolt by the military since
    ¶1963.  He said the DEM does not and should not support the
    controllers' action, but they have grievances and the
    government has done absolutely nothing.  He accused the Lula
    administration of a complete lack of leadership to address a
    problem they have known about for four years.

    Rumors That Airlines Paid Bribes That Went to Government
    Campaigns
    --------------------------------------------- -----------

    ¶3.  (C)  ACM Neto told poloff that the Parliamentary
    Committee of Inquiry ("CPI"), if it is created, is likely to
    become a wide-ranging investigation and no one can predict
    what its eventual scope will be.  He revealed that there are
    unsubstantiated rumors in the Congress ) which any CPI on
    air traffic would undoubtedly investigate ) that after the
    collapse of Varig, administration officials took bribes to
    ensure that the two remaining large national airlines, TAM
    and Gol, were ensured a dominant position in the market.  He
    said the government is impeding market access and expansion
    by smaller companies to fill the void left by Varig, leaving
    TAM and Gol the lion's share of the commercial aviation
    business.  These payments, according to the rumors, were
    channeled into campaign coffers.  ACM Neto did not say which
    parties in the government coalition might have benefited from

    BRASILIA 00000598  002 OF 002

    these illegal payments.

    Parliamentary Inquiry Will Reveal Corruption
    --------------------------------------------

    ¶4.  (C) ACM Neto said that he expected a CPI would also
    reveal irregularities in contracting carried out by Infraero,
    the state company that runs the airports, especially while it
    was managed by Carlos Wilson, a Lula appointee.  (Note:
    Carlos Wilson is now a Federal Deputy from the Workers Party,
    representing Pernambuco.  He was president of Infraero from
    2003 to 2006, and oversaw new construction and major upgrades
    at several airports, including Recife, Congonhas, Belo
    Horizonte, and others.  End note.)  ACM Neto said there had
    been all manner of contractual malfeasance for these
    projects.  Moreover, he said, Infraero was negligent in its
    duty to maintain runways and equipment, while it proceeded to
    "turn the airports into shopping malls."  He said the "black
    holes" in air traffic control, such as the location where Gol
    flight 1907 and an Embraer Legacy jet collided last September
    29, resulting in Brazil's worst air disaster and the loss of
    154 lives, were an example of the government's overall
    failure - both on the part of the Air Force, which is wholly
    responsible for running the air traffic control system, as
    well as Infraero, the civilian agency that runs and maintains
    the airports - to address persistent technical deficiencies.

    Comment
    -------

    ¶5.  (C)  Comment.  ACM Neto is in the opposition and it is
    natural for him to allege wrongdoing, lack of leadership and
    incompetence.  Clearly there is a political agenda behind his
    statements.  But the allegations of corruption in Infraero
    that he described would fit squarely within a pattern of
    corruption in Lula's first term, and is entirely plausible.
    Even if true, Lula could probably get away with saying he did
    not know, as he successfully did with past scandals.  The
    allegation that bribes were taken and recycled into political
    campaigns presents a far more serious danger to the
    administration, since it could strike the PT and/or the
    government at a very senior level, and Lula would have to
    clean house (again), while claiming he did not know.  It
    could generate another far-reaching CPI with an unpredictable
    outcome, even if it is never substantiated.

    ¶6.  (C)  Comment, continued.  ACM Neto's tour d'horizon of
    the air traffic crisis also echoes our conviction that Lula's
    government continues to suffer from a profound lack of
    decisive executive competence, rendering it incapable of
    dealing simultaneously with routine policy making and looming
    crises.  It can carry out a major income redistribution
    program, but it is utterly incapable of addressing the major
    structural problems that have resulted in six months of air
    havoc.  In a country the size of Brazil, where air travel is
    essential to business and livelihoods, this represents a huge
    failure of Lula's leadership.

    Chicola

`