BRAZIL INTERNAL POLITICS UPDATE, 21-25 AUGUST 2006.

UNCLAS SECTION 01 OF 02 BRASILIA 001798 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PREL ECON BR SUBJECT: BRAZIL INTERNAL POLITICS UPDATE, 21-25 AUGUST 2006. REF: BRASILIA 1744 AND PREVIOUS ¶1. (U) SUMMARY. The Chamber of Deputies began proceedings against 67 of its own that could result in expulsion from Congress and several years' banishment from political life. They were implicated in the "Bloodsuckers" scandal involving rigged ambulance contracts and kickbacks for congressional supporters. The electoral court in Rio de Janeiro disqualified several incumbent federal deputies because of accusations against them in the scandal. Lula's government has taken steps to keep ample benefits flowing to retirees and the poor in this pre-electoral period. A new drug law gets tougher on dealers, sends users to treatment, not jail. END SUMMARY. -------------- Chamber of Deputies Acts against 67 Deputies -------------- ¶2. The Chamber of Deputies opened its proceedings against 67 deputies implicated in the "Bloodsuckers" corruption scandal involving overpriced ambulance purchases and kickbacks to members of congress. The accused were named by a Parliamentary Committee of Inquiry (CPI). The investigation now moves to the Chamber of Deputies Ethics Council. They are charged with violation of parliamentary decorum and could be expelled from congress and banned from electoral office for a period of time to be determined by the congress. The overwhelming majority of the accused are candidates for re-election. Two accused deputies escaped the Council's action by resigning from Congress. The process will take time: Ethics Council chairman Ricardo Izar predicted the Council will finish only 20 cases by year's end. -------------- Court Disqualifies Accused Candidates -------------- ¶3. (U) The Regional Electoral Court in Rio de Janeiro (TRE-RJ) disqualified four federal deputies running for re-election to the Chamber of Deputies because they were implicated in the "Bloodsuckers" scandal. A fifth candidate, a soccer club owner and former federal deputy, was also disqualified for past corrupt allegations. One accused federal deputy was allowed to continue her campaign. One of the five TRE-RJ judges voted against the disqualifications because none had been convicted of a crime. The TRE of Sao Paulo has also barred numerous would-be candidates from seeking office, mainly for irregularities in campaign documents presented. TRE rulings are subject to appeal before the Superior Electoral Tribunal. Many media pundits praised the moves as steps forward in ending impunity for corrupt politicians, though there are questions regarding the constitutional aspects of the decision. In any case, the TRE actions fit into a pattern of growing institutional strength that can be seen in a few prominent governmental bodies, notably the electoral courts, the Federal Police and the Federal and state-level Public Ministries. These organs, along with a professional and vigilant media, have investigated and sought sanctions in many of the myriad scandals of the past year, and their increasing efficacy is one encouraging aspect of Brazil's battle with corruption. -------------- Lula Orders September Pension Bonus -------------- ¶4. (U) President Lula has drawn fire from critics, including Marco Aurelio Mello, president of the Superior Electoral Tribunal, for decreeing an early half-payment of the "thirteenth month" bonus for pensioners in the federal pension system (INSS, equivalent to U.S. Social Security),to be disbursed just two weeks before national elections. The "thirteenth month" bonus is normally disbursed in December. Mello said the "sack of goodies is always opened around election time and that is not good for democracy." At the same time, new figures show a sharp rise in public spending; leading daily O Estado de S. Paulo suggested an electoral motive. Federal spending in July rose 12.9 percent over June, and in the January-July period was up 14.8 percent over the same previous period. (Government income rose only 11.1 percent during January-July.) The government also announced that it is relaxing the criteria for families under threat of suspension from the Bolsa Familia program benefits. Without the rule change, 164,000 families would have been removed from the program in September, according to press reports. -------------- -------------- Lula Signs New Drug Law; Tough on Dealers, Easy on Users BRASILIA 00001798 002 OF 002 -------------- -------------- ¶5. (U) President Lula signed into law a new drug law that increases penalties for dealers and establishes alternative sentences such as counseling and community service for users. The new law could reinforce the president's weak credentials on crime and the drug problem. ¶6. (U) Polling shows continuing small upticks in Lula's re-election chances, and opponent Geraldo Alckmin is trying to be heard amid the din of corruption reporting, which grabs page one headlines day after day. The publicity surrounding the corruption scandal should work in Alckmin's favor, but it is not. Lula's Teflon continues to deflect, and the approval rating of his government has hit a record high of 52 percent, according to a Datafolha poll. CHICOLA