Lula leaves for China leaving multiple crises in Brazil

After being forced to postpone his trip to China with a large entourage of politicians and businessmen, initially scheduled for last Saturday (25), President Luiz Inácio Lula da Silva (PT) is completing three months of government marked by crises and frustrations. In his almost 90 days in office, he accumulates several conflicts in Congress, within the government itself and in society, which need to be resolved soon to preserve the country’s governability.

Lula is in a hurry to solve the crises. Unemployment rose again, economic growth estimates worsened, the fiscal anchor project was not even presented and, to top it all off, the opposition has managed to find arguments to validate its criticism of the Planalto. So far, six requests for impeachment have been filed in the Chamber of Deputies. This scenario is stimulated by the many controversies generated by the president’s public reactions.

The most recent crisis was Lula’s statement questioning the fairness of an investigation by the Federal Police, launched this Wednesday (22), which foiled a plan by the criminal organization Primeiro Comando da Capital (PCC) to kidnap and kill authorities, including the Senator Sergio Moro (União-PR) and his family. “I’m going to find out what happened, because it’s visible that it’s a frame by Moro”, said Lula during an agenda at the Naval Complex of Itaguaí, on Thursday (23).

The conclusion was seen as an attack on the work of the PF and the judge in the case, Gabriela Hardt, from Paraná, and raised notes of repudiation from federal career associations. By saying that the operation was a “framework”, Lula further aggravated the crisis by discrediting Minister of Justice Flávio Dino (PSB-MA), who had been aware of the investigation for 45 days. He also contradicted PT president Gleisi Hoffmann (PR), who said it was “very good to see the Federal Police acting independently”.

The day before the PF operation was launched, another of Lula’s crises had occurred. The president had said, in a live interview with the Brasil 247 portal, that he wanted to take revenge on Moro while he was imprisoned in the Federal Police jail in Curitiba, between 2018 and 2019. week to visit and see if everything was ok, three or four people would come in, and ask ‘everything ok? ‘” said the president. Moro was the one who first condemned Lula for corruption in the Sítio de Atibaia process. After the sentence was confirmed in the second instance, the petista was arrested.

Lula fails to expand base in Congress

But the list of imbroglios goes beyond these episodes and takes on more dramatic contours when one sees the Planalto’s difficulty in building a solid base of parliamentary support.

The lack of broad support in Congress makes the already complicated definition of a replacement mechanism for the government spending cap, and the proposal of a tax reform, even more challenging. Without making progress on these two points, the government still has no credible perspectives to induce an improvement in the economy’s declining indicators and, by extension, increase its popularity.

Proof that Lula was unable to secure enough votes for his projects in Congress lies in the inability of the Planalto to demote parliamentarians from setting up a Mixed Parliamentary Commission of Inquiry (CPMI) dedicated to investigating acts of vandalism on January 8 in the Praça dos Três Poderes. The prospect is for its installation to take place after