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C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 002246 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: DECL: 10/26/2016 
TAGS: PGOV BR
SUBJECT: BRAZIL PRESIDENTIAL ELECTION: VOTERS WILL RE-ELECT 
LULA, DESPITE SCANDAL ACCUSATIONS 
 
REF: A. BRASILIA 2193 
 
     ¶B. BRASILIA 2157 
     ¶C. BRASILIA 2100 
 
Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS: 1.4(B)(D). 
 
¶1.  (SBU)  Summary.  President Luiz Inacio Lula da Silva (PT 
- Workers Party) appears to be headed for re-election on 
October 29.  Challenger Geraldo Alckmin (PSDB - Brazilian 
Social Democracy Party) has failed to convince a majority of 
voters that they would be better off if he were elected, and 
polls this week give Lula a twenty point advantage over his 
opponent.  The campaign has been conducted amidst accusations 
of corruption and illicit acts by operatives in Lula's PT 
party -- which have apparently not resonated with Lula's 
large base of low income voters -- and specious charges by 
Lula that Alckmin would privatize state entities -- which 
appear to have had some effect, despite Alckmin's vociferous 
denials and lack of any evidence that he ever intended to go 
that route.  Alckmin's sound debating skills have been on 
display through three rounds of televised debates, but they 
have not helped him turn the tide in the electorate.  This 
has been particularly true of the millions of Brazilians with 
low incomes who benefit from government programs aimed at the 
poor, and who are the bedrock of Lula's support base.  In the 
weeks since the first round of voting (refs), Lula has played 
on class and regional tensions, portraying Alckmin as an 
enemy of "social spending," as Alckmin has slipped in polls 
since the first debate on October 8 (refs).  A top pollster 
said only a "spectacular revelation" about Lula could turn 
the tide for Alckmin on October 29.   End summary. 
 
Lula Almost Certain to be Re-elected 
 
¶2.  (SBU)   President Lula will almost assuredly be 
re-elected to a second four year term on October 29, 
defeating Geraldo Alckmin, a former governor of Sao Paulo. 
Latest polling shows Lula could win over 60 percent of the 
vote.  Senior PSDB party leaders have told us in private that 
their party-commissioned internal polling show a much 
narrower gap with Lula, as was the case just before Alckmin's 
surprisingly strong outcome in the first round of voting on 
October 1. Hence Alckmin may yet tighten the result, but it 
is unlikely to be enough to win.  Carlos Augusto Montenegro, 
president of the polling firm Ibope, told media the 
difference is insurmountable, barring a "spectacular 
revelation," such as one directly linking the president to 
criminal acts. 
 
¶3.  (SBU)  Alckmin has been unable to construct a winning 
majority of voters with his arguments that Brazil's economic 
growth has stagnated under the current administration, and 
that Lula should be turned out of the Planalto Palace because 
his administration has been convulsed by a series of scandals 
involving cabinet ministers, party officials, congressmen, 
and members of Lula's innermost circle of trusted advisers 
and longtime associates.  But sluggish growth in the economy 
has not proven a selling point to low income voters, and 
Alckmin's attacks on corruption -- including the most recent 
attempts by PT operatives to use illicit funds to buy a 
dossier damaging PSDB candidates (ref c) -- may resonate with 
the middle class, but are not swaying poorer voters away from 
a vote they believe will ensure the continuation of Lula's 
spending on social programs. 
 
Lula Plays on Class Tensions... 
 
¶4.  (SBU)  Lula's campaign has deliberately played on these 
social class differences.  The map of voting patterns after 
October 1 showed a country starkly divided into red and blue 
states along a line separating the country's prosperous 
southern half, with industry and agribusiness, from the 
underdeveloped and poor northeast and north.  In the 
prosperous, comparatively more developed south, center west, 
and much of the south, Alckmin's message of economic growth, 
low taxes, low interest rates and honest government carried 
the day on October 1, while the northeast and much of the 
north voted overwhelmingly then for Lula's promises of 
continued social spending.  Lula's campaign is betting on 
 
BRASILIA 00002246  002 OF 003 
 
 
this continued divide, and his rhetoric draws a line between 
"us" and "them," with Lula portraying himself as a modern-day 
"father of the poor," a title historically associated with 
Getulio Vargas, the populist president of Brazil in the last 
century.  Lula claims that "never before" has anyone done as 
so much for the poor, and warns that if he is not re-elected, 
powerful "elites" will conspire to undo his social programs. 
Alckmin was handicapped by his Sao Paulo origins, while Lula 
comes from a poor Pernambuco family and has a legitimate 
claim to identification with poor northeasterners.  Alckmin 
made only a belated attempt to even address that issue, and 
his messages of honest government and anti-corruption did not 
translate for the poor into a guarantee of a continued 
commitment to social spending. 
 
