BRAZIL INTERNAL POLITICS UPDATE, 14-18 AUGUST 2006.

UNCLAS SECTION 01 OF 02 BRASILIA 001744

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON BR
SUBJECT: BRAZIL INTERNAL POLITICS UPDATE, 14-18 AUGUST 2006.

REF: BRASILIA 1659 AND PREVIOUS


1. (U) SUMMARY. Campaign season is now in full swing across
Brazil. The first debate among presidential candidates was held on
August 14, but President Lula did not participate, although the
others made him the focus of the two hour program. On August 15
candidates began running campaign messages on the free TV airtime
allocated to parties. Pervasive government corruption continues to
factor heavily in the national electoral conversation, but thus far
Lula's Teflon coat remains largely intact. END SUMMARY.

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Lula Skips Television Debate, But Is Its Focus
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2. (U) President Lula skipped the first television debate of the
campaign season on August 14. Broadcaster BAND TV provided a chair
and nameplate for him. All other legitimate candidates
participated: Geraldo Alckmin (Brazilian Social Democracy Party,
Heloisa Helena (Socialism and Freedom Party),Luciano Bivar (Liberal
Social Party) Cristovam Buarque (Democratic Labor Party),and Jose
Eymael (Christian Social Democrat Party). Lula had vowed to
participate in a debate only if there is a second round of voting,
but on August 17 he reversed himself and said he would participate
"when it is useful." (He may have been responding to criticism in
Geraldo Alckmin's TV ads.) The debate stirred no dramatic media or
public reactions, and was characterized (fairly) by leading daily
Folha de S. Paulo as "soporific."

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Corruption Is On The Ballot
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3. (U) Just before the first televised debate, and apparently after
surveying the long list of scandal veterans now shamelessly seeking
re-election, Marco Aurelio Mello, president of the Superior
Electoral Court, delivered a televised message in which he asked
Brazilians to vote against corrupt candidates. Later in the week
he repeated his public admonition in stronger terms, warning voters
not to vote for any candidate under suspicion, and he declared some
TV campaign messages misleading. He assessed a fine of 900,000 reais
(about USD 425,000) against President Lula for running a campaign ad
outside of the allotted time blocks. Opposition candidates accused
Lula of running misleading ads because they showed images of public
works projects in several cities that have not been completed.

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More Congressmen Implicated in "Bloodsuckers" Scandal
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4. (U) The Parliamentary Inquiry (CPI) investigating the
Sanguessugas corruption scandal ("Bloodsuckers") named twenty-seven
more federal deputies as suspects, and asked the Federal Supreme
Court to open investigations of them. (Note: The scandal centers on
fraudulent legislation surrounding budget appropriations for
ambulances and other municipal services. End note.) This brings the
number of accused members of congress in this scandal to 99,
although the CPI has asked the Supreme Court to investigate 84. The
work of the CPI has been laudable, based on mostly compelling
documentary evidence, and the results are staggering. They are bad
news for the PT-led coalition, since it reminds voters that most of
the accused in the "mensalao" political bribery of the past year and
the current "bloodsuckers" scandals have been members of the small,
mercenary parties that make up most of the government's ramshackle
coalition. Nonetheless, there is no indication thus far -- even
after a more than a year of sensational scandals that have decimated
Lula's party and cabinet and roiled through the congress - that
Lula's personal popularity with his base is substantially affected.


5. (U) Comment: In a vast country united by one of the largest
audiences of television viewers in the world, the TV campaign season
is important, and Alckmin hopes it can be decisive. But four days
after the beginning of television and radio campaign advertising it
is too soon to see an impact. Current polling still shows Lula with
a two to one advantage, though some experts believe he is nearing
his ceiling. Seven weeks can be a long time in anyone's politics,
and Brazil is no exception. But in the current view of most
analysts here, Alckmin's only chance is to do well enough on the
campaign trail and in TV time to deny Lula a first round win on
October 1 and shift the decision to a second round runoff on
October 22. Alckmin must grow dramatically in the next three to
four weeks, and hope also that Lula stumbles politically or
rhetorically.


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