GOVERNOR LEMBO DISCUSSES POST-ELECTION POLITICAL LANDSCAPE

UNCLAS SECTION 01 OF 03 SAO PAULO 001202

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR FOR CRONIN
NSC FOR FEARS
TREASURY FOR OASIA, DAS LEE AND JHOEK

E.O. 12958: N/A
TAGS: PGOV PINR BR
SUBJECT: GOVERNOR LEMBO DISCUSSES POST-ELECTION POLITICAL LANDSCAPE


REF: (A) SAO PAULO 899; (B) SAO PAULO 675;
(C) SAO PAULO 532

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

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SUMMARY
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1. (SBU) During a lunch with the CG, Sao Paulo Governor Lembo
predicted that President Lula will face some opposition from within
his own party, and expressed concern that if Lula has difficulty
sustaining a majority in Congress, he might resort to populist
rhetoric, though probably not populist action. Lembo and his
foreign affairs advisor, Ambassador Adalnio Senna, said Lula's
choice of Under Secretary Antonio Patriota to be Ambassador to the
U.S. was a sign that Lula will try to engage the U.S. more during
his second term. Senna noted that Patriota is eminently qualified
as well as extremely close, both personally and professionally, to
FM Amorim. With respect to state politics, Lembo expressed
satisfaction that he will be able to turn the state government over
to his successor in "perfect" financial condition. He opined that
Governor-elect Jose Serra is not a leftist, as many observers
allege, but rather "a regulator and an enforcer" who will provide
good government for the state. Lembo intimated that things are not
going well for his own Liberal Front Party (PFL) but implied that
the party will continue to ally with Serra's Social Democracy Party
of Brazil (PSDB). He dismissed media reports that Serra was
attempting to create a new center-left party. End Summary.


2. (SBU) Consul General (CG) invited departing Governor Claudio
Lembo and his foreign affairs advisor, Ambassador Adalnio Senna
Ganem, to lunch at the Residence to observe the impending end of
Lembo's term in office. The 71-year-old Lembo assumed the
governorship on April 1 when Geraldo Alckmin resigned to run for
President and is due to depart on December 31. During his term as
Lieutenant Governor and later Governor, he has been a key contact
and resource for the Consulate, especially on anti-piracy issues.
He was instrumental in establishing the Sao Paulo State Anti-Piracy
Committee and in bringing Governors from other states together to
discuss piracy during the visit of Commerce Secretary Gutierrez (ref
B). Lembo, who is known for his candid and sometimes politically
incorrect utterances, is also a shrewd observer of the state and
national political scene.

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PFL INTERNAL PROBLEMS
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3. (SBU) Lembo indicated that he plans to return to teach at
Mackenzie University, where he used to be Rector, but also hopes to
continue to have a voice and some influence in politics. He noted
that things are not going well for the PFL, which lost ground in
this year's election. Historically strong in the northeast, the PFL
has been weakened by the declining influence of the "colonels" or
regional bosses who used to deliver votes. However, Lembo also said
that "the colonels have changed" and that in many places
representatives of Lula's Workers Party (PT) have replaced the old
PFL "caciques." Lembo noted that Senator Jorge Bornhausen (PFL from
Santa Catarina in the south),who did not seek re-election this
year, will also soon retire as President of the PFL and will be
replaced by Sao Paulo Mayor Gilberto Kassab. (Note: Lembo, who has
contentious relations with Bornhausen, has been quoted in the press
as suggesting he might leave the PFL for another party if Bornhausen
stays on. End Note.) While not saying so directly, he implied that
the PFL will remain allied with the Social Democracy Party of Brazil
(PSDB).


4. (SBU) With respect to the PSDB, Lembo did not expect Minas
Gerais Governor Aecio Neves to be the party's candidate for
President in 2010. He was not explicit, but made a vague,
unelaborated reference to Neves's private life being a possible
obstacle. He seemed more sanguine about the chances of Sao Paulo
Governor-elect Jose Serra. Lembo dismissed press reports that Serra
intends to create a new center-left political party, predicting that
Serra would remain in the PSDB. He also thought Tasso Jereissati
would continue as PSDB President.

SAO PAULO 00001202 002 OF 003



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LULA'S SECOND-TERM CHALLENGES
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5. (SBU) President Lula will face a number of challenges, Lembo
said. His immediate priority will be creating a sustainable
majority in Congress, which will require extensive courting of the
centrist Brazilian Democratic Movement Party (PMDB),a process which
is already underway. Lula will be helped to some extent by the
Barrier Clause, under which numerous small parties will disappear or
be merged into others, leaving fewer parties, more rationally
organized, to negotiate with. But Lula's Workers Party will be less
influential in the second term, a reality that will exacerbate the
existing tension between Lula and some elements of the PT,
especially the social movements on the left. And Lembo expressed
concern that if he should be unable to sustain a majority, Lula
might adopt a more populist posture. However, he thought Lula might
resort to populist rhetoric but not undertake populist actions. At
heart, he said, Lula remains a petit bourgeois, which is another
reason the leftist elements in the PT are dissatisfied with him.
Lembo opined that Chief of the Civil Household Dilma Rousseff, whom
he characterized as the most able of the people close to Lula, would
be a viable candidate to succeed him in 2010.

