FEWER PCC ATTACKS IN SAO PAULO BUT NEW POLITICAL BATTLES

UNCLAS SECTION 01 OF 04 SAO PAULO 000873

SIPDIS

DEPARTMENT FOR DS/IP/WHA, DS/ICI/PII, DS/DSS/OSAC, WHA/BSC
NSC FOR FEARS
DEA FOR OEL/DESANTIS AND NIRL/LEHRER
DEPT ALSO FOR WHA/PDA, DRL/PHD, INL, DS/IP/WHA, DS/DSS/ITA
BRASILIA FOR RSO AND LEGAT; RIO DE JANEIRO FOR RSO
SOUTHCOM ALSO FOR POLAD

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KCRM CASC ASEC SNAR SOCI BR
SUBJECT: FEWER PCC ATTACKS IN SAO PAULO BUT NEW POLITICAL BATTLES
AMIDST TALK OF ARMY INTERVENTION

REF: (A) SAO PAULO 869; (B) SAO PAULO 865; (C) SAO PAULO 771; (D)
SAO PAULO 742; (E) SAO PAULO 573

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY.


1. (SBU) SUMMARY: The third day of what is being called the third
wave of PCC-led attacks in Sao Paulo state brought only a few new
incidents on Wednesday morning, August 9. The newest attacks,
however, included targets in upper-scale neighborhoods and the
greater use of homemade bombs. Meanwhile, the state's crime and
security problems are becoming increasingly politicized, as civic
leaders of different parties level accusations of ineffectiveness
and even collaboration with criminals. Amidst renewed and louder
calls for military intervention to combat organized crime in Sao
Paulo, the state's governor and public security secretary stand firm
in resistance, with some analysts suggesting that either way,
President Lula gains political strength as problems in Brazil's most
populous and affluent state - governed by rival political parties -
are highlighted in the news daily. Appearing to enter the fray
personally, it appears Lula himself will visit an Army installation
in Sao Paulo this Friday, but will leave the state on the eve of the
Father's Day holiday, during which many fear the PCC will launch new
attacks. END SUMMARY.

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URBAN WARFARE, DAY THREE
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2. (SBU) Elements of the organized crime gang First Capital Command
(PCC) orchestrated few attacks against government and private sector
targets in the early morning of Wednesday, August 9, in what is
being called the Third Wave of PCC-led attacks since May (reftels).
Early morning attacks on Wednesday occurred in the cities of Itu and
Sumare, approximately 65 and 75 miles northwest of Sao Paulo
respectively. Homemade bombs were tossed at a police station and
the house of a police officer. A bus was also torched inside a
municipal garage.


3. (SBU) In greater Sao Paulo, homemade bombs were tossed at bank
outlets in the fashionable Pinheiros and Morumbi neighborhoods. The
bank in Pinheiros was on Avenida Teodoro Sampaio, which, during the
daytime, is a long, bustling, reduced-price shopping district. A
car was also torched in a court parking lot. The bomb squad of the
Military Police unit called "GATE" (Special Actions and Tactics
Group) also detonated a suitcase or briefcase left unattended on
Avenida Paulista in the city's main business district, but it was
found to be harmless. In all, there have been 150 attacks in Sao
Paulo state since early Monday morning (August 7). Perhaps due to
increased security around police and public security facilities, the
attacks this week seem to be targeting "softer" targets in more
upscale neighborhoods, and involve the use of homemade bombs versus
the Molotov cocktails and drive-by shootings that were more common
during the previous waves of attacks.

