LULA TOUTS JOBS AND CAMPOS IN NORTHEAST

UNCLAS SECTION 01 OF 02 RECIFE 000060

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: BR PGOV ECON EPET
SUBJECT: LULA TOUTS JOBS AND CAMPOS IN NORTHEAST


1. Summary (SBU) During a visit to the Suape port on September
11, President Lula heaped praise on Governor Eduardo Campos
(PSB),in his fifth visit to Pernambuco this year, fueling
speculation that PT will offer Campos a high profile role -
possibly the vice-presidency - in the upcoming presidential
campaign . With Lula enjoying solid support in the Northeast,
the event did not have any of the trappings of a campaign rally
but felt more like a victory celebration. During events aimed
at highlighting new industrial investment and jobs in the
region, Lula lauded the dynamic growth in the Northeast and the
strength of the Brazilian economy more generally amid the world
financial crisis. Even though the day in Suape was all about the
economy, commentators noted that PT prospective presidential
candidate Dilma Rousseff did not attend due to medical reasons
and was hardly mentioned in the speeches. Dilma's apparent
failure to carry over Lula's high popularity levels in the
Northeast has raised the value of electoral support from Campos,
who has been courted heavily by PSDB leaders Jose Serra and
Aecio Neves in recent months. End summary.

2. (U) President Lula inaugurated the fifth dock in the
Northeast's largest port, and construction of the first Suezmax
tanker at the Atlantico Sul shipyard, and also visited a new
flour mill, all at the Port of Suape industrial zone; he then
inaugurated two federal research labs at the UFPE campus. The
shipyard event featured speeches from Transpetro chairman Sergio
Machado, Estaleiro Atlantico Sul president Angelo Bellelis,
Petrobras CEO Sergio Gabrielli, Pernambuco Governor Eduardo
Campos, capped by an emotional half-hour speech from President
Lula. Machado and Bellelis signed a contract for seven more
tankers (for a total of 22) and Gabrielli announced an order for
28 deep-sea drilling rigs, a $495m investment that should create
8500 additional local jobs. Lula, three of his federal
ministers, Governor Campos, and various federal deputies, CEOs,
trade unionists, and local officials were on stage and in the
audience Lula also recognized officials from Venezuela's PdVSA
and from South Korea's SungDong corporation.

3. (SBU) Minister Dilma Rousseff was originally scheduled to
participate in the events, but was undergoing medical treatment
and was only mentioned once, and not by Lula. Her absence
served as a reminder that she may not be sufficiently healthy
for a vigorous campaign next year and also coincided with the
release of new polls that showed probable PSDB candidate Jose
Serra widening his lead over her - largely due to Dilma's
inability to retain Lula's large advantage in the Northeast .
With the announcement by Marina Silva that she will run with the
Green Party and Ceara's Federal Deputy, former Governor, and
former presidential candidate Ciro Gomes (PSB) publicly
indicating his interest in a run, Dilma's vulnerability has
prompted rumors Lula may turn to Campos to shore up the ticket.
Campos is frequent visitor in Brasilia and traveled to the
capital the week before and the week after the Suape event,
publicly participating in negotiations on infrastructure
investments under the accelerated growth program (PAC) and the
pre-salt royalties revenue-sharing debate.
Lula's Governor

4. (SBU) Lula praised Campos as a strong, new kind of leader
for the Northeast and emphasized the importance of the project
in creating jobs and decentralizing Brazil's economy beyond the
Southeast. Lula significantly referred to the Governor of his
state of birth as an `achado de deus' - or gift from god - for
Pernambuco, citing the fact that Campos puts the national and
regional interest ahead of narrow state concerns, unlike
previous Northeastern governors who bickered over federal funds.
Campos served in Lula's first-term cabinet as Minister of
Science and Technology, and as a federal deputy before his 2006
election as Governor. He is the political heir of his
grandfather, the three-time governor Miguel Arraes, who was a
close political ally of Lula and who was imprisoned and exiled
during the military regime. The 44-year-old Campos is a gifted
politician and strategic campaigner who knows how to employ a
populist touch, while still maintaining his image as a competent
administrator and economist attracting investment to the state.
Investment and Jobs for Pernambuco

5. (U) At the Atlantico Sul event, Lula applauded Gabrielli's
decision to opt for creating a new Brazilian shipyard over
purchasing foreign-produced ships from Korea and congratulated
the thousands of workers in the audience. Petrobras opted to
pay more for the tankers than the cost of buying from Korea as
part of policy to revive domestic shipbuilding. Echoing Campos'
message touting the growth of the NE economy, he said that five
years ago it would have been unimaginable for the sons of
cane-cutters to hold industrial jobs. Lula also used the
campaign-rally-style address to criticize the Washington
consensus and economic policies of previous governments and
lament that fact that the 80s and 90s did not create enough
engineering jobs for the Northeast. He gave credit to
low-income Brazilians' continued consumption for saving the
country from the effects of the global crisis. Lula's overall
theme for the event was that "today is the day Brazilian's start

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believing in themselves."

6. (U) The Lula visit received extensive and positive
television and press coverage in Recife with full-page cover
stories and pages of articles and graphics celebrating the 9000
jobs at the shipyard, and the projection of 2000 more with the
signing of the contract for seven additional tankers, bringing
the total Petrobras order to 22. Lula's characterization of
Eduardo Campos as a godsend and Pernambuco's 6% GDP growth
beating China's (compared to 2% nationally) also garnered wide
coverage, in addition to other expansion at Suape and the new
research labs.
Campos in 2010?

7. (SBU) Comment: A beaming Lula together again with Campos
provided a picture of a successful up-and-coming governor from a
state on the move economically. While it is still perhaps a
long shot that Campos will actually be chosen as vice president,
given the strong alliance between PT and PMDB (and especially
Chamber of Deputies President Michel Temer, most post contacts
confirm that Campos is interested in higher office. Some even
see him as a potential dark horse presidential candidate, if
Dilma stumbles or is unable to run and Ciro fails to gain
traction with PT supporters. Either as a dynamic and popular
Northeasterner to balance a ticket led by Dilma, or as a viable
back-up at the top of the ticket, Campos seems focused on more
than just re-election in Pernambuco. One post contact close to
the governor sees the charismatic Campos as someone who could
run an engaging campaign, holding his own against the PSDB's
Serra one-on-one in the 2010 presidential race. PSDB is aware
of Campos' clout and potential and will also continue courting
him aggressively. End comment.
DEL CORSO