This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 SAO PAULO 001541 
 
SIPDIS 
 
NSC FOR MIKE DEMPSEY 
 
DEPARTMENT ALSO FOR WHA/PD 
 
E.O. 12958: N/A 
TAGS: PGOV PINR SOCI BR
SUBJECT: MUNICIPAL ELECTION RESULTS IN THE SOUTH:  PT 
LOSSES; PSDB GAINS 
 
REF:  A) BRASILIA 2742; B) SAO PAULO 1527; C) SAO PAULO 
 
1483; D) SAO PAULO 1472 
 
 
¶1.  Summary.  In Sao Paulo and the South, the PSDB was the 
big winner and the PT the big loser in the second round of 
the Brazilian municipal elections on October 31.  The PT 
lost control of the two biggest prizes in the region, Sao 
Paulo and Porto Alegre, the second of which the party had 
governed for the last 16 years.  Although it defeated the 
PSDB in several important cities in Sao Paulo state, 
overall, the PT lost ground to the PSDB in the 27 largest 
cities in the state.  The PSDB's victories in Sao Paulo, 
Curitiba and Florianopolis, capital cities the party has 
never previously governed, will undoubtedly fortify the 
party's position in the run-up to the 2006 presidential 
election.  Jose Serra's decisive victory (55% - 45%) over 
incumbent PT mayor Marta Suplicy also bolsters PSDB Governor 
Geraldo Alckmin's position among the party's 
"presidenciaveis," or potential presidential nominees.  In 
Parana state, the PT loss in Curitiba was also a major loss 
for PMDB Governor Roberto Requiao, who had strongly backed 
the PT candidate in that race.  The PPS also gained strength 
in the southern state of Rio Grande do Sul, with victories 
in Porto Alegre and Pelotas. END SUMMARY 
 
SETBACKS IN SAO PAULO AND RIO GRANDE DO SUL 
------------------------------------------- 
 
¶2.  The PT lost big in the two states -- Sao Paulo and Rio 
Grande do Sul -- where it traditionally has had its 
strongest base of support.  In addition to losing the 
capitals, Sao Paulo and Porto Alegre, the PT lost ground in 
the major cities in both states.  PT party president Jose 
Genoino acknowledged that the party's losses in these states 
were "very heavy defeats" for the party, though he denied 
that they indicated that the party was facing a "crisis." 
In Sao Paulo state, among the 27 cities with populations 
over 150,000, the number in PT hands fell from nine to five. 
The results were mixed for the PT in the large industrial 
suburbs (known as the ABC region) of Sao Paulo.  It defeated 
the PSDB in the second round in Santo Andre, Diadema and 
Osasco (which the PSDB has governed for the last eight 
years), and won reelection in Guarulhos in the first round 
on October 3.  The PT defeat of the PSDB in Osasco, the 
hometown of Federal Chamber of Deputies President Joao Paulo 
Cunha (PT), may strengthen Cunha's hand in jockeying with 
other PT stars for a spot in Lula's cabinet or for a 
gubernatorial run in 2006.  In other ABC cities, the PT lost 
Sao Caetano to the PTB, and failed yet again to win in Sao 
Bernardo, Lula's hometown.  PT incumbents did not make it 
into the second round in the key interior cities of Riberao 
Preto, Campinas, Piraciacaba and Sorocaba.  The PT suffered 
an upset second round loss in the important port city of 
Santos, where former PT mayor Telma da Souza had been 
expected to win her bid to return to office. 
 
¶3.  The PSDB, and specifically Governor Geraldo Alckmin, 
were the big winners in the state.  Alckmin noted that the 
party had the best performance in the state since it was 
founded in 1990.  In addition to the capital, the PSDB took 
Sorocaba, Riberao Preto and Piraciacaba away from the PT. 
The party will now govern 10 of the state's largest cities, 
one more than their current total, and twice the number of 
any other party.  Control of these voter rich cities will 
undoubtedly help the party consolidate its position as the 
strongest party in the most populous state in Brazil.  The 
party's success helps to burnish Alckmin's own standing 
within the party and as a potential player on the national 
stage, though the Governor has little visibility outside his 
home state.  Alckmin threw his own political capital 
strongly behind Serra in the capital, demonstrating his 
effectiveness as a political godfather.  He did the same in 
Sorocaba, where he participated actively in the campaign in 
the first round, supporting both the PSDB and PFL candidates 
to deny the incumbent PT mayor a slot in the second round. 
 
