Brazil
Analysis

Spotlight: The first indications of Brazil's incoming government

Bnamericas Published: Thursday, November 10, 2022
Spotlight: The first indications of Brazil's incoming government

Brazil's transition government has now been working for a week sinc the election and analysts are watching keenly for any indications of what the direction of the new administration will be and who will fill key cabinet positions under the leadership of incoming president Luiz Inácio Lula da Silva (in photo). 

Lula has the right to nominate a total of 50 people to work in a temporary cabinet as the transition team makes preparations for the official start of his government on January 1. 

During this period, the president chooses specialists in various areas to gain a better understanding of the real state of the federal administration and it is common to see speculation about which of those people might be appointed as ministers.

"This [transition] team collects data to effectively know the state of the country's administration, particularly if we consider that the current government has ruled with some secrecy and has not disclosed all the data with that much transparency," Carlos Melo, a professor of political science at São Paulo business school Insper told BNamericas.

"This task is very important because the new government can't wait until January 1 to start administering the country, otherwise there would be a lapse in government," he added. 

"There are very important names that dominate certain areas, such as Pérsio Arida and André Lara Resende, who are working in the economic area in the transition team and who could become minister of economy, as both have relevant knowledge," Melo said.

The name of the person to head the economy ministry is eagerly awaited by investors, since that will give clear signs of the direction of the new administration and what the stance will be on public finances.

Arida and Resende are both economists that are well respected by financial market agents, since they worked on the creation of the Plano Real in the 1990s, which was the economic program used to control Brazil's spiraling inflation at the time and which successfully stabilized the national economy.

The team also includes Guilherme Mello and Nelson Barbosa, both of whom have strong links to Lula's Workers Party (PT), suggesting that the state will have a greater role in the economy. There has also been recent speculation that Fernando Haddad, a former mayor of São Paulo and also a PT member, was also being considered by Lula to head the economy ministry.

POLITICAL TIES 

Geraldo Alckmin, set to be the vice president, is coordinating the transition team, while Lula has been working on political alliances to facilitate his administration, holding a key meeting with the leaders of the upper and lower house of congress, Rodrigo Pacheco and Arthur Lira, respectively. 

While Pacheco is considered a neutral politician, Lira was a close ally of President Jair Bolsonaro, so it is clear that Lula is attempting to offer an olive branch to facilitate governability.

"It is not the role of the president to interfere in the workings of the lower house or senate. We are autonomous powers. They don't interfere in our work, nor we in theirs, and so society will live peacefully, democratically, and that's how things will happen," Lula said in a press conference after the meeting with Lira and Pacheco. 

SOCIAL SPENDING 

One of the most urgent tasks being undertaken by the transition team is the search for funds in the budget to implement the social programs promised during the presidential campaign. 

In the next few weeks, PT lawmakers are expected to file a proposal for a constitutional amendment to exempt some social expenditure from the existing spending caps, as the current rules tie budget increases to inflation.

INTERNATIONAL AFFAIRS 

Under Lula's administration, Brazil is expected to work on improving some of its international relationships, particularly with its main trade partners, China and the US. 

Alckmin said this week during the annual conference of the Brazil-China business council (CEBC), that he hopes to "contribute as much as possible to strengthening relations between Brazil and China under the new administration," according to a CEBC release. 

During Bolsonaro's presidency, the government has provoked various tensions with Chinese leaders, especially when he was trying to build closer ties with the US administration under Donald Trump. However, once Trump was defeated by Joe Biden, the relationship with the US cooled significantly.

Although relations with China will likely improve under Lula, observers believe that Brazil will assume a relatively pragmatic position and will also seek to build a better relationship with the US. 

"Brazil will tend to assume a neutral stance with respect to China and the United States, not taking any side in the global dispute that these two countries have, which is also a good alternative for those two countries," said Luciano Rostagno, chief Latin America strategist at Banco Mizuho, during the BNamericas Webinar, What’s next for Brazil, which can be seen at this link.  

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