CONVERSATION WITH OPPOSITION FEDERAL DEPUTY

UNCLAS SECTION 01 OF 04 SAO PAULO 000048

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/BSC
STATE ALSO FOR DS/IP/WHA, DS/DSS/ITA, DS/DSS/OSAC
STATE PASS USTR FOR SULLIVAN/CRONIN
STATE PASS EXIMBANK
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STATE ALSO PASS TDA FOR ANGULO AND MCKINNEY
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E.O. 12958: N/A
TAGS: PGOV PINR BR
SUBJECT: CONVERSATION WITH OPPOSITION FEDERAL DEPUTY


SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY

REF: (A) BRASILIA 107; (B) 06 SAO PAULO 980
(C) 06 SAO PAULO 73

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SUMMARY
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1. (SBU) Summary: Opposition Federal Deputy Arnaldo Madeira
outlined what he considers Brazil's four major problems, which have
the cumulative effect of impeding the country's economic growth. He
also decried the immaturity of Brazil's political class, one symptom
of which is the perennial weakness of political parties, including
his own Brazilian Party of Social Democracy (PSDB),as illustrated
by its weak, half-hearted defense of privatizations concluded during
the 1995-2002 presidency of Fernando Henrique Cardoso (FHC) when
they were attacked by President Lula during the 2006 presidential
campaign. Madeira, who served (2001-2006) as Sao Paulo Governor
Geraldo Alckmin's Chief of Staff until Alckmin left to run
unsuccessfully for President, deemed it extremely unlikely that
Alckmin would be a candidate again in 2010, but predicted that
Alckmin will run for Mayor of Sao Paulo in 2008. Madeira has his
own plans for political reform, beginning with changing to a
single-district electoral system for the Chamber of Deputies. He
characterized Lula as politically weak and predicted the PSDB would
mount a strong and effective opposition during Lula's second term.
On the state level, he identified a few areas where he thought Sao
Paulo Governor Jose Serra could make a difference. End Summary.

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DEPUTY PROPOSES CONGRESSIONAL DISTRICTS
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2. (SBU) Poloff and Political Assistant met January 11 with Arnaldo
Madeira (ref C),who was recently re-elected to a fourth term as
Federal Deputy from Sao Paulo. Madeira, who served as Chief of the
Civil Household to Sao Paulo Governor Geraldo Alckmin, said that
during the campaign he visited 68 cities in this state of 40
million. He complained about Brazil's electoral system, especially
the nationwide and statewide proportional allocation of votes in
legislative races. In reply to poloff's remark that PT politicians
have articulated the same complaint, Madeira noted that he, unlike
the PT, favors a straightforward single-district system such as the
U.S. has, as does former President Fernando Henrique Cardoso
(FHC)(see ref B). Last November, Madeira introduced a proposal for
a constitutional amendment that, if passed, would implement this
change. The statewide, proportional electoral system (in which Sao
Paulo, Brazil's largest state, elects 70 Deputies at large) results
in a disconnect between voters and candidates, he said. Madeira's
proposal differs from the PT's proposal for political reform in that
it opposes party lists. The Lula/PT proposal involves a combination
of single district and party list voting. It also calls for public
financing of political campaigns (which Madeira considers
"impossible"),and a requirement that politicians remain faithful to
their party (a prohibition of the widespread practice of
party-jumping).

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PROBLEMS: EDUCATION, JUDICIARY, MANAGEMENT, POLITICS
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3. (SBU) Madeira identified four major problems that he believes
are holding Brazil back and impeding economic growth:

-- Education. Primary and secondary schools don't work. Children
spend eight years in the public schools and leave functionally

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illiterate.

-- Judicial system. Courts are slow and inconsistent. The same law
can be interpreted in a variety of different ways by different
judges, causing widespread unpredictability as well as concerns
about a lack of independence on the part of some judges.

-- Public administration. The bureaucracy is cumbersome and poorly
structured, leading to gross inefficiencies.

-- Political system. There's no control over representatives (state
and federal deputies, senators) once they're in office; they're not
accountable to voters, who can't even remember who they voted for.
They switch parties at the drop of a hat. Personalism leads to
situations like the notoriously corrupt Paulo Maluf being elected
Federal Deputy with the highest vote total in the country. The
parties lack identity, so a candidate's personal fame and charisma
become the dominant factors.


4. (SBU) Elaborating on the last point, Madeira commented that the
PT is the only real political party in Brazil. Unlike the others,
the PT has a real party apparatus, while the rest, including
Madeira's own PSDB, are mere "membership cards." The PSDB is in the
process of putting together a new program, which should be ready in
the second half of 2007. The election for the party's leadership is
expected to take place late in the year (anytime from September on).
FHC won't himself be a candidate, but he wants a big say in who
replaces Tasso Jereissati as PSDB President.

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WHITHER ALCKMIN?
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5. (SBU) Madeira dismissed the possibility of former Governor
Geraldo Alckmin's running again for President in 2010. He
predicted, however, that Alckmin will run for Mayor of Sao Paulo in
2008, and that the most likely PT candidate was former Mayor
(2001-04) Marta Suplicy. The next four years will see a rivalry
between Sao Paulo Governor Jose Serra and Minas Gerais Governor
Aecio Neves for the PSDB 2010 presidential nomination.

