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DE RUEHBR #1855/01 2441923
ZNR UUUUU ZZH
R 011923Z SEP 06
FM AMEMBASSY BRASILIA
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INFO RHEHNSC/NSC WASHDC
RUEHRG/AMCONSUL RECIFE 5387
RUEHSO/AMCONSUL SAO PAULO 7924
RUEHRI/AMCONSUL RIO DE JANEIRO 2790
RUEHBU/AMEMBASSY BUENOS AIRES 4240
RUEHMN/AMEMBASSY MONTEVIDEO 6441
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RUEHSG/AMEMBASSY SANTIAGO 5745

UNCLAS SECTION 01 OF 02 BRASILIA 001855 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON BR
SUBJECT:  BRAZIL INTERNAL POLITICS UPDATE, 28 AUGUST - 1 SEPTEMBER 
¶2006. 
 
REF: BRASILIA 1798 AND PREVIOUS 
 
 ¶1. (U) SUMMARY. The presidential race entered a new phase this week, as opposition PSDB candidate Geraldo Alckmin began to hit President Lula da Silva hard with negative campaign messages. Alckmin, who has been criticized by some PSDB-PFL coalition figures for demurring in attacks on Lula for the PT-led corruption scandals of the past year, is now trying to place ethical responsibility on Lula, in hopes of forcing a second round in the October election. Lula is outpolling Alckmin by almost two to one, and polls show he has even moved up to 50 percent of voter intentions, right at the borderline for a first round victory. Third place candidate Heloisa Helena, a far left firebrand, has slipped into single digits. President Lula is acting as though his re-election is assured, displaying limited regard for public opinion, at least among the middle and upper classes. This week he refused to participate in the series of candidate interviews sponsored by leading Rio daily O Globo, and he received disgraced former Workers Party leader Jose Genoino in his office in the presidential palace. The Superior Electoral Court signaled it would annul last week's decision by the Rio de Janeiro Regional Electoral Court to disqualify several congressional candidates because of corruption allegations. Former president Fernando Collor, finally able to re-enter politics after impeachment and banishment from politics, has announced his candidacy for the senate. END SUMMARY. 

---------------------------------------- Lula is confident; Alckmin goes negative ---------------------------------------- 

¶2. (U) The presidential race has entered a new phase now that opposition candidate Geraldo Alckmin has begun to hit President Lula hard with negative campaign messages. He is trying to tar Lula with the several corruption scandals of his administration in hopes of forcing a second round. Alckmin made national headlines with his jibe that "the Lula Administration is the telephone book of corruption." Lula is still outpolling Alckmin by almost two to one, and polls show he has even moved up from 45 to 50 percent, easily enough for a first round victory. But Alckmin launched the negative offensive only mid-week, too recently for polling results. Third place candidate Heloisa Helena, a far left firebrand, has slipped into single digits. 

¶3. (U) Lula is acting as though his re-election is assured and seems to display limited regard for public opinion, at least among the middle and upper classes. This week he refused to participate in the series of candidate interviews sponsored by leading Rio daily "O Globo." The paper published an "interview" with Lula showing the questions from prominent journalists, followed by Lula's answer (white space). Lula also received disgraced former Workers Party leader Jose Genoino in his office in the presidential palace. Genoino, who held no elective office, was forced out of the leadership of Lula's party when the "mensalao" bribery scandal erupted. He was never prosecuted, though, for his possible responsibility in the scheme that involved illegally funneling public funds into campaign coffers of Lula's PT and small allied parties, as well as into the pockets of several congressmen. 

¶4. (U) Lula continues to be so popular with voters in Brazil's northeast that even regional candidates from opposition parties have used his image in their television ads. The most prominent example has been Lucio Alcantara, governor of Ceara, a member of the PSDB, Alckmin's party. Alcantara used Lula in his TV ads, and this week made a pilgrimage to Brasilia to pose for a grip and grin with the president. The TRE electoral court determined that this widespread use of Lula's image constituted additional advertising time for Lula and punished him by docking his daily TV time allocation by 65 seconds, with a threat of 40 additional seconds if it continues. 

--------------------------------------------- -- Allegedly Corrupt Deputies Can Resume Campaigns --------------------------------------------- -- 

¶5. (U) The Federal Superior Electoral Court signaled this week that it may annul last week's decision by the Rio de Janeiro Regional Electoral Court to disqualify several congressional candidates because of corruption allegations. The decision had been the subject of much comment - for and against -- by knowledgeable legal authorities. The federal court is indicating that, until there are guilty verdicts against the accused, the parties themselves should screen out the bad apples, not the electoral courts. This decision was characterized by some observers as a victory of rules over 

BRASILIA 00001855 002 OF 002 2006. 

ethics. With this decision, many of the politicians accused of wrongdoing in the past year's scandals stand a good chance of being re-elected, and could then work to absolve themselves. 

---------------------- Collor Campaigns Again ---------------------- 

¶6. (U) Former president Fernando Collor, finally able to re-enter politics after his 1992 impeachment and banishment from politics, has announced his candidacy for the senate from his home state of Alagoas. He has also declared his support for Lula. 

--------------------------------------------- --------- Public Outlays for Poor Rise in Electoral Season --------------------------------------------- --------- 

¶5. (U) Reftel reported that Lula's government was beefing up public outlays for the poor and federal pensioners by relaxing rules for the Bolsa Familia subsidy program and making an early payment of holiday bonuses for participants in the local equivalent of Social Security. This week it was revealed that the Bolsa Familia outlays rose 60 percent during July, the first month of political campaigning (598 million reais in June vs. 952 million reais in July, according to the "0 Globo" newspaper). The paper says that many families, especially in the northeast, received advance payments equivalent to two months in July. 

¶6. (SBU) Comment: With only a month until election day, the PSDB is painfully aware that it has only about two weeks to turn Alckmin's numbers around. It remains to be seen whether an onslaught of negative advertising will do the trick. Lula is protecting himself from his Achilles heel (public debate) and using public resources to take care of his base. So far it is working, but we are not ready to count Alckmin out. The media drumbeat of corruption allegations is not likely to sway the poorest, but could gnaw away at the margin enough to force a second round in which Alckmin would have four more weeks to make his case with the voters. CHICOLA.