

Currently released so far... 12648 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
AORC
AF
AU
ASEC
AMGT
AS
APER
AR
AG
ARF
AJ
AA
AINF
APECO
AODE
ABLD
AMG
ATPDEA
AE
AEMR
AMED
AGAO
AFIN
AL
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
AID
ASCH
AM
AORL
ASEAN
APEC
ADM
AFSI
AFSN
ADCO
ABUD
AN
AY
AIT
AGR
ACOA
ANET
ASIG
AMCHAMS
AGMT
AADP
ADPM
ATRN
ALOW
ACS
APCS
AFFAIRS
ADANA
AECL
ACAO
AORG
AROC
AO
ACABQ
AX
AMEX
AFGHANISTAN
AZ
AND
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AC
AUC
ASEX
AER
AVERY
AGRICULTURE
AFU
BR
BTIO
BY
BO
BA
BU
BL
BN
BM
BF
BEXP
BK
BG
BB
BTIU
BBSR
BRUSSELS
BD
BIDEN
BE
BH
BILAT
BC
BX
BT
BP
BMGT
BWC
CS
CA
CH
CD
CO
CE
CU
CVIS
CASC
CJAN
CI
CPAS
CMGT
CDG
CIC
CAC
CBW
CWC
COUNTER
CW
CT
CY
CNARC
CACM
CG
CB
CM
CV
CIDA
CLINTON
CHR
COE
CR
CIS
CDC
CONS
CF
CODEL
COPUOS
CIA
CFED
CARSON
CL
CROS
CAPC
CTR
CACS
CN
CBSA
CEUDA
COM
CONDOLEEZZA
CICTE
COUNTRY
CBE
CKGR
CVR
COUNTERTERRORISM
CITEL
CLEARANCE
CARICOM
CSW
CITT
CDB
CJUS
CTM
CAN
CLMT
CBC
EAID
ECON
EFIS
ETRD
EC
ENRG
EINV
EFIN
EAGR
ETTC
ECPS
EINT
ES
EIND
EAIR
EU
EUN
EG
EPET
ELAB
EWWT
EMIN
ECIN
ESA
ER
ETRDEINVECINPGOVCS
EAIG
ET
ETRO
ELTN
EI
EN
EUR
EK
EUMEM
EPA
ENGR
EXTERNAL
EUREM
ELN
EUC
ENERG
ENIV
EZ
ERD
EFTA
ETRC
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ESENV
ENNP
ENVI
ETRDECONWTOCS
ECINECONCS
EFINECONCS
ELECTIONS
ENVR
EXIM
ERNG
ECA
EINVEFIN
ETC
EAP
ECONOMY
EINN
ECONOMIC
EXBS
ECUN
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EAIDS
EREL
EINVETC
ECONCS
ETRA
IC
IV
IAEA
IR
IO
IT
IN
IS
IZ
IMO
IPR
IWC
ICAO
ILO
ID
ICTY
ICJ
INMARSAT
INDO
IL
IMF
IRS
IQ
IA
ICRC
IDA
IAHRC
IBRD
ISLAMISTS
IGAD
ILC
ITU
ITF
INRA
INRO
IDP
ICTR
IEFIN
IRC
ITRA
ITALY
INRB
INTELSAT
IBET
IRAQI
ISRAELI
IIP
ITPGOV
ITALIAN
INTERNAL
INTERPOL
IEA
INR
IZPREL
IRAJ
IF
ITPHUM
ISRAEL
IACI
KBTR
KPAO
KOMC
KCRM
KDEM
KHIV
KBIO
KTIA
KMDR
KNNP
KSCA
KTIP
KWMN
KIPR
KCOR
KRVC
KFRD
KPAL
KWBG
KE
KTDB
KUNR
KSPR
KJUS
KGHG
KAWC
KCFE
KGCC
KOLY
KSUM
KACT
KISL
KTFN
KFLU
KSTH
KMPI
KHDP
KS
KHLS
KMRS
KID
KN
KU
KAWK
KSAC
KCOM
KAID
KIRC
KWMNCS
KMCA
KNEI
KCRS
KPKO
KICC
KPOA
KV
KDRG
KIRF
KSEO
KVPR
KSEP
KTER
KBCT
KFIN
KGIC
KCIP
KZ
KG
KWAC
KRAD
KPRP
KTEX
KNAR
KPLS
KPAK
KSTC
KFLO
KSCI
KIDE
KOMS
KHSA
KSAF
KPWR
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KFSC
KRIM
KVRP
KENV
KNSD
KCGC
KDDG
KPRV
KTBT
KWMM
KMFO
KMOC
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KPAI
KO
KVIR
KREC
KX
KR
KCRCM
KBTS
KOCI
KGIT
KNUP
KPAONZ
KNUC
KNNPMNUC
KERG
KTLA
KCSY
KTRD
KNPP
KJUST
KCMR
KRCM
KCFC
KCHG
KREL
KFTFN
KLIG
KDEMAF
KICA
KHUM
KSEC
KPIN
