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RHMFISS/CDR USSOUTHCOM MIAMI FL

UNCLAS SECTION 01 OF 03 SAO PAULO 000862 
 
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 PREL PINR ECON BR
SUBJECT: LULA'S BALANCING ACT: PT LEADER OUTLINES PARTY'S ELECTORAL 
STRATEGY 
 
REF: BRASILIA 1136 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
------- 
SUMMARY 
------- 
 
¶1.  (SBU) Summary: Sao Paulo State Legislator Renato Simoes outlined 
the strategy of Lula's Workers Party (Partido dos Trabalhadores - 
PT) for the October elections.  Simoes indicated that the party 
believes the Sao Paulo state and national campaigns have to be 
integrated.  PT gubernatorial candidate (and Senator) Aloysio 
Mercadante needs President Lula's coattails to have a chance to 
defeat former Sao Paulo Mayor Jose Serra, just as Lula needs a 
strong showing by Mercadante to improve his own electoral 
performance in Brazil's most populous state.  The PT's ideal 
scenario would have Lula winning in the first round while Mercadante 
forces the gubernatorial race into a second round.  On the national 
level, the PT will focus on the Lula administration's achievements 
while remaining vague and general about future programs and plans; 
in the state campaign, the PT believes that Serra has weaknesses 
that can be exploited despite his strong position in the polls.  The 
message in both campaigns will be that Lula needs a strong ally in 
Sao Paulo's state government to ensure a successful second term. 
Simoes also indicated that the PT's campaign for the federal Chamber 
of Deputies will focus on the party list rather than individual 
candidates; he is optimistic that the "disaster" of lost seats 
predicted by many observers will not occur.  He also expressed the 
view that although the popular and social movements that comprise 
the left wing of the PT will support Lula's re-election, they remain 
disappointed with Lula and will be more aggressive and demanding in 
a second term.  END SUMMARY. 
 
¶2.  (SBU) Poloff and Political Assistant met July 31 with Renato 
Simoes, a leader of the PT in the Sao Paulo State Legislative 
Assembly.  Simoes is also a member of the PT's National Directorate 
and is serving on its Executive Committee as acting National 
Secretary for Popular Movements, replacing Bruno Maranhao, who was 
 
SIPDIS 
suspended after leading the Landless Workers Liberation Movement 
(MLST) invasion of Congress in June (reftel). 
 
--------------------------------- 
LOOKING FOR A FIRST ROUND VICTORY 
--------------------------------- 
 
¶3.  (SBU) Simoes expressed confidence that Lula will win the 
election in the first round. The votes for Lula from the northeast - 
especially from the poor - are already solid, he said, so the 
President can afford to focus his campaign in the south and 
southeast, where his performance in recent polls is worrisome. In 
these areas, Simoes acknowledged, Lula is trailing his opponent, 
Geraldo Alckmin of the Social Democracy Party of Brazil (PSDB). This 
part of the country comprises more than 35 percent of all voters, as 
well as the largest proportion of middle class families.  Lula needs 
to retain the votes of the poor while regaining the trust of the 
middle class.  Thus, in both his government programs and his 
campaign speeches, he is trying to appeal to both groups while 
alienating neither, a delicate balancing act.  His government is 
distributing benefits both to the poor (e.g., the "Bolsa Familia 
program and the increase in the minimum wage) and to the medium 
class (e.g., a tax break for families that hire a maid formally). 
Likewise, his government program is intentionally vague.  Lula is 
being careful to steer clear of controversy and specific 
commitments.  The PT strategists believe he will be reelected if he 
can run on his image and his bond with poor voters and avoid making 
any mistakes during the campaign. 
 
SAO PAULO 00000862  002 OF 003 
 
 
 
¶4.  (SBU) Simoes thinks Heloisa Helena, presidential candidate of 
the Socialism and Liberty Party (PSOL) and a former PT member, 
probably has a ceiling of about 8 percent despite recent polls 
showing her higher.  The PSOL, a new party created largely from PT 
defectors, has no organization at the national or state level to 
work for its candidates.  Heloisa takes some votes from Lula, but 
really takes votes from everybody because some voters express 
support for her as a protest against the system.  Simoes thinks she 
may fall to her natural level of about 5-6 percent; with Democratic 
Labor Party (PDT) candidate Cristovam Buarque at around 2 percent, 
Lula should thus be able, with his still sizeable lead over Alckmin, 
to win in a first round. 
 
¶5.  (SBU) Simoes recognizes that a second round would be hard on 
Lula.  The President would have to campaign in a much more hostile 
political environment.  The PT won't have gubernatorial candidates 
running in the second round in many important battleground states. 
(This is one reason the PT considers it critical for Mercadante to 
force Serra into a second round in Sao Paulo.)  In addition, merely 
by making it to the second round, Alckmin will have shifted the 
momentum and will begin to look more like a winner.  Many Brazilian 
political analysts argue that voters like to vote for winners. 
 
