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UNCLAS SECTION 01 OF 03 SAO PAULO 000338 
 
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 BR
SUBJECT: SAO PAULO: WITH AN EYE TO 2010 PRESIDENTIAL ELECTIONS, 
GOVERNOR SERRA MAKES TACTICAL RETREAT; PSDB NOMINATES ALCKMIN FOR 
MAYOR 
 
REF: (A) SAO PAULO 285; (B) SAO PAULO 225; (C) SAO PAULO 142; 
     (D) SAO PAULO 94; (E) BRASILIA 813 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
¶1. (SBU) Summary: Avoiding open confrontation, the Social Democracy 
Party of Brazil (PSDB) held its municipal convention June 22 and 
nominated former Governor Geraldo Alckmin as its candidate for Mayor 
of Sao Paulo.  In a deal reportedly brokered by Governor Jose Serra, 
the faction that favored supporting incumbent Mayor Gilberto Kassab 
(Democratic Party - DEM) decided at the last minute not to put 
forward an alternative ticket, leaving Alckmin unopposed.  Governor 
Serra delivered a speech in support of Alckmin, who reciprocated 
with remarks implying he will support Serra for President in 2010. 
The last-minute agreement represents a tactical retreat by Serra, 
who wants to avoid an open schism in the PSDB as he prepares his 
presidential candidacy.  But most of the leaders of the pro-Kassab 
group, including 10 of the 12 PSDB City Council members, were 
conspicuously absent from the convention, and even held their own 
parallel meeting.  Whatever the outcome of this election, much work 
will be needed to heal the PSDB's internal rift and restore its 
important alliance with the DEMs.  End Summary. 
 
¶2. (U) The PSDB convention itself was an anti-climax at the end of a 
week of increasing tension and suspense.  On June 14, the Democratic 
Party municipal convention, as expected, nominated Gilberto Kassab 
as the party's candidate for Mayor.  A number of prominent "tucanos" 
(PSDB members) attended the DEM convention to advocate maintaining 
the PSDB-DEM alliance and nominating Kassab as their own candidate. 
Governor Serra was out of the country, but Lieutenant Governor 
Alberto Goldman (PSDB) attended in his stead and delivered an 
address expressing the hope that "the political alliance be 
converted immediately into an electoral alliance... [but] if not, we 
will be together in 90 days."  The somewhat confused Goldman said at 
one point, "We are here to consolidate the candidacy of Geraldo 
Alckmin" when he meant Gilberto Kassab, and later referred to the 
Mayor as "Geraldo Kassab."  For his part, Kassab expressed pride in 
the PSDB-DEM alliance and what the two parties have accomplished 
together in his administration, and added that if it were up to him, 
none of the many PSDB members holding positions in the municipal 
government would leave his administration. 
 
¶3. (U) On June 17, a group including 11 PSDB City Council members 
submitted a slate with Kassab as the Mayoral candidate, along with 
the signatures of 424 delegates.  (There were 1,344 voting delegates 
to the convention; 403 were needed to register the slate.)  Alckmin 
supporters charged that delegates were being pressured to sign on to 
the Kassab ticket, and a potentially ugly situation developed with 
accusations of fraud and talk of possible legal challenges.  Party 
leaders and representatives of both factions recognized that an open 
clash at the convention would be tantamount to political suicide, 
but nobody seemed to know how to avoid it.  One Kassab/DEM supporter 
said he would back off "only if my commander orders me to," a 
reference to Governor Serra.  Finally, on the evening before the 
convention, after meeting with national and state party leaders and 
senior advisors to Serra, the Kassab supporters agreed to desist. 
However, many of the dissidents boycotted the convention and held 
their own parallel gathering where they complained of Alckmin's 
"stubbornness" and talked of the "sacrifice" they had made in the 
name of a "larger objective" - Jose Serra's presidential candidacy. 
 
