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UNCLAS SECTION 01 OF 02 BRASILIA 002003 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON BR
 
SUBJECT:  Bahia PFL Leaders Combative and Pessimistic 
 
REFS: A. Brasilia 1961, B. Brasilia 1996 
 
¶1. (SBU) Summary. Senator Antonio Carlos Magalhaes (ACM)(protect), opposition PFL (Party of the Liberal Front) from Bahia, said Lula will try but fail to form a government of reconciliation if he is re-elected on October 1, and Federal Deputy Jose Carlos Aleluia (protect), PFL from Bahia, says Brazilian voters have been brought to Lula's side by excessive public spending but the country is heading for a moral and political "precipice." During a September 12 meeting with Poloff, ACM sounded determined to work toward preventing Lula from forming a government that would include current members of the opposition, and said the opposition in congress might even attempt to impeach Lula. In a separate meeting, Aleluia made clear to Poloff his frustration that voters seem ready to re-elect President Lula despite what Aleluia views as Lula's first term record of gross abuses of authority, a poor economic policy, and widespread corruption. End Summary. 

--------------------------------------------- - Excessive Public Spending Means Votes for Lula --------------------------------------------- - 

¶2. (SBU) Embassy Poloff met on September 12 over breakfast with Jose Carlos Aleluia (PFL) from Bahia at Aleluia's home. Aleluia said two of the biggest problems with Lula's administration are runaway public spending and low public investment. He complained that Lula has used the powers of the presidency to "buy" the courts, the universities, the Federal Police, and the Public Ministry. He said the public payroll has ballooned under Lula. Lula has "bought" universities by creating new ones, he said, and he named several states where new public universities had been created, encumbering the government with lifetime academic appointees and pensions for their spouses. In Minas Gerais, for example, four new public universities had been created during Lula's first term, according to Aleluia. Further, Aleluia accused Lula of manipulating the Federal Police so that the many of the corruption cases it discovered recently are claimed to have existed all along but were previously undetected. 

¶3. (SBU) Aleluia said Lula had appointed so many judges to the Supreme Court that if the Court ever had to make a decision concerning the coming election, it would decide in Lula's favor. He also criticized the hiring of a large of number of public employees through job competitions. "Brazil has become the country of job competitions," he complained. As an example, he said the government had created many entry level judgeships with excessive salaries. He said the young judges earn 18,000 reais (about USD 8400) a month, which is a very high salary in Brazil. 

¶4. (SBU) Aleluia said the bloated federal payroll, combined with the Bolsa Familia assistance program for poor families, make Lula practically unbeatable on October 1, although he added that if the election goes to second round Lula would be vulnerable and could lose to Geraldo Alckmin of the Party of Brazilian Social Democracy (PSDB), with which the PFL is currently allied in opposition to Lula. Alleging a political manipulation of Lula's flagship social welfare program, the Bolsa Familia (Family Allowance), Aleluia noted that when Lula took power, the program provided benefits to five million families. Lula added three million more, and recently added three million more, bringing the total to about 11 million families. (Note: according to Brazilian government statistics, in May 2006 there were 9.2 million families in the Bolsa Familia program, and in June 2006 the figure jumped to 11.1 million, which is current figure.) Aleluia also said the Bolsa Familia program has induced some families to quit working, creating a new dependency on the federal government, although he stopped short of saying he was opposed to the Bolsa and other assistance programs, some of which Lula inherited from the Fernando Henrique Cardoso administration. 

¶5. (SBU) Aleluia also criticized the Lula government for a lack of public investment, but did not get into specifics, aside from noting that the government had failed to build new roads. He also complained of high interest rates, a low economic growth rate, and an unfavorable foreign exchange rate for the Brazilian real. The foreign exchange rate is hurting all exporters, especially agricultural interests in the south, he added. He acknowledged that the trade balance is good, but said it could be better. 

