Bahia PFL Leaders Combative and Pessimistic

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.

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Excessive Public Spending Means Votes for Lula
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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.

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Lula Will Fail to Bring Opposition to His Camp
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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.

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Need to be Tougher on Lula, Even Impeach Him
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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