SAO PAULO MAYOR WANTS U.S. INVESTMENT, MAY RUN FOR

UNCLAS SECTION 01 OF 02 SAO PAULO 000767 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/FO, WHA/BSC STATE PASS USTR FOR KATE DUCKWORTH STATE PASS FED BOARD OF GOVERNORS FOR ROBITAILLE NSC FOR TOMASULO TREASURY FOR JHOEK USDOC FOR 4332/ITA/MAC/WH/OLAC USDOC ALSO FOR 3134/USFCS STATE PASS EXIMBANK STATE PASS OPIC FOR DEMROSE, NRIVERA, CMERVENNE USAID FOR LAC/AA E.O. 12958: N/A TAGS: ECON PINR PGOV BR SUBJECT: SAO PAULO MAYOR WANTS U.S. INVESTMENT, MAY RUN FOR RE-ELECTION REF: SAO PAULO 731 SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY SUMMARY -------------- ¶1. (SBU) In an introductory lunch with recently arrived Consul General (CG) and DPO, Sao Paulo Mayor Gilberto Kassab expressed an interest in strengthening the city's cooperative relationship with the USG and said Sao Paulo was interested in attracting U.S. investors for infrastructure projects. He indicated he would also like to invite New York City Mayor Michael Bloomberg to visit Sao Paulo and perhaps develop a formal city-to-city relationship. On the political front, Kassab fixed January 2008 as a deadline for deciding whether he would run for re-election or instead support former Governor and 2006 presidential candidate Geraldo Alckmin. End Summary. ¶2. (U) The Mayor was relaxed throughout, and reflected on the governance challenges posed by a city of over 11 million people and 5.5 million cars, and an annual budget of 21 billion Reals (slightly more than USD 10 billion). He expressed satisfaction with beautification projects, commenting that under his "Clean City" program aimed at reducing visual pollution, some 6,300 billboards have been removed. The Mayor has also devoted considerable effort to cleaning up Sao Paulo's downtown area and such crime-ridden nearby neighborhoods as "Cracolandia" by relocating residents, tearing down abandoned buildings, and cracking down on itinerant street vendors selling legal and other merchandise. WANTED: FUNDS FOR INFRASTRUCTURE -------------- ¶3. (U) CG and Mayor Kassab exchanged views on areas where USG and the municipal government have common interests and may be able to work together, including security and environment. The city government is looking for interested private investors for infrastructure development, and the Mayor mentioned several state and municipal projects. Some improvement projects are designed as public-private partnerships (PPPs),and would be ideal for U.S. investment. For example, a planned rapid light rail system connecting Sao Paulo to Guarulhos International Airport some 30 km away will facilitate the rerouting of flights away from the overcrowded Congonhas airport. The city's mass transit system is being expanded, while the state and city are planning an outer ring road to alleviate congestion. CG commented that he had recently had a similar conversation with Central Bank President Henrique Meirelles (reftel),and that a group of institutional investors from the U.S., including major pension funds like CalPERS, is visiting Rio and Sao Paulo to learn about opportunities in Brazil. ¶4. (U) Kassab asked the Consulate to help him invite New York City Mayor Michael Bloomberg to Sao Paulo, possibly to develop a formal city to city relationship. (Note: Sao Paulo is partnered with Miami Dade County in the Sister Cities International organization, but Kassab did not mention it. End note.) CG replied that the city should put forward a specific program of activities that would interest the Mayor and should think carefully about the timing of any invitation, given next year's electoral calendar. ELECTORAL PROSPECTS -------------- ¶5. (SBU) Kassab, whose approval ratings have improved in recent months, told CG he might run for re-election in October 2008. Recalling that he was elected Vice-Mayor in 2004 on a PSDB-DEM ticket with Jose Serra of the Social Democracy Party of Brazil (PSDB),becoming Mayor in March 2006 when Serra resigned to run SAO PAULO 00000767 002 OF 002 (successfully) for Governor, Kassab said the PSDB and DEM should agree on a single candidate. PSDB former Governor and presidential candidate Geraldo Alckmin appears to be interested and would certainly be a strong, accomplished candidate who could attract a lot of votes. Kassab expected the question to be resolved by January of next year so the candidate can begin campaigning. The most important thing, he said, was to maintain the PSDB-DEM alliance. ¶6. Participants: U.S. Consul General Thomas White Deputy Principal Officer James Story Political officer Peter Higgins Brazil Sao Paulo Mayor Gilberto Kassab Chief of Protocol Brasilia Arruda Municipal Secretary for International Relations Alfredo Cotait Neto Staff Assistant Guilherme Mattos. COMMENT -------------- ¶7. (SBU) This lunch represented an opportunity for the Mayor and the CG to get to know one another, and to build on the existing city-Consulate relationship. They identified a number of common interests and areas of possible cooperation between the municipal government and ConGen Sao Paulo. The Mayor's interest in attracting private investment for infrastructure projects is reflected at all levels of government as awareness grows that high costs and logistical impediments are hurting Brazilian industries and the economy. Much work remains to be done, however, to create the necessary regulatory environment to attract foreign participation. End Comment. WHITE