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POLITICAL WARFARE IN EARNEST
--------------


4. (SBU) Politicization of Sao Paulo's crime and prison problems
has taken off in earnest with this third wave of PCC attacks, as
President Lula's Workers Party (PT) challenges the effectiveness of
opposition party leadership of Sao Paulo state under current
Governor Claudio Lembo of the Liberal Front Party (PFL) and former
governor and current presidential candidate Geraldo Alckmin of the
Brazilian Party for Social Democracy (PSDB). In an interview with
the daily newspaper Folha de Sao Paulo, Governor Lembo admitted that
his government was surprised by this third wave of PCC attacks, but
he said this did not indicate fault in police intelligence or public
security. He once again dismissed the increasingly vociferous calls
from Ministers and politicians in Brasilia for Army units to be
dispersed in Sao Paulo. When asked what he thought of federal

SAO PAULO 00000873 002 OF 004


Justice Minister Marcio Thomaz Bastos's renewed offer of Army troops
to combat the PCC, Lembo said, "I would very much like to see the
Army on the borders. But this issue is between the borders." Lembo
also said the issue is being politicized, but not by him (ref B).


5. (SBU) Justice Minister Bastos admitted that Sao Paulo never
received the 100 million reals (approximately $500,000) of federal
funds it was promise for public security upgrades, at first
faultingbureaucratic snafus, and then admitting that 13 milion
reals of the allotment went to a prison proect in Santa Catarina
state in southern Brazil. He defended this diversion of funding,
saying theSanta Catarina project was ready and under way whie Sao
Paulo still needs to submit project plans or use of prison
construction funds. The Ministr promised to release 35 million
reals as early s this week for two "large and important" projects
in Sao Paulo, as long as the State Prison Authoriy (SAP) provides
his office with solid plans. Te remaining 65 million reals is
earmarked for imroving intelligence-sharing with the Federal
Polce, and Bastos said this will also be released when
documentation is in order.


6. (SBU) Meanwhil, political opponents turned up the heat on Sao
aulo's Secretary for Public Security Saulo Abreu, aying he is full
of "pyrotechnics," and the PT sid it will sue Abreu for comments he
made during live television program. During the show, Abreu
accused the PT of collaborating with the PCC in oder to make Sao
Paulo's state government appear eak. While several other
politicians have insinated such a link, Abreu stated on air
yesterday tat he had proof of a connection between the PT and
efforts to destabilize Sao Paulo's government fo political gain in
the run-up to national electins. He also accused a former
PT-aligned transportation secretary of similar collusion with the
criminal gang, alleging that the only buses burned in Sao Paulo this
week belonged to cooperatives with ties to the ex-secretary.


7. (SBU) President Lula himself appears to have entered the fray.
The daily newspaper Estado de Sao Paulo reported that the president
will visit Sao Paulo on Friday, August 11, to review newly minted
troops at the Army's Southeast Military Command (CMSE). He has
never visited the CMSE, and Estado reported that he only informed
the base's commander of his visit this last Monday morning, just as
news outlets were reporting that the PCC had launched a new wave of
attacks across Sao Paulo state. His visit is scheduled for 11:00 am
on Friday, and he will leave that same day, before the Father's Day
weekend furlough of thousands of prisoners brings the threat of
renewed violence (refs A-B).


8. (SBU) Leading dailynewspaper Estado suggested that if violence
breaks out this weekend and the state government finally succumbs to
pressure to call in the Army, Lula will score a "triple victory," by
1) exposing weakness on the part of the Sao Paulo government if the
streets quiet down after the dispersal of federal troops, 2) linking
a sense of security amongst the populace to federal action, and 3)
enhancing the image of federal effectiveness (and, by extension, of
Lula's) if violence returns after a short-term Army intervention.
But the newspaper Folha suggested a completely opposite intention on
the part of the Lula Administration: Lula and his top aides are
happy that Governor Lembo continues to resist the use of the Army on
the streets of Sao Paulo, because the tension allows the federal
government to appear beneficent and at the ready while the state
government appears arrogant and hapless, and Lula's team does not
want to risk failure in confronting the PCC during an election
campaign.

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CALLING IN THE ARMY
--------------


9. (SBU) Various top members of the Lula Administration continue to
press the need for Brazilian Armed Forces to intervene in Sao Paulo
state security, including Vice President Jose Alencar, who compared

SAO PAULO 00000873 003 OF 004


the situation to one that occurred while he was Defense Minister and
federal troops successfully restored law and order in the state of
Espirito Santo at the request of its governor.


