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P 161835Z JUN 06
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UNCLAS SECTION 01 OF 04 SAO PAULO 000676 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR MSULLIVAN 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR MORONESE, RIVERA, MERVENNE 
NSC FOR FEARS 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/USFCS/OIO/WH/SHUPKA 
TREASURY FOR OASIA, DAS LEE AND DDOUGLASS 
DOL FOR ILAB MMITTELHAUSER 
SOUTHCOM ALSO FOR POLAD 
USAID/W FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON BR
SUBJECT: PSDB INSIDER OFFERS "REALISTIC" ASSESSMENT OF ALCKMIN'S 
CHANCES AGAINST LULA 
 
REF: (A) SAO PAULO 647; (B) SAO PAULO 643; 
 
     (C) SAO PAULO 623;  (D) SAO PAULO 355; 
     (E) SAO PAULO 316; (F) SAO PAULO 278; 
     (G) SAO PAULO 206; (H)SAO PAULO 73; 
     (I) 05 SAO PAULO 1256 
 
------- 
SUMMARY 
------- 
 
¶1.  (SBU) Though not sanguine about the odds, PSDB heavyweight 
Andrea Matarazzo thinks Geraldo Alckmin still has a chance to defeat 
President Lula in the election this October, provided that all the 
pieces fall into place.  But the Assistant Mayor of Sao Paulo's 
downtown district thinks his party blundered badly by choosing 
Alckmin as its candidate over former Mayor Jose Serra.  Alckmin and 
the people around him, in Matarazzo's admittedly biased view (as a 
"serrista"), simply have no conception of how to run a national 
campaign.  Though Alckmin's call for a "management shock" may appeal 
to the business community, the voters in the northeast whom he must 
win over in order to defeat Lula have no idea what he's talking 
about.  More than likely, according to Matarazzo, Lula will win a 
second term but will have very little support in Congress.  As a 
result, Brazil will remain "fragile."  The opposition PSDB will not 
support Lula but will try to provide some sort of "balance" to keep 
the country from foundering completely.  Why Alckmin, who fought 
with such intelligence, tenacity, and determination for the 
nomination, has so far run such a lackluster campaign remains a 
mystery.  END SUMMARY. 
 
¶2.  (SBU) Consul General (CG) and Poloff paid a call June 14 on 
Andrea Matarazzo, a leader of the opposition Brazilian Social 
Democracy Party (PSDB), to discuss the current political situation 
and the upcoming elections.  Scion of one of Brazil's wealthiest 
families, Matarazzo served in Fernando Henrique Cardoso's (FHC) 
administration as Minister of Social Communications and later as 
Ambassador to Italy.  Now he wears two hats in the city government, 
as Assistant Mayor of Sao Paulo's downtown district and Municipal 
Secretary in charge of coordination among the 31 assistant 
 
SIPDIS 
mayoralties ("subprefeituras").  In his suite on the 35th floor of a 
downtown office building with commanding views on all sides of Sao 
Paulo's endless concrete jungle, Matarazzo was very much in his 
element; our meeting was interrupted while he held a lengthy 
telephone conversation with a leader of the gay community 
negotiating issues pertaining to the 
Gay-Lesbian-Bisexual-Transgender Pride parade to take place June 17 
on Paulista Avenue in the heart of the business district. 
 
------------------------ 
A "REALISTIC" ASSESSMENT 
------------------------ 
 
¶3.  (SBU) CG led off by indicating we had recently met with Joao 
Carlos de Souza Meirelles (ref A), coordinator of former Governor 
Geraldo Alckmin's presidential campaign.  Matarazzo laughed and said 
that instead of the party line purveyed by Meirelles, he would 
provide a "realistic" view of the campaign.  The PSDB, he explained, 
had simply decided wrongly back in March (ref F) when it chose 
Alckmin.  Jose Serra was a national politician who had served as a 
Senator, as a Federal Deputy, and twice as a Minister.  He knew how 
the Congress worked, had his own base of support there, and had even 
introduced two Constitutional amendments.  Serra had a well-defined 
government program and knew how to negotiate alliances and 
coalitions at the state level. 
 
