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DE RUEHSO #1155 3031413
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O 301413Z OCT 06
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6010
INFO RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC IMMEDIATE
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7072
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 7558
RUCPDOC/USDOC WASHDC 2606

UNCLAS SAO PAULO 001155 
 
SIPDIS 
 
SIPDIS 
 
STATE INR/R/MR; IIP/R/MR; WHA/PD 
 
DEPT PASS USTR 
 
USDOC 4322/MAC/OLAC/JAFEE 
 
E.O. 12958: N/A 
TAGS: KMDR OPRC OIIP ETRD BR
SUBJECT: MEDIA REACTION: WESTERN HEMISPHERE: BRAZIL, PRESIDENTIAL 
RUN-OFF OCT 29; SAO PAULO 
 
 
¶1. "Lula Reelected" 
 
Liberal, largest national circulation daily Folha de S. Paulo 
(10/30) editorialized: "Reelected with more than 60 percent of valid 
votes, President Lula da Silva now has before him a much more 
diverse political horizon than that of 2002.... Lula is far from the 
aura of social and ethical renovation which his voters imagined in 
2002, but his reelection is now also dissociated from the threats of 
economic irresponsibility and political turbulence projected by his 
adversaries' discourse four years ago.... The game of sustaining 
parliamentary power, which led the government into so many shameful 
disasters, will have to be played again. Any discourse on 
comprehensive political reforms capable of providing more 
transparency and functionality to republican institutions will 
bitterly contrast with the predominance of old-fashioned politics 
and absence of ideological compromises among those who hold the real 
power." 
 
¶2. "The Cost Of An Electoral Fraud" 
 
The lead editorial in center-right O Estado de S. Paulo (10/30) 
maintained: "After a campaign in which the President triumphantly 
and falsely addressed the voters about the economic situation, and 
the challenger did not dare to propose what must be done to prevent 
the economy from deteriorating, the time of truth has come.... Given 
the dramatic status of Brazil's public finances, the solutions that 
sooner or later will have to be adopted to prevent an otherwise 
unavoidable explosion of the fiscal crisis will be extremely 
painful. And facing the problem has become even more difficult as a 
result of the electoral fraud carried out by President Lula.... 
Productive Brazil has been for too long lethargic. The series of 
scandals, the unrestrained use of the administration at service of 
the reelection and the consequent radicalization of the political 
climate have already cost Brazil dearly.... As the electoral battle 
is over, the parties must look for civilized coexistence so as to 
provide the nation with the necessary tools to overcome the 
political crisis and foster growth. If harmony and public spirit do 
not prevail, Brazil will be condemned to backwardness." 
 
¶3. "Another Chance To Resume Growth" 
 
The editorial in business-oriented Valor Economico (10/30) remarked: 
"Reelected with a large margin of votes over the opposition 
candidate, President Lula regained the necessary political 
conditions to carry out in his second term the changes Brazil 
expects from him.... Lula now has sufficient power to try to lead 
Brazil to the path of growth that he could not find in his first 
mandate. The President will try to create a broader range of 
alliances, something that may ensure him greater support in the 
Congress, but not necessarily a successful administration. It is up 
to him and his staff to overcome the main challenge of providing the 
public accounts with a long lasting balance to permit the economy a 
sustainable growth.... Fiscal balance is the premise so that the tax 
burden that suffocates growth and the formalization of the economy 
can be cut systematically and generalized.  A political agreement 
with the main Congressional forces will be able to, supported by the 
prestige of the great advantage of votes the President obtained, 
conclude the tax reform that is currently stuck in the Congress." 
 
McMullen