SAO PAULO GOVERNOR CLAUDIO LEMBO TALKS ABOUT

UNCLAS SECTION 01 OF 04 SAO PAULO 000492

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E.O. 12958: N/A
TAGS: PGOV PINR BR
SUBJECT: SAO PAULO GOVERNOR CLAUDIO LEMBO TALKS ABOUT
ELECTORAL ALLIANCES, ALCKMIN'S PROSPECTS

REF: (A) SAO PAULO 355; (B) SAO PAULO 350;

(C) SAO PAULO 316; (D) 05 SAO PAULO 1181;
(E) 02 BRASILIA 1392 AND PREVIOUS

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY.

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SUMMARY
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1. (SBU) Sao Paulo Governor Claudio Lembo told us that despite
press reports suggesting otherwise, his Liberal Front Party (PFL)
will/will form an alliance with the Brazilian Social Democracy Party
(PSDB) and will strongly support the presidential candidacy of PSDB
Sao Paulo ex-Governor Geraldo Alckmin against President Lula.
Finalizing the alliance is only a matter of time, he said, as the
PFL has no other option. Governor Lembo shared his views on the
prospects for alliances in various key states, and expressed the
hope of obtaining the support of the large but divided Brazilian
Democratic Movement Party (PMDB) in vote-rich Sao Paulo state.
Lembo, who served as Alckmin's Lieutenant Governor for more than
three years, recognized that Lula is the front-runner and that
Alckmin faces a serious challenge in trying to unseat him. His
predicament is complicated by the PSDB's internal divisions and lack
of vision, and tepid support from party leadership, including former
President Fernando Henrique Cardoso. Still, Alckmin, unlike Lula,
is still relatively unknown and will likely see his support increase
as voters nationwide get to know him, Lembo opined. Even if Lula
wins, his Workers Party (Partido dos Trabalhadores - PT) will fare
badly in the elections, leaving him isolated and impeding his
ability to govern. In that case, conservatives may support the
government for the good of the country and try their best to ride
out the four years of Lula's second term. Governor Lembo's views
on the Bolivian gas situation will be reported septel. END
SUMMARY.

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PSDB-PFL ALLIANCE "ONLY A MATTER OF TIME," GOVERNOR SAYS
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2. (U) Consul General (CG) - accompanied by Commercial MINCOUNS and
Poloff - and Political Assistant had separate meetings over the past
week with Sao Paulo Governor Claudio Lembo. In both meetings, Lembo
wanted to talk about domestic politics. (Per ref A, Lembo assumed
the governorship on March 31 when Geraldo Alckmin resigned as
required by law to launch his presidential candidacy.) Post will
report septel his comments to the CG in their May 5 meeting
concerning Evo Morales's nationalization of Bolivia's hydrocarbons
sector and its impact on Brazil. Lembo stated that the PFL and
Alckmin's PSDB continue to negotiate the terms of alliances in the
various states as part of a larger package to include a "pefelista"
(PFL member) as Alckmin's running mate. (NOTE: During Fernando
Henrique Cardoso's two terms (1995-2002) as President, PFL Senator
Marco Maciel of Pernambuco state in the northeast served as
Vice-President. However, in 2002, the PSDB-PFL alliance was
ruptured when PFL presidential candidate Roseana Sarney blamed the
Cardoso administration and the PSDB for sparking the corruption
scandal that forced her to withdraw from the race. See ref E. END
NOTE.) The alliance is only a matter of time, he said, as the PFL
has nowhere else to go.


3. (SBU) Governor Lembo acknowledged that the inter-party
negotiations have encountered some turbulence. In Rio de Janeiro,
for example, PFL Mayor Cesar Maia, who had originally planned to run

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for President himself, is apparently miffed that the PSDB has
launched its own candidate (Federal Deputy Eduardo Paes) for Rio de
Janeiro state Governor instead of supporting a PFL gubernatorial
candidate. Maia recently stated at a public event in Alckmin's
presence that, due to the complications caused by the
"verticalization" rule, the PFL might do better in Congressional
elections if it eschewed a formal alliance with the PSDB and went
its own way.

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COURTING NORTHEAST POLITICIANS AND VOTERS
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4. (SBU) Lembo confirmed press reports that the front-runner for the
Vice-Presidential nomination is Senator Jose Jorge de Vasconcelos
Lima (more commonly known simply as Jose Jorge) of Pernambuco, a
co-founder of the PFL who served four terms (1983-98) as a Federal
Deputy before gaining his Senate seat. For geographic reasons (see
ref C),the running mate is almost certain to be from the northeast,
and Pernambuco is considered more important and pivotal than Rio
Grande do Norte, home of PFL Senator Jose Agripino Maia, who is on
most observers' short list of possible candidates, including Lembo's
own list (ref D).


5. (SBU) Lembo also believes the two parties may be able to ally in
the northeastern states of Bahia and Maranhao. According to his
scenario, the PSDB could support Roseana Sarney's gubernatorial
candidacy in Maranhao. In Bahia, the PSDB is focused on securing
the support of powerful PFL Senator Antonio Carlos Magalhaes, and is
reportedly willing in return to support the re-election of PFL
Governor Paulo Souto.

