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DE RUEHSO #0882/01 3051149
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P 011149Z NOV 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 7636
INFO RUEHBR/AMEMBASSY BRASILIA 8751
RUEHAC/AMEMBASSY ASUNCION 3156
RUEHBU/AMEMBASSY BUENOS AIRES 2920
RUEHCV/AMEMBASSY CARACAS 0589
RUEHMN/AMEMBASSY MONTEVIDEO 2481
RUEHLP/AMEMBASSY LA PAZ 3540
RUEHSG/AMEMBASSY SANTIAGO 2183
RUEHRI/AMCONSUL RIO DE JANEIRO 8417
RUEHRG/AMCONSUL RECIFE 3861
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RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 SAO PAULO 000882 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NSC FOR TOMASULO 
TREASURY FOR JHOEK 
SOUTHCOM FOR POLAD 
USAID FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON EFIN BR
SUBJECT: BRAZIL'S OPPOSITION PSDB POSITIONING FOR 2008 AND 2010 
 
REF: (A) SAO PAULO 878; (B) SAO PAULO 780; 
     (C) SAO PAULO 777; (D) 06 SAO PAULO 1012; 
     (E) 06 SAO PAULO 980; (F) 06 SAO PAULO 676 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
¶1.  (SBU) Summary: It is not true, according to Sao Paulo city 
official Andrea Matarazzo, that the Sao Paulo State Social Democracy 
Party of Brazil(PSDB) is divided between allies of Governor Jose 
Serra and supporters of former Governor (and 2006 presidential 
candidate) Geraldo Alckmin.  Matarazzo, one of Governor Serra's top 
advisors, believes Alckmin wants to run for Mayor of Sao Paulo in 
2008 for the job's own sake, and not as a stepping-stone to another 
run for the presidency in 2010.  Though Minas Gerais Governor Aecio 
Neves, considered a strong Serra rival for the PSDB's 2010 
presidential nomination, is "a factor" to be dealt with, Matarazzo 
is confident that Serra will be the nominee, perhaps with Neves as 
his running mate.  He outlined some of the challenges facing the 
PSDB, including the high political cost of attacking a very popular 
President Lula.  In Matarazzo's view, PSDB President Tasso 
Jereissati has provided no leadership, and the party has suffered as 
a result.  He expects no surprises at the PSDB's National Congress 
in November, and predicts Senator Sergio Guerra of Pernambuco will 
be elected to replace Jereissati.  At the same time, former 
President (1995-2002) Fernando Henrique Cardoso (FHC) still has a 
great deal of influence within the party.  End Summary. 
 
------------------------------------ 
SERRA'S "DIFFERENT MANAGEMENT MODEL" 
------------------------------------ 
 
¶2.  (SBU) Consul General (CG) and Poloff met October 22 with Andrea 
Matarazzo, Assistant Mayor of Sao Paulo.  Matarazzo (see refs D and 
F), a former Minister and Ambassador under Fernando Henrique Cardoso 
(FHC), noted that the Sao Paulo State Social Democracy Party of 
Brazil (PSDB) had held its convention over the weekend and elected a 
new state  President.  While many believe the state PSDB is divided 
between those loyal to Governor Serra and followers of former 
Governor Alckmin, this is nonsense, according to Matarazzo.  In 
fact, the state PSDB is divided between pro-Serra and anti-Serra 
factions.  Serra has a "different management model," in Matarazzo's 
words, that involves "doing what has to be done," with no favors, no 
special interests, and no half-measures.  Not everyone appreciates 
his management style; even some from within his own party disapprove 
of the way Serra does business.  Per ref D, Matarazzo also 
understands that Serra's abrasive personal style often causes him 
problems with other politicians.  Also, "the banks detest Serra" 
because they believe - wrongly, in Matarazzo's view - that he has 
nationalizing and interventionist tendencies.  As Health Minister 
under FHC, Serra asserted Brazil's right to break the patents on 
HIV/AIDS medications.  See Ref A for Matarazzo's description of 
Serra's role in the municipal government. 
 
------------------------------ 
THE DOWNSIDES OF OPPOSING LULA 
------------------------------ 
 
¶3.  (SBU) The PSDB is going through difficult times, Matarazzo 
acknowledged.  Outgoing president Tasso Jereissati, Senator from 
Ceara, has provided "no leadership."  President Lula remains popular 
and his government is largely unopposed.  Lula is very intelligent 
and a great communicator but also very primitive and simplistic, 
appealing to the common people, Matarazzo said.  Under his 
administration, the rich have gotten richer and the poor also saw 
their income grow.  Lula has garnered all the credit for the "Bolsa 
Familia" (BF) cash transfer program, even though FHC created it. 
Lula removed the conditions of eligibility, which enabled him to 
expand it to where now about a quarter of the population receives a 
BF stipend.  The polls show, Matarazzo said, that attacks on Lula 
will backfire. 
 
¶4.  (SBU) The Lula administration, in Matarazzo's view, also 
benefits from a climate of political correctness - "Anti-Americanism 
is a part of it, too" - in which people are afraid to criticize the 
 
SAO PAULO 00000882  002 OF 003 
 
 
government for fear of being accused of right-wing tendencies. 
Recent efforts by elements in the business community to articulate 
conservative positions have been puny and ineffective, he said, 
recalling the Civic Movement for Brazilians' Rights, aka "Cansei" 
(ref C), which has faded from view, and a recent demonstration 
organized by Paulo Skaf, President of the Sao Paulo State Federation 
of Industries (FIESP), against renewal of the Provisional 
Contribution on Financial Movements (CPMF - financial transactions 
tax).  Organizers had hoped to attract 2 million protesters to 
downtown Sao Paulo on October 16 but got a turnout of about 15,000. 
Matarazzo commented that though the CPMF is unpopular in the 
business community, the federal government could not function 
without it.  Thus, Governor Serra, who wants to be president, will 
not speak out against it.  In fact, he was recently quoted as saying 
that "there are worse taxes" than the CPMF.  The PSDB bloc in the 
Chamber of Deputies is working with Lula's Workers' Party (PT) and 
the government coalition on a compromise measure that would extend 
the CPMF with some modifications. 
 