¶4.  The PT's performance in the southern state of Rio Grande 
do Sul was equally dispiriting for the party faithful.  In 
addition to losing Porto Alegre, the first major city 
governed by the PT, where it has been in power for the last 
16 years, the party was ousted from power in Caxias do Sul 
and Pelotas, the state's second and third largest interior 
cities.  The party will now govern in only one of the 
state's five largest cities.  The PT won reelection in Santa 
Maria in the first round, but failed to dislodge the PSDB 
incumbent from city hall in Canoas.  As in Sao Paulo state, 
while the PT was the big loser, the governor was the big 
winner in Rio Grande do Sul.  Though he remained 
ostentatiously neutral in all of the first round races in 
his state, reportedly to avoid causing difficulties among 
the state's governing alliance, PMDB Governor Germano 
Rigotto threw his support to the opposition candidates in 
all three cities with run-off  races.  Though he did not 
campaign actively with Jose Fogaca, the PPS victor in Porto 
Alegre, until the final days of the campaign, he made his 
support for the opposition alliance clear.  In his home city 
of Caxias do Sul, where the incumbent PT mayor remains very 
popular, Rigotto's support was instrumental in helping the 
PMDB's Jose Ivo Sartori, defeat the PT's Marisa Formolo. 
The PMDB will control city hall in 137 of the state's 496 
municipalities, the greatest number of any party in the 
state.  Overall, parties that comprise Rigotto's governing 
base will hold power in a total of 441 cities.  The other 
winner in the state was the Popular Socialist Party (PPS), 
which in addition to winning in Porto Alegre, also ousted 
the PT in Pelotas and picked up 3 additional cities in the 
first round.  The PPS victories in Rio Grande do Sul, which 
notably were at the expense of the PT, may strengthen the 
"oppositionist" wing of the PPS party, which has suggested 
that the party leave the national governing alliance. 
 
THE PSDB BREAKS NEW GROUND IN PARANA AND SANTA CATERINA 
--------------------------------------------- ---------- 
 
¶5. The PSDB's victories in Curitiba and Florianopolis, the 
capitals of Parana and Santa Catarina states, will bolster 
the party's position in a region where it has not previously 
had much of a presence.  In Curitiba, the PSDB's Beto Richa 
convincingly defeated the PT's Angelo Vanhoni (55% to 45%); 
Vanhoni had been favored to win until well into the first 
round campaign.  The city is currently governed by the PFL. 
In addition to failing to pick up the capital, the PT lost 
control of two of the state's three largest interior cities. 
The losses in Parana's big cities will more than offset the 
PT's success in more than doubling the number of small to 
medium sized cities it governs in the state.  Along with the 
PT, the big loser in Parana is PMDB governor Roberto 
Requiao, who bet heavily on Vanhoni in Curitiba and the 
defeated PT incumbents in Ponta Grossa and Maringa.  In an 
indication of how closely the polemical Governor had become 
identified with the PT candidate in Curitiba, the victory 
celebration by Richa supporters took place outside the 
governor's palace, rather than at one of the more 
traditional political gathering points in the city.  Former 
Governor Jaime Lerner was among many who blamed Requiao for 
Vanhoni's defeat, stating that the Governor succeeded in 
"burying Vanhoni's candidacy, and that the vote represented 
a veto of the Governor's "arrogance and authoritarianism." 
 
¶6.  In Santa Catarina, Dario Berger's win over PP candidate 
Chico Assis in Florianopolis will help firm up the PSDB's 
still tentative foothold in the state.  The PSDB incumbent 
won a first round victory in Joinville, the state's largest 
city.  In both cities, the PSDB candidates benefited from 
the active support of PMDB governor Luiz Henrique da Silva, 
who thus emerges from the municipal elections strengthened 
vis-a-vis the PP's Angela Amin, the outgoing mayor of 
Florianopolis and one of his most likely opponents in the 
2006 race for governor. 
 
COMMENT 
------- 
 
¶7.  The PT's electoral setbacks in the South loomed so large 
that even party president Jose Genoino made no attempt to 
hide his dismay.  The party lost Sao Paulo and Porto Alegre, 
the two largest state capitals in the South, and the two 
most important cities the PT governs.  At the national 
level, the PT will undoubtedly spin the election results in 
the major cities of Sao Paulo and the South by focusing on 
the party's gains in smaller cities and regions outside its 
traditional base.  It will not be able, however, to disguise 
the fact that it suffered serious setbacks, in particular by 
losing control of Sao Paulo and Porto Alegre.  The PT will 
undoubtedly be picking through the entrails of its defeats 
there for some time to come.  Among the fall-out we 
anticipate from this self-examination are a further 
weakening of the influence of the leftist gaucho wing of the 
party on the national party leadership and the Lula 
government, and a heated competition for the PT 
gubernatorial nomination in Rio Grande do Sul in 2006.  The 
PT gubernatorial selection process in Sao Paulo state will 
also likely become more complicated, as Marta Suplicy may 
well mount an effort to dislodge PT Senator Aloizio 
Mercadante from his perch as the reputed party favorite for 
the nomination.  The PSDB emerged from the elections 
energized not only in Sao Paulo but in the southern states 
of Parana and Santa Caterina.  END COMMENT. 
 
¶8.  This message was coordinated with Embassy Brasilia. 
 
DUDDY