Cablegate: Lula Finally Gets a Break - Congress Supports His

Published: Wed 23 Jun 2004 08:15 PM
This record is a partial extract of the original cable. The full text of the original cable is not available.
E.O. 12958: N/A
1. (SBU) SUMMARY. Brazilian President Lula da Silva broke
his losing streak on June 23 when the Chamber of Deputies
voted to ratify his Presidential Decree raising the minimum
wage from R$240 to R$260 (about US$ 87) per month. This vote
follows a series of defeats Lula has suffered in Congress,
caused by a fractured coalition and coming on top of polls
showing his popularity has slipped. While this vote does not
fully restore Lula's political authority, it should help end
the worst phase of his presidency --a losing streak that
began on February 13 when the "Waldomiro scandal" broke,
revealing that one of Lula's advisors had solicited bribes
from a numbers racketeer. With municipal elections coming up
in October, Lula is surely breathing a sigh of relief that he
may be able to refortify his coalition and begin queuing up
his legislative agenda for late 2004 and 2005. END SUMMARY.
2. (SBU) On June 23, the Brazilian Chamber of Deputies voted
272-172 to ratify a Presidential Decree issued by President
Lula on April 30 that raised the minimum wage from R$240 to
R$260 per month. This raise was criticized both inside and
outside Lula's coalition for being so small it barely covers
inflation. Presidential decrees must be approved by
Congress, and this one had a torturous path to ratification
that carried the administration on a six-week roller coaster
ride. Far more than the numerical level of the minimum wage
was at stake: the strength of Lula's eight-party coalition
was being tested, and the opposition sensed his weakness and
began pressing to defeat his legislative agenda. A loss on
the minimum wage would have called into question the
President's ability to pass any future bills. Lula himself
lobbied hard for passage and deployed his cabinet ministers
and political advisors to work the corridors of Congress on
his behalf.
3. (SBU) On June 2, Lula's coalition in the Chamber beat back
an opposition proposal to raise the wage as high as R$275 per
month (a raise that Lula calls fiscally impossible). But
when the measure went to the Senate on June 17, several
administration allies either abstained or voted for the
opposition's R$275 proposal, suggesting Lula had lost
legislative authority in the upper house. The measure then
went back to the Chamber for the final decision, and the June
23 vote ratifying the Lula-decreed R$260 wage allows the
administration to breathe a sigh of relief.
4. (SBU) The matter is now closed. Candidates for Lula's
Workers' Party (PT) running for local office in the October
elections are certain to be criticized for not endorsing a
higher wage, but this had become a must-win battle for the
administration. As it stands, Lula's authority in Congress
is bent but not broken. His coalition in the Chamber is more
dependable than in the Senate, and Chamber Speaker Joao Paulo
Cunha (PT-Sao Paulo) is certain to reap Lula's gratitude
(pundits say he may get a cabinet slot in the next
Ministerial shuffle). Lula will live to fight another day in
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