... and Continues With the Misinformation Tactic 
 
¶5.  (C)  In the October 23 debate, Alckmin confronted Lula 
over his misleading campaign tactics (refs), and directly 
accused him of lying when he said that Alckmin would 
privatize state-owned enterprises.   Lula in turn claimed 
that he was just "deducing" from Alckmin's and former 
President Fernando Henrique Cardoso's past records that 
Alckmin would privatize.  Lula's campaign has stuck by this 
blatantly deceptive tactic since the October 8 debate, in 
spite of repeated protest from Alckmin that there is 
absolutely no evidence in his platform or statements to 
indicate he intended to privatize any companies.  Fernando 
Henrique Cardoso himself stepped in to defend Alckmin in a 
speech earlier this week in which he said the PT is 
perpetrating a Hitlerian "big lie" campaign with its 
accusations that Alckmin would introduce a new round of 
privatization affecting Petrobras, the Post Office, the Bank 
of Brazil, and the Caixa Economica Federal.  But despite the 
PSDB protests, it appears from polls that this brazen PT 
tactic has had an impact. In a private meeting with the 
Ambassador and PolCouns on 19 October, PSDB party president 
Tasso Jereissati lamented that Alckmin had been placed on the 
defensive on the privatization issue.  He opined that, while 
Alckmin should have challenged Lula on the duplicity of the 
current PT rhetoric, there is no reason to be apologetic or 
defensive about the earlier PSDB government's successful 
privatization programs.  Jereissati said that Alckmin would 
have scored points with many lower income voters if he had 
pointed out that the wide-spread use of cellular phones today 
in Brazil, including among the poor, is a direct result of 
the privatization of the telecommunication sector. 
 
President's Chief of Staff Named in Investigation 
 
¶6.  (SBU)  Two more names of prominent PT figures emerged 
over the weekend as Federal Police continue their 
investigation into a scheme to purchase a dossier of 
ostensibly damaging information about Jose Serra (PSDB 
governor-elect of Sao Paulo) and Geraldo Alckmin.  Eight PT 
figures have already been implicated and will be called to 
testify before a congressional inquiry.  Giberto Carvalho, 
Lula's chief of staff,and Jose Dirceu, a former minister in 
Lula's administration, were discovered to have spoken by 
phone with Jorge Lorenzetti, former chief of a Lula campaign 
intelligence unit, just after the dossier scheme was 
discovered, and well before Lorenzetti's name was in the 
press.  The Parliamentary Inquiry Committee (CPI) that is 
looking into the dossier scandal will hear testimony from 
eight of the implicated figures, but only after the election. 
 Indeed, the PSDB continues to criticize the slow pace of the 
investigation, alleging top-down pressure on the police to 
move slowly until after the vote on 29 October. 
 
Comment:  The Day After -- A Continuing Confrontation 
 
¶7. (C)  Lula's campaign has been telegraphing through the 
media that, after the elections are over, their side would 
seek a modus vivendi with the opposition in the interests of 
governability. But we are skeptical that peace will break 
out. The PSDB declared outright on October 24 there will be 
no "governability agreement."  Alckmin stated forcefully this 
week that the PSDB will not stand for "impunity" for 
officials implicated in the dossier case and other scandals. 
 
BRASILIA 00002246  003 OF 003 
 
 
Moreover, in their private conversation with Ambassador and 
PolCouns, PSDB leaders Jereissati and Virgilio laid out two 
possible scenarios, neither indicative of a truce: the 
PSDB-PFL opposition will not force a crisis, and will 
cooperate with Lula in a minimum number of issues of national 
interest, while pointing out the "exhaustion" of his 
government and preparing for the 2010 election; a second 
scenario would see a much more aggressive opposition that 
relentlessly criticizes Lula across the board, presses hard 
for investigations, and does not back away if talk of 
institutional crises roils up again, as it did a year ago at 
the outset of the corruption scandals.  The path will depend 
largely on the scale of the additional scandal revelations 
everyone expects soon after the elections, the choice of 
opposition leadership in the Senate (the harder-line PFL may 
emerge as the largest party in the Senate, depending on 
second round election results) and the overall mood of the 
country, Jereissati opined. 
 
¶8. (C) Comment continued.  We would bet on scenario two. 
Indeed, many pundits here are already dubbing the continuing 
conflict scenario the "third round" of the election, in which 
the opposition will attack Lula on the corruption issues, 
while the government and PT counter-charge that the PSDB and 
PFL are trying "a white collar coup," attempting to decimate 
Lula's victory through congressional and police 
investigations, pressure on the judicial system to disqualify 
his candidacy after the fact, and possibly even impeachment. 
All of this suggests to us that October 29 will bring a 
certain but hollow victory and a troubled second term for 
Lula, starting the day after the votes are in. 
 
SOBEL