Cablegate: Brazil Internal Politics Update, 21-25 August 2006.

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RUEHSG/AMEMBASSY SANTIAGO 5722

UNCLAS SECTION 01 OF 02 BRASILIA 001798

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON BR
SUBJECT: BRAZIL INTERNAL POLITICS UPDATE, 21-25 AUGUST 2006.

REF: BRASILIA 1744 AND PREVIOUS

1. (U) SUMMARY. The Chamber of Deputies began proceedings against
67 of its own that could result in expulsion from Congress and
several years' banishment from political life. They were implicated
in the "Bloodsuckers" scandal involving rigged ambulance contracts
and kickbacks for congressional supporters. The electoral court in
Rio de Janeiro disqualified several incumbent federal deputies
because of accusations against them in the scandal. Lula's
government has taken steps to keep ample benefits flowing to
retirees and the poor in this pre-electoral period. A new drug law
gets tougher on dealers, sends users to treatment, not jail. END
SUMMARY.

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Chamber of Deputies Acts against 67 Deputies
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2. The Chamber of Deputies opened its proceedings against 67
deputies implicated in the "Bloodsuckers" corruption scandal
involving overpriced ambulance purchases and kickbacks to members of
congress. The accused were named by a Parliamentary Committee of
Inquiry (CPI). The investigation now moves to the Chamber of
Deputies Ethics Council. They are charged with violation of
parliamentary decorum and could be expelled from congress and banned
from electoral office for a period of time to be determined by the
congress. The overwhelming majority of the accused are candidates
for re-election. Two accused deputies escaped the Council's action
by resigning from Congress. The process will take time: Ethics
Council chairman Ricardo Izar predicted the Council will finish only
20 cases by year's end.

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Court Disqualifies Accused Candidates
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3. (U) The Regional Electoral Court in Rio de Janeiro (TRE-RJ)
disqualified four federal deputies running for re-election to the
Chamber of Deputies because they were implicated in the
"Bloodsuckers" scandal. A fifth candidate, a soccer club owner and
former federal deputy, was also disqualified for past corrupt
allegations. One accused federal deputy was allowed to continue her
campaign. One of the five TRE-RJ judges voted against the
disqualifications because none had been convicted of a crime. The
TRE of Sao Paulo has also barred numerous would-be candidates from
seeking office, mainly for irregularities in campaign documents
presented. TRE rulings are subject to appeal before the Superior
Electoral Tribunal. Many media pundits praised the moves as steps
forward in ending impunity for corrupt politicians, though there are
questions regarding the constitutional aspects of the decision. In
any case, the TRE actions fit into a pattern of growing
institutional strength that can be seen in a few prominent
governmental bodies, notably the electoral courts, the Federal
Police and the Federal and state-level Public Ministries. These
organs, along with a professional and vigilant media, have
investigated and sought sanctions in many of the myriad scandals of
the past year, and their increasing efficacy is one encouraging
aspect of Brazil's battle with corruption.

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Lula Orders September Pension Bonus
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4. (U) President Lula has drawn fire from critics, including Marco
Aurelio Mello, president of the Superior Electoral Tribunal, for
decreeing an early half-payment of the "thirteenth month" bonus for
pensioners in the federal pension system (INSS, equivalent to U.S.
Social Security), to be disbursed just two weeks before national
elections. The "thirteenth month" bonus is normally disbursed in
December. Mello said the "sack of goodies is always opened around
election time and that is not good for democracy." At the same
time, new figures show a sharp rise in public spending; leading
daily O Estado de S. Paulo suggested an electoral motive. Federal
spending in July rose 12.9 percent over June, and in the
January-July period was up 14.8 percent over the same previous
period. (Government income rose only 11.1 percent during
January-July.) The government also announced that it is relaxing the
criteria for families under threat of suspension from the Bolsa
Familia program benefits. Without the rule change, 164,000 families
would have been removed from the program in September, according to
press reports.

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Lula Signs New Drug Law; Tough on Dealers, Easy on Users

BRASILIA 00001798 002 OF 002

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5. (U) President Lula signed into law a new drug law that increases
penalties for dealers and establishes alternative sentences such as
counseling and community service for users. The new law could
reinforce the president's weak credentials on crime and the drug
problem.

6. (U) Polling shows continuing small upticks in Lula's re-election
chances, and opponent Geraldo Alckmin is trying to be heard amid the
din of corruption reporting, which grabs page one headlines day
after day. The publicity surrounding the corruption scandal should
work in Alckmin's favor, but it is not. Lula's Teflon continues to
deflect, and the approval rating of his government has hit a record
high of 52 percent, according to a Datafolha poll.
CHICOLA

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