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POSITIVE SIGNAL ON BILATERAL RELATIONS
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6. (SBU) Asked how the U.S. could best engage Lula during his
second term, Lembo acknowledged that this would be difficult, but
not impossible. Both he and Ambassador Senna opined that by
proposing MFA Under Secretary Antonio Patriota as the next
Ambassador to the U.S., Lula was sending a signal that he wants to
strengthen relations. Senna, who served both former Governor
Alckmin and Lembo as foreign affairs adviser and informally advised
Alckmin's presidential campaign, characterized Patriota as not only
eminently capable and experienced but also as extremely close to FM
Celso Amorim. There is probably nobody in the MFA Amorim trusts
more, Senna stressed, noting that Patriota is the only official
Amorim will sign papers for without even looking at them.


7. (SBU) For his part, Ambassador Senna has been named Consul
General in Atlanta and is looking forward to taking up his new post.
However, the Atlanta Consulate cannot open until the question of
disposition of USG diplomatic property in Brazil is resolved. He
noted that the MFA has approved the proposed agreement and forwarded
it to the President's office. Once the President approves the
proposal, it will be sent to Congress for ratification. Lembo said
Senna, who is pragmatic and has worked trade issues at the
governor's palace, would be in a good position in Atlanta to
identify new opportunities to expand trade and investment.

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HIGH HOPES FOR SERRA'S GOVERNMENT
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8. (SBU) On the state level, Lembo said he and his staff had
completed a review of state government operations and that
everything is ready for Governor-elect Serra to take over on January

1. In particular, he asserted that the finances are in perfect
order. Serra, he continued, is extremely well-prepared for the
governorship. Contrary to popular opinion, Serra is not a leftist,
but rather a "regulator" and an enforcer. The most important issues
he will face are public security, the state penitentiary system, and
the youth corrections system (formerly FEBEM, now CASA). It will be
interesting, Lembo commented, to see how Serra handles public
security, since he has been uncomfortable around police since his
days as President of the National Students' Union (UNE) in the
1960s, when he was arrested for leading a demonstration and spent
time in jail in Sao Paulo. (Note: During the military dictatorship,
Serra was in exile in Chile and later the United States. End Note.)
When Lembo, after the election, took him to meet the commander of
the state military police, Serra was visibly nervous, he said.


9. (SBU) Lembo noted that former Justice Minister Aloysio Nunes
Ferreira had declined the position of State Secretary for Public
Security. The most likely candidate now, he said, is prominent

SAO PAULO 00001202 003 OF 003


criminal attorney and former military police officer and prosecutor
Ronaldo Marzagao, who served in the Secretariat under Governor Andre
Franco Montoro and in the Justice Ministry in the Sarney
administration (1985-89). Public Security will be a key position in
Serra's government because of the continuing challenges posed by the
organized criminal group First Capital Command (PCC) (ref C).
(Note: On November 20, Governor-elect Serra announced a number of
appointments, including Marzagao to the Public Security post and
Nunes Ferreira as Chief of the Civil Household. He also announced
that, based on Lembo's recommendation, Antonio Ferreira Pinto would
stay on as Secretary for Prison Administration. Pinto was named to
the post in June in the aftermath of the mid-May PCC-led prison
riots. End note.)


10. (SBU) Concerning other appointments, Lembo said that Lieutenant
Governor (and long-time Federal Deputy and PSDB leader) Alberto
Goldman would serve as Secretary of Transportation. Guilherme Afif
Domingos, President of the Sao Paulo Chamber of Commerce, will
likely be named Secretary of Labor. Afif Domingos is a state PFL
leader who narrowly lost his Senate race to incumbent Eduardo
Suplicy (PT).


11. (SBU) Lembo considers it very likely that Mayor Gilberto Kassab
will seek re-election in 2008, most likely against PT former Mayor
Marta Suplicy (2001-04),who lost her own bid for re-election to
Serra and who has been mentioned as a possible Lula successor. But
he noted that the PSDB's unsuccessful presidential candidate,
Geraldo Alckmin, may also want to run for Mayor, since "he has
nothing else to do." Assuming the PSDB-PFL alliance holds together,
which at this point appears likely, at least at the state level,
Kassab and Alckmin cannot both run, creating a difficult and
delicate situation which Serra will have to mediate.

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COMMENT
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12. (SBU) Lembo, who was the target of vocal public criticism
during and after the May wave of PCC-orchestrated violence, appeared
relaxed and content with leaving office in Serra's able hands. He
will likely continue to exercise influence within the PFL,
especially if Bornhausen does retire. We were struck by Ambassador
Senna's enthusiastic comments on the proposed appointment of
Patriota as ambassador to the U.S., especially since Senna seems to
have a more conservative and pragmatic view of foreign policy
orientation than the current MFA leadership. However, one former
Ambassador to the U.S. was less sanguine. He said Patriota, while
personally loyal to FM Amorim, is unknown in the Brazilian business
community, which will limit his ability to promote stronger
commercial ties, at least initially. According to this source,
Patriota could be expected to "deliver the mail" in Washington but
would have no influence in shaping policy. End Comment.


13. (U) This cable was coordinated/cleared with Embassy Brasilia.

MCMULLEN