--------------------------------- 
THE IMPORTANCE OF BEING SAO PAULO 
--------------------------------- 
 
¶6.  (SBU) In discussing electoral strategy, Simoes stressed the 
importance of integrating the national campaign with the campaign in 
Sao Paulo state.  The idea of winning the Sao Paulo government is 
more than just an electoral target. The PT believes the state, with 
a friendly government, could give support to the Lula administration 
as it did for President Fernando Henrique Cardoso's (FHC) 
administration.  Simoes remembered that some of FHC's programs were 
first implemented in Sao Paulo as a test or pilot and then enlarged 
to encompass the whole country. In addition, many things that happen 
in Sao Paulo tend to resonate quickly throughout the rest of the 
country. 
 
¶7.  (SBU) Simoes is convinced that Mercadante can force a second 
round with Serra in the gubernatorial race, despite poll numbers 
showing Serra with a commanding lead.  Former Governor Orestes 
Quercia, candidate of the centrist Brazilian Democratic Movement 
Party (PMDB) and third on the polls, who has strong support in the 
state's interior, has a ceiling of about 12 percent.  According to 
Simoes' electoral arithmetic, Mercadante should get around 25 
percent of the votes and has a chance of reaching 30 as the PT's 
Jose Genoino did in 2002.  At the same time, if PDT candidate Carlos 
Apolinario and PSOL candidate Plinio de Arruda Sampaio, of PSOL each 
get 2-3 percent, a second round is guaranteed. 
 
¶8.  (SBU) In the state campaign, the PT needs to focus on social 
issues and the disenchantment of some voters after twelve years of 
PSDB rule.  Public security, health, and education are areas where 
the PSDB Covas-Alckmin governments made insufficient investment, 
Simoes said. Public security and the issue of the organized criminal 
gang First Capital Command (PCC) won't necessarily be a winning 
issue for the PT, however, because the public holds everyone 
responsible. The PCC attacks in May damaged Alckmin at the time and 
may continue to hurt him in some quarters, but many also held the 
federal government accountable.  Under Brazil's federal system, 
municipalities also have a role to play.  The Lula administration 
didn't provide enough federal security assistance to Sao Paulo state 
over its first three years, in part because state government was in 
the hands of the opposition.  Thus, while the issue is important to 
the campaign, it's not a winner for any candidate or party. 
 
SAO PAULO 00000862  003 OF 003 
 
 
 
¶9.  (SBU) Simoes also outlined the PT strategy to fight for more 
seats in the Congress.  Most observers expect that due to the 
"mensalao" corruption scandal, the PT will elect at most 60 (some 
say 50) members to the Chamber of Deputies after electing 90 in 
¶2002.  However, Simoes thinks the PT can repeat its 2002 
performance.  Its television campaign will focus on the party list 
as a whole instead of promoting individual candidates, and will 
attempt to remind voters of the party's historic role in Brazilian 
politics.  Via this "voto de legenda," the party hopes to take 
advantage of the positive image it continues to enjoy with some 
segments of the electorate, and to avoid the public identification 
of certain candidates who became notorious during the scandals.  In 
short, Simoes believes that "the anticipated disaster will not 
happen." 
 
------------------ 
LULA'S SECOND TERM 
------------------ 
 
¶10.  (SBU) The leftist popular and social movements will campaign 
for Lula, because they are afraid of losing ground under an Alckmin 
administration.  However, Simoes said, these leftist movements have 
been disappointed with Lula's government and will continue to make 
their disappointment felt.  They are frustrated with Lula's handling 
of social security reform, labor reform, and his failure to do more 
on land reform.  Assuming a second Lula term, the social movements 
will be more active, more aggressive, and more confrontational. 
They will expect Lula, with more political maneuvering room, to do 
more for his leftist political base. 
 
¶11.  (SBU) Nevertheless, Simoes warned against expecting fundamental 
changes from a second Lula administration.  Macroeconomic policy 
will continue on the same course.  But there may be ways that Lula 
can open up some political space, work more closely with the leftist 
and the social/popular movements, and increase social participation. 
 Simoes conceded that the MLST invasion of Congress (reftel) had 
gotten the PT and the movements some bad publicity, but didn't think 
it had done long-term damage to the party's electoral prospects. 
Everyone knows, he said with a shrug, that such demonstrations 
sometimes turn out well and sometimes end badly. 
 
------- 
COMMENT 
------- 
 
¶12.  (SBU) Simoes' predictions combine optimism with apprehension. 
He thinks Lula can win in the first round but fears the consequences 
if he doesn't.  He expects the PT at the national level to avoid the 
worst consequences of the corruption scandals but recognizes the 
need to improve the party's performance in key states like Sao 
Paulo.  He seems aware that one or two prominent blunders could cost 
Lula dearly and stressed that the campaign is going to play it safe. 
 He is aware that Lula has ignored the popular and social movements 
and probably cannot do so indefinitely.  Despite Lula's comfortable 
lead in the polls, all is not well in the land of the PT.  END 
COMMENT. 
 
¶13. (U) This cable was coordinated with Embassy Brasilia. 
 
MCMULLEN