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UNCLAS SECTION 01 OF 04 SAO PAULO 000492 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NSC FOR CRONIN 
STATE PASS USTR FOR SULLIVAN/LEZNY 
DEPT OF TREASURY OASIA, DAS LEE AND FPARODI 
USDOC FOR 4332/ITA/MAC/WH/OLAC/SHUPKA 
USDOC ALSO FOR 3134/USFCS/OIO/EOLSON/DANDERSON 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DMORONESE, NRIVERA, CMERVENNE 
DOL FOR ILAB MMITTELHAUSER 
SOUTHCOM FOR POLAD 
AID/W FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PINR BR
SUBJECT: SAO PAULO GOVERNOR CLAUDIO LEMBO TALKS ABOUT 
ELECTORAL ALLIANCES, ALCKMIN'S PROSPECTS 
 
REF: (A) SAO PAULO 355; (B) SAO PAULO 350; 
 
     (C) SAO PAULO 316; (D) 05 SAO PAULO 1181; 
      (E) 02 BRASILIA 1392 AND PREVIOUS 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
 
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SUMMARY 
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¶1.  (SBU) Sao Paulo Governor Claudio Lembo told us that despite 
press reports suggesting otherwise, his Liberal Front Party (PFL) 
will/will form an alliance with the Brazilian Social Democracy Party 
(PSDB) and will strongly support the presidential candidacy of PSDB 
Sao Paulo ex-Governor Geraldo Alckmin against President Lula. 
Finalizing the alliance is only a matter of time, he said, as the 
PFL has no other option.  Governor Lembo shared his views on the 
prospects for alliances in various key states, and expressed the 
hope of obtaining the support of the large but divided Brazilian 
Democratic Movement Party (PMDB) in vote-rich Sao Paulo state. 
Lembo, who served as Alckmin's Lieutenant Governor for more than 
three years, recognized that Lula is the front-runner and that 
Alckmin faces a serious challenge in trying to unseat him.  His 
predicament is complicated by the PSDB's internal divisions and lack 
of vision, and tepid support from party leadership, including former 
President Fernando Henrique Cardoso.  Still, Alckmin, unlike Lula, 
is still relatively unknown and will likely see his support increase 
as voters nationwide get to know him, Lembo opined.  Even if Lula 
wins, his Workers Party (Partido dos Trabalhadores - PT) will fare 
badly in the elections, leaving him isolated and impeding his 
ability to govern.  In that case, conservatives may support the 
government for the good of the country and try their best to ride 
out the four years of Lula's second term.   Governor Lembo's views 
on the Bolivian gas situation will be reported septel.  END 
SUMMARY. 
 
----------------------------------------- 
PSDB-PFL ALLIANCE "ONLY A MATTER OF TIME," GOVERNOR SAYS 
----------------------------------------- 
 
¶2. (U) Consul General (CG) - accompanied by Commercial MINCOUNS and 
Poloff - and Political Assistant had separate meetings over the past 
week with Sao Paulo Governor Claudio Lembo.  In both meetings, Lembo 
wanted to talk about domestic politics.  (Per ref A, Lembo assumed 
the governorship on March 31 when Geraldo Alckmin resigned as 
required by law to launch his presidential candidacy.)  Post will 
report septel his comments to the CG in their May 5 meeting 
concerning Evo Morales's nationalization of Bolivia's hydrocarbons 
sector and its impact on Brazil.  Lembo stated that the PFL and 
Alckmin's PSDB continue to negotiate the terms of alliances in the 
various states as part of a larger package to include a "pefelista" 
(PFL member) as Alckmin's running mate.  (NOTE: During Fernando 
Henrique Cardoso's two terms (1995-2002) as President, PFL Senator 
Marco Maciel of Pernambuco state in the northeast served as 
Vice-President.  However, in 2002, the PSDB-PFL alliance was 
ruptured when PFL presidential candidate Roseana Sarney blamed the 
Cardoso administration and the PSDB for sparking the corruption 
scandal that forced her to withdraw from the race.  See ref E. END 
NOTE.)  The alliance is only a matter of time, he said, as the PFL 
has nowhere else to go. 
 
