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UNCLAS SECTION 01 OF 02 SAO PAULO 000102 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
NSC FOR CRONIN 
STATE PASS USTR FOR SULLIVAN/LEZNY 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO/DANDERSON 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON BR
SUBJECT: SAO PAULO VICE-MAYOR GILBERTO KASSAB: PFL INSIDER DISCUSSES 
ELECTORAL POLITICS 
 
REF: Sao Paulo 73 
 
Sensitive but Unclassified -- Protect Accordingly 
 
¶1. (SBU) Summary: Charge d'Affaires (CDA), accompanied by POLCOUNS, 
Sao Paulo Consul General, and Sao Paulo poloff, met January 19 with 
Sao Paulo Vice-Mayor Gilberto Kassab.  The 45-year-old Kassab, an 
influential leader of the state Liberal Front Party (PFL), will 
serve as acting Mayor through the end of 2008 if Jose Serra departs 
by the end of March to run for President.  He said Serra is 
well-prepared to be President and that the PFL continues to 
negotiate an electoral alliance with Serra's Brazilian Social 
Democracy Party (PSDB) and hopes to choose the running mate.  Kassab 
said this year's elections will change Brazil's political landscape 
because of a provision newly in effect that will withdraw privileges 
from political parties that receive less than five percent of the 
nation-wide Congressional vote, effectively eliminating a number of 
small parties.  End summary. 
 
¶2. (SBU) Kassab said Serra is the best candidate for President 
because he has experience at the national, state, and local levels, 
having twice been a Minister in the government of Fernando Henrique 
Cardoso and having served as Secretary of Economy and Planning of 
Sao Paulo State in the mid-1980s, and now as Mayor of Brazil's 
largest city.  He will have to resign by the end of March if he 
plans to run, but for political reasons he should decide earlier, 
preferably by the end of February.  (NOTE: Per reftel, Serra told 
CDA he has not decided if he will leave the Mayor's office to run 
for President, but will decide in the latter half of March. 
Nevertheless, there are few who believe he will not run, and he is 
considered the frontrunner for his party's nomination.  END NOTE.) 
 
¶3.  (SBU) It is "natural and legitimate" for the PFL to ally with 
Serra's PSDB for the Presidential race, Kassab continued, since the 
two parties are already closely allied in Sao Paulo, Brazil's 
largest state and city.  Negotiations continue, with the PFL trying 
to secure the Vice-Presidential nomination.  One strong candidate 
would be party president Jorge Bornhausen, Senator from the southern 
state of Santa Catarina.  Meanwhile, the Brazilian Democratic 
Movement Party (PMDB) remains sharply divided, more a "federation of 
parties" than a single entity.  One wing, led by party president 
Michel Temer, Federal Deputy from Sao Paulo, is closer to the PSDB, 
but a minority faction is closer to President Lula's government.  It 
will be difficult for the PMDB to run its own candidate, Kassab 
averred, but if it does, Rio Grande do Sul Governor Germano Rigotto 
could be a viable alternative to populist former Rio de Janeiro 
Governor Anthony Garotinho; many in the PMDB consider Rigotto more 
trustworthy.  In Kassab's view, another "gaucho," Nelson Jobim, 
outgoing Minister (judge) of the Supreme Federal Tribunal (STF), is 
positioning himself to be Lula's Vice-Presidential candidate.  Jobim 
was a member of the PMDB in his previous political incarnation, and 
some have speculated he may even seek the party's presidential 
nomination, but if that doesn't work out Kassab thinks Jobim might 
join the Brazilian Socialist Party (PSB) or even Lula's Workers' 
Party (PT). 
 
¶4.  (SBU) Kassab pointed out that the 2006 elections will change 
Brazil's political landscape because the "Clausula de Barreira," 
enacted in 1995 as part of the Law on Political Parties, will be in 
force for the first time.  According to this provision, political 
parties must garner five percent of the nationwide vote for the 
Chamber of Deputies in order to maintain their parliamentary 
privileges.  Their votes must be spread over at least nine of the 27 
states, and parties must receive a minimum of two percent in each 
state.  Parties whose vote falls below these thresholds do not lose 
their registration or legal status, and their members may still 
serve in elective office.  However, such parties lose their free 
radio and television time and almost their entire share of the 
political party fund ("Fundo Partidario") distributed by the federal 
government.  Furthermore, members of such parties may not serve on 
congressional committees or appoint party leaders or hold positions 
of leadership (President, Vice-President, etc.) in either the 
Chamber or the Senate.  Under certain conditions, the parties may 
 
SAO PAULO 00000102  002 OF 002 
 
 
lose these rights in state and local legislative bodies as well. 
 
¶5. (SBU) This new rule, Kassab noted, will cause the disappearance 
of many small political parties which fall below the threshold. 
Four larger ones will survive:  the PT, the PSDB, the PMDB, and his 
own PFL.  Possibly two more may be able to get the five percent 
needed to maintain their viability.  But many will not.  (NOTE: In 
2002, seven parties garnered more than 5 percent, the aforementioned 
four plus the PSB, the Democratic Labor Party (PDT) and the 
Progressivist Party (PP); seven other parties, including the PC do B 
(Communists) and the PV (Green Party), fell below the threshold and 
would, had the rule been in effect then, have lost their privileges. 
 END NOTE.)  The Clausula de Barreira is the first step towards 
political reform, in Kassab's view.  It will rid the political scene 
of "rent-a-parties," as small, ideologically vacuous parties are 
called, which many consider vehicles for corruption and some blame 
for this year's vote-buying scandal (mensalao) in the Congress. 
Three parties whose members were involved in the scandal, the 
Brazilian Labor Party (PTB) the Liberal Party (PL), and the PP will 
likely disappear after the elections.  With political reform out of 
the way, Kassab suggested that the new government might take on 
social security reform as its first task. 
 
¶6. (SBU) Bio note: Of mixed Arab and Italian descent, Gilberto 
Kassab is a member of the PFL's National Executive Committee as well 
as Sao Paulo state party Vice President and local party President. 
He served on the Sao Paulo City Council 1993-95 and in the state 
Legislative Assembly, 1995-99, taking a leave of absence to serve 
1997-98 as Secretary of Planning in the municipal administration of 
Mayor Celso Pitta.  He served a term as Federal Deputy, 1999-2003, 
and was re-elected, but left the Chamber in January 2005 to become 
Vice-Mayor.  He is under an ethical cloud due to his work for Mayor 
Pitta, who is himself under investigation for large-scale corruption 
in public works.  According to press reports, Kassab's tax returns 
show that his net worth grew by more than 300 percent during Pitta's 
four years as Mayor, an increase he attributes to legitimate 
business activities; public prosecutors continue to investigate him. 
 He has stated publicly that his biggest mistake was serving in 
Pitta's government.  Some political observers have also suggested 
that Kassab lacks the necessary experience to run Sao Paulo, with 
its population of more than 10 million and an annual budget of 
nearly USD 8 billion, but many of these may be motivated by a 
preference for Governor Geraldo Alckmin over Serra as the PSDB 
Presidential candidate.  While Kassab has a low public profile, he 
is a consummate party insider who is personally close to PFL leader 
Bornhausen.  He has been credited with designing the successful 
partnership that placed PFL academic (and now Lieutenant Governor) 
Claudio Lembo on the ticket with Alckmin in 2002.  End bio note. 
 
¶7. (U) This cable was cleared/coordinated with Embassy Brasilia. 
 
McMullen