¶4. (U) Per reftels, Governor Serra has made clear all along his 
preference for maintaining the PSDB's alliance with the DEMs by 
supporting the re-election of Kassab.  In recent press interviews, 
however, he indicated he would support Alckmin if the party chose 
 
SAO PAULO 00000338  002 OF 003 
 
 
him, while adding that he would continue to praise Kassab as 
appropriate, both for implementing Serra's programs after he 
departed the Mayor's office to run for Governor, and for offering 
innovations of his own in governing the city.  Serra and Kassab 
appear together regularly at ribbon-cutting and other events 
involving state and local government.  (For example, on June 27, the 
Governor and Mayor presided at a high-profile road opening while 
Alckmin, in contrast, was campaigning by himself at a trade fair.) 
But Serra evidently concluded that a direct challenge to Alckmin's 
candidacy, whether it succeeded or not (and it likely would not 
have), would carry too high a price. 
 
¶5. (SBU) Though Serra pledged his support to Alckmin, it is hard to 
imagine him campaigning enthusiastically for him, and the most 
likely scenario is that he will keep some distance, not opposing him 
overtly and more than likely not working behind the scenes to 
undermine him.  If Alckmin is elected Mayor, Serra will need his 
support for his 2010 presidential bid, or, at the very least, he 
will need not to have an enemy in the Mayor's office.  It is no 
coincidence that one key supporter of Alckmin's candidacy within the 
national PSDB has been Minas Gerais Governor Aecio Neves, Serra's 
main rival for the party's presidential nomination.  Serra and 
Alckmin worked reasonably well together in 2005-6 when their roles 
were reversed - Alckmin was Governor and Serra was Mayor - but that 
was before Alckmin defeated Serra for the PSDB's 2006 presidential 
nomination (and then went on to lose to Lula), and before Alckmin 
insisted on running for Mayor this year, disrupting Serra's plan to 
get Kassab re-elected and thereby continue his own strong presence 
and influence in Sao Paulo's City Hall. 
 
¶6. (U) For his part, Mayor Kassab, though no doubt disappointed, 
expressed satisfaction that he has so many supporters within the 
PSDB.  It now appears that at least some of the PSDB Assistant 
Mayors and Municipal Secretaries will remain in his administration 
while trying, in a very delicate balancing act, to avoid any overt 
political activity.  Both the Kassab and Alckmin camps continue to 
talk about a "non-aggression pact" in which the two candidates 
compete without confronting or attacking each other and instead 
direct all their fire against Marta Suplicy and the Workers' Party 
(PT).  (Note: On June 29, the PT formally nominated Suplicy, with 
Aldo Rebelo (Communist Party - PC do B) as her running mate. 
Following intervention by President Lula, the "Little Left Bloc" 
(see ref A) of Communist, Socialist (PSB), Democratic Labor (PDT), 
and two smaller parties decided to ally with Suplicy in Sao Paulo. 
End Note.)  Leaders of both PSDB and DEM, and the candidates 
themselves, say they will unite in the second round against her, 
though they also recognize that there will be scars from the 
campaign.  A new IBOPE poll shows Suplicy opening a small lead over 
Alckmin, 31 to 25 percent, with Kassab trailing at 13 percent. 
Alckmin, however, has by far the lowest rejection rate among the 
three main candidates, and would be the favorite in a second round 
against either of the other two. 
 
¶7. (SBU) Comment: This is the second time Jose Serra has been 
outmaneuvered in his own party by Geraldo Alckmin.  Despite his 
considerable political skills, Serra has an abrasive manner and 
style of doing business that sometimes turns potential allies into 
adversaries.  The question remains whether his retreat from this 
confrontation and his abandonment of Kassab and the DEMs will be 
seen as a sign of weakness, possibly damaging his presidential 
prospects, or will put Alckmin and his supporters in his debt and 
even turn them into allies in 2010.  End Comment. 
 
¶8. (U) This cable was coordinated with and cleared by Embassy 
Brasilia. 
 
SAO PAULO 00000338  003 OF 003 
 
 
 
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