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GETTING THE PMDB ON BOARD
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6. (SBU) The PSDB-PFL alliance is already strong in Sao Paulo state,
where 23 percent of the electorate resides and where Lembo succeeded
Alckmin and "pefelista" Gilberto Kassab assumed the mayorship of Sao
Paulo city when Jose Serra resigned to run for Governor. However,
Governor Lembo is trying to bring the Brazilian Democratic Movement
Party (PMDB) into the picture as well. He is planning to meet next
week with PMDB state chairman and former Governor Orestes Quercia
and former President Itamar Franco. Lembo foresees Quercia's
running for a Senate seat on Serra's gubernatorial ticket and even
believes that Franco might support Alckmin in his home state of
Minas Gerais, though he admitted the latter partnership is a bit of
a long shot. "Mineiros" [people from Minas Gerais], Lembo observed,
referring both to Franco and to Minas Gerais Governor (and PSDB
leader) Aecio Neves, "are difficult to deal with. They always want
things their own way." He did not rule out the possibility that
Alckmin might offer the Vice Presidential nomination to someone from
the PMDB, in which case the PFL would back off but continue to
support him. The great advantage of an alliance with the PMDB,
Lembo, explained, is that, due to the size of the party's vote in
the 2002 Congressional election, it is entitled to a great deal of
free television time.

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ALCKMIN CAMPAIGN TROUBLED, BUT HE CAN STILL WIN
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7. (SBU) Lembo recognized that the Alckmin campaign faced many
challenges. Allegations that Alckmin's wife had received some 400

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dresses free of charge from her couturier were harmful to Alckmin
because they highlight the glamour of the ex-Governor's family in
contrast to Lula's working-class background. It's the sort of thing
voters understand and respond to. He also acknowledged that Alckmin
hadn't handled the situation very well. On the other hand, Lembo
didn't think the allegations that state-owned bank "Nossa Caixa" had
steered advertising business to Alckmin's political allies (ref B)
would hurt Alckmin's chances. The real problem, in Lembo's view, is
that the PSDB is "lost." The party is internally divided and lacks
an affirmative vision. So far, all they've been able to do is
criticize the Lula government. The PSDB isn't really a national
party; they're a Sao Paulo party with some regional branches. If
Alckmin wins, it will be no thanks to his own party but because the
PFL brings him victory. There's a cultural clash between former
President Fernando Henrique Cardoso, who considers himself a
cosmopolitan, international figure, and Alckmin, whom Cardoso views
as a "caipira" (hillbilly) because he comes from Pindamonhangaba, a
small town in the interior of Sao Paulo state.


8. (SBU) Right now, Lembo conceded, President Lula has to be
considered the favorite. His poll numbers remain stubbornly high
despite the corruption scandals, largely because of his support from
the poor, who tend to see things in black and white. Fortunately,
Lembo said, Lula isn't a populist in the mold of Hugo Chavez or Evo
Morales, but more a "petit bourgeois." He can still be beaten; in
fact, internal PSDB polls showed Alckmin's support will grow as the
voters get to know him. Lula, on the other hand, is a known
quantity whose numbers are unlikely to improve. Lula may even be
better off, in Lembo's opinion, without former Chief of Staff Jose
Dirceu, who is a difficult personality with his own agenda, though
the loss of Finance Minister Antonio Palocci does hurt Lula. Even
if Lula does win the election, Lembo is sure the PT will fare badly,
and Lula will be isolated and, lacking support in Congress, will
have a "governability" problem. In this scenario, Lembo predicted
that even conservatives from the PFL would likely support him to
help keep the government afloat, and just wait out the four years
until the next election.

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STATE POLITICS
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9. (SBU) Asked about the May 7 primary for the PT gubernatorial
nomination, Lembo expressed the view that former Sao Paulo Mayor
Marta Suplicy is likely to defeat Senator Aloisio Mercadante. He
was not convinced that Lula was supporting Mercadante, suggesting
that the "Machiavellian" Lula may secretly prefer Suplicy as the PT
candidate. In either case, Lembo was quite confident that Serra
would ultimately win the election.


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COMMENT
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10. (SBU) Governor Lembo is an Alckmin loyalist who lobbied
vigorously (and successfully) to get the then-Governor a
Cabinet-level meeting in Washington when Alckmin visited there in
February. He also owes his current position to Alckmin. Anything
he says about the campaign and possible alliances must be viewed in
that light. However, he is also a PFL insider and deal-maker whose
assessment of the negotiations between the two parties is probably
fairly close to the mark. We believe the PSDB and PFL will
eventually reach an agreement and identify a PFL running mate.

SAO PAULO 00000492 004 OF 004


Efforts to form a triple alliance with the PMDB, on the other hand,
in Sao Paulo or anywhere else, are much more problematic. Lula and
the PT continue to court the PMDB arduously, including with an offer
of the Vice-Presidential nomination. The PMDB is likely to enjoy
the attentions of both sides for some time to come, even as the
party tries to figure what to do about its presidential
pre-candidate, Anthony Garotinho. END COMMENT.


11. (U) BIOGRAPHIC NOTE: Claudio Lembo, 71, was born in Sao Paulo
and educated at the University of Sao Paulo and Mackenzie
University, where he later served as Law Professor and Rector. He
was President of the National Renewal Alliance (ARENA) during the
military dictatorship and later helped found the Brazilian Popular
Party (PPB). He served as Sao Paulo Municipal Secretary of
Extraordinary Affairs (1974-79),Secretary of Judicial Affairs
(1986-89),and Secretary of Planning (1993). On the federal level,
he has served as Chief of Staff to the Minister of Education and
advisor to Vice-President Maciel. Lembo joined the PFL in 1989 and
was the party's Vice-Presidential candidate that year. He was
elected Lieutenant-Governor of Sao Paulo state on Alckmin's ticket
in 2002. His term as Governor will end December 31, 2006. END
BIOGRAPHIC NOTE.


12. (U) This cable was coordinated with Embassy Brasilia and
Consulate Recife.

MCMULLEN