VZCZCXRO6050
PP RUEHRG
DE RUEHBR #1250/01 2941421
ZNY CCCCC ZZH
P 211421Z OCT 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5243
INFO RUEHRG/AMCONSUL RECIFE 0031
RUEHRI/AMCONSUL RIO DE JANEIRO 8298
RUEHSO/AMCONSUL SAO PAULO 4665

C O N F I D E N T I A L SECTION 01 OF 04 BRASILIA 001250 
 
SIPDIS 
 
E.O. 12958: DECL: 10/21/2019 
TAGS: PREL PGOV BR
SUBJECT: BRAZIL'S 2010 ELECTIONS: ONE YEAR OUT 
 
REF: A. BRASILIA 1127 
     ¶B. BRASILIA 905 
     ¶C. RECIFE 66 
     ¶D. RIO DE JANEIRO 340 
     ¶E. SAO PAULO 551 
 
Classified By: Charge D'Affaires Lisa Kubiske for reasons 1.4 (b) and ( 
d). 
 
¶1.  (SBU) Summary.  One year before Brazil's October 2010 
national elections, Social Democratic Party (PSDB) 
presidential candidate Jose Serra continues to lead Labor 
Party (PT) hopeful Dilma Rousseff in the polls, while PMDB, 
Brazil's largest party, uses its bargaining leverage to 
maintain its advantages in parliament and in key state races. 
 President Lula has further solidified the PT-PMDB alliance 
in recent weeks, but is having difficulty herding the 
center-left parties in his coalition, some of which are 
launching their own presidential candidates.  The October 3 
deadline for party switching and electoral reform produced a 
flurry of movement, including party switches by both the 
Foreign Minister and the Central Bank President.  These moves 
presaged a potential forthcoming exodus of over half the 
ministers in Lula's cabinet by April 3, the date by which 
candidates must declare themselves for office; such an event 
would dramatically reduce Brazil's governing capacity during 
the campaign season.  Congress will likewise lose impetus by 
April, increasing the need for a strong push by Lula in order 
to enact Pre-Salt oil exploration and other key legislative 
objectives considered crucial to the campaign.  Observers 
from all sides expect the presidential race to tighten 
considerably as the election approaches, with the final 
outcome depending in large part on Lula's ability to transfer 
his personal popularity to Dilma while at the same time 
allowing her to distinguish herself from Lula as a viable 
presidential figure.  End summary. 
 
What's At Stake, What's to Come 
------------------------------- 
 
¶2.  (SBU) Brazil's national elections, to be held October 3, 
2010, will feature the largest number of open races for 
federal and state office in over a generation.  In addition 
to the presidential race, 54 of 81 federal senate seats, all 
513 federal deputy seats, all 27 governorships, and all state 
deputy seats will be contested.  On October 3, 2009, the 
deadlines passed for switching parties or residences in order 
to run as a candidate from that party/state, and also for 
passing electoral reforms related to the 2010 election.  This 
is the first of several milestones in the next twelve months, 
including: 
 
- April 3, 2010: Deadline for announcement of candidacy for 
all offices.  State governors and members of the executive 
branch running for office, including cabinet members, must 
resign; 
- June 10: Commencement of political party nominating 
conventions for all offices; 
- July 3: Parties and candidates can start advertising on 
radio, television, and the internet; 
- July 17: The Electoral Tribune (TSE) will allocate radio 
and television advertising to parties; 
- September 13: TSE must confirm the correct functioning of 
vote machines; 
- October 3: Election Day, First Round; 
- October 31: Election Day, Second Round.  A second and final 
round is held when the leading candidate for a given office 
receives less than 50 percent of the vote in the first round. 
 Only the top two candidates are eligible to compete. 
 
One-Year Deadline 
----------------- 
 
¶3.  (C) In the two weeks leading to the October 3 deadline, 
five senators and at least 33 federal deputies switched 
parties.  The high number of party switches reflects the 
non-ideological nature of Brazilian politics and is standard 
operating practice here among officials seeing greater 
opportunity elsewhere.  (During an October 6 Embassy meeting 
with Senate Foreign Relations Committee Chairman Eduardo 
Azeredo, Sao Paulo Deputy William Woo cheerfully entered 
midway through and, despite having left Azeredo's PSDB for 
PPS the previous week, was well received by the Chairman.) 
The PSDB, which picked up three senate seats and several 
deputy seats, was the biggest winner in the shuffle, while 
PMDB and DEM, the second largest opposition party, both 
suffered significant losses.  Small parties fared 
surprisingly well, especially the opposition PSC.  House 
Foreign Relations Committee Chairman Severiano Alves switched 
from PDT to PMDB (both parties within the governing 
coalition) and left Congress altogether in order to prepare 
 
BRASILIA 00001250  002 OF 004 
 
 
for a run as Vice-Governor in his home state of Bahia. 
Damiao Feliciano, also PDT and from the northeastern state of 
Paraiba, took over October 8 as Committee Chairman. 
 