¶3. (SBU) Governor Lembo acknowledged that the inter-party 
negotiations have encountered some turbulence.  In Rio de Janeiro, 
for example, PFL Mayor Cesar Maia, who had originally planned to run 
 
SAO PAULO 00000492  002 OF 004 
 
 
for President himself, is apparently miffed that the PSDB has 
launched its own candidate (Federal Deputy Eduardo Paes) for Rio de 
Janeiro state Governor instead of supporting a PFL gubernatorial 
candidate.  Maia recently stated at a public event in Alckmin's 
presence that, due to the complications caused by the 
"verticalization" rule, the PFL might do better in Congressional 
elections if it eschewed a formal alliance with the PSDB and went 
its own way. 
 
---------------------------------- 
COURTING NORTHEAST POLITICIANS AND VOTERS 
---------------------------------- 
 
¶4. (SBU) Lembo confirmed press reports that the front-runner for the 
Vice-Presidential nomination is Senator Jose Jorge de Vasconcelos 
Lima (more commonly known simply as Jose Jorge) of Pernambuco, a 
co-founder of the PFL who served four terms (1983-98) as a Federal 
Deputy before gaining his Senate seat.  For geographic reasons (see 
ref C), the running mate is almost certain to be from the northeast, 
and Pernambuco is considered more important and pivotal than Rio 
Grande do Norte, home of PFL Senator Jose Agripino Maia, who is on 
most observers' short list of possible candidates, including Lembo's 
own list (ref D). 
 
¶5. (SBU) Lembo also believes the two parties may be able to ally in 
the northeastern states of Bahia and Maranhao.  According to his 
scenario, the PSDB could support Roseana Sarney's gubernatorial 
candidacy in Maranhao.  In Bahia, the PSDB is focused on securing 
the support of powerful PFL Senator Antonio Carlos Magalhaes, and is 
reportedly willing in return to support the re-election of PFL 
Governor Paulo Souto. 
 
------------------------- 
GETTING THE PMDB ON BOARD 
------------------------- 
 
¶6. (SBU) The PSDB-PFL alliance is already strong in Sao Paulo state, 
where 23 percent of the electorate resides and where Lembo succeeded 
Alckmin and "pefelista" Gilberto Kassab assumed the mayorship of Sao 
Paulo city when Jose Serra resigned to run for Governor.  However, 
Governor Lembo is trying to bring the Brazilian Democratic Movement 
Party (PMDB) into the picture as well.  He is planning to meet next 
week with PMDB state chairman and former Governor Orestes Quercia 
and former President Itamar Franco.  Lembo foresees Quercia's 
running for a Senate seat on Serra's gubernatorial ticket and even 
believes that Franco might support Alckmin in his home state of 
Minas Gerais, though he admitted the latter partnership is a bit of 
a long shot.  "Mineiros" [people from Minas Gerais], Lembo observed, 
referring both to Franco and to Minas Gerais Governor (and PSDB 
leader) Aecio Neves, "are difficult to deal with.  They always want 
things their own way."  He did not rule out the possibility that 
Alckmin might offer the Vice Presidential nomination to someone from 
the PMDB, in which case the PFL would back off but continue to 
support him.  The great advantage of an alliance with the PMDB, 
Lembo, explained, is that, due to the size of the party's vote in 
the 2002 Congressional election, it is entitled to a great deal of 
free television time. 
 
---------------------------------- 
ALCKMIN CAMPAIGN TROUBLED, BUT HE CAN STILL WIN 
---------------------------------- 
 
¶7. (SBU) Lembo recognized that the Alckmin campaign faced many 
challenges.  Allegations that Alckmin's wife had received some 400 
 
SAO PAULO 00000492  003 OF 004 
 
 
dresses free of charge from her couturier were harmful to Alckmin 
because they highlight the glamour of the ex-Governor's family in 
contrast to Lula's working-class background.  It's the sort of thing 
voters understand and respond to.  He also acknowledged that Alckmin 
hadn't handled the situation very well.  On the other hand, Lembo 
didn't think the allegations that state-owned bank "Nossa Caixa" had 
steered advertising business to Alckmin's political allies (ref B) 
would hurt Alckmin's chances. The real problem, in Lembo's view, is 
that the PSDB is "lost."  The party is internally divided and lacks 
an affirmative vision.  So far, all they've been able to do is 
criticize the Lula government.  The PSDB isn't really a national 
party; they're a Sao Paulo party with some regional branches.  If 
Alckmin wins, it will be no thanks to his own party but because the 
PFL brings him victory.  There's a cultural clash between former 
President Fernando Henrique Cardoso, who considers himself a 
cosmopolitan, international figure, and Alckmin, whom Cardoso views 
as a "caipira" (hillbilly) because he comes from Pindamonhangaba, a 
small town in the interior of Sao Paulo state. 
 
