Distrust in markets and tension with allies: Why Lula is already facing wear and tear

Brasilia.- There are still two weeks to the inauguration of the president Brazil, Luiz Inacio Lula da Silva faces his first attrition, a break in new appointments to lead ministries in the face of stalled negotiations with allies and the legislature and a controversial relaxation of the main law for state institutions.

State oil company Petrobras’ common shares fell nearly 10% on Wednesday on the Sao Paulo Stock Exchange. State Companies Act.

The regulation, approved in 2016 during the government of former President Michel Temer, emerged as a shield for government agencies against political interference after the Lava Jato corruption scandal.

The quarantine period required for politicians who held relevant positions in party structures or campaigns was shortened on Tuesday night, record time. 36 months for 30 days, A movement that led to Lula’s appointees taking charge of the National Bank for Economic and Social Development (Bndes) and Petrobras.

After confirming the former mayor of São Paulo and a 59-year-old sociologist Fernando Haddad As the future finance minister, Lula pointed to the former senator Aloisio MercadanteAnother historical worker and one of the founders of the PT was the president of Bndes.

Shares of state-owned companies fell on fears of higher risk Using company resources for political purposes, with the appointment of a “developer” like Mercadante. In particular, investors feared a return to the “principle of champions” in Bundes, for which large companies in the past benefited from subsidized borrowing rates, cheaper than market rates.

Senator Daso Gerisatti from the Brazilian Social Democratic Party (PSDB) and rapporteur of the State Law, described the motion of the delegates. “Historical Regression in the Life of Brazilian State Institutions Towards a Banana Republic”.

In addition, flexibility is widely supported by the Labor Party (PT) bench in the Chamber, Raised spending limit of state-owned enterprises from 0.5% to 2% for unspecified corporate advertisements.

“By advocating the relaxation of the law on government agencies, Lula undermines his government morally and politically from the first hour. The Center “He will demand more charges in negotiations,” the newspaper questioned this week. State of S. Paulo In one of his editorials.

In an action with recyclers on Thursday, Lula repeated it in an electoral tone If you look at fiscal policy you can’t overlook the poorA day after Haddad tried to calm investors, he assured that “the expansion of public spending will not be the engine that drives the growth of the economy” this time around.

The president-elect, who is returning to power after ruling Brazil between 2003 and 2010, has been criticized by economists. Excessive increases in spending by 2023 in CongressHis new finance minister is trying to show a commitment to the country’s “fiscal stability” from the new administration.

“Social responsibility is part of financial responsibility”Haddad said.

Leandro Consentino, a political scientist at Insper de São Paulo, said the appointment of the former mayor of São Paulo was “a sign of a possible successor rather than the protection the market wants”. .

The PT’s leader had to postpone new ministerial announcements this week to keep in mind the implementation of the Constitutional Amendment Bill (PEC) in Congress. Approves more than $30 billion in extraordinary spending over the next two years to fund the Bolsa Familia.

According to reports in the Brazilian press, in order to approve the PEC, Chamber President Arthur Lira is seeking control of positions in ministries and public institutions such as health and regional development.

“During strong questions, Lula knows that she must distribute ministries to groups that need to retain their support. She wants to see allies, but unlike Dilma, she wants to maintain lasting alliances,” Paulo Calmon, a political scientist and professor at the University of Brasilia, told LA NACION.

The incoming PT government is yet to define who will lead key ministries such as Planning and Foreign TradeToday under the orbit of the economy led by Paulo Guedez, and other high level Social development -Responsible for Polsa Familia-, Health One of the biggest budget- and environment.

In addition to Haddad, last week Lula confirmed Mauro Vieira, ambassador to Itamarati; Jose Muzio on defense; Rui Costa for Chief of Staff; and Flavio Tino in the Judiciary. Singer Margaret Menezes was officially commissioned for Culture this week.

Most of them are B.D. One of the key questions is whether dignitaries, ex-ministers or historical allies of the party and whites – with the exception of Menezes – are at odds, at least in the first appointments. A promise of “diversity” in the cabinet.

“Lula contradicts a good portion of what he said in the campaign. “The PT’s “broad front” to defeat Bolsonaro is not linked to fiscal responsibility with concern for the poor and lacks gender equality (in ministries),” Consentino questioned.

“If Lula promotes an electoral scandal, it will strengthen Bolsonaro,” he added.