VZCZCXRO7872
PP RUEHRG
DE RUEHSO #0387/01 1001140
ZNR UUUUU ZZH
P 101140Z APR 06
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 4838
INFO RUEHBR/AMEMBASSY BRASILIA 5981
RUEHBU/AMEMBASSY BUENOS AIRES 2152
RUEHAC/AMEMBASSY ASUNCION 2498
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RUEHLP/AMEMBASSY LA PAZ 2703
RUEHSG/AMEMBASSY SANTIAGO 1647
RUEHBJ/AMEMBASSY BEIJING 0380
RUEHRI/AMCONSUL RIO DE JANEIRO 6981
RUEHRG/AMCONSUL RECIFE 2831
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RUCPDOC/USDOC WASHDC 2361

UNCLAS SECTION 01 OF 03 SAO PAULO 000387 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NSC FOR CRONIN 
STATE PASS USTR FOR SULLIVAN/LEZNY 
TREASURY FOR OASIA, DAS LEE AND FPARODI 
USDOC FOR 4332/ITA/MAC/WH/OLAC/SHUPKA 
USDOC ALSO FOR 3134/USFCS/OIO/EOLSON/DDEVITO/DANDERSON 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DMORONESE, NRIVERA, CMERVENNE 
AID/W FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: EAGR TBIO PGOV PREL PINR ETRD BR CH
SUBJECT: "TUCANO" TALKS CAMPAIGN, CHICKENS, CHINA 
 
REF: (A) BRASILIA 609; (B) BRASILIA 603 
     (C) SAO PAULO 316 AND PREVIOUS 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
 
------- 
SUMMARY 
------- 
 
¶1. (U) Poloffs met April 3 with Christian Lohbauer, until recently a 
municipal official in the administration of Sao Paulo Mayor Serra 
and now a lobbyist for Brazil's poultry association.  Lohbauer 
ventured some predictions about the upcoming presidential campaign, 
described some of the challenges facing Brazil's poultry industry, 
and expressed disappointment over his recent visit to China in 
connection with Vice-President Alencar's high-level meetings.  End 
Summary. 
 
¶2. (SBU) Christian Lohbauer is a long-time contact of the Consulate 
who served from January 2005 through January 2006 as Deputy 
Secretary for International Relations in the municipal government of 
 
SIPDIS 
Sao Paulo.  He departed to take a position as International 
Relations Manager for the Brazilian Chicken Producers and Exporters 
Association (ABEF).  Lohbauer is a loyalist of the Brazilian Social 
Democracy Party (PSDB) - party members are called "tucanos," after 
their toucan bird emblem - and the former International Affairs 
Manager of the influential Federation of Industries of Sao Paulo 
State (FIESP).  He met with Poloffs April 3 to exchange views on the 
current political scene and talk about his new job.  He thought his 
party's presidential candidate, former Sao Paulo Governor Geraldo 
Alckmin, had a good chance to beat President Lula, but was not 
sanguine about the current status of the poultry industry and was 
critical of the Lula government's trade promotion efforts, as 
illustrated by Vice President Alencar's recent visit to China, in 
which Lohbauer participated as an industry representative. 
 
----------------- 
ALCKMIN AND SERRA 
----------------- 
 
¶3. (U) In Lohbauer's view, Alckmin waged a remarkable campaign 
within the PSDB to wrest the nomination away from Mayor Serra (ref 
C).  Particularly impressive was the way Alckmin's acolytes rounded 
up support among party legislators.  For example, the mid-February 
election of a Serra supporter as PSDB leader of the federal Camara 
dos Deputados by a very small margin was a clear indication that 
Alckmin's support among party office-holders was stronger than 
previously realized.  Shortly thereafter, PSDB deputies in the Sao 
Paulo state Legislative Assembly voted overwhelmingly to support 
Alckmin. 
 
¶4. (SBU) Serra's lifelong dream, to be President of Brazil, may now 
be impossible to achieve, Lohbauer thought.  Even if Alckmin loses 
to Lula this year, Serra will have trouble getting the PSDB 
nomination four years from now, because Minas Gerais Governor Aecio 
Neves will want to run.  However, though personally loyal to Serra, 
Lohbauer acknowledged that Alckmin may be the better candidate to 
run against Lula, with a good chance to win.  He cited a clear 
distinction between Alckmin's and Lula's economic philosophies and 
noted, as have other observers, that the most likely swing voters 
are to be found among the lower-middle and lower classes - what 
Brazilians call Classes "C" and "D" - the working poor.  Lula is 
perceived to be doing things for these voters, and Alckmin's 
challenge will be to convince them he can improve their standard of 
living and their opportunities.  He's beginning with a deficit - 
Lula leads by 15-20 percent in most polls - but that can be 
overcome, Lohbauer opined. 
 