¶6. (SBU) Even though in the northeast Lula may win the votes of eighty percent of the poor, Aleluia said, about ten percent of those votes will be lost because the least sophisticated voters will have trouble with the electronic voting machine. He explained that not only do voters have to confront the electronic voting machine, they 

BRASILIA 00002003 002 OF 002 

have to know their candidates' numbers and enter each one manually, as opposed to selecting from a list. Finally, he said, the voting order places the presidential vote at the end, and some voters will give up before getting to that point. 

¶7. (SBU) Finally, Aleluia opined that Brazilians are generally happy with their country and their lives, but the country is heading toward a moral and political precipice. He said the choice is between taking Brazil in the direction of Bolivia or Chile. He is convinced that Lula's re-election will take Brazil toward the Bolivian model. 

--------------------------------------------- - Lula Will Fail to Bring Opposition to His Camp --------------------------------------------- - 

¶8. (SBU) Embassy Poloff, accompanied by the Salvador Consular Agent, met with Antonio Carlos Magalhaes at his Salvador office on September 12. ACM began by saying that Lula would try but fail to form a government of reconciliation if he is re-elected on October 1. ACM said he expected Lula to appoint two or three persons as ministers who are not identified as political or partisan figures. He said they might be figures similar to former and current Justice Ministers Nelson Jobim and Marcio Thomaz Bastos. He predicted a majority of the Senate will be in opposition, including at least two to three PMDB senators, such as Jarbas Vasconcelos of Pernambuco. Asked who the other PMDB opposition Senators might be, ACM said that is not yet known. ACM predicted that after October 1, when a new threshold law will eliminate parties failing to reach a certain minimum of votes nationally, only about six parties will remain standing. He also commented in passing that the PFL is perceived as being on the right, but is really a centrist party, and that the PSDB is perceived as being center-left but is also a centrist party. 

¶9. (SBU) When asked whether the PSDB and PT might unite in the future out of ideological similarity, ACM dismissed this possibility out of hand. He said this would not happen for two reasons: they are competitors, and Fernando Henrique Cardoso will not allow it. 

-------------------------------------------- Need to be Tougher on Lula, Even Impeach Him -------------------------------------------- 

¶10. (SBU) On corruption in the Lula government, ACM said without hesitation that Lula knew everything. The opposition had missed an opportunity to impeach Lula in his first term, but might try again in the second, ACM declared. He said Lula has committed impeachable crimes and there is enough evidence to impeach. When asked to comment on Alckmin's new campaign emphasis on corruption, ACM said he had been telling Alckmin to be tougher on Lula on this issue. Alckmin was late to start attacking on corruption, said ACM, but it is having an effect. At the same time, ACM said the general public cares about corruption, but the poor think "Lula is their friend and all politicians steal." ACM also said Lula has not yet been directly implicated in a corruption scandal because the Ministerio Publico is subject to Lula's political control through the Minister, who owes allegiance to Lula. ACM continued to say that Lula has "bought lots of people," including NGOs, which he claimed were now "all corrupt." (Note: the conversation with ACM occurred before the most recent scandal breaking over Lula and the PT, per reftel B. End note.) 

¶11. (SBU) Comment: Deputy Aleluia and Senator Magalhaes's pessimistic and combative attitudes toward the PT and President Lula are in line with predictions of difficult executive-legislative relations we have heard from at least one other politician (reftel) and some journalists in the Brazilian northeast. If ACM and Aleluia are typical of PFL attitudes, Lula will have a difficult time with the Senate in a prospective second term, where the opposition may hold a majority after October 1. In that case, political progress, in spite of Lula's best efforts, could be subject to some degree of gridlock. But ACM's influence over his colleagues is less than it was in the past. In 2001 he resigned from the Senate during a scandal in which he was accused of accessing information about secret Senate votes. By resigning, he retained his political SIPDIS rights, and was elected again in 2002 to a term ending in 2010. ACM, who is now 79 years old, expresses sentiments held many among in the anti-Lula block, but to the point where even some who sympathize believe he has crossed a line and insults the presidency, not the President. Whether others will join his openly hostile camp remains to be seen. End comment. 

Chicola