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UNCLAS SECTION 01 OF 04 SAO PAULO 000623 
 
SIPDIS 
 
STATE PASS USTR FOR SULLIVAN/LEZNY 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DMORONESE, NRIVERA, CMERVENNE 
DEPT OF TREASURY FOR OASIA, DAS LEE AND FPARODI 
USDOC FOR 4332/ITA/MAC/OLAC/JANDERSEN/ADRISCOLL/MWARD 
USDOC ALSO FOR 3134/USFCS/OIO/SHUPKA 
DOL FOR ILAB MMITTELHAUSER 
NSC FOR CRONIN 
SOUTHCOM ALSO FOR POLAD 
AID/W FOR LAC/AA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR BR
SUBJECT: PMDB LEADER RULES OUT ALLIANCE WITH LULA 
 
REF: (A) SAO PAULO 573 AND PREVIOUS; 
 
     (B) SAO PAULO 355; (C) SAO PAULO 30 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
 
------- 
SUMMARY 
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¶1.  (SBU) Former Governor Orestes Quercia, Sao Paulo state chairman 
of the Brazilian Democratic Movement Party (PMDB), will support 
Senator Pedro Simon if he decides to run for President, but he 
considers it far more likely the PMDB will run no presidential 
candidate and will not ally with any party at the national level. 
He opined that having a PMDB Vice-Presidential candidate on the 
ticket with Lula is "no longer a viable option" because it would 
prejudice the party in many state races.  Quercia said he would 
likely vote for opposition candidate Geraldo Alckmin but did not 
expect Alckmin to defeat Lula.  He had low expectations of a second 
Lula administration, predicting that the economy will continue its 
low growth and Brazil will fall farther behind in competitiveness. 
Quercia has not decided whether to run for Governor of Sao Paulo 
state or for the Senate; the Brazilian Social Democracy Party (PSDB) 
has offered to support him in a run for the Senate, but he doesn't 
completely trust them to provide full support.  In the gubernatorial 
race, he acknowledged that former Mayor Jose Serra remains a strong 
favorite, but also noted that things can change very fast in 
politics.  When asked about the recent violence in Sao Paulo state, 
Quercia pointed to press reports showing that the number of 
policemen per capita has declined since his term as Governor and 
said the blame for the rise of the PCC criminal gang rests on former 
Governors Covas and Alckmin, because "the police force has been 
weakened."  END SUMMARY. 
 
------------------------------------- 
A PARTY DISUNITED, BUT MUCH IN DEMAND 
------------------------------------- 
 
¶2.  (SBU) Poloff and Econpol assistants met May 30 with Sao Paulo 
state PMDB chairman Orestes Quercia to discuss the upcoming 
elections.  Quercia, who served as Governor from 1987 to 1991, now 
has a wide variety of business interests.  He spoke of his 
activities exporting high-quality Sao Paulo coffee to U.S. 
processors, and indicated he might be interested in investing in his 
own coffee roasting factory in the United States.  When the subject 
turned to politics, Quercia said he had always favored the PMDB's 
running its own presidential candidate because it was good way to 
unite the party - "unless the candidate were Garotinho, who creates 
total disunity" - and was prepared to support Pedro Simon, the 
76-year old PMDB Senator from Rio Grande do Sul who recently 
announced his pre-candidacy.  However, he believed that either Simon 
would ultimately decide not to run or else the party, at its June 29 
national convention, would decide - definitively this time, unlike 
at its "unofficial" May 13 convention - not to run any candidate for 
President.  (NOTE: Per press reports, supporters of a PMDB 
presidential candidacy plan to hold yet another national convention 
June 11.  Opponents have not decided whether to boycott the meeting 
to deprive it of a quorum, or to attend it and muster the votes 
necessary to defeat the initiative.  END NOTE.) 
 
¶3.  (SBU) Quercia acknowledged that the PMDB is being assiduously 
courted by both President Lula's Workers' Party (Partido dos 
 
SAO PAULO 00000623  002 OF 004 
 
 
Trabalhadores - PT) and by the opposition Brazilian Social Democracy 
Party (PSDB).  The party's pro-government faction, led by Senators 
Renan Calheiros and Jose Sarney, favored an electoral alliance with 
the PT because it would generate more government jobs, including at 
Cabinet level, for PMDB members.  However, Quercia opined that the 
PMDB would not accept the Vice-Presidential slot on the ticket or 
otherwise formally ally with the PT, because, under the 
"verticalization" rule, this would require the PMDB to ally with the 
PT in campaigns for Governor and Federal Deputy as well.  He 
dismissed as "PT propaganda" press accounts that Lula was trying to 
talk to him personally about a possible alliance, though he 
acknowledged he had spoken with PT Senator (and gubernatorial 
candidate) Aloizio Mercadante.  The PMDB remains essentially a loose 
confederation of state and regional parties, with viable 
gubernatorial candidates in as many as fifteen of Brazil's 27 
states, and it requires the freedom and flexibility to enter into ad 
hoc electoral alliances with other parties in many of these states, 
Quercia explained.  For example, he expected populist PMDB Governor 
Roberto Requiao of Parana state to ally with the PSDB at the state 
level, even choosing a "tucano" as his running mate, while at the 
same time supporting Lula's re-election.  Some would call it 
schizophrenia, but it's par for the course for the PMDB.  Quercia 
expects the party to retain its leading role in both houses of 
Congress.  It will again elect about 90 Deputies out of a total of 
513, and will have about 20 Senators out of 81; whoever is running 
the government will need PMDB support in Congress in order to 
accomplish anything. 
 