 
SAO PAULO 00000387  002 OF 003 
 
 
--------------------------- 
LULA AND THE LATEST SCANDAL 
--------------------------- 
 
¶5. (SBU) Lohbauer was still shaking his head over the recent scandal 
that brought down Finance Minister Antonio Palocci (ref A).  It was 
incomprehensible to him that senior officials of the Caixa Economica 
Federal (CEF) could have been unaware of the implications of their 
actions when they illegally accessed the bank account information of 
Palocci's accuser, handyman/caretaker Francenildo Costa, allegedly 
at the behest of the Minister and his advisors, information that was 
subsequently made public.  This wasn't a trivial matter.  CEF was a 
very important state-owned bank from which "Bolsa Familia" and other 
social funds are disbursed.  Lohbauer also noted with amusement that 
former CEF President Jorge Mattoso, who was implicated in the 
scandal, had served as Sao Paulo's Secretary for International 
Relations during Marta Suplicy's first two years as Mayor (2001-02). 
 Normally, a career diplomat on leave or loan from the MFA would 
fill such a position, but Mattoso got the job because he was a 
long-time loyalist of Lula's Workers Party (Partido dos 
Trabalhadores - PT). 
 
¶6. (U) With Palocci's departure, Lula was "more alone than ever," 
Lohbauer said.  "There's nobody left in his party except him.  If he 
weren't available, who would they have to run?  If he wins the 
election, he'll have to seek a government of national unity like 
Itamar Franco did after [Fernando] Collor's resignation [in 1992], 
ask the other parties to rally around and support him for the good 
of the country, because he'll have nobody.  It will be a big mess. 
I think Alckmin will win, but it won't be easy to convince people to 
change course.  It will be close, and it could go either way." 
 
------------------------ 
TOUGH TIMES FOR CHICKENS 
------------------------ 
 
¶7. (U) Brazil's poultry industry is facing serious challenges, 
Lohbauer said.  Forty percent of the world's chicken exports are 
from Brazil, whose annual poultry exports bring in revenues of USD 
2.5 billion.  Four million Brazilians depend economically on some 
aspect of the poultry sector.  One third of poultry production is 
destined for export, with the other two thirds for the domestic 
market.  Due to limits on consumption and storage, right now they 
almost can't give away the domestic production.  Brazilian producers 
are cutting back by 20 percent, with a concomitant loss of income 
and jobs.  This is all due to fear of avian influenza, Lohbauer 
said.  If and when the disease appears on the South American 
continent or, worse yet, in Brazil itself, the economic consequences 
will be dire.  "If a few ducks in Guanabara Bay [Rio de Janeiro] are 
found to have traces of the virus, the whole country will be under 
quarantine before you know it." 
 
-------------- 
THE CHINA TRIP 
-------------- 
 
¶8. (SBU) Lohbauer said he had traveled to China in late March and 
had attended (along with a representative of the Brazilian beef 
industry) some of Vice President (and until recently Defense 
Minister) Jose da Silva Alencar's meetings with Chinese officials 
(ref B) on agricultural issues.  He opined that Alencar had not been 
well prepared and the Brazilian delegation appeared unwilling to 
engage the Chinese on the substance of issues.  According to 
Lohbauer's account, the Chinese Minister of Agriculture had raised 
an issue related to Brazilian exports of soybeans to China.  Alencar 
appeared embarrassingly unfamiliar with the details, and neither MFA 
Secretary General Samuel Pinheiros Guimaraes nor the Brazilian 
 
SIPDIS 
Agriculture Ministry or Embassy officials present had anything to 
 
SAO PAULO 00000387  003 OF 003 
 
 
say about the issue. 
 
¶9.  (SBU) Likewise, when the Minister mentioned a visit to Brazil by 
Chinese veterinarians to inspect meat processing facilities, the 
Vice President again offered virtually no substantive comment.  He 
didn't even express a strong interest in exporting Brazilian beef 
and poultry to China, as might be expected.  Embassy officials later 
told Lohbauer they had provided Vice President Alencar with abundant 
briefing materials on all subjects likely to come up in the talks, 
but he hadn't read them.  Lohbauer noted ruefully that ABEF had paid 
for his trip to China to attend the meetings, and it had been a 
waste of time and money, as nothing was accomplished on the chicken 
front. 
 
------- 
COMMENT 
------- 
 
¶10.  (SBU) Lohbauer is a dyed-in-the-wool "tucano," and his 
criticism of the Lula government, and especially its conduct of 
foreign and commercial affairs, is predictable, though probably not 
inaccurate.  Of more concern is his assessment of the state of 
Brazil's chicken sector, which is facing times of uncertainty and 
anxiety.  End comment. 
 
¶11. (U) This cable was coordinated with Embassy Brasilia. 
 
MCMULLEN