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UNCLAS SECTION 01 OF 03 SAO PAULO 001202 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR CRONIN 
NSC FOR FEARS 
TREASURY FOR OASIA, DAS LEE AND JHOEK 
 
E.O. 12958:  N/A 
TAGS: PGOV PINR BR
SUBJECT: GOVERNOR LEMBO DISCUSSES POST-ELECTION POLITICAL LANDSCAPE 
 
 
REF: (A) SAO PAULO 899; (B) SAO PAULO 675; 
     (C) SAO PAULO 532 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
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SUMMARY 
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¶1.  (SBU) During a lunch with the CG, Sao Paulo Governor Lembo 
predicted that President Lula will face some opposition from within 
his own party, and expressed concern that if Lula has difficulty 
sustaining a majority in Congress, he might resort to populist 
rhetoric, though probably not populist action.  Lembo and his 
foreign affairs advisor, Ambassador Adalnio Senna, said Lula's 
choice of Under Secretary Antonio Patriota to be Ambassador to the 
U.S. was a sign that Lula will try to engage the U.S. more during 
his second term.  Senna noted that Patriota is eminently qualified 
as well as extremely close, both personally and professionally, to 
FM Amorim.  With respect to state politics, Lembo expressed 
satisfaction that he will be able to turn the state government over 
to his successor in "perfect" financial condition.  He opined that 
Governor-elect Jose Serra is not a leftist, as many observers 
allege, but rather "a regulator and an enforcer" who will provide 
good government for the state.  Lembo intimated that things are not 
going well for his own Liberal Front Party (PFL) but implied that 
the party will continue to ally with Serra's Social Democracy Party 
of Brazil (PSDB).  He dismissed media reports that Serra was 
attempting to create a new center-left party.  End Summary. 
 
¶2.  (SBU) Consul General (CG) invited departing Governor Claudio 
Lembo and his foreign affairs advisor, Ambassador Adalnio Senna 
Ganem, to lunch at the Residence to observe the impending end of 
Lembo's term in office.  The 71-year-old Lembo assumed the 
governorship on April 1 when Geraldo Alckmin resigned to run for 
President and is due to depart on December 31.  During his term as 
Lieutenant Governor and later Governor, he has been a key contact 
and resource for the Consulate, especially on anti-piracy issues. 
He was instrumental in establishing the Sao Paulo State Anti-Piracy 
Committee and in bringing Governors from other states together to 
discuss piracy during the visit of Commerce Secretary Gutierrez (ref 
B). Lembo, who is known for his candid and sometimes politically 
incorrect utterances, is also a shrewd observer of the state and 
national political scene. 
 
--------------------- 
PFL INTERNAL PROBLEMS 
--------------------- 
 
¶3.  (SBU) Lembo indicated that he plans to return to teach at 
Mackenzie University, where he used to be Rector, but also hopes to 
continue to have a voice and some influence in politics.  He noted 
that things are not going well for the PFL, which lost ground in 
this year's election.  Historically strong in the northeast, the PFL 
has been weakened by the declining influence of the "colonels" or 
regional bosses who used to deliver votes.  However, Lembo also said 
that "the colonels have changed" and that in many places 
representatives of Lula's Workers Party (PT) have replaced the old 
PFL "caciques."  Lembo noted that Senator Jorge Bornhausen (PFL from 
Santa Catarina in the south), who did not seek re-election this 
year, will also soon retire as President of the PFL and will be 
replaced by Sao Paulo Mayor Gilberto Kassab.  (Note: Lembo, who has 
contentious relations with Bornhausen, has been quoted in the press 
as suggesting he might leave the PFL for another party if Bornhausen 
stays on.  End Note.)  While not saying so directly, he implied that 
the PFL will remain allied with the Social Democracy Party of Brazil 
(PSDB). 
 
¶4.  (SBU) With respect to the PSDB, Lembo did not expect Minas 
Gerais Governor Aecio Neves to be the party's candidate for 
President in 2010.  He was not explicit, but made a vague, 
unelaborated reference to Neves's private life being a possible 
obstacle.  He seemed more sanguine about the chances of Sao Paulo 
Governor-elect Jose Serra.  Lembo dismissed press reports that Serra 
intends to create a new center-left political party, predicting that 
Serra would remain in the PSDB.  He also thought Tasso Jereissati 
would continue as PSDB President. 
 
SAO PAULO 00001202  002 OF 003 
 
 
 
----------------------------- 
LULA'S SECOND-TERM CHALLENGES 
----------------------------- 
 
¶5.  (SBU) President Lula will face a number of challenges, Lembo 
said.  His immediate priority will be creating a sustainable 
majority in Congress, which will require extensive courting of the 
centrist Brazilian Democratic Movement Party (PMDB), a process which 
is already underway. Lula will be helped to some extent by the 
Barrier Clause, under which numerous small parties will disappear or 
be merged into others, leaving fewer parties, more rationally 
organized, to negotiate with.  But Lula's Workers Party will be less 
influential in the second term, a reality that will exacerbate the 
existing tension between Lula and some elements of the PT, 
especially the social movements on the left.  And Lembo expressed 
concern that if he should be unable to sustain a majority, Lula 
might adopt a more populist posture.  However, he thought Lula might 
resort to populist rhetoric but not undertake populist actions.  At 
heart, he said, Lula remains a petit bourgeois, which is another 
reason the leftist elements in the PT are dissatisfied with him. 
Lembo opined that Chief of the Civil Household Dilma Rousseff, whom 
he characterized as the most able of the people close to Lula, would 
be a viable candidate to succeed him in 2010. 
 