10. (SBU) Intervention in Sao Paulo by Brazilian federal forces
would likely come in two forms, and possibly in two stages. The
National Force for Public Security (FNSP) would likely be called in
first; then, if needed, members of the Brazilian Armed Forces. In
his rejection of federal troops on the streets of Sao Paulo,
Governor Lembo routinely says 200 men will not have an effect on a
massive criminal organization in a city of 18 million inhabitants
and a state of 42 million. In this argument, Lembo focuses on the
FNSP, which is a relatively new and unknown entity in Brazil.


11. (SBU) President Lula created the National Force for Public
Security in 2004, in an effort to support states' efforts at
combating riots and crime sprees. The National Force is essentially
a reserve unit comprised of elite police officers from every state
in Brazil. The Force receives special training for rapid reaction
and deployment during times of mass disturbances. The National
Force was first deployed in the state of Espirito Santo in November
2004, after several nights of bombings and vehicle burnings --
similar to the PCC-led attacks in Sao Paulo of late -- left the
state's security forces overwhelmed. 150 members of the FNSP were
deployed to replace Army troops originally sent in to quell the
violence. More recently, a contingent of the National Force was
used in July 2006 to move five inmates thought to be leaders of a
recent prison riot from a prison in the interior of Mato Grosso do
Sul to a maximum-security facility in the state's capital, Campo
Grande.


12. (SBU) The Estado article quotes a protected source in the
capital as saying that on a scale of 1 to 10, the chances of the
Army being called into Sao Paulo are "close to 10." The article
lays out options for the use of several infantry and airborne
brigades situated in Sao Paulo state that could be mobilized
quickly. These units have experience with urban discord through
recent peacekeeping tours in Haiti. Justice Minister Bastos is
quoted as saying that up to 10,000 men could be deployed in Sao
Paulo within 48 hours, suggesting these locally-based units would be
tapped.


13. (SBU) The countervailing argument made by Folha is that
Brazilian military leaders are not nearly as anxious to enter Sao
Paulo to combat organized crime as some of the civilian leadership
seems to be, in part because they will not subordinate command of
their troops to state Secretary of Public Security Abreu. While
Brazilian constitutional law seems to confer to the president full
control over the mobilization of the military in a crisis, political
disputes would likely arise, particularly given Secretary Abreu's
forceful presence (considered arrogant and abrasive by opponents)
and Governor Lembo's prolific use of the bully pulpit. The Estado
article also suggested that while both the Army leadership and
Governor Lembo concur that deploying federal troops in Sao Paulo
would likely cause a diminution of street crime, the real and
long-term problem lies in the overcrowded and undisciplined prisons.
Lembo also complains that the cost of any federal presence will be
enormous and will be billed to the state government. Referring to
the recent agreement for the State to lease two Cougar HM-3
helicopters from the Army (ref B),the Governor quipped, "The
helicopters will cost us $50,000 [per use]. How much with the Army
cost?"

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CRIME AND POLITICS
--------------


14. (SBU) COMMENT: Crime and public safety have long been
troubling societal issues in Sao Paulo and across Brazil. But as
the presidential candidates swing into full campaign mode, crime and
public safety are now taking on renewed political significance, such

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that every attack by the PCC in Sao Paulo will be viewed not only in
terms of the injury and damage caused, but through the prism of
party politics. The commander of the Sao Paulo Military Police (PM)
noted in an interview Tuesday that Sao Paulo residents should expect
ongoing PCC attacks up until the presidential elections in October.
How and when federal forces will be called in to help combat
organized crime in Sao Paulo - if at all - and whether those forces
will be effective against the well-armed and organized PCC, is yet
another calculation both state and national leaders must make in
both their policy and political strategies. By playing the role of
the wild-card, it seems the PCC might still have the strongest hand
in this game. END COMMENT.


15. (U) This cable was coordinated/cleared by Embassy Brasilia.

MCMULLEN