¶8. (SBU) Right now, Lembo conceded, President Lula has to be 
considered the favorite.  His poll numbers remain stubbornly high 
despite the corruption scandals, largely because of his support from 
the poor, who tend to see things in black and white.  Fortunately, 
Lembo said, Lula isn't a populist in the mold of Hugo Chavez or Evo 
Morales, but more a "petit bourgeois."  He can still be beaten; in 
fact, internal PSDB polls showed Alckmin's support will grow as the 
voters get to know him.  Lula, on the other hand, is a known 
quantity whose numbers are unlikely to improve.  Lula may even be 
better off, in Lembo's opinion, without former Chief of Staff Jose 
Dirceu, who is a difficult personality with his own agenda, though 
the loss of Finance Minister Antonio Palocci does hurt Lula.  Even 
if Lula does win the election, Lembo is sure the PT will fare badly, 
and Lula will be isolated and, lacking support in Congress, will 
have a "governability" problem.  In this scenario, Lembo predicted 
that even conservatives from the PFL would likely support him to 
help keep the government afloat, and just wait out the four years 
until the next election. 
 
-------------- 
STATE POLITICS 
-------------- 
 
¶9. (SBU) Asked about the May 7 primary for the PT gubernatorial 
nomination, Lembo expressed the view that former Sao Paulo Mayor 
Marta Suplicy is likely to defeat Senator Aloisio Mercadante.  He 
was not convinced that Lula was supporting Mercadante, suggesting 
that the "Machiavellian" Lula may secretly prefer Suplicy as the PT 
candidate.  In either case, Lembo was quite confident that Serra 
would ultimately win the election. 
 
 
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COMMENT 
------- 
 
¶10.  (SBU) Governor Lembo is an Alckmin loyalist who lobbied 
vigorously (and successfully) to get the then-Governor a 
Cabinet-level meeting in Washington when Alckmin visited there in 
February.  He also owes his current position to Alckmin.  Anything 
he says about the campaign and possible alliances must be viewed in 
that light.  However, he is also a PFL insider and deal-maker whose 
assessment of the negotiations between the two parties is probably 
fairly close to the mark.  We believe the PSDB and PFL will 
eventually reach an agreement and identify a PFL running mate. 
 
SAO PAULO 00000492  004 OF 004 
 
 
Efforts to form a triple alliance with the PMDB, on the other hand, 
in Sao Paulo or anywhere else, are much more problematic.  Lula and 
the PT continue to court the PMDB arduously, including with an offer 
of the Vice-Presidential nomination.  The PMDB is likely to enjoy 
the attentions of both sides for some time to come, even as the 
party tries to figure what to do about its presidential 
pre-candidate, Anthony Garotinho.  END COMMENT. 
 
¶11.  (U) BIOGRAPHIC NOTE: Claudio Lembo, 71, was born in Sao Paulo 
and educated at the University of Sao Paulo and Mackenzie 
University, where he later served as Law Professor and Rector.  He 
was President of the National Renewal Alliance (ARENA) during the 
military dictatorship and later helped found the Brazilian Popular 
Party (PPB).  He served as Sao Paulo Municipal Secretary of 
Extraordinary Affairs (1974-79), Secretary of Judicial Affairs 
(1986-89), and Secretary of Planning (1993).  On the federal level, 
he has served as Chief of Staff to the Minister of Education and 
advisor to Vice-President Maciel.  Lembo joined the PFL in 1989 and 
was the party's Vice-Presidential candidate that year.  He was 
elected Lieutenant-Governor of Sao Paulo state on Alckmin's ticket 
in 2002.   His term as Governor will end December 31, 2006.  END 
BIOGRAPHIC NOTE. 
 
¶12.  (U) This cable was coordinated with Embassy Brasilia and 
Consulate Recife. 
 
MCMULLEN