-------------------------------------- 
POSITIVE SIGNAL ON BILATERAL RELATIONS 
-------------------------------------- 
 
¶6.  (SBU) Asked how the U.S. could best engage Lula during his 
second term, Lembo acknowledged that this would be difficult, but 
not impossible.  Both he and Ambassador Senna opined that by 
proposing MFA Under Secretary Antonio Patriota as the next 
Ambassador to the U.S., Lula was sending a signal that he wants to 
strengthen relations.  Senna, who served both former Governor 
Alckmin and Lembo as foreign affairs adviser and informally advised 
Alckmin's presidential campaign, characterized Patriota as not only 
eminently capable and experienced but also as extremely close to FM 
Celso Amorim.  There is probably nobody in the MFA Amorim trusts 
more, Senna stressed, noting that Patriota is the only official 
Amorim will sign papers for without even looking at them. 
 
¶7.  (SBU) For his part, Ambassador Senna has been named Consul 
General in Atlanta and is looking forward to taking up his new post. 
 However, the Atlanta Consulate cannot open until the question of 
disposition of USG diplomatic property in Brazil is resolved.  He 
noted that the MFA has approved the proposed agreement and forwarded 
it to the President's office.  Once the President approves the 
proposal, it will be sent to Congress for ratification.  Lembo said 
Senna, who is pragmatic and has worked trade issues at the 
governor's palace, would be in a good position in Atlanta to 
identify new opportunities to expand trade and investment. 
 
--------------------------------- 
HIGH HOPES FOR SERRA'S GOVERNMENT 
--------------------------------- 
 
¶8.  (SBU) On the state level, Lembo said he and his staff had 
completed a review of state government operations and that 
everything is ready for Governor-elect Serra to take over on January 
¶1.  In particular, he asserted that the finances are in perfect 
order.  Serra, he continued, is extremely well-prepared for the 
governorship.  Contrary to popular opinion, Serra is not a leftist, 
but rather a "regulator" and an enforcer.  The most important issues 
he will face are public security, the state penitentiary system, and 
the youth corrections system (formerly FEBEM, now CASA).  It will be 
interesting, Lembo commented, to see how Serra handles public 
security, since he has been uncomfortable around police since his 
days as President of the National Students' Union (UNE) in the 
1960s, when he was arrested for leading a demonstration and spent 
time in jail in Sao Paulo.  (Note: During the military dictatorship, 
Serra was in exile in Chile and later the United States.  End Note.) 
 When Lembo, after the election, took him to meet the commander of 
the state military police, Serra was visibly nervous, he said. 
 
¶9.  (SBU) Lembo noted that former Justice Minister Aloysio Nunes 
Ferreira had declined the position of State Secretary for Public 
Security.  The most likely candidate now, he said, is prominent 
 
SAO PAULO 00001202  003 OF 003 
 
 
criminal attorney and former military police officer and prosecutor 
Ronaldo Marzagao, who served in the Secretariat under Governor Andre 
Franco Montoro and in the Justice Ministry in the Sarney 
administration (1985-89).  Public Security will be a key position in 
Serra's government because of the continuing challenges posed by the 
organized criminal group First Capital Command (PCC) (ref C). 
(Note: On November 20, Governor-elect Serra announced a number of 
appointments, including Marzagao to the Public Security post and 
Nunes Ferreira as Chief of the Civil Household.  He also announced 
that, based on Lembo's recommendation, Antonio Ferreira Pinto would 
stay on as Secretary for Prison Administration.  Pinto was named to 
the post in June in the aftermath of the mid-May PCC-led prison 
riots.  End note.) 
 
¶10.  (SBU) Concerning other appointments, Lembo said that Lieutenant 
Governor (and long-time Federal Deputy and PSDB leader) Alberto 
Goldman would serve as Secretary of Transportation.  Guilherme Afif 
Domingos, President of the Sao Paulo Chamber of Commerce, will 
likely be named Secretary of Labor.  Afif Domingos is a state PFL 
leader who narrowly lost his Senate race to incumbent Eduardo 
Suplicy (PT). 
 
¶11.  (SBU) Lembo considers it very likely that Mayor Gilberto Kassab 
will seek re-election in 2008, most likely against PT former Mayor 
Marta Suplicy (2001-04), who lost her own bid for re-election to 
Serra and who has been mentioned as a possible Lula successor.  But 
he noted that the PSDB's unsuccessful presidential candidate, 
Geraldo Alckmin, may also want to run for Mayor, since "he has 
nothing else to do."  Assuming the PSDB-PFL alliance holds together, 
which at this point appears likely, at least at the state level, 
Kassab and Alckmin cannot both run, creating a difficult and 
delicate situation which Serra will have to mediate. 
 
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COMMENT 
------- 
 
¶12.  (SBU) Lembo, who was the target of vocal public criticism 
during and after the May wave of PCC-orchestrated violence, appeared 
relaxed and content with leaving office in Serra's able hands.  He 
will likely continue to exercise influence within the PFL, 
especially if Bornhausen does retire.  We were struck by Ambassador 
Senna's enthusiastic comments on the proposed appointment of 
Patriota as ambassador to the U.S., especially since Senna seems to 
have a more conservative and pragmatic view of foreign policy 
orientation than the current MFA leadership.  However, one former 
Ambassador to the U.S. was less sanguine.  He said Patriota, while 
personally loyal to FM Amorim, is unknown in the Brazilian business 
community, which will limit his ability to promote stronger 
commercial ties, at least initially.  According to this source, 
Patriota could be expected to "deliver the mail" in Washington but 
would have no influence in shaping policy.  End Comment. 
 
¶13.  (U) This cable was coordinated/cleared with Embassy Brasilia. 
 
MCMULLEN