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UNCLAS SECTION 01 OF 04 SAO PAULO 000749 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/BSC, INR/IAA, INR/R/AA 
STATE PASS USTR FOR KATE DUCKWORTH 
NSC FOR TOMASULO 
TREASURY FOR JHOEK 
USDOC FOR 4332/ITA/MAC/WH/OLAC 
USDOC ALSO FOR 3134/USFCS/OIO 
DOL FOR ILAB 
SOUTHCOM ALSO FOR POLAD 
USAID FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ELAB ECON BR
SUBJECT: WORKER PARTY CONGRESS GETS BRAZIL'S NEXT PRESIDENTIAL RACE 
OFF TO AN EARLY START 
 
REF: (A) SAO PAULO 742; (B) BRASILIA 1670; 
 
     (C) SAO PAULO 734; (D) SAO PAULO 91 
 
SAO PAULO 00000749  001.2 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
------- 
SUMMARY 
------- 
 
¶1.  (SBU) The Workers' Party (PT) National Congress held in Sao 
Paulo between August 31 and September 2 - only the third in the 
party's 27-year history - set the stage for a marathon presidential 
election cycle as the PT looks forward to 2010.  A decision to move 
internal elections up to December 2007, a resolution calling for a 
Constituent Assembly to design a broad political reform package, and 
a statement expressing the party's intention to put forward a 
candidate for president in 2010 were all designed to position the PT 
for its next run.  Remarks delivered by President Lula show a 
President who is unapologetic for what he sees as the triumphs of 
his party and defiant in the face of corruption scandals emanating 
from within the PT (ref B).  But with Lula constitutionally barred 
from running for a third term, PT members are already fretting over 
their first national election without him as a candidate,  with some 
fearing that Lula may abandon the PT to support a candidate from a 
coalition party.  From the PT's perspective, this would be a 
disaster.  End Summary. 
 
--------------------------- 
TRIUMPHANT AND UNAPOLOGETIC 
--------------------------- 
 
¶2.  (U) Addressing the Workers' Party (PT) National Congress 
September 1, President Lula acknowledged that some party members 
were facing charges but nonetheless asserted the PT's moral 
superiority over others.  He called upon the party faithful to 
defend former PT leaders indicted by the Supreme Federal Tribunal 
(STF) in the 2005 "mensalao" vote-buying scandal (ref B).  "It is 
true," Lula said early in his address, "that we could have made 
mistakes, and the mistakes are being aired as they need to be. 
Nobody in this country has more moral and ethical authority than our 
party.  We admit that there are some people equal to us, but we 
don't admit that there's any better...When one of us makes a 
mistake, no matter how good a friend he may be, he will be subject 
to the same laws and rules as the 190 million [Brazilians]..."  Lula 
then reprised the scandal towards the end of his speech: "I know 
that some comrades were indicted by the Supreme Court.  I don't 
usually talk about Supreme Court decisions, but I want 'petistas' 
[PT members] to keep one thing in mind: Up to now, none of them has 
been acquitted, but neither has any of them been found guilty, up to 
now.  There is a trial, and only these comrades, not me or you, 
knows what happened.  These comrades will have time to defend 
themselves...What is important is that nothing that happens to us, 
those on trial or not, can make us lose heart.  We do not have the 
right to feel defeated, whatever may be the adversity we are facing. 
 More important, no 'petista' has to be ashamed of defending a 
comrade...In politics, we can't lose our sensitivity or our sense of 
comradeship." 
 
¶3.  (U) Lula's enthusiastically received speech had something of a 
triumphal tone as he recalled the party's past struggles, the 
opposition it has generated over the years, and his electoral 
victories of 2002 and 2006.  He devoted most of his time to 
highlighting his administration's successes, such as low inflation, 
job creation, increased exports, sustainable economic growth, 
advances in education, liberation from the IMF and the Paris Club, 
 
SAO PAULO 00000749  002.2 OF 004 
 
 
and the "Bolsa Familia" social program, which Lula called "the 
greatest wealth transfer in Brazil's history".  Referring to the 
party's critics, Lula asserted that "we are more often criticized 
for our merits than for our defects.  The PT has nothing to be 
ashamed of.  Don't be afraid to be 'petistas'...We are the ones most 
responsible for the country's long strides towards dignity and 
justice.  We were and are the builders of Brazilian democracy.  We 
are a party of winners." 
 