¶4.  (SBU) Alckmin, on the other hand, had been City Councilman and 
later Mayor of the small rural town of Pindamonhangaba, had served a 
 
SAO PAULO 00000676  002 OF 004 
 
 
term as Federal Deputy, and in 1994 was chosen to run for Sao Paulo 
Lieutenant Governor on the ticket with Mario Covas, "against Covas's 
wishes," Matarazzo asserted.  (NOTE: Inadvertently or otherwise, 
Matarazzo slights Alckmin's resume; he in fact served one four-year 
term in the Sao Paulo state Legislative Assembly and two terms in 
the Chamber of Deputies; in both raceas for Federal Deputy he was 
among his party's leading vote-getters.  END NOTE.)  Furthermore, 
all the major accomplishments of the twelve years of PSDB rule in 
the state - Covas died in 2001 and was succeeded by Alckmin, who was 
re-elected in his own right in 2002 - were to the credit of Covas 
and not to Alckmin, according to Matarazzo.  By the time Alckmin 
became Governor, Covas had already put the state's finances on a 
sound footing.  Alckmin had pushed the "Rodoanel," the ring of 
highways around the metropolitan area, but had not completed it. 
His performance in the areas of health and education had not been 
overly impressive.  As a Catholic conservative ("of course" Alckmin 
is a member of Opus Dei, despite his denials, Matarazzo opined, 
though he is not a leader of the group), Alckmin had charted a 
rightist direction in his governance, which helps explain why he 
enjoys the support of so large a segment of the business community. 
Many of the people around him, whom Matarazzo characterizes as the 
"baixo clero" or lower caste of the PSDB, may have some political 
ability - some, like Edson Aparecido (see ref E), are powers in the 
state Legislative Assembly -  but have no idea what it takes to 
operate a campaign on the national level. 
 
¶5.  (SBU) Alckmin and his advisers, Matarazzo continued, see the 
world from a Sao Paulo perspective, but the candidate needs to 
compete for votes in the impoverished, rural northeast, where people 
don't understand concepts like "management shock."  Though Brazil's 
economy may be stagnating, the lower classes of the northeast have 
done fairly well in recent years due to the growth in social 
spending, the large increase in the minimum wage, and the increased 
access to consumer credit (ref B).  He cited figures showing 
dramatic growth in the purchase of household appliances in the 
northeast as one example of what Alckmin was up against.  More to 
the point, Alckmin's communications strategy has simply not worked 
so far. 
 
-------------- 
PARTY DISUNITY 
-------------- 
 
¶6.  (SBU) Alckmin still might beat Lula, Matarazzo said; anything 
can happen.  There might be an economic downturn or some other event 
in August or September to alter the dynamic.  He discounted 
speculation that the PSDB might be holding back some scandalous 
secret about Lula to spring late in the campaign.  The Brazilian 
 
SIPDIS 
people, he opined, know Lula well by now, and a solid segment of 
them would vote for him no matter what might be revealed.  Major 
media groups like "Globo" support Lula.  Moreover, Matarazzo 
explained candidly, the PSDB is not strongly united behind Alckmin, 
despite public protestations to the contrary.  Serra knows that if 
Alckmin wins, his own chances at age 64 of ever again aspiring to 
the Presidency are finished; Minas Gerais Governor Aecio Neves, who 
doesn't want to wait too long, may have to search for another party 
as a vehicle for his aspirations if Alckmin wins; and, though 
certainly FHC supports Alckmin, he does so "without any enthusiasm." 
 Backed up by polls coming out every week showing Lula's lead at 
20-25 percentage points and growing, predictions by major figures in 
his own party that Alckmin is going to lose are in danger of fast 
becoming self-fulfilling prophecies. 
 
