Fernando Haddad: how former mayor became minister on plane – 11/04/2023 – Power

On the plane on the way to Egypt for his first international trip as president-elect, Lula (PT) knocked the gavel on the person chosen to lead the country’s economic policy.

It took almost a month, however, between silent gestures and behind-the-scenes discussions, for the president to announce the most anticipated name of the team he had chosen for his third term at the head of the Executive.

It was on November 14, on the aircraft that would later become Lula’s first source of stress after winning the elections, that the PT member offered the former mayor of São Paulo Fernando Haddad the head of the Ministry of Finance.

Until his appointment to the position, on December 9, Haddad had lunch with bankers, participated in meetings with economists and began to design the measures he intended to implement after being formally appointed to the position.

Before that, he already gave signals about the role he wanted to play in the PT administration and revealed his preference for the portfolio.

Minister of Education for the PT from 2005 to 2012, Haddad had refused to coordinate the education group in the transition team and maintained dialogue with economists and members of the financial market.

He had the same caprice of not distancing himself from economic issues when he was still preparing to run for Government of São Paulo.

In April 2022, he published an article in Sheet in which he defended the creation of a South American currency to boost the regional integration process and strengthen the monetary sovereignty of South American countries.

Lula, already president-elect and before announcing the first nominees for ministries, made it clear, even without verbalizing it, that the nomination for the Ministry of Finance had been defined.

In two public movements, he made his choice clear.

The first was Haddad’s casting for a dinner with bankers on November 24th.

Five days later, he included his ally in a meeting he held with the coordinators of the transitional government and the economic working group, which the former mayor was not an official member of.

Although Haddad stated, back in 2018, that he had already received the invitation at that time to take over the Treasury if Lula overcame the legal obstacles and won that year’s elections, there was uncertainty as to whether the PT member would maintain four years later the choice he had not been able to make. .

Elected in 2022 with a speech of unity of a broad front in order to defeat the risk to democracy represented by Jair Bolsonaro (PL), Lula was under pressure to appoint an economist from outside the PT and close to the market to the head of the Treasury.

Even before the victory, part of the allies defended that the PT member announced his former president of the Central Bank Henrique Meirelles for the post as a way of signaling to the moderate right.

In a second moment, with the elections defined, speculation for the position fell on economists linked to the Real Plan who had approached the PT member, such as André Lara Resende and Pérsio Arida. The idea also came up of nominating a name linked to the industry, Josué Gomes, son of José Alencar, Lula’s former deputy.

Behind the scenes, some influential PT members were also moving to take over the Treasury, such as Aloizio Mercadante, who later became president of BNDES, and Alexandre Padilha, who later took over the government’s political coordination.

In internal assessments of the PT, although defeated by Tarcísio de Freitas (Republicans) in the dispute for the Government of São Paulo, Haddad was stronger. The diagnosis was that his performance was essential to guarantee votes for Lula in São Paulo in the dispute for the Palácio do Planalto.

Speculation about his favoritism as head of the Treasury provoked negative reactions on the Stock Exchange. Lula, however, made the invitation and guaranteed the former mayor a window of time to try to reduce resistance in the financial world. Only then would there be a formal announcement.

Haddad and allies began to intensify dialogue with market members and spread promises of a constant search for fiscal responsibility and balance in public accounts.

As an argument, they recalled that he had been the first mayor of São Paulo —a position he held from 2013 to 2016— to achieve investment grade, a type of good-paying seal given by risk rating agencies.

Haddad, however, was haunted by his reputation as a poor political organizer in the administration of São Paulo, which could make it difficult for him to deal with Congress.

With just under two months of government, the minister’s performance on certain fronts allowed the impression that he was beginning to gain the trust of investors, rehearsing a reversal of pessimistic expectations about his performance.

This same performance, however, cost the minister his first clash with the most left wing of the PT.

One example was the debate on fuel recharging. In 2022, faced with the explosion in the price of gasoline, alcohol and diesel, then-president Bolsonaro decided to exempt fuels from federal taxes in order to improve the government’s image in an attempt to pave the way for his re-election.

With the end of this exemption approaching (Lula had extended it until the end of February this year), pressure from PT leaders for Planalto to further postpone the return of tax collection grew.

The party’s president, deputy Gleisi Hoffmann (PT-PR), openly criticized the possibility of repayment and said that adopting a measure in this regard would be breaking a campaign promise.

Haddad defended the end of the subsidy with the argument that it had an impact on federal revenue, further unbalancing the Executive’s accounts and putting the PT administration at risk in the long term.

It was up to Lula to arbitrate the dispute, giving victory to the Finance Minister. The episode earned Haddad praise from market analysts.

A new chapter of stress with the PT emerged in the discussion about the 2024 Budget. The minister defended a bold target of zero deficit for next year and once again heard public criticism from Gleisi.

To allies, however, the minister usually praises the president of his party and states that he prefers her stance to that of important government ministers who, according to him, do not play an open game and conspire behind the scenes to prevent the implementation of certain ideas.

The ambitious goal of bringing the government’s primary deficit to zero next year also became a reason for the Treasury’s arguments with market agents. The minister faces distrust mainly regarding his ability to approve the measures he presented to the Legislature to increase federal revenues in 2024.

In his relationship with Congress, he oscillates between ups and downs. He managed, for example, to articulate the approval of changes in Carf (Administrative Council of Fiscal Resources) — which, in practice, will increase federal revenue. However, he struggles to unlock other agendas, such as the proposal to tax the super-rich (taxation of exclusive and offshore funds).

From Arthur Lira (PP-AL), president of the Chamber, he already drew praise in the first semester, when the parliamentarian even suggested that Haddad take over the Executive’s Civil House. In August, however, the two had a tense clash that was caused precisely by a disagreement linked to the proposal to tax the funds.

Recently, the minister entered his worst phase in office when he saw Lula practically bury his objective of eliminating the deficit in government accounts in 2024. The president declared that it was not necessary to achieve this goal given the need to maintain works and investments across the country, contradicting publicly the head of the economic team.

Despite the difficulties, allies say the minister tends to be optimistic. Reports of the most recent meetings are good-natured. In a joking tone, the PT member often repeats to close advisors: he is fueled by one meal and three drinks a day.