US embassy cable - 05BRASILIA2219

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 002219 
 
SIPDIS 
 
TREASURY FOR PARODI, STATE PASS TO USTR AND USAID/LAC/AA 
 
E.O. 12958: DECL: 08/17/2015 
TAGS: PGOV, PREL, ECON, BR, Domestic Politics 
SUBJECT: BRAZIL CORRUPTION SCANDAL UPDATE: JOSE DIRCEU 
REFLECTS 
 
REF: A. BRASILIA 2082 
     B. BRASILIA 1979 
     C. BRASILIA 1874 
     D. BRASILIA 1973 
     E. BRASILIA 1631 
     F. BRASILIA 2025 
     G. BRASILIA 2150 
 
Classified By: Classified by Political Counselor Dennis Hearne. 
Reasons 
 1.4 (b)(d). 
 
1. (C) Introduction:  Per refs, Jose Dirceu, formerly the 
most powerful minister in President Lula da Silva's cabinet 
and currently a federal deputy subject to possible revocation 
of his congressional status, is a central figure in the 
ongoing scandals roiling the government and PT Party.  As 
such, at present he is "too hot" for direct contacts with 
mission personnel.  However, PolCouns, with COM approval, 
decided to capitalize on the visit this week to Brasilia of 
WHA Special Advisor Bill Perry -- who was in Brazil in a 
semi-private capacity and has known Dirceu for several years 
personally -- to gauge Dirceu's views on the political crisis 
and his own predicament.  Perry agreed to seek out Dirceu, 
and met privately with him for breakfast at Dirceu's 
apartment in Brasilia on 17 August.  Perry subsequently 
reported the following points and impressions from that 
conversation, and contributed to the comment in para 6. 
 
2. (C) Dirceu seemed well and fit, despite the stress of 
recent weeks. He said he had disciplined himself to take 
regular exercise and have sufficient contact with his family, 
and he is sleeping reasonably well.  But Dirceu seemed much 
less combative than in a meeting with Perry in late June, 
just after his resignation as Minister of the Casa Civil. 
Most remarkably, Dirceu claimed he had resigned himself to 
the fact that he will be "cassado" -- i.e., suffer the 
revocation of his congressional seat and right to run again 
for any office for an eight year period -- probably by 
November. 
 
3. (C) Dirceu predictably considered this unjust and defended 
his own record. His line was that the post-2002 PT leadership 
came up with the "hair-brained and perverse" scheme for 
illegal financing that is at the center of current 
investigations in response to pressures from small, mercenary 
allied parties -- the PTB, PL, PP -- and from 2002 campaign 
media specialist Duda Mendonca. In this version, Dirceu had 
nothing to do with these arrangements.  Indeed, ex-PT 
treasurer Delubio Soares was "not his guy" -- Soares came 
from the labor movement -- and Dirceu never wanted him in 
such a sensitive post. Dirceu also criticized as weak both 
ex-PT President Jose Genoino and acting PT president Tarso 
Genro (who currently is trying to wrest control of the PT 
from the powerful Dirceu faction). 
 
4. (C) This defense was interwoven with criticisms by Dirceu 
of the Lula government. Lula does not do much on his own 
initiative, Dirceu claimed, and he said Lula should have paid 
more attention to cultivating legitimate corporate funding 
sources in the wake of 2002 elections. He also should have 
brought the PMDB and other large, responsible parties into 
the government earlier and rewarded them with ministerial 
posts. Dirceu said he had wanted to finish up with the 
ministerial re-shuffle and go back to Congress long before he 
could get the president to do anything about it. Importantly, 
Lula is mishandling the current crisis, Dirceu opined. 
 
5. (C) As a result of these failings and the unfolding 
debacle, Dirceu now believes that Lula is unlikely to win 
re-election next year.  Indeed, Dirceu said he thinks Lula 
may not run "if he gets depressed."  Dirceu views a PSDB 
candidate as the probable victor (Sao Paulo Mayor Jose Serra 
was his forecast), but he does not think a PSDB-led 
administration will be able to govern effectively.  Dirceu 
was more optimistic about the future of the PT, at least 
after a few years of rehabilitation and recovery. Dirceu said 
he thinks his faction will win again in the September party 
election, thus continuing its domination of the PT. 
 
6. (C) Comment. Dirceu disassociated himself utterly from any 
blame for the scandals engulfing his party and Lula 
government, and sustained the "I knew nothing" defense of his 
recent testimony before the congressional ethics committee. 
Both positions are widely regarded as ludicrous by Brazilian 
politicians and journalists who have followed Dirceu's career 
and understand both the extent of his power within the GOB as 
a minister and the iron grip he exerts over the PT even 
today. We share in the skepticism.  Beyond that, the 
sincerity of Dirceu's professions about his own future may be 
doubted, given his long and extraordinary personal history of 
a single-minded pursuit of power. But, to be fair, perhaps he 
is being realistic. It looks highly likely that Dirceu will, 
in fact, lose his congressional mandate and political rights. 
 Further, the wounds inflicted by the crisis on Lula -- who 
is Dirceu's creature, in many ways -- together with new polls 
that show Lula losing to PSDB candidates, suggest Lula's era 
may be waning.  For now the only things for Dirceu to do are 
try to avoid further serious charges, preserve a measure of 
behind-the-scenes influence through domination of the PT by 
his faction, and, at 59, make the most of the rest of his 
life. On this, he mused on some specific possibilities, 
including leaving Brazil for several months to go to the US 
for the purpose of learning English and writing a book. 
Dirceu's departure from the political scene would be a 
watershed, closing out a distinctive chapter in modern 
Brazilian politics. Yet we cannot quite bring ourselves to 
believe that this ruthless and brilliant chameleon is willing 
to go so quietly into the night -- not just yet. 
 
DANILOVICH