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 001660 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV PINR PREL ECON BR
SUBJECT: LULA'S RIGHT-HAND WOMAN - DILMA ROUSSEFF BECOMES 
CHIEF OF STAFF 
 
REF: BRASILIA 1631 
 
¶1. (SBU) SUMMARY.  On June 21, Brazilian President Lula da 
Silva named Minister of Mines and Energy Dilma Rousseff to be 
his new Chief of Staff, replacing Jose Dirceu, who resigned 
last week amid an unfolding corruption scandal.  Rousseff was 
an opposition militant who was jailed and tortured by 
Brazil's military regime.  She earned degrees in economics 
and spent years in senior posts in city and state governments 
in the state of Rio Grande do Sul.  Rousseff joined Lula's 
Workers' Party in 2001 and worked on Lula's 2002 transition 
team.  She is a blunt and demanding manager who will seek to 
improve the administration's policy implementation.  She will 
be far less of a political lightning rod than Dirceu, more 
focused on pushing the bureaucracy than political infighting. 
 More cabinet moves are expected in the coming days, with the 
allied PMDB party likely to get a larger role in the 
administration.  END SUMMARY. 
 
"JOAN OF ARC OF SUBVERSION" BECOMES CHIEF OF STAFF 
--------------------------------------------- ----- 
¶2. (SBU) On July 21, President Lula named Mines & Energy 
Minister Dilma Rousseff, 57, as his new Chief of Staff 
("Minister-Chief of the Civilian Household").  She replaces 
Jose Dirceu, who stepped down last week because of an ongoing 
corruption scandal (reftel).  Dirceu was deeply involved in 
all the administration's political strategies, but Rousseff 
announced at her swearing-in ceremony that she intends to 
focus more on moving the administration's policy agenda 
forward.  She noted that --contrary to press assessments-- 
this does not mean she is a technocrat.  "This is not a 
technical job, but a political one", she announced, 
"Political in the best sense of the word.  I am no longer an 
executor (at the Ministry of Mines and Energy) but a 
facilitator of the projects of my cabinet colleagues." 
 
¶3. (SBU) Dilma Vana Rousseff Linhares was born 14 December 
1947 in the state of Minas Gerais.  Her father was a 
Bulgarian attorney who had naturalized Brazilian citizenship. 
 She became actively involved in opposition to the military 
dictatorship in 1967, at age 19, while studying economics in 
Minas Gerais.  Joining various underground groups, she 
organized three bank robberies and then co-founded the 
guerilla group "Armed Revolutionary Vanguard of Palmares". 
In 1969, she planned a legendary robbery popularized as the 
"Theft of Adhemar's Safe".  The operation broke into the Rio 
apartment of the lover of former-Sao Paulo Governor Adhemar 
de Barros, netting US$2.5 million that Adhemar had stashed 
there.  Rousseff separated from her first husband, Claudio 
Linhares, who in January 1970 hijacked a plane to Cuba and 
remained there.  That same month, she was captured by the 
regime and jailed for over three years (the prosecutor called 
her "the Joan of Arc of Subversion"), including 22 days of 
brutal electro-shock torture. 
 
¶4. (SBU) Freed in late 1973, Rousseff moved to the southern 
state of Rio Grande do Sul.  When her rights were restored by 
the 1979 general amnesty, she joined the PDT party of leftist 
leader Leonel Brizola, serving in various city and state 
positions:  Secretary of Finance of the city of Porto Alegre 
(1986-1988); President of the Economy and Statistics 
Foundation of the state of Rio Grande do Sul (1991-1993); 
State Secretary of Energy, Mines and Communications 
(1993-1994).  She served again as State Secretary of Mines 
under Workers' Party (PT) Governor Olivio Dutra (1999-2002), 
and switched to the PT in 2001.  She was a key member of 
Lula's transition team in the weeks before he took office in 
January 2003, and Lula named her Minister of Mines & Energy 
days after his inauguration. 
 
¶5. (SBU) Rousseff has a Masters degree in economic theory 
from the University of Campinas and an uncompleted doctorate 
in economics.  In 1992, she participated in an International 
Visitor program in the US.  She is now separated from her 
second husband (who was also an opposition militant).  She 
has a daughter, Paula, in Porto Alegre, where she spends her 
weekends.  She enjoys movies and classical music.  She has 
lost weight recently, reportedly after adopting President 
Lula's diet. 
 
NO-NONSENSE STYLE 
----------------- 
¶6. (SBU)  With her technical background and no-nonsense 
style, Rousseff has earned grudging respect from the energy 
sector.  While U.S. companies were initially wary when she 
was appointed Energy Minister, they now admit that she has 
done a competent job.  In particular, they praise her for her 
willingness to listen and respond to their views, even when 
she is inclined to a different conclusion.  She has a 
reputation as being stubborn, a tough negotiator, and 
detail-oriented.  Adjectives used here by those who know her 
include "demanding" and "workaholic".  Her greatest 
accomplishment as Minister has been the development of 
Brazil's new "Electricity Sector Model", which seeks to 
reduce consumer prices by establishing long-term supply 
contracts between generators and distributors.  Other 
programs developed during her tenure include "Lights for 
Everyone" and a focus on biodiesel development.  Unlike Jose 
Dirceu, Rousseff never held elective office and her contacts 
in Congress are limited, which suggests the administration's 
political coordination will be handled by others.  The press 
notes that Lula hopes she will produce a "management shock" 
within the administration, which --because of  managerial 
inefficiencies, bureaucratic gridlock, and most recently 
because of the raft of corruption scandals-- finds its agenda 
treading water. 
 
¶7. (SBU) Some in Congress complain that Rousseff does not 
understand party politics.  In April, the Senate rejected her 
nominee to head the national oil agency in retaliation for 
her opposition to a nominee from the allied PMDB party to 
head a subsidiary of Eletrobras, the state-owned electricity 
company.  (Rousseff instead opted to give the position to 
Adhemar Palocci, brother of FinMin Antonio Palocci.)  Her 
senior advisors tell us that she sometimes disregards 
hierarchy, directly tasking technical employees, bypassing 
their supervisors.  In addition, they note, her event horizon 
at the Ministry has been no more than two to three weeks in 
the future, thus making long (or even medium) term planning 
difficult. 
 
COMMENT: MAKING ROOM FOR THE PMDB 
--------------------------------- 
8.(SBU) The large allied PMDB party is likely to get a higher 
profile in the Lula administration as the cabinet shuffle 
continues to unfold in the coming days.  One rumor has 
Rousseff being replaced at Mines & Energy by Silas Rondeau, 
currently the president of Eletrobras, whose political 
sponsor is influential PMDB Senator Jose Sarney.  As for 
Lula's office, with Rousseff as Chief of Staff, it is unclear 
what will happen with the separate cabinet-level position of 
Political Coordinator.  The incumbent, Aldo Rebelo, has not 
been successful in pushing the administration's agenda in 
Congress or unifying the fractious coalition.  He is expected 
to step down and return to his congressional seat.  Thus, 
Lula may either replace Rebelo or fold his duties into 
another office, such as that of Economic and Social 
Development Secretary Jaques Wagner. 
DANILOVICH