Centrão and part of allies reject Lula’s speech – 02/08/2023 – Market

Party leaders claim that there is no intention, on the benches that represent the majority of Congress, to retreat from economic agendas already approved in previous governments.

They also expressed fear that the third term of President Luiz Inácio Lula da Silva (PT) will be more interventionist and radical than the first two, in a scenario where the newly sworn Congress has signaled a more liberal vision in the economy.

Despite Lula’s attack on the Central Bank and the privatization of Eletrobras, the centrão and leaders of government allied parties reject the idea of ​​reviewing these measures – encamped in the management of Jair Bolsonaro (PL).

Lula’s recent statements in the economic area irritated the top of the Chamber, according to interlocutors of the President of the House, Arthur Lira (PP-AL). He specifically expressed discomfort with criticism of the privatization of Eletrobras.

The PT’s offensive against the autonomy of the Central Bank and the mandate of the president of the autarchy, Roberto Campos Neto, has also not had the support of senators or the president of the House, Rodrigo Pacheco (PSD-MG).

Behind the scenes, members of Lula’s base parties, who attended breakfast with the president this Wednesday (8), say that the PT needs to moderate his speech to avoid attrition with Congress and the financial market. This is the position of the most moderate wing among the PT’s allies.

“I consider it a breakthrough, an autonomy that distances political criteria from something that has a very strong technical aspect”, said Pacheco on Wednesday night (8), arguing that autonomy has already been debated by Congress and the Supreme Court. Federal (STF).

“The president of the Central Bank is a prepared man, with very good treatment. President Lula is really determined to face the problem of hunger, misery. They are all men of good intentions and, when men of good intentions get together, the problems resolved,” he added.

On the other hand, leaders of the wing more connected to the left want Campos Neto to go to Congress to provide explanations. However, even among senators allied with Lula, the view is that the chance of this happening is remote, not least because a good number of them defend the autonomy of the Central Bank.

The president of Solidariedade, Paulinho da Força, said that Campos Neto “has to be framed” and that “several” members of the base supported the president’s movement to “confront this Central Bank economic policy”.

According to members of the PP, Republicans, PSD, União Brasil and MDB, there is a fear that the statements are an indication that Lula 3 will be less pragmatic, similar to the government of former President Dilma Rousseff (PT).

Hugo Motta, leader of the Republicans, said he did not believe that the Chamber would approve a project against the autonomy of the Central Bank or an invitation for Campos Neto to go to the House to speak on the subject.

President Lula’s allies in the Chamber, in turn, are mobilizing to make the invitation possible – this was a topic addressed in a meeting with leaders of the allied base and government deputy leaders in the Chamber on Wednesday night (8).

Deputy Guilherme Boulos, PSOL leader in the Chamber, is collecting signatures for an urgent request so that the invitation can be voted on in plenary next Tuesday (14). According to him, some leaders decided to consult their benches.

PT leader in the Chamber, Zeca Dirceu, says he signed the document. “For me, he will have to explain the inexplicable. They took many measures in previous years that led the country to hunger, misery, unemployment, flat wages, uncontrolled inflation, high interest rates,” he said.

“It’s not just the responsibility of the [ex-presidente Jair] Bolsonaro or [ex-ministro] Paulo Guedes. The BC has a very relevant role.”

Leader of the government in the Chamber, Deputy José Guimarães (PT) says he will also sign the application, but stated that it is a “trivial” situation that should not “generate stress”.

“It’s good to debate, this cannot generate stress either in the market or between the government and the opposition. I’ve been here for 16 years and nothing is more trivial than an invitation by an authority of the country, from an autarchy, to come here and debate with us. No it has to generate stress”, said the congressman.

In the specific case of Lula’s attacks on the BC president, centrão members see two hypotheses for the PT’s repeated criticisms.

One of them would be to force the resignation of the president of the monetary authority, who, since the approval of the BC’s autonomy, started to have a mandate. If Campos Neto left office, the government could appoint his replacement, who would take office after Senate approval.

Another possibility is that, with the criticism, Lula is trying to outsource the responsibility for an eventual lower-than-expected growth of the Brazilian economy.

This wing of Congress, therefore, has pointed out similarities between Lula’s behavior and that of Bolsonaro – who used to say that he had no room for maneuver in the face of the actions of other Powers and bodies.

Members of the centrão also criticize Lula’s position on agendas already approved by Congress. In the case of the privatization of Eletrobras, the president’s statements also bothered the leader of União Brasil, Elmar Nascimento (BA), who was the rapporteur for the measure in the Chamber. Elmar didn’t go to breakfast with Lula.

On Tuesday (7), Lula said that the AGU (Attorney General of the Union) will question the contract that paved the way for the privatization of Eletrobras. He stated that the government would seek to review the rules to which the Union was submitted.

The PT contests that, although the Union has 40% of the company’s shares, it can only have 10% of the votes.

Centrão leaders also already articulate defeats for the Planalto Palace. The idea is to overthrow the transfer of Coaf (Financial Activities Council) from the Central Bank to the Ministry of Finance, proposed by Lula.

Parliamentarians point out that there is a contradiction in the PT, which embraced the defense of Coaf keeping the Central Bank in the Bolsonaro government. The argument was that the body should be free from the influence of Paulo Guedes (former Minister of Economy) and Sergio Moro (former Minister of Justice).

There is also strong resistance in Congress to the proposal that extinguished Funasa, which is the National Health Foundation. A wing of the PT also showed dissatisfaction with the end of the entity. Lula is going to discuss the issue with party allies.

With regard to the economic agenda more closely linked to the left, centrão deputies and senators also claim that there is no climate in Congress for a broad review of the pension reform and labor reform, as Lula indicated in the election campaign.

In recent days, Lula has been harshly criticizing the BC president. He said this week that the country’s current basic interest rate, the Selic, is a disgrace. He has also classified the institution’s autonomy as “nonsense”.

The Minister of Institutional Relations, Alexandre Padilha, put a damper on the crisis and said that there is no need to fry directors of the monetary authority.

“There is no government initiative on changing the law [da autonomia] of the Central Bank and no pressure on any director’s tenure. The law clearly establishes that it has mandates and that they will be fulfilled,” he told reporters.

“The president has to say what he thinks. In fact, these are issues that he addressed in the campaign. I don’t see any problem. responsibility for the economy is his,” he told Sheet the national president of the PT, Gleisi Hoffmann.

“I don’t think that [declarações de Lula] will cause wear. He was elected with a commitment to generating growth and employment, to putting money into public policy. He never cheated. Everyone who entered, supported and who is today at the base knows Lula’s position”, completed Gleisi.