KESS
KDEV
KWWMN
KOM
KWNM
KRFD
KMIG
KRGY
KIFR
MARR
MOPS
MASS
MX
MNUC
MCAP
MO
MR
MEPP
MTCRE
MAPP
MEPN
MZ
MT
ML
MA
MY
MIL
MD
MASSMNUC
MU
MK
MTCR
MUCN
MAS
MEDIA
MAR
MC
MI
MQADHAFI
MPOS
MTRE
MASC
MG
MARAD
MRCRE
MW
MP
MOPPS
MTS
MLS
MILI
MEPI
MEETINGS
MERCOSUR
MCC
MIK
MAPS
MV
MILITARY
MDC
NATO
NZ
NL
NO
NK
NU
NPT
NI
NG
NEW
NSF
NA
NPG
NSG
NE
NSSP
NS
NDP
NSC
NAFTA
NH
NV
NP
NPA
NSFO
NT
NW
NASA
NORAD
NATIONAL
NGO
NR
NIPP
NZUS
NC
NRR
NAR
NATOPREL
OEXC
OTRA
OPRC
OVIP
OAS
OIIP
OSCE
OREP
OPIC
OFDP
OMIG
ODIP
OVP
OSCI
OIC
OECD
OIE
OPDC
ON
OCII
OPAD
OBSP
OFFICIALS
OPCW
OHUM
OES
OCS
OTR
OSAC
OFDA
PGOV
PREL
PM
PHUM
PTER
PINR
PINS
PREF
PARM
PL
PK
PU
PBTS
PBIO
PHSA
PE
PO
PROP
PA
PNAT
POL
PLN
POLITICAL
PARTIES
PCUL
PAK
PGGV
PAO
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PAS
PGIV
PHUMPREL
PCI
PG
POGOV
PHUMPGOV
PEL
POLITICS
POLICY
PINL
PP
PREO
PAHO
PBT
PMIL
POV
PRL
PDOV
PTBS
PRAM
PREFA
PSI
PAIGH
POSTS
PALESTINIAN
PARMS
PROG
PTERE
PRGOV
PORG
PS
PGOF
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PINF
PNG
PFOR
PUNE
PGOVLO
PHUMBA
PSEPC
PNR
POLINT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PROV
PGOC
PY
PHUH
PF
PHUS
RU
RS
RO
RW
RP
RFE
REGION
REACTION
REPORT
ROOD
RCMP
RM
RSO
ROBERT
RICE
RSP
RF
RIGHTS
RIGHTSPOLMIL
RUPREL
RELATIONS
SENV
SU
SCUL
SOCI
SNAR
SL
SW
SMIG
SP
SY
SA
SHUM
SZ
SYRIA
SF
SR
SO
SARS
SN
SC
SIPRS
SI
SYR
SEVN
SG
SPCE
SK
STEINBERG
SH
SNARCS
SAARC
SCRS
SENVKGHG
SAN
ST
SIPDIS
SNARIZ
SNARN
SSA
SPCVIS
SOFA
SEN
SANC
SWE
SHI
TW
TU
TBIO
TSPL
TPHY
TRGY
TC
TT
TSPA
TINT
TERRORISM
TX
TR
TS
TN
TD
TH
TIP
TNGD
TI
TZ
THPY
TP
TBID
TF
TL
TV
TK
TO
TRSY
TURKEY
TFIN
TAGS
UN
UK
UNSC
UNGA
US
UNESCO
UP
UNHRC
UNAUS
USTR
UNDP
UNEP
UY
UNCHR
UG
UZ
UNPUOS
USEU
UNMIK
UNDC
UNICEF
UV
UNHCR
UNCHC
UNCSD
USOAS
UNFCYP
USUN
USNC
UNIDROIT
UNO
UNCND
USPS
USAID
UE
UNVIE
UAE
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
Browse by classification
Community resources
courage is contagious
Viewing cable 04BRASILIA572, WORST OF BRAZILIAN SCANDAL HAS PASSED
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #04BRASILIA572.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
04BRASILIA572 | 2004-03-10 20:20 | 2011-02-23 00:00 | CONFIDENTIAL | Embassy Brasilia |
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000572
SIPDIS
DEPT FOR WHA/BSC
E.O. 12958: DECL: 03/10/2014
TAGS: PGOV ECON SOCI KCRM BR
SUBJECT: WORST OF BRAZILIAN SCANDAL HAS PASSED
REF: A. BRASILIA 402
¶B. BRASILIA 458
¶C. BRASILIA 564
¶D. SAO PAULO 378
Classified By: POLOFF RICHARD REITER, FOR REASONS 1.5 B AND D.
