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ZNR UUUUU ZZH
R 181850Z AUG 06
FM AMEMBASSY BRASILIA
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RUEHSO/AMCONSUL SAO PAULO 7815
RUEHRI/AMCONSUL RIO DE JANEIRO 2718
RUEHBU/AMEMBASSY BUENOS AIRES 4210
RUEHMN/AMEMBASSY MONTEVIDEO 6412
RUEHAC/AMEMBASSY ASUNCION 5599
RUEHSG/AMEMBASSY SANTIAGO 5699

UNCLAS SECTION 01 OF 02 BRASILIA 001744 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON BR
SUBJECT:  BRAZIL INTERNAL POLITICS UPDATE, 14-18 AUGUST 2006. 
 
REF: BRASILIA 1659 AND PREVIOUS 
 
¶1.  (U) SUMMARY.  Campaign season is now in full swing across 
Brazil.  The first debate among presidential candidates was held on 
August 14, but President Lula did not participate, although the 
others made him the focus of the two hour program.  On August 15 
candidates began running campaign messages on the free TV airtime 
allocated to parties.  Pervasive government corruption continues to 
factor heavily in the national electoral conversation, but thus far 
Lula's Teflon coat remains largely intact.  END SUMMARY. 
 
--------------------------------------------- - 
Lula Skips Television Debate, But Is Its Focus 
--------------------------------------------- - 
 
¶2.  (U) President Lula skipped the first television debate of the 
campaign season on August 14.  Broadcaster BAND TV provided a chair 
and nameplate for him.  All other legitimate candidates 
participated: Geraldo Alckmin (Brazilian Social Democracy Party, 
Heloisa Helena (Socialism and Freedom Party), Luciano Bivar (Liberal 
Social Party) Cristovam Buarque (Democratic Labor Party), and Jose 
Eymael (Christian Social Democrat Party).  Lula had vowed to 
participate in a debate only if there is a second round of voting, 
but on August 17 he reversed himself and said he would participate 
"when it is useful." (He may have been responding to criticism in 
Geraldo Alckmin's TV ads.)  The debate stirred no dramatic media or 
public reactions, and was characterized (fairly) by leading daily 
Folha de S. Paulo as "soporific." 
 
--------------------------- 
Corruption Is On The Ballot 
--------------------------- 
 
¶3.  (U) Just before the first televised debate, and apparently after 
surveying the long list of scandal veterans now shamelessly seeking 
re-election, Marco Aurelio Mello, president of the Superior 
Electoral Court, delivered a televised message in which he asked 
Brazilians to vote against corrupt candidates.   Later in the week 
he repeated his public admonition in stronger terms, warning voters 
not to vote for any candidate under suspicion, and he declared some 
TV campaign messages misleading. He assessed a fine of 900,000 reais 
(about USD 425,000) against President Lula for running a campaign ad 
outside of the allotted time blocks.  Opposition candidates accused 
Lula of running misleading ads because they showed images of public 
works projects in several cities that have not been completed. 
 
--------------------------------------------- -------- 
More Congressmen Implicated in "Bloodsuckers" Scandal 
--------------------------------------------- -------- 
 
¶4.  (U) The Parliamentary Inquiry (CPI) investigating the 
Sanguessugas corruption scandal ("Bloodsuckers") named twenty-seven 
more federal deputies as suspects, and asked the Federal Supreme 
Court to open investigations of them. (Note: The scandal centers on 
fraudulent legislation surrounding budget appropriations for 
ambulances and other municipal services. End note.) This brings the 
number of accused members of congress in this scandal to 99, 
although the CPI has asked the Supreme Court to investigate 84.  The 
work of the CPI has been laudable, based on mostly compelling 
documentary evidence, and the results are staggering.  They are bad 
news for the PT-led coalition, since it reminds voters that most of 
the accused in the "mensalao" political bribery of the past year and 
the current "bloodsuckers" scandals have been members of the small, 
mercenary parties that make up most of the government's ramshackle 
coalition.  Nonetheless, there is no indication thus far -- even 
after a more than a year of sensational scandals that have decimated 
Lula's party and cabinet and roiled through the congress - that 
Lula's personal popularity with his base is substantially affected. 
 
¶5.  (U) Comment: In a vast country united by one of the largest 
audiences of television viewers in the world, the TV campaign season 
is important, and Alckmin hopes it can be decisive.  But four days 
after the beginning of television and radio campaign advertising it 
is too soon to see an impact.  Current polling still shows Lula with 
a two to one advantage, though some experts believe he is nearing 
his ceiling.  Seven weeks can be a long time in anyone's politics, 
and Brazil is no exception.  But in the current view of most 
analysts here, Alckmin's only chance is to do well enough on the 
campaign trail and in TV time to deny Lula a first round win on 
October 1 and shift the decision  to a second round runoff on 
October 22.  Alckmin must grow dramatically in the next three to 
four weeks, and hope also that Lula stumbles politically or 
rhetorically. 
 
 
BRASILIA 00001744  002 OF 002 
 
 
SOBEL