¶4.  (U) NOTE: The day after our meeting, television news footage 
showed Quercia and Mercadante meeting with President Lula, 
reportedly discussing a possible national alliance.  Quercia was 
characterized in the press as interested in the PMDB's providing a 
running mate, but as still concerned over the impact of such a 
candidacy on the PMDB's prospects in the various states.  According 
to press reports, Lula plans to push for an alliance with the PMDB 
"up to the very last minute," or until the PT's June 13 convention, 
when the party has to decide on its alliances.  If he can't convince 
the PMDB to provide a Vice-Presidential candidate, Lula reportedly 
will offer the job to Socialist Minister of National Integration 
Ciro Gomes or Communist President of the Chamber of Deputies Aldo 
Rebelo.  END NOTE. 
 
------------------------------------ 
ALCKMIN AND LULA: NOT MUCH TO CHOOSE BETWEEN 
------------------------------------ 
 
¶5.  (SBU) Quercia thought the PSDB had made a mistake in nominating 
Alckmin instead of Serra, and he was highly critical of Alckmin's 
campaign thus far.  Alckmin, in his view, had gone too far in trying 
to differentiate himself from Lula.  His speeches not only aroused 
no passion, they dampened it.  And Alckmin's effort to portray 
himself as humble and ordinary by taking commercial flights and 
arriving at airports alone, with no one there to meet him, might 
make sense on paper, but in reality, "It's anti-marketing.  It 
depresses people."  Though he planned to vote for Alckmin himself, 
Quercia predicted Lula would defeat him.  He did not expect much 
from a second Lula administration, though he said he had voted for 
Lula in 2002.  Lula had followed the same orthodox macro-economic 
policies as Fernando Henrique Cardoso, which stifled growth. 
Quercia lamented that twenty years ago, Brazil, along with India and 
China, was the country of the future; while the other countries are 
now arriving, Brazil remains mired in the past.  Furthermore, 
 
SAO PAULO 00000623  003 OF 004 
 
 
Quercia - himself the target of countless corruption allegations 
over the years, some of them likely well-founded - believed that 
Lula's government and the PT, in implementing the "mensalao" bribery 
scandal, had introduced a new ingredient to the culture of political 
corruption in Brazil.  In short, "probably the most successful 
initiative of Lula's government has been filling potholes," Quercia 
grumbled. 
 
--------------------------------- 
SENATOR OR GOVERNOR?  OR NEITHER? 
--------------------------------- 
 
¶6.  (SBU) Asked about the PMDB's posture in Sao Paulo state, Quercia 
began by saying, "I can't tell you what's happening."  He confirmed, 
however, that he has been discussing a possible alliance with PSDB 
representatives.  Given a choice of running for Governor or Senator, 
Quercia said, he would much rather run for the Senate.  But he did 
not rule out a gubernatorial candidacy.  In December, polls had 
shown him the front-runner among possible gubernatorial candidates, 
"and I hadn't held any public office in fifteen years."  Since then, 
of course, Jose Serra resigned as Mayor and launched his 
gubernatorial campaign (ref B), and polls show him winning in the 
first round against all comers, but "things can change very fast in 
politics... Serra wants me to stay out of the race because if I run 
it'll go to a second round, and who knows, I might even beat him." 
He did not think much of Mercadante's prospects, and thought Sao 
Paulo former Mayor Marta Suplicy would have been a stronger 
candidate, but acknowledged that Mercadante's candidacy might boost 
Lula's vote in the state. 
 
¶7.  (U) Quercia's analysis of the current political scene was 
intermingled with nostalgic reminiscences of his term as Governor, 
prompting Political Assistant to ask what sort of government program 
he would propose if he ran again.  Investment in education was 
Quercia's reply.  He spoke about schools he had opened and 
educational programs he had initiated, only to see them shut down by 
his successors. 
Asked about the recent wave of violence (ref A) instigated by the 
criminal gang First Capital Command (PCC), Quercia said blame should 
be laid at the door of PSDB former Governors Mario Covas and Geraldo 
Alckmin, whose policies, he claimed, had weakened the police.  He 
was also critical of the overcrowded state prison system, noting 
that during his four-year term he had built 22 prisons. 
 
¶8.  (SBU) In addressing a possible campaign for the Senate, Quercia 
admitted that incumbent PT Senator Eduardo Suplicy would be 
difficult to defeat, but noted that the PSDB had offered the support 
of their alliance if he ran.  "I'd do it if I were confident I'd 
have their full, united support, but...I trust Lembo [Alckmin's 
successor as Governor, from the Liberal Front Party (PFL)] and 
Kassab [Serra's successor as Mayor, also from the PFL] and even 
Serra, but some of the people around Alckmin, especially the ones 
who date back to the time of [the late Governor Mario] Covas 
[1994-2001], they never liked me and even if they supported me 
publicly, I don't think they'd work very hard for me." 
 
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COMMENT 
------- 
 
¶9.  (SBU) Quercia left office in 1991 amidst allegations of 
large-scale financial mismanagement and corruption.  He ran for 
 
SAO PAULO 00000623  004 OF 004 
 
 
President in 1994 and finished a dismal and distant fourth, due in 
part to a lack of strong support from the already divided PMDB.  His 
political career was considered to be over, but although he never 
returned to public office, he has continued to exercise considerable 
power within the party, which he served (1991-93) as national 
president.  Current PMDB national president Michel Temer, a Federal 
Deputy from Sao Paulo (see ref C), reportedly can't do anything in 
Sao Paulo state (where about 23 percent of the country's voters 
reside) without Quercia's acquiescence.  In our meeting, Quercia 
came across as relaxed, detached, and somewhat cynical.  More than 
likely, he would prefer not to run for or hold any office, but he is 
enjoying all the attention and holding out to see which side makes 
him a better offer, one that will enable him to increase his 
influence on both the state and national levels.  END COMMENT. 
 
¶10.  (U) This cable was coordinated with Embassy Brasilia. 
 
MCMULLEN