¶1. (C) SUMMARY. On March 4, Brazil's Workers' Party (PT) quashed efforts to set up a congressional inquiry (CPI) into the gaming sector and the "Waldomiro Diniz" scandal (refs A,B). This, coupled with the fact that no new allegations pointing to wrongdoing by PT leaders have emerged in recent days, suggests that the worst of the scandal has passed. Lula's Chief of Staff, Jose Dirceu, was emboldened to give a defiant press interview in VEJA magazine. The post-mortem shows that the winners include PMDB Senator Jose Sarney, who gave key support to the administration in quashing the CPI. Losers, aside from Dirceu, include PT Senator Aloizio Mercadante and PL Senator Magno Malta. Other big losers are the nation's more than 120,000 bingo parlor employees put out of work when Lula closed the parlors February 20.
¶2. (C) And of course the Workers' Party has lost political capital. It is too early to say whether the scandal will hurt the PT in October's municipal elections, but it is likely to slow the legislative agenda in an already compressed congressional year. The PT may also emerge more dependant on its coalition partners (who will extract maximum benefits in return), particularly the PMDB, which was instrumental in saving the PT from worse disgrace. The PT's poor response to the crisis is in part due to its inexperience with ethics scandals, but the party is likely to discover that learning these lessons is politically expensive. END SUMMARY.
CONGRESSIONAL INQUIRY GETS PUT IN A DRAWER ------------------------------------------
¶3. (SBU) On March 4, three weeks after the "Waldomiro Diniz" scandal broke --in which a senior advisor on President Lula's staff was caught soliciting bribes from a numbers racketeer-- the Workers' Party used a parliamentary tactic to quash efforts to establish a congressional inquiry (CPI). The CPI was sponsored by Senator Magno Malta, of the coalition's Liberal Party. On March 4, Malta filed his petition with the Senate leadership, but the fix was already in. Senate President Jose Sarney, a leader of the coalition's PMDB party, went ahead and authorized the CPI, but then neither the PT nor the PMDB nominated their members to the committee. Without a quorum, the committee could not be established and, in the lexicon, was "put in a drawer". Investigations by the Federal Police, the Federal Prosecutor, and the Rio state assembly still continue. With the CPI threat gone, and the fact that no new allegations against PT leaders have emerged in recent days, the worst of the scandal appears to have blown over.
JOSE DIRCEU FINALLY GOES PUBLIC -------------------------------
¶4. (U) In fact, Lula's embattled Chief of Staff Jose Dirceu, for whom Waldomiro Diniz worked, felt emboldened enough to make his first public statement when he gave a long interview for the March 10 issue of VEJA magazine. Defiant, Dirceu wondered why the opposition politicians who now say they have known about Diniz's malfeasance for over a year did not raise the issue earlier. Saying that he made a mistake in trusting Diniz but committed no crime, Dirceu confirmed that Lula refused his offer to resign. He insisted that the scandal is not an "institutional crisis" and that the Workers' Party maintains its "standard of ethical behavior and transparency".
LEGISLATIVE AGENDA A TOUGH SELL -------------------------------
¶5. (C) The Lula administration and the PT have not emerged unscathed. Lula's personal approval remains at a teflon 60%, but his government's popularity has slipped to 38% (ref C). Even PT politicians tell us that the administration will have to work harder to sell its bills in Congress and may have to offer more pork to coalition allies. Congress is now turning to its legislative agenda (one PT Federal Deputy told us that when the PT caucus in the lower house held its weekly meeting on March 9, crisis management was not even on the agenda), which in the coming weeks will include the Energy Model, Public-Private Partnerships, a Bankruptcy Law, follow-on legislation for last year's tax and pension reforms and possibly judicial reforms. (A bill to reform campaign financing, which got an early boost from the scandal, has once again been put on the back burner.) The legislative plate is full of tough bills, and with municipal elections set for October, Congress will essentially stop working when it goes into recess on June 30.