¶4.  (C) While most switchers are relatively obscure figures, 
two high-profile ministers switched parties while a 
presidential candidate changed residence.  After much 
speculation, Central Bank President Henrique Meirelles 
announced his move from non-aligned to PMDB, where he is 
expected to run for Senate from Goias state, but might run 
instead for Governor.  Embassy sources, including Sen. Romero 
Juca (PMDB-RO), have told us that Meirelles' transfer 
confirms rumors that he is also a top-tier potential 
vice-presidential candidate for Dilma.  (It is broadly 
expected that PMDB will get the Vice slot on Dilma's ticket, 
with Chamber of Deputies President Michel Temer most often 
named as the leading contender.)  Foreign Minister Celso 
Amorim officially switched from PMDB to PT, but there are no 
indications at this point that he will step down to run for 
office in his home state of Rio de Janeiro.  Finally, Ciro 
Gomes switched his residence from the northeastern state of 
Ceara to his birth state, Sao Paulo, in a move that allows 
him to both run for President on the PSB ticket and, 
potentially, to switch gears to run for Governor of Sao Paulo 
if his presidential campaign falters.  See ref C for more on 
Gomes. 
 
Election Law, Internet and the Media 
------------------------------------ 
 
¶5.  (SBU) President Lula also signed on September 29 the law 
that will define the rules for the 2010 elections.  The 
more interesting changes include rules to permit campaign 
contributions and electioneering via the internet, to 
increase participation of minor candidates in 
television/radio debates, and to introduce absentee voting. 
Many here believe, as the chief PSDB-affiliated advisor to 
the Senate Foreign Relations Committee told poloff recently, 
that PT is better prepared to take advantage of rule changes 
liberating the use of media and the internet but that his 
party and several others will catch up in time.  The new 
legislation has been widely panned by Embassy contacts -- 
including some senators who voted for the law -- for actually 
reducing federal oversight over party campaign activities and 
expenditures.  Although the deadline for electoral reform has 
passed, a petition drive has gathered enough signatures to 
authorize Congress through June 5 to pass legislation to 
prohibit candidates convicted of crimes to run for office. 
It is unclear whether PMDB leadership, which has taken the 
lead in opposing such legislation, will allow such a bill to 
pass. 
 
Ministerial Exodus, Congressional Paralysis 
------------------------------------------- 
 
¶6.  (C) Both Congress and the ministries will be in a hurry 
to produce as many electoral deliverables as possible before 
the April 3 deadline for declaring candidacies.  Ministers 
who declare are required to step down for their positions, 
which means that no minister has officially declared his or 
her candidacy at this point -- even those who are already 
actively campaigning.  Media and Embassy sources suggest that 
over half of Lula's 37-member candidate will run for office, 
most notably Chief-Minister Dilma Rousseff and Meirelles, but 
also the Ministers of Justice, Energy, Social Security, 
Education, Environment, Planning, Labor, Communications, 
Agriculture and several others.  It is still unclear when 
ministers will declare their candidacies and depart their 
ministries, but recent media reports indicate that Dilma will 
officially launch her presidential bid at the PT Annual 
Convention, which takes place February 18-21.  In Meirelles' 
case, Dep. Antonio Carlos Magalhaes Neto (DEM-BA) told poloff 
on October 9 that Meirelles will not announce the office he 
will run for until a week before the deadline because "Lula 
needs to keep him in his current position as long as 
possible."  Other ministers, he said, will be free to 
announce earlier. 
 
¶7.  (C) Congress will also be under pressure for progress 
before the campaign starts in earnest, particularly on the 
Pre-Salt oil exploration legislation, but also on a range of 
minor social assistance and education initiatives expected to 
be launched shortly.  The governing coalition still holds a 
strong position in the Chamber of Deputies but the recent 
round of party switches complicates matters for Lula in the 
Senate, where his coalition officially suffered a net loss of 
three seats but unofficially two more.  Sen. Arthur Virgilio 
(PSDB-AM), the leader of his party in the Senate, outlined 
for poloff on October 7 member-by-member how this would 
affect the President's ability to pass the legislation he 
desires.  Virgilio counted only 40 firm votes for the 
 
BRASILIA 00001250  003 OF 004 
 
 
governing coalition on key party-line matters, and pointed 
out specific coalition members likely to jump ship on key 
issues, including Venezuela's accession to Mercosul -- which 
he said did not currently have the votes to pass either the 
Foreign Relations Committee or the full Senate due to worries 
about Hugo Chavez.  Virgilio also emphasized that Dilma needs 
to maintain her viability in the oil-producing states of Sao 
Paulo, Rio de Janeiro, and Espirito Santo, as do the seven 
senators from those states belonging to coalition parties. 
This will make it very difficult to pass Pre-Salt legislation 
with the distribution of royalties scheme that Lula and Dilma 
would prefer. 
 
