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

UNCLAS SECTION 01 OF 02 BRASILIA 003075 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV BR
SUBJECT: LULA MAY END UP WINNER IN PMDB PARTY CRISIS 
 
REF: BRASILIA 3031 
 
¶1. (SBU) SUMMARY.  The large PMDB party decided at a December 
12 convention to defect from the governing coalition of 
Brazilian President Lula da Silva.  The decision exacerbated 
the rift between the party's pro- and anti-government wings, 
but as the dust settles it appears that Lula could benefit 
from the crisis.  Lula plans to keep the two PMDB members in 
his cabinet and will continue to collaborate with the 
pro-government PMDB members of Congress.  This posture has 
helped to solidify the party's pro-government wing, and Lula 
can now reasonably count on most of the PMDB votes in both 
houses.  The crisis may not play out until February, but with 
the administration and savvy PMDB Senator Jose Sarney working 
against the withdrawal from the coalition (and the 
anti-government wing making tactical blunders), Lula may well 
turn the crisis in his favor.  END SUMMARY. 
 
¶2. (SBU) The Party of the Brazilian Democratic Movement 
(PMDB) is being derided as the "Party of the Brazilian 
Disorganized Mix-ups".  The anti-government wing forced a 
vote at a December 12 party convention to pull out of Lula's 
coalition (reftel).  By this, party leaders hoped to 
establish themselves as "independent" of Lula's Workers' 
Party (PT) so that they can run against Lula and the PT's 
other candidates in the 2006 elections.  However, those party 
leaders are now on the defensive as the pro-government wing 
has united in a counter-attack supported by the 
administration. 
 
PMDB CAUCUS IN CONGRESS SWINGS TOWARD LULA 
------------------------------------------ 
¶3. (SBU) In Congress, leading PMDB Senators Jose Sarney and 
Renan Calheiros have finally buried the hatchet on their 
dispute over who will be the next Senate President (it will 
likely be Calheiros).  Their reconciliation brought together 
the PMDB caucus in the Senate so that 20 of the party's 23 
Senators are now counted as pro-government.  Sarney's 
support, in particular, is key.  His political instincts are 
unrivalled, and he is a devoted government ally who can pull 
innumerable strings on Lula's behalf (but on the few 
occasions that he has been irritated with the administration, 
he has caused it to lose key floor votes).  In the lower 
house, the picture is similar.  The party's pro-government 
faction in the Chamber showed its teeth December 15 in 
collecting 47 votes (of the party's 78 Deputies) to retain 
pro-government Deputy Jose Borba as party whip.  Thus the 
pro-Lula faction owns a solid majority of the party caucus in 
both houses. 
 
TEMER'S FAILED MOVE TO EXPEL DISSIDENTS 
--------------------------------------- 
¶4. (SBU)  As a key coalition member, the PMDB nominated two 
cabinet ministers and several other senior administration 
officials.  In the wake of the party's withdrawal from the 
coalition, PMDB president Michel Temer, who leads the party's 
anti-government bloc, ordered these officials to quit their 
posts.  They refused, and Temer moved to expel them from the 
party.  Those threatened with expulsion are:  Communications 
Minister Eunicio Oliveira, Social Security Minister Amir 
Lando, Director of the Social Security Agency (INSS) Carlos 
Bezerra, Director of Petrobras's transportation unit 
(Transpetro) Sergio Machado, and Director of the Postal 
System (Correios) Joao Henrique de Almeida.  But the battle 
is also being waged in the courts, and Temer's move was 
short-circuited by a judge's decision that declared the 
entire PMDB convention void.  Thus, the party members who 
hold posts in Lula's administration will defy Temer and keep 
their jobs.  As a tactical matter, Temer's move to expel the 
five was a failed show of strength that backfired and may 
cost him dearly as events unfold. 
 
LULA CAPITALIZING ON THE SITUATION 
---------------------------------- 
¶5. (SBU) The day after the December 12 party convention, Lula 
met with the PMDB's pro-government leaders and reportedly 
offered them behind-the-scenes support to replace Temer with 
Sarney as party president in mid-2005.  In the meantime, Lula 
will seek to exploit the party's divisions by working 
exclusively with the pro-government faction, offering support 
and pork spending to its congressional bloc, and keeping the 
two PMDB cabinet ministers in place.  Lula pointedly said 
this week that he plans no cabinet shuffle until January at 
the earliest. 
 
COMMENT 
------- 
¶6. (SBU)  Senator Jose Sarney and the pro-government wing of 
the PMDB are counter-attacking, and Sarney is a formidable 
tactician who has already managed to forge a weighty support 
bloc in Congress.  Party President Michel Temer and the 
anti-government wing have the support of the large party 
delegations from Sao Paulo, Rio de Janeiro, and a handful of 
other key states that have never been comfortable in Lula's 
camp.  Both sides will continue to maneuver, but in the 
short-term, Lula will to treat the pro-government wing as a 
coalition member (and will retain his PMDB cabinet 
ministers).  Congress will go out of session by December 30, 
so the crisis may not play out until February or March. 
Senator Jorge Bornhausen (president of the opposition PFL 
party) notes with dismay that the crisis has had the effect 
of clearly defining the  PMDB's internal rift and making its 
pro-government wing more committed to Lula.  Thus, he 
predicts, the work of the opposition may become more 
difficult in the coming year because it will be harder to 
pick off disaffected PMDB members during votes.  On the other 
hand, Rio Mayor Cesar Maia, also of the PFL, commented in the 
press that "the PMDB is a rare case of a party that gets 
stronger with disunity.  As the sides become defined, the 
government and opposition wings get stronger through 
bargaining.  When it is united, the party is weaker." 
DANILOVICH