families this year, or (assuming two children per family) roughly 44 million Brazilians. This, combined with the increase in the minimum wage, the rise of the Real against the US dollar, and the fall in the price of certain basic food staples, make the poor much better off. Paradoxically, many of the rich, especially bankers and other major financial players, have also benefited from Lula's policies. 4. (SBU) It is the middle class that has suffered from both an increasing tax burden and the loss of professional-level jobs. In SAO PAULO 00000689 002 OF 004 truth, Temer continued, it is difficult to be optimistic about Brazil's economic future. The fact of 11 million families eligible for Bolsa Familia handouts implies a minimum of 44 million people in abject misery in Brazil. He described a recent event he had attended sponsored by the Institute for Industrial Development Studies (IEDI), where Minister of Development, Commerce, and Industry Luiz Fernando Furlan delivered an upbeat speech. When challenged by a member of the audience with a few hard questions and statistics, Furlan, who has himself been at times a tough critic of the GoB's economic policies, was at pains to respond. Brazil faces serious challenges in fostering growth, stimulating productivity, attracting investment, improving infrastructure, and reducing inequality; however, Lula's sleight of hand has made many voters all but unaware of these growing problems. -------------------------- ALCKMIN'S LACK OF CHARISMA -------------------------- 5. (SBU) Meanwhile, Alckmin is simply stuck. Temer believes that since inheriting the governorship from Mario Covas in 2001, Alckmin has provided honest, decent, competent government to Sao Paulo. However, in a country that relishes superlatives, he did not champion any great works, and his accomplishments are not visible. Alckmin is not personally aggressive or charismatic and is not given to showmanship, so he didn't leave a distinctive mark on the state. By way of comparison, Orestes Quercia (ref C), Governor of Sao Paulo from 1987 to 1990, was a controversial (many say corrupt) figure, but he definitely left his mark on the state in the many streets and highways and prisons and hospitals he built. (COMMENT: The same might be said of colorful, and reportedly equally corrupt, former Mayor and Governor Paulo Maluf. END COMMENT.) Former President Cardoso was another example of a politician who had charisma. But let's wait and see what happens, Temer suggested. Wait until after the World Cup, which could impact on the voters in a variety of different and not easily predictable ways, depending on the result. Wait until the government-subsidized television advertising begins. It will be "a great war" on the airwaves, and it opens up innumerable possibilities for the underdog. 6. (U) Temer, a former Sao Paulo state Secretary for Public Security, was not certain whether Alckmin would suffer as a result of the recent violence on the streets and in the prisons of Sao Paulo (ref E) perpetrated by the criminal gang First Capital Command (PCC). Some of his public criticism of his successor, Governor Claudio Lembo, had been unfortunate and not good for his image. But only