By PAULO NOGUEIRA BATISTA JR.

What will probably happen now is a shift from political activity to a space dispute within a future Lula government.

I start the year by addressing the main source of hope for everyone who cares about our country – the 2022 presidential elections. There is a lot of uncertainty, of course, but former President Lula's favoritism is evident. This favoritism triggered, or threatens to trigger, a dispute for space within a possible or likely new Lula government. I will address, first, the electoral framework as it is presented today. Then, I will make some conjectures about the dispute for the Lula government.

the electoral board

To put the issue of elections in perspective, it might be useful to go back in time, say six or seven months, to mid-2021.

What was the situation at that time? Lula already appeared as a favorite in the polls, but with two important caveats. First, there was the expectation, intensely fueled by the media, that a “third way” could be made viable. And, second caveat, there was the perception that Bolsonaro, who was going through a low point, would recover politically.

The third way, as is known, did not take off. The fiasco of launching the Moro candidacy seems to have buried this path. I say “seems” because, in politics, forecasts are always highly risky. But how can we bet that, in less than 10 months, it will still be possible to make Moro or any other name competitive? Possible, maybe. Not likely.

Bolsonaro’s empowerment also failed to materialize. On the contrary, his political difficulties have increased – a crucial change compared to the picture 6 or 7 months ago. In mid-2021, Professor Marcos Nobre, from Unicamp, a qualified analyst of the Brazilian political scene, maintained that Bolsonaro would be a “very strong” candidate for re-election. I myself, without going to that extreme, warned here in this column of the risk that Bolsonaro would become stronger until the elections.

This expectation of Bolsonaro's recovery was based on predictions that have not been confirmed, at least not until now: a) an improvement in the economic situation; b) the reduction of the political burden represented by the pandemic; and c) the use of the government machinery and instruments of power by the president in the exercise of his office, a point to which Lula himself warned.

It hasn't happened yet. The level of economic activity, measured by GDP, has stagnated since the second quarter of 2021. Unemployment has dropped, but little, remaining at a very high level. The jobs generated were mostly informal jobs, with lower pay and poorer quality. For analysts of the economic situation, the most surprising thing was the persistence of inflation. High inflation eroded the purchasing power of wages. Unemployment and high prices – recipe for political failure.

Vaccination advancement has occurred, saving lives. But this success was not, and could not be, credited to the federal government. The CPI of the pandemic, with great coverage by the corporate media, which was unsuccessfully trying to pave the way for a third way, wore Bolsonaro out, sticking to him the image of being responsible for most of the more than 600 deaths. The idea that Brazilians would gradually forget the tragedy and its victims was not confirmed, fortunately. And the new outbreak of the disease since December, resulting from the arrival of the omicron variant, keeps alive the issue of the pandemic and the irresponsibility and incompetence of the Bolsonaro government in dealing with it.

As for the use of the machine and instruments of power, what was observed was a growing disorganization of the government. Bolsonaro managed to buy his life, avoiding impeachment, but he was unable to act in a coordinated and efficient manner. It fell into the hands of the “centrão”, which knows how to defend its specific guidelines, but does not guide any government. Bolsonaro’s attempts to “make loyal” his radical base, with outrageous statements and measures, increased his rejection and aggravated his isolation.

Thus, Lula's favoritism grew and it seems possible, although perhaps not likely, a victory in the first round. Adherences to his candidacy grow, with support that transcends the left and center-left. I would almost say that, like Getúlio Vargas in the 1950 election, Lula could win “without leaving São Borja”.

But let's not overdo it. As Nelson Rodrigues said, thinking about the 1950 World Cup, the rout is the eve of tragedy.

The dispute for the Lula government

What will probably happen now is a displacement of political activity towards a space dispute within a future Lula government. It is no use, reader, to say that this is premature. The process must have already started.

From the point of view of my dear friends from the “turma da bufunfa”, what matters is to tame or colonize the future government, ensuring that Lula 3 is as similar as possible to Lula 1 – the period in which Palocci was the Minister of Finance and Meirelles, the president of the Central Bank. Let's be honest: in Lula 1, what happened was blatant plagiarism. Palocci's policy was a pure and simple copy of the policy of his predecessor, Pedro Malan. He failed to pay royalties.

Lula will agree to repeat the script? There are important differences, for better and for worse, between the situation in 2002, when Lula was elected for the first time, and that of 2022. I highlight two of them.

In the economic field, the external fragility of the economy was much greater in 2002, which gave the market greater blackmail power over the elected president. External accounts were in deficit, the economy depended on foreign capital and international reserves were low. Today, the external sector of the economy is much more robust. The trade surplus is high, the current account deficit low, dependence on international financing small. And, more importantly, international reserves are comfortable, thanks to the accumulation effort carried out by the Lula and Dilma governments.

On the other hand, in the institutional field, the future president's room for maneuver is narrower. With the approval of the Central Bank autonomy law, the elect inherits the president, Roberto Campos Neto, and most of the directors of the institution, whose power was increased by the exchange rate framework approved by Congress. In the first two years of the new government, the Central Bank will remain under the control of the current leaders.

I do not believe that Lula will try to reverse the autonomy law. It would be an uphill battle in Congress and the outcome uncertain. It remains to be seen whether Lula, elected, will agree to nominate someone nominated or approved by the “market” for the Ministry of Finance or Economy, that is, by financial capital – as Dilma did after her re-election in 2014.

We'll see. I have no privileged information, I stress. But it does not seem plausible that Lula, returning to power consecrated by yet another electoral victory, will start the government with his head down. Perhaps he decides to break the Ministry of Economy into three, re-establishing the Ministry of Planning and the Ministry of Industry and Commerce. In Finance, the most important ministry, he will probably place someone of his strict confidence, but who does not cause turmoil in the financial market.

With the Central Bank autonomous, it will establish a modus vivendi, anchored in the authority that will confer the election. Lula ties a knot in a drop of water. Why wouldn't it know how to manage the Central Bank's financiers and technocrats?

*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).

Extended version of article published in the journal Capital letter, on January 21, 2022.