DESPITE CORRUPTION SCANDALS, MAJORITY CAMP WINS IN WORKERS'

UNCLAS SECTION 01 OF 02 SAO PAULO 001004

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/BSC, DRL/ILCSR, INR/IAA, INR/R/AA
STATE PASS USTR FOR KATE DUCKWORTH
NSC FOR TOMASULO
TREASURY FOR JHOEK
USDOC FOR 4332/ITA/MAC/WH/OLAC
USDOC ALSO FOR 3134/USFCS/OIO
DOL FOR ILAB
SOUTHCOM ALSO FOR POLAD
USAID FOR LAC/AA

E.O. 12958: N/A
TAGS: PINR PGOV KDEM BR
SUBJECT: DESPITE CORRUPTION SCANDALS, MAJORITY CAMP WINS IN WORKERS'
PARTY ELECTIONS

REF: SAO PAULO 961

Summary
--------------


1. (SBU) Federal Deputy Ricardo Berzoini won the second round of
internal voting in President Lula's Workers' Party (PT) presidential
elections on December 16. The results maintain the distribution of
political power within the PT's national directorate and
consolidates President Lula's faction, the "Majority Camp," as the
decisive force going into the 2008 municipal and 2010 national
Brazilian elections. Sao Paulo results also forecast the likely
return of former Sao Paulo Mayor and current Tourism Minister Marta
Suplicy as the PT candidate for mayor in Sao Paulo's 2008 city-wide
elections. Berzoini's election indicates that Lula's faction has
survived all recent corruption scandals and that the PT is unlikely
to change its public policy goals in the short term. End Summary.

PT Internal Elections: The Winners
--------------


2. (SBU) Approximately 200,000 PT members cast their ballots
throughout Brazil in internal party elections on December 16.
Federal Deputy Berzoini's win with 61 percent of the vote was widely
expected based on his first round victory in November with 43.8
percent. Federal Deputy Tatto, Berzoini's main opponent, garnered
38.6 percent. A candidate of a local PT faction, Tatto finished in
second place during the November voting with 23 percent. (Note:
Although in the lead-up to PT elections Berzoini suggested an
alliance with Tatto that could avoid a second round election, Tatto
rejected the offer. End Note.) During the first round of PT voting
in November, Federal Deputy Jose Eduardo Cardozo, who was the
candidate of Justice Minister Tarso Genro's "Message to the Party"
faction, ended up in the third position with 17 percent. Cardozo's
performance not only frustrated Genro's group's hope of changing the
party internal structure but also facilitated Berzoini's second
round victory: after Cardozo's loss, the majority of his supporters
shifted their backing to Berzoini's candidacy. The December 16
voting also led to Sao Paulo City Councilman Jose Americo's election
as president of the City of Sao Paulo branch of the PT and
Araraquara Mayor Edinho Silva's election as president of the State
of Sao Paulo PT.


3. (SBU) Incumbent PT President Berzoini represents the so-called
"Majority Camp," a faction that has controlled the PT since 1995,
and includes former Ministers Jose Dirceu, Antonio Palocci and other
PT leaders accused of being involvedt in the "mensalao" vote-buying
scandal such as Federal Deputies Jose Genoino and Joao Paulo Cunha.
During the campaign leading up to the PT's second round of voting,
President Lula himself defended Berzoini's candidacy. The "Majority
Camp," which recently relabeled itself the "Building a New Brazil"
faction, will control the process for municipal elections in 2008
and, more importantly, will determine the party's candidate for
Brazil's presidency in 2010. (Note: President Lula has stated that
he will not run for re-election in 2010 although opponents and
supporters alike have not yet discounted a Lula change of heart and
ultimate candidacy for re-election. Should Lula decide to run for
president again, Congress would first have to amend the
Constitution. End Note.)

The Losers
--------------


4. (SBU) Heading into the first round of party elections, Genro's
faction called for internal PT changes and ethical reform. Owing to

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support from intellectuals and artists unsatisfied with the PT's
involvement in several corruption scandals, the "Message to the
Party" faction expected at least to make it to the second round of
party voting. Had it managed to do so, faction members believed
they could count on additional leftist group votes to beat back
Berzoini's "Majority Camp."


5. (SBU) Federal Deputy Tatto represented a group whose most visible
figure is former Sao Paulo Mayor and current Tourism Minister
Suplicy (Note: Tatto, Suplicy, and their followers used o belong
to the "Majority Camp." End Note.) Sulicy's own faction,
nicknamed the "New Course" goup, has strong influence over the
local party mchinery in the city of Sao Paulo. Despite the "New
Course's" loss in the PT elections, it was able o solidify its
position and has now increased it influence within the PT as well
as strengthenedSuplicy's candidacy for Sao Paulo mayor in 2008.
Comment
--------------


6. (SBU) With Berzoini's vicory, the PT elections have solidified
President Lula's dominance over the party and support for a
continuation of his national policies. President Lula and the
"Majority Camp" or "Building a New Brazil" faction will continue to
dictate the PT's path for the next few years despite the fact that
only a year ago a series of corruption scandals seemed to spell
serious trouble for the party. While the scandals soiled the
reputations of many "Majority Camp" leaders - including Berzoini
himself, who was accused of involvement in a 2006 conspiracy that
used a fake dossier to smear Jose Serra, then running his eventually
successful campaign for Sao Paulo governor, - Berzoini's victory
demonstrated that the "Majority Camp" still controls the party and
Brazil's future. End Comment.


7. (U) This cable was cleared by Embassy Brasilia.

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