WINNERS... -----------
¶6. (SBU) The post-mortem on the scandal is still being written, but there are some clear winners and losers. Among the winners are Senate President Jose Sarney (PMDB) who provided sound advice and procedural support in helping the administration quash the CPI. Rumors that Sarney will be rewarded by getting to name the next head of Electrobras have resurfaced, and it is rumored that the PT will support Sarney's bid to amend the constitution to allow him to remain as Senate President through 2006. Similarly, leading PMDB Senator Renan Calheiros and Chamber Speaker Joao Paulo Cunha (PT) worked hard on the administration's behalf and will expect recognition. Meanwhile, former-Rio Governor Anthony Garotinho, who came in third in the 2002 presidential elections, is positioning himself for another presidential run in 2006. Though Garotinho heads Rio's PMDB branch --and the PMDB is part of Lula's coalition-- he did not miss the opportunity to slam the administration over the Diniz scandal.
...AND LOSERS -------------
¶7. (C) The list of losers from the Diniz scandal must start with Chief of Staff Jose Dirceu. He appears to have dodged the bullet, in that there is no evidence that he was personally involved in corrupt activities. But Diniz worked for him, and there are still unanswered questions about Dirceu's role in both the Diniz and Celso Daniel (ref D) cases. Dirceu is convinced that another member of Lula's inner circle, Communications Secretary Luiz Gushiken, tried to undermine him with tactical leaks over the past weeks, and Lula reportedly had to mediate their dispute. In a March 2 poll (ref C), two-thirds of Brazilians said Dirceu should step down, either temporarily or permanently, from his post.
¶8. (SBU) Leading PT Senator Aloizio Mercadante also came out badly. It was he who gave disastrous tactical guidance to the PT caucus in the Senate that nearly resulted in the CPI being established. (There is some speculation that Mercadante may be replaced by Calheiros as the coalition's floor leader in the Senate.) Liberal Party Senator Magno Malta, leader of the PL's Senate caucus, was badly damaged by his insistence on requesting the CPI, despite the fact that the administration and PL leadership were opposed. (The PL is a coalition member and the party of Vice President Alencar.) Malta gave a tearful mea culpa on the Senate floor on March 9, but he may be forced out of his leadership position, if not out of the party altogether.
BINGO PARLORS OUT OF LUCK -------------------------
¶9. (C) Bingo parlors are losers, and an estimated 120,000 or more gaming employees are out of work. On February 20, Lula issued a decree closing all bingo games and slot machines in Brazil. Bingo was originally legalized in 1993 to allow gaming houses to affiliate with sports clubs and donate 7% of their revenues to the clubs' upkeep. However, many clubs complain that they never received the promised bingo revenues. PT Federal Deputy Jose Eduardo Cardozo told us the system is "a fraud", and the bingo parlors are simply money laundering operations. PT floor leader Arlindo Chinaglia assured us that Congress will support Lula's decree (which must be approved by Congress to remain in force), and no thought is being given to reopening the parlors anytime soon.
WORKERS' PARTY IMAGE TARNISHED ------------------------------
¶10. (C) And of course the Workers' Party has lost political capital. It is too early to say whether the scandal will have an impact on October's municipal elections, and there are still seven months for the party to recover, but the declining popularity of the PT-led administration indicates that the party has suffered a black eye. The PT's code of ethics is more than just image (of 76 members of Congress who are currently defendants in criminal or electoral cases, none is a PT member), but the spate of bad press is damaging, and PT candidates will be hard-pressed to point fingers at their opponents' misdeeds in the election run-up.
¶11. (C) The PT showed itself inexperienced in crisis management, precisely because it is rarely faced with ethical crises. The fact that it was saved by behind-the-scenes support from figures like Senators Jose Sarney and Antonio Carlos Magalhaes, both widely perceived as ethically-challenged, but who have therefore developed superb crisis management skills, is surely not lost on the public or the Workers' Party rank-and-file. The PT learned some tough lessons that it hoped never to need, and finds itself diminished as a result.
COMMENT - PT NOW A HOSTAGE? --------------------------- 12. (C) Pundits here wonder whether, and to what extent, the PT now finds itself held hostage by its coalition allies. The large PMDB party, in particular, is never shy about demanding pork, the right to fill federal job vacancies, compromises on controversial legislation, and now deals on local-level coalitions in the upcoming elections. One PT Deputy told us with a sigh that campaign finance reform and labor reform will not pass this year because the PT will have to limit its exposure on controversial bills. There still may be time and political capital to pass important legislation, but the expectations have been sharply reduced by the scandal. This is surely not how Lula and the PT wanted to begin their second year.
VIRDEN