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POLITICAL WEAKNESS ABOUNDS
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6. (SBU) Despite his impressive showing in the second round of the
election, President Lula begins his second term politically weak, in
Madeira's view. Nobody knows what he is going to do or what his
priorities are; he himself likely doesn't know. Lula went on
vacation without naming new members of his Cabinet or articulating a
legislative agenda. During the campaign, Madeira said, Lula's
speeches were devoted to attacking FHC's administration, especially
the privatizations of state-owned companies. The unwillingness of
the opposition candidate - or anyone else in the PSDB - to speak up
and highlight the benefits Brazilians had received from, for
example, privatization of telecoms, illustrates the weakness of the
party.

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CONFUSION OVER CONTEST FOR CHAMBER PRESIDENCY
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7. (SBU) Regarding the current competition for the Presidency of
the Chamber of Deputies, Madeira declined to say whom the PSDB would
support; however, he derided as "exotic" the idea of having a member
of the Communist Party, which has only 13 of the Chamber's 513
seats, as President of the Chamber, as is currently the case. He

SAO PAULO 00000048 003 OF 004


said the Brazilian Democratic Movement Party (PMDB),as the largest
party, would normally get to choose the President, but they made a
deal to support the PT candidate in return for the job of First
Secretary, the Chamber's extremely powerful number two leadership

SIPDIS
position. Thus, the PT and PMDB support Arlindo Chinaglia (PT-SP),
who is challenging incumbent Aldo Rebelo of the Communist Party of
Brazil (PCdoB),whom Lula supports. The fact that Lula's party is
opposing his preferred candidate is emblematic of the current
confused political situation. Everyone wants to avoid the fiasco of
early 2005, when a split in PT ranks between two candidates led to
the election as Chamber President Severino Cavalcanti (PP-PE) of the
so-called "lower clergy" (backbenchers),who was widely regarded as
unqualified for the job and as an embarrassment to Brazil. (Note:
Cavalcanti was forced to resign in September 2005 after being
credibly accused of corruption. End Note.) But they may be headed
for just that. Madeira remarked that his own PSDB is
"meeting-averse;" nobody wants to sit down and have a meeting to
decide a controversial issue where there is a divergence of views,
because they dislike airing their differences, even among
themselves. It's a serious weakness, he acknowledged. Thus, all he
would say for sure was that the PSDB was unlikely to nominate its
own candidate, but rather would have to take sides between Rebelo
and Chinaglia.


8. (U) (NOTE: Later the same day, the press announced that the PSDB
leadership in the Chamber had decided to support Chinaglia, making
him all but unbeatable. They apparently did so with only a straw
poll, of some members, without meeting with anyone. At any rate,
various party leaders close to Geraldo Alckmin and FHC immediately
began howling about "betrayal," and PSDB President Tasso Jereissati,
Senator from Ceara (northeast),called a meeting of the party
leadership to discuss the issue. On January 16, the "group of 30"
-- a newly-formed collection of independent-minded Federal Deputies
from a variety of parties who favor a "third way" -- nominated
Gustavo Fruet, a PSDB member from the southern state of Parana. The
PSDB subsequently withdrew its support from Chinaglia and decided to
support Fruet, throwing the outcome into doubt. The election will
take place February 1, when the new Chamber is seated, with a second
round likely. See ref A and stay tuned. End Note.)

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BRAZIL SHOULD OBEY ITS OWN LAWS
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9. (SBU) Brazil, Madeira said, needs to learn to obey its own laws.
There's a famous saying here, "a lei nao pegou," the law didn't
stick. Laws - good laws - are passed but not implemented or
enforced. The Constitution of 1988 has specific provisions
governing the leadership of the Senate and the Chamber of Deputies
-- Madeira had his secretary bring him the thick tome containing the
Constitution and read passages from it, commenting on the various
ways they are being flouted. He decried the lack of maturity of
Brazil's political institutions and the "cultural backwardness" of
the legal environment.


10. (U) Madeira served several times as the Government's
Vice-leader in the Chamber and briefly as leader during FHC's
administration. He does not, however, anticipate being one of his
party's leaders in this Congress. The PSDB leader, he said, will be
Antonio Carlos Pannunzio (PSDB-SP).


11. (SBU) Lula and his government are very popular with the people,
Madeira said, but his failure to take action on important issues
leaves a vacuum. The PSDB will do what it can to weaken him, and
may succeed, he said; after all, Lula's mandate is not eternal.
Madeira supports social security reform and will continue to call
for it; however, if the majority does not propose it, he will not

SAO PAULO 00000048 004 OF 004


try to push it through Congress from a minority position. As an
opposition Deputy, he noted, his job is to oppose.

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SERRA WILL BE A GREAT GOVERNOR
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12. (SBU) This will be an interesting four-year period, Madeira
predicted, because the elections led to considerable turnover among
Governors and what he called "a renovation of the political elite."
Jose Serra, he prognosticated, will do an excellent job as Governor
of Sao Paulo. He has certain challenges to meet. There are grave
problems, for instance, in the state payroll system, from which
60,000 public-sector employees are paid. If Serra looks in the
right places - and Madeira, based on his experience as Governor
Alckmin's Chief of Staff, has told him where to look - can save 600
million Reals (about USD 275 million) just by eliminating payroll
inefficiencies and abuses. Savings can also be made by improving
the state government's internal communications.

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COMMENT
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13. (SBU) Despite (or perhaps because of) his five years as Geraldo
Alckmin's right-hand man, Madeira does not talk like an Alckmin
insider. He was critical of Alckmin's performance during the
campaign, for example, and gave the impression of being much closer
to FHC, who is still a force in the PSDB. Whichever camp, if any,
he belongs to, Madeira is an able, experienced lawmaker with
strongly-held views on what ails Brazil and some practical ideas on
how to fix it. End Comment.


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

MCMULLEN