--------------------------------- 
RE-ELECTION: EXTEND IT OR END IT? 
--------------------------------- 
 
¶5.  (SBU) Between now and 2010, Lula will work indirectly towards a 
third term, Matarazzo said.  This will involve creating the 
political conditions to amend the Constitution via either plebiscite 
or Congressional action to allow him to run again.  If that doesn't 
work, he will find someone to support and then plan to run again in 
¶2015.  This scenario presupposes a different Constitutional 
amendment, which the PSDB would support, repealing the 1997 
re-election amendment and limiting the president to one five-year 
term (up from four years as is currently the case).  Matarazzo 
thinks Lula will support Ciro Gomes of the Brazilian Socialist Party 
(PSB), his former Minister of National Integration now serving as a 
Federal Deputy.  If elected president, Gomes would be a "nightmare" 
for the PSDB, Matarazzo opined, because he is "pathologically 
insane, sick."  (Note: Others of our interlocutors, including FHC, 
have expressed similar opinions of Gomes, albeit in not quite the 
same language.  See refs B and E.  End Note.) 
 
¶6.  (SBU) Matarazzo acknowledged rivalries within the PSDB but does 
not think they pose a serious problem.  Serra will most likely be 
the candidate in 2010, though Minas Gerais Governor Aecio Neves is a 
factor and could oppose him.  Most likely, Neves will end up as 
Serra's running mate, Matarazzo predicted in what might have been 
wishful thinking, under an amendment banning re-election or an 
agreement by Serra not to run again, leaving the way clear for Neves 
in 2014 or 2015.  The PSDB and its main ally, the Democratic Party 
(DEM), will "walk together" in 2010 as they did in 2006, he said 
confidently. 
 
----------------------------------- 
"WE CAN'T CAMPAIGN AGAINST ALCKMIN" 
----------------------------------- 
 
¶7.  (SBU) The 2008 municipal elections pose a different problem. 
Matarazzo is sure former Governor Geraldo Alckmin wants to run for 
Mayor of Sao Paulo.  Matarazzo, no fan of Alckmin, who defeated 
Serra for the 2006 presidential nomination, doubts that Alckmin is 
seeking a platform from which to run for president again in 2010. 
"I think he really wants to be Mayor.  And quitting the office 
halfway through the term to run for another office won't work." 
The incumbent Mayor, Gilberto Kassab (DEM), is gaining popularity 
and wants to be re-elected, but, as Matarazzo put it, "The city 
government is probably 80 percent PSDB," including all 31 Assistant 
Mayors.  "Kassab is doing well in a PSDB administration, but we 
can't run a campaign against Alckmin."  In other words, if Alckmin 
wants to run, he will be the PSDB/DEM candidate, and Kassab will 
have to look for other work. 
 
¶8.  (SBU) Assessing the other side's chances, Matarazzo said PT 
former Mayor (2001-04) Marta Suplicy doesn't really want to run for 
Mayor in 2008.  "There's too much disenchantment with her," 
especially after her ill-fated advice to travelers to "relax and 
 
SAO PAULO 00000882  003 OF 003 
 
 
enjoy" Brazil's aviation crisis and she wouldn't have an easy time 
of it.  More likely, he predicted, Suplicy will wait until 2010 and 
run for Governor or Senator.  "We have no name for Governor in 
2010," he explained, referring to the PSDB/DEM coalition, unless 
Serra is for some reason unable to run for President and decides to 
seek a second term as Governor.  But Serra is well positioned in the 
national party, Matarazzo said, and is developing a good record as 
Governor to run on.  He is privatizing Nossa Caixa, the state-owned 
bank, and some state highways, and is working to improve 
transportation infrastructure.  As reported ref A, Matarazzo praised 
Serra's non-nonsense approach to public security, focused on both 
prevention and repression. 
 
--------------------------------------------- -- 
NO SURPRISES AT UPCOMING PSDB NATIONAL CONGRESS 
--------------------------------------------- -- 
 
¶9.  (SBU) Looking to the PSDB National Congress, scheduled for late 
November in Brasilia, Matarazzo foresaw no surprises.  Sergio 
Guerra, Senator from Pernambuco who was Alckmin's national campaign 
coordinator in 2006, will be elected PSDB president, replacing 
Jereissati, without serious opposition, he predicted confidently. 
But he also noted that PSDB Honorary President FHC retains "great 
influence" within the party, even though he's spending much of his 
time teaching at Brown University and traveling abroad as part of a 
range of international activities. 
 
------- 
COMMENT 
------- 
 
¶10.  (SBU) After Serra resigned as Mayor to run for President, 
Andrea Matarazzo stayed behind in City Hall to ensure Serra's 
influence in the Kassab administration.  Everything he says must be 
viewed through the prism of his long-standing friendship with Serra, 
to whom he is extremely loyal.  He also remains close to FHC and 
undoubtedly knows much more than he is telling us about internal 
PSDB machinations.  The PSDB/DEM coalition appears to be in a strong 
position in Sao Paulo for the 2008 elections and nationwide for 
2010, if the PSDB can avoid the sort of destructive internecine 
dissension that hurt it last year.  End Comment. 
 
¶11.  (U) This cable was coordinated with Embassy Brasilia. 
 
WHITE