¶7.  (SBU) Even if Lula wins, Matarazzo said, his Workers' Party (PT) 
is going to take a hit because of the political corruption scandals. 
 As a result, Lula will lack a strong base in Congress and have a 
difficult time governing.  In this situation, the PSDB will not 
 
SAO PAULO 00000676  003 OF 004 
 
 
support Lula - that would be too much to expect - but they may try 
to provide some sort of "balance" to help keep his government afloat 
for the good of the country. 
 
¶8.  (SBU) Matarazzo, who had planned to leave the city government to 
play a key role in Jose Serra's presidential campaign, has no plans 
to join his gubernatorial campaign.  In fact, he stayed on to ensure 
continuity in the municipal government under Serra's successor, 
Gilberto Kassab.  He told us he spends half of every day in the "no 
man's land" he occupies as Assistant Mayor of the blighted, 
dangerous downtown district and the other half in the skyscraper 
where he received us.  He still dreams of what might have been, 
reminding us that Serra has a national vision and, unlike Alckmin, 
is not a prisoner of macroeconomic orthodoxy. 
 
¶9.  (SBU) Ever since his March 31 resignation and announcement of 
his candidacy for Governor (ref D), Serra has been an invisible man. 
 First he took some time off to have a hernia operation.  Since 
then, with polls showing him likely to win in the first round no 
matter who his opponents are, he has kept a low profile to avoid 
rocking the boat.  Matarazzo expects Serra, who is already popular 
in the city, to start running radio ads in the interior of the state 
in July.  He doesn't expect much trouble from the PT candidate, 
Senator Aloisio Mercadante, or from possible PMDB candidate Orestes 
Quercia (ref C); with the help of Serra's strong coattails, the PSDB 
should elect a strong slate of Federal Deputies from Sao Paulo, he 
believes. This will give Serra, as Governor of Brazil's largest 
state, considerable freedom of movement no matter who is elected 
President. 
 
------- 
COMMENT 
------- 
 
¶10.  (SBU) Matarazzo essentially told us what has been widely 
rumored and whispered but what few wanted to say out loud: that a 
sizable portion of the PSDB has no enthusiasm for Alckmin's 
candidacy, expects him to lose, and is disinclined to lift a finger 
to help him (PSDB Senate leader Arthur Virgilio Neto gave a 
prominent interview to national newsweekly Istoe headlined, "The 
Candidate Should Have Been Jose Serra").  There is a cultural divide 
within the party between the intellectual, internationalist types 
represented by FHC and Matarazzo, and the more provincial elements 
exemplified by Alckmin and the "baixo clero" around him.  Matarazzo 
makes a decent argument as to why Serra might have been a better 
choice as the PSDB's presidential candidate; what he fails to 
mention is that Serra was the front-runner for the nomination, but, 
when challenged by Alckmin (refs G-H), declined to fight for the 
nomination and opted instead, for reasons of his own, to run for the 
governorship that Alckmin vacated.  Had the party had in place a 
democratic mechanism for addressing such disputes -- Alckmin called 
for a primary, but Serra and his supporters said no -- he might have 
taken Alckmin on and prevailed, and he might now be head-to-head 
with Lula. 
 
¶11.  (SBU) But Matarazzo's analysis of the campaign leaves another 
key question unanswered.  During the blitz he unleashed this past 
January in seeking the nomination, Alckmin showed himself to be not 
only highly intelligent and focused but also fiercely determined and 
tenacious.  Why his performance in the campaign has been so 
uniformly, almost obsessively, lackluster is an abiding mystery.  On 
June 11, he formally accepted the PSDB nomination at the party's 
national convention in Belo Horizonte.  He did so with a sixty-five 
minute speech characterized by one media report as "long and 
tiring," and in the process reportedly managed to drive half his 
audience away.  "It had to be a dense speech, that's all there is to 
it," said national campaign manager Sergio Guerra.  "Otherwise 
 
SAO PAULO 00000676  004 OF 004 
 
 
they'd say he had no content."  Maybe so, but "no content" might 
have been an improvement; just ask Lula.  END COMMENT. 
 
¶12.  (U) This cable was cleared/coordinated with Embassy Brasilia. 
 
MCMULLEN