Prospectus: President 
--------------------- 
 
¶8.  (SBU) Dilma will need signature accomplishments in 
Congress to raise her presidential profile to compete with 
Sao Paulo Governor Jose Serra (PSDB), the front-runner for 
the Presidency.  Serra is pulling 36 to 43 percent in recent 
polls, roughly 20 points ahead of Dilma, who has seen her 
support on the left eroded by PSB candidate Ciro Gomes and PV 
candidate Marina Silva, both of whom are polling nearly even 
with Dilma.  Heloisa Helena (PSoL), though barely visible in 
the news for months and possibly not even running, also polls 
around 10 percent.  Serra has benefitted immensely from the 
negative publicity created by PT's marriage of convenience 
with the PMDB (ref A).  Also, Dilma's perceived lack of 
charisma makes her, in the words of Sen. Azeredo (PSDB), "the 
perfect opponent" for Serra because she is unable to take 
advantage of Serra's own lack of personal magnetism.  The 
difficulty for Serra, who enjoyed a similarly strong early 
lead when running for President in 2002, will be to translate 
the support from his base to other parts of the country and 
to lower income brackets.  Recent state polls indicate that 
Serra's support tops 50 percent in Sao Paulo and nearly so in 
the three states to the south, but falls to the 10-25 percent 
range everywhere else, including Rio and Brasilia.  Many PSDB 
leaders are pushing reluctant Minas Gerais Governor Aecio 
Neves (ref D & E), who would rather be President himself or 
perhaps President of the Senate, to accept the 
vice-presidency to shore up support from his large state and 
potentially put an all-PSDB ticket over the top. 
 
¶9.  (SBU) Observers from all sides acknowledge that, barring 
a major health crisis for Dilma or Serra, the "x factor" in 
this campaign will happen in the final weeks, when Lula's 
undereducated base in the northeast starts to pay attention 
to the race.  In a country where less than ten percent of 
voters belong to a political party but voting is mandatory 
and voter participation rates run in the high 90s, final 
election results do not reflect the early polls.  The advisor 
to a prominent opposition parliamentarian from Pernambuco 
told poloff that he expects Serra to win the first round, but 
expects Dilma to rise dramatically in the last week out of 
voter loyalty to Lula.  In the second round, he worries, "If 
they add up the votes of all four of them (Dilma, Ciro, 
Marina, Helena), they win."  Another opposition party advisor 
from the Northeast told poloff to watch out for Ciro, whom he 
characterized as "the only person who can beat Serra, even if 
he doesn't win himself."  Ciro has lately been playing an 
attack dog role in the campaign against Serra, while Dilma 
and Serra have been reluctant to engage one another directly. 
 
Prospectus: Parliament and Governors 
------------------------------------ 
 
¶10.  (C) Governor, Senate, Federal Deputy, and State Deputy 
races in each state will be heavily influenced by the needs 
of the leading parties in the Presidential race.  The key 
dynamic to watch will be between PMDB, which wants to retain 
its position as the party with the most seats in all four 
categories, and PT, which is under pressure to throw support 
behind PMDB candidates in order to shore up support for 
Dilma's presidential bid.  With few candidates officially 
declared, it is too early to predict how these races will go, 
but the general consensus in Brasilia is that PSDB stock is 
rising and PMDB falling at the federal level.  The PMDB 
already lost two senators and ten deputies in party-switching 
season, and legislators are increasingly confident that PMDB 
will lose its pre-eminent position at 
the federal level.  In a reference to the damage done by the 
recent scandal involving Senate President Jose Sarney, Sen. 
Virgilio told poloff, "Thanks to Sarney, PMDB is about to 
become a state-level party."  A PT-affiliated Senate advisor 
told us much the same, but believed that PT and smaller 
parties within the governing coalition, rather than the 
opposition, would gain at PMDB expense.  At the state level, 
PMDB remains in solid position to retain or increase its 
governorships, with strong candidates in key states such as 
Rio de Janeiro, Minas Gerais (PSDB-held), and Bahia 
 
BRASILIA 00001250  004 OF 004 
 
 
(PT-held). 
 
Comment: Stay Tuned! 
-------------------- 
 
¶11.  (C) While Brazil's 20l0 national elections appear to be 
moving toward a PT-PSDB presidential showdown, with Serra 
leading and Dilma expected to make up ground toward the end, 
it will be months before dependable outlines of the election 
environment take shape.  The first few months of 2010 will 
bring focus, as candidates officially declare, state-level 
alliances with national implications further crystallize, and 
ministers depart their posts.  The late 2009-early 2010 
dynamic between Congress and Lula, who will be in a hurry to 
pass legislation ranging from Pre-Salt to social program 
reform to Mercosul accession, may bring to the forefront 
policy differences in an election race that has thus far been 
about personalities and image.  Even if policy issues do not 
grow in importance, the debates will indicate how the two 
major coalitions, if elected, could address issues of 
interest to the United States.  End comment. 
KUBISKE