US embassy cable - 04BRASILIA2052

UNCLAS BRASILIA 002052 
 
SIPDIS 
 
DEPT FOR WHA/BSC 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, SOCI, BR, Domestic Politics 
SUBJECT: LULA'S POPULARITY TICKS UPWARD ON ECONOMIC OPTIMISM 
 
REF: SAO PAULO 1138 
 
1.  SUMMARY.  A CNT/Sensus poll released August 10 in Brazil 
shows that President Lula da Silva's approval ratings have 
ticked upwards to 58%, after slipping steadily since he took 
office.  Similarly, the GoB's approvals, which tend to run 
lower than Lula's personal numbers, also showed signs of 
recovery, jumping to 38%.  The uptick seems to be based on 
incipient signs of an economic recovery and an improved 
political climate.  If the trend continues in the coming 
months, it could strengthen Lula's legislative hand in 
Congress and improve the prospects for Workers' Party (PT) 
candidates in October's nationwide municipal elections.  END 
SUMMARY. 
 
2.  A CNT/Sensus poll released in Brazil on August 10 shows 
that President Lula's personal approval ratings improved by 
four points, to 58%, since June.  Still substantially lower 
than the 84% approval he enjoyed when he took office in 
January 2003, the increase suggests that Lula is recovering 
from his administration's nadir in early 2004.  Similarly, 
the GoB's approvals improved by nine points to 38%. 
 
APPROVAL RATINGS - CNT/SENSUS POLLING 
 
      1/03     8/03     2/04     6/04     8/04 
      ---------------------------------------- 
Lula   84%      77%      65%      54%      58% 
GoB    57%      48%      40%      29%      38% 
 
 
3.  The nadir of this administration began in February 2004 
with the "Waldomiro scandal", which weakened the government 
and led to a series of well-publicized defeats in Congress 
and acrimonious debate over the minimum wage that continued 
through June.  At the same time, the economy --and 
particularly employment figures-- were stubbornly sluggish 
despite a year of fiscal austerity.  But over the past 
several weeks the economic news has begun to improve with 
strengthening wage and employment figures.  The poll revealed 
that respondents' satisfaction with health and education has 
also ticked up since June, and 46% of respondents believe the 
economy's performance will improve their quality of life. 
 
4.  Paralleling Lula's improvement, Marta Suplicy, the 
Workers' Party (PT) incumbent running a tough campaign to 
keep her seat as Sao Paulo's Mayor, also saw her numbers 
strengthen, according to Datafolha polling (reftel).  Marta 
was trailing challenger Jose Serra (PSDB) by fifteen points 
in May but has taken the lead by 30%-25%, with Paulo Maluf 
dropping to 19%.  However, if no candidate wins a majority in 
the October 3 voting, a second round will be held on October 
31, and Serra still leads Marta in second-round projections 
by 52-38%.  Nationwide, the PT is running competitively in 
the mayoral races in at least 12 of the 26 state capitals. 
 
5.  COMMENT.  Lula and the GoB are surely breathing a sigh of 
relief that they seem to have emerged from the slump of early 
2004.  This trend may be a based on a combination of factors: 
 the economy's finally responding to eighteen months of 
fiscal austerity, the government's regaining its traction 
after the Waldomiro scandal, or --as some pundits suggest-- 
now that Lula's honeymoon has ended, the public has reduced 
its unrealistically high expectations for his administration. 
 Of course, this confidence is worth little unless it carries 
some political agency.  The true test of Lula's recovery is 
whether it translates into victories in the October municipal 
elections and whether it strengthens the administration's 
hand when Congress gets back to business in November. 
DANILOVICH