LULA'S PERSONAL APPROVAL UNSCATHED BY RECENT

UNCLAS SECTION 01 OF 02 BRASILIA 000564

SIPDIS

DEPT FOR WHA/BSC

TAGS: PGOV SOCI ECON BR
SUBJECT: LULA'S PERSONAL APPROVAL UNSCATHED BY RECENT
SCANDAL

REFS: A) BRASILIA 0458

B) BRASILIA 0402


1. SUMMARY: The administration of Brazilian President Lula
da Silva is facing the worst crisis of its fifteen months in
power, yet Lula's personal approval rating remains at 60%,
according to a recent poll. However, his government's
approval number stands at 38%, suggesting that Lula will
have to expend greater personal and political effort to move
legislation and to maintain popular support for his agenda.
The difference in the numbers also demonstrates Lula's
personal charisma, though this alone is unlikely to be
enough to ensure his administration's success. As it now
appears the worst of the scandal is abating, Lula and his
government emerge with a tarnished reputation and reduced
political capital, both in Congress and with the public.
END SUMMARY.

LULA AT 60%, BUT HIS GOVERNMENT AT 38%
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2. The personal popularity of President Lula da Silva
remains high (60%) despite the rash of bad press from the
recent "Waldomiro Diniz scandal" involving a senior aide
caught soliciting bribes from a numbers racketeer (refs A
and B). A nationwide poll released March 2 by Datafolha
showed that Lula's personal approval remains at the same
level as it was in October 2003 (and nearly the same as the
61% of the popular vote he received in the October 2002
elections). Most Brazilians do not believe that Lula is
linked to or knew about Diniz's corruption.


3. As always, Lula personally is much more popular than his
administration. The approval numbers for Lula's government
have slipped steadily since taking office, dropping again
from 42% in December 2003 to 38% on March 2 (though this
change is within the margin of error). In response to
specific questions about the Diniz scandal, 81% of
respondents believe there should be a congressional inquiry
(which Lula's PT party vigorously opposed and managed to
kill on March 4); 43% think Lula's powerful Chief of Staff,
Jose Dirceu (for whom Diniz worked) should step aside during
the investigation; and 24% believe Dirceu should step down
permanently. Lula has reportedly refused Dirceu's offered
resignation.


4. The scandal is not the only thing weighing down the
government's approval numbers. An economy that remains
sluggish despite fiscal belt-tightening (and controversial
pension reforms passed in December) has not helped the
administration's popularity. The Datafolha poll also notes
that many Brazilians (36%) do not see President Lula as a
hard worker, an increase over the 21% who held this opinion
last year. This may be a function of his frequent
international travels. Yet Ricardo Antunes, a Professor of
Sociology at the University of Campinas in Sao Paulo,
commented to the press that Lula's populist style enables
him to communicate effectively with the working class, and
therefore this segment of the population will give him more
time to show results, in a sense give him a longer
honeymoon.


5. The March 2 polling numbers also show that the
popularity of the government has fallen regardless of
region. In the prosperous southeast (which includes the
economic centers of Sao Paulo and Rio) the government's
approval fell from 37% in December to 31% on March 2. In
the poorer northeast, the numbers slipped from 47% to 42% in
the same period.

COMMENT
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6. Waldomiro Diniz was a senior advisor to Jose Dirceu,
Lula's closest and most powerful advisor. Dirceu has been
diminished by the scandal, though he is not personally
implicated. Yet Lula continues to rise above the image of
his party and his administration. The Datafolha numbers
show that his personal popularity is a remarkable 22 points
higher than that of his government. This dynamic has caused
press and pundits to speculate on how long Lula's popularity
balloon can sustain the deadweight of a sluggish economy and
controversial political reforms. With the Diniz scandal
making matters even worse for the government, some believe
that the GoB may be forced to make concessions, either on
fiscal austerity or on controversial pieces of legislation,
in order to maintain popular and congressional support. To
date, this is just speculation, and Lula has given no sign
that he will cave in to political pressures. In fact, even
in the wake of the latest dismal GDP figures, Lula again
reasserted his long-term commitment to Finance Minister
Palocci's austerity program.
RVIRDEN