-------------------------- 
THE PT POSITIONS ITSELF... 
-------------------------- 
 
¶4.  (SBU) Lula's speech was the highlight of the National Congress, 
but not the only noteworthy event.  Delegates voted, as anticipated 
(ref C), to move forward the date of PT internal elections for 
national, state, and local presidents, directors, and other 
officials from September 2008 to December 2007.  They also adopted a 
motion calling for the convocation of a Constituent Assembly for the 
sole purpose of designing and approving a broad political reform. 
Such an Assembly is the PT's proposed solution to the Chamber of 
Deputies' failure to pass the government's political reform 
proposals.  Details are to be worked out in consultation with social 
movements, unions, and other democratic parties.  Many in the 
opposition oppose such an Assembly, seeing it as a possible vehicle 
for a Constitutional amendment permitting Lula to run for a third 
consecutive term (see ref D).  Lula himself has several times denied 
any such intention, saying most recently, "I will pass the sash to 
another president on January 1, 2011.  And I'm going to make my 
roast rabbit, which I haven't made in five years."  Many in the PT 
recognize that a third-term amendment is a political non-starter in 
the current environment, but some see another Lula term as the only 
way to ensure the party's continuation in power, and its members and 
affiliates stand to lose a great many jobs and considerable funding 
if any other party, allied or not, holds the presidency. 
 
------------------------------------ 
...FOR A 2010 PRESIDENTIAL CANDIDACY 
------------------------------------ 
 
¶5.  (SBU) Finally, delegates adopted a resolution on electoral 
tactics for the 2008 municipal elections and the 2010 national and 
state elections.  The resolution calls for victories in 2008 to 
strengthen the party's base and goes on to state that: "The PT will 
present a candidacy for president, to be constructed with other 
parties and thus form a programmatic, partisan, and social alliance 
capable of being victorious in the 2010 elections and to avoid the 
return of neo-liberalism."  The language aims to mollify both those 
who support a PT candidacy in 2010 and want to begin now to prepare 
the way, and those who, like Lula and his Ministers, are concerned 
about holding together the 12-party governing coalition. 
 
¶6.  (SBU) Since Lula cannot run for a third term absent a 
Constitutional amendment, the question of his succession has been a 
hot topic in recent months.  The PT is universally perceived as 
having few candidates with the charisma, stature or national profile 
required to lead the party to another victory.  Lula is on record as 
wanting the coalition to unite around a single candidate.  He is 
known to be considering supporting a candidate from his largest 
ally, the Brazilian Democratic Movement Party (PMDB), someone who 
can attract votes from the middle class and the business community. 
He is also known to have great respect for Ciro Gomes, a Federal 
Deputy and former Minister from the northeast who is a member of the 
Brazilian Socialist Party (PSB).  Many commentators consider the PT 
candidacy resolution a defeat for Lula and PT President Ricardo 
 
SAO PAULO 00000749  003.2 OF 004 
 
 
Berzoini.  A group of allied parties - the PSB, the Communist Party 
of Brazil (PC do B), and the Democratic Labor Party (PDT) and three 
smaller entities - responded by announcing the formation of a "Left 
Bloc" for the purpose of running their own candidate, possibly 
Gomes. 
 
¶7.  (SBU) For many in the PT, especially those on the left who have 
never approved of the party's alliances with centrist and 
center-right parties, the idea of supporting a candidate from 
outside the PT is anathema.  They argue that the PT should put 
forward its own candidate as early as possible to foreclose Lula's 
options.  Many doubt that Lula would break with his own party to 
support an outside candidate.  Rui Falcao, a leader of the "New 
Course" faction (ref A) and a supporter of Tourism Minister Marta 
Suplicy, doubts that Lula would split with the PT to support Ciro 
Gomes.  Ricardo Azevedo, President of the Perseu Abramo Foundation, 
the PT's think tank, thought that Gomes just might be barely 
palatable to the PT faithful, if he positions himself right and if 
Lula makes a convincing argument.  If, however, Lula decides to 
support a candidate from the PMDB (for example, new Defense Minister 
Nelson Jobim), it could "tear the PT apart," Azevedo said.  Worst of 
all, in his view, would be "Operation Aecio," the much-rumored 
(albeit unlikely) scenario in which Aecio Neves, Governor of Minas 
Gerais, switches from the PSDB - where he faces strong opposition 
from Sao Paulo Governor Jose Serra - to the PMDB and runs for 
President with Lula's support. 
 
¶8.  (SBU) Even with few strong candidates, the PT is not without 
options.  Marta Suplicy, if elected Mayor of Sao Paulo next year, 
could be a strong presidential candidate in 2010.  Jaques Wagner, a 
former Minister of Institutional Relations who remains close to 
Lula, surprised many in 2006 by being elected Governor of Bahia, 
Brazil's fifth largest state.  If he can deliver good government, he 
may be viable.  Azevedo mentioned another name that is only now 
beginning to be heard, that of Patrus Ananias.  As Minister for 
Social Development and the Fight Against Hunger, Ananias is 
responsible for the GoB's flagship "Bolsa Familia," a conditional 
cash transfer program that currently reaches more than 11 million 
families, or about one-fourth of the population.  Rui Falcao noted 
that Fernando Pimentel, Mayor of Belo Horizonte, has supporters 
within the party as well.  Many lean towards Lula's Chief of Staff, 
Dilma Rousseff, but while considered an able technocrat (she was 
previously Minister of Mines and Energy), Rousseff has never before 
run for elective office.  Justice Minister Tarso Genro wants to run 
for president, but he would face opposition from within the PT, 
especially from the Majority Camp, whose hegemony he has 
challenged. 
 
¶9.  (SBU) Despite the PT's determination to have a candidate of its 
own, events will dictate the outcome.  Lula will wait until after 
the 2008 municipal elections, see how the teams are lined up and 
which way the wind is blowing, and choose the individual he 
considers best equipped to win the election and to perpetuate his 
legacy.  While not definitive, his decision will strongly influence 
how the race goes. 
 
------- 
COMMENT 
------- 
 
¶10.  (SBU) Comment:  The PT is having trouble deciding how to handle 
the ongoing scandal involving some of its most prominent members. 
Lula's remarks, a shift from his earlier attempts to distance 
himself from the accused, represented something of a balancing act 
aimed at airing the party's problems and showing strong solidarity 
 
SAO PAULO 00000749  004.2 OF 004 
 
 
with the defendants, two of whom - Jose Dirceu and Jose Genoino - 
are past PT presidents of long association with Lula.  On the one 
hand, the PT wants to recover its mantle as the "party of ethics". 
Indeed, the PT Congress unanimously approved the establishment of a 
Code of Ethics for its members, while postponing until 2009 
discussion of the formation of a "Corregedoria" or enforcement arm. 
On the other hand, Jose Dirceu remains extremely influential, as 
does Joao Paulo Cunha, a former President of the Chamber of 
Deputies.  On the eve of the Congress, about 150 PT members attended 
a dinner in honor of Cunha at which those present blamed the 
corruption scandal on the media.  Although the general public seems 
to believe firmly that the accused are guilty, it may not be until 
after the 2008 elections that the PT decides whether to take the 
high road or stick with its friends. 
 
¶11.  (SBU) Comment continued: The PT Congress got Brazil's 2010 
presidential election cycle off to an abnormally early start.  And 
the PT has a rough road ahead.  The criminal trials of the "Gang of 
40," including three PT ex-Ministers; the party's former President, 
Secretary-General, and Treasurer; and four current and former 
 
SIPDIS 
federal deputies, are expected to last at least three years and to 
attract constant publicity.  Lula can consider himself "absolved" by 
the 61 percent vote he received in 2006, but most of his party 
comrades are not so fortunate.  While the party can still count on 
the support of many loyal militants, others have come to perceive it 
as just another political organ devoted to no principle other than 
the perpetuation of its own power.  The PT's challenge now is to 
accept its loss of innocence and move past the shock over Lula's 
impending departure so that it can focus on fielding strong 
candidates in next year's municipal elections and rally behind a 
standard bearer and a slate of strong candidates for 2010.  End 
Comment. 
 
¶12.  (U) This cable was coordinated with Embassy Brasilia. 
 
WHITE