Lula will now face the third and fourth rounds!

Image: Aaditya Arora
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By PAULO NOGUEIRA BATISTA JR.*

The dangerous clash against the coup d'état of the Bolsonarist extreme right and the attempt of the economic-financial power tries to frame the elected president

Will the reader allow me to interrupt, for a moment, the celebrations for the wonderful victory in the second round? The intense celebration is more than deserved. After so many years of suffering and barbarity, we are finally breathing again.

Without forgetting, however, that the fight continues. Jair Bolsonaro, defeated by a small margin, tends to keep on messing around. Its more radical supporters, many of them inclined to lawlessness and violence, are resentful and nonconformist. Lula will probably have to face what some in the media are calling the “third round”, that is, a dangerous clash against the coup d'état of the Bolsonarist extreme right. Care for the president-elect's safety, by the way, must be redoubled.

In any case, I risk predicting that Lula's victory in this third round will be easier than the victory in the second. Jair Bolsonaro has little internal and external support for an adventure, as seen by what happened after the vote was counted. The result of the election is being widely recognized, both in Brazil and abroad.

I regret to say, however, that we will also have a “fourth shift”. I don't want to burden the reader with sinister concerns, but it is never prudent to ignore reality, however many reasons we have, at this moment, to cultivate optimism and the best expectations for the future of our dear Country.

What would this “fourth round” be? It is the process by which the economic-financial power tries to frame the elected president, acting so that the future government contemplates its interests and privileges. This includes extracting commitments on what will and will not be done. And even, perhaps more importantly, it includes the intention to choose the future president's team, indicating who should and who should not be appointed to the main functions, especially in the economic area.

The article is perhaps getting a little abstract and vague. I will try to be more specific. Economic-financial power has a primary objective – having failed to secure the third way in the elections, its effort now is to ensure that Lula evades as little as possible from the script traditional. Using stronger words: they are trying to colonize the new government. This pressure has been going on for some time, having started before the first round. Lula and his assistants, seasoned as they are, seem to be resisting. They know very well that it would be a shame to win in the first, second and third rounds to lose in the fourth.

I'm not talking about a new phenomenon. In 2002, pressure from economic and financial interests resulted in Lula appointing Antônio Palocci to the Treasury and Henrique Meirelles to the Central Bank. In 2014, this pressure led to the appointment by Dilma Rousseff of Joaquim Levy to the Treasury.

History never quite repeats itself, but the pattern desired by these interests is essentially the same. With one important difference – the starting point of the establishment The financial situation is better this time, as the Central Bank autonomy law, approved during the Bolsonaro government, establishes that the command of the monetary authority will remain in the hands of a market executive, Roberto Campos Neto, for the first two years of the future government. Lula therefore inherits the president of the Central Bank chosen by Jair Bolsonaro.

However, the establishment want more, always more. It seeks control of the Ministry of Finance, with the indication of one of their names, or one that is palatable to them, for the command of this, which is the most important ministry. I take it for granted that the superministry of the Economy, a bad idea taken up by Bolsonaro, will be divided again into Finance, Planning and Industry and Commerce. Finance will remain, however, the most powerful ministry.

How will Lula react to this pressure? He declared during the campaign, repeatedly, that he comes back to do more and better. Now, the poor performance of the Brazilian economy and society in terms of dynamism and justice demands a more structural change in the conduct of economic policy and in other areas. How to make this change with the Treasury and the Central Bank immobilized, under the control of sectors that defend the status quo?

Obviously, under penalty of constituting electoral fraud, the new government cannot be radically different from Noah's Ark that won the elections. Lula presented himself as a candidate from a super-broad front, with a significant participation of the traditional right, and this political reality will be considered, of course, in the formation of the government.

This does not mean, however, capitulating to the pressures of the so-called market. I don't believe I'm being too idealistic or dreaming unrealizable dreams. It seems to me perfectly possible to fight these pressures from economic power and lead the country to a better future, of development with national autonomy and income distribution. This requires courage and clarity of purpose, which Lula certainly has.

Finally, let's go to some practicalities. First point: it would be crucial to maintain control of the Treasury. This could happen, perhaps, by appointing a politician the president trusts. It may be someone who doesn't scare the market, but that someone should be committed to an innovative agenda. Not a new Palocci, for God's sake!

Why a politician and not an economist? It's just that the position requires, more than ever, the ability to interact and negotiate with Congress. A politician with parliamentary experience could help a lot, especially now that the powers of Congress have grown due to Bolsonaro's vital dependence on Centrão. Economists can occupy advisory offices and secretariats and, who knows?, the command of the Ministry of Planning. The Minister of Industry and Commerce could perhaps be with someone from the business area. And Itamaraty will have great weight in the definition and execution of the new government's foreign economic policy.

Federal public banks are also of strategic importance. This is the case, for example, of the command of BNDES, Banco do Brasil and Caixa Econômica Federal, institutions that will play a decisive role in providing credit to priority sectors and in boosting the recovery of the economy and job creation. With fiscal policy subject to various constraints, in part because of the heavy legacy left by Bolsonaro, credit policy acquires even more relevance.

On the other hand, at the Central Bank, where the presidency and most directors will be, in 2023 and 2024, those chosen by Bolsonaro, the room for maneuver is much smaller. The law provides, however, that two directors will be appointed in early 2023 by the new government. Both will be members of the Copom, where monetary policy is defined, and will have specific responsibilities in the domestic and international fields. For example, the Central Bank, together with the Treasury and Itamaraty, conducts Brazilian participation in forums such as the G-20 and the BRICS. It should be remembered that, by a happy coincidence, Brazil will exercise the shift presidency of these two forums in 2024!

Well, enough guessing. Nobody asked me anything. But I reiterate, by way of conclusion and summary: despite the limitations and risks, we have reason to hope that there may be a victory in the third and fourth rounds as well!

*Paulo Nogueira Batista Jr. he holds the Celso Furtado Chair at the College of High Studies at UFRJ. He was vice-president of the New Development Bank, established by the BRICS in Shanghai. Author, among other books, of Brazil doesn't fit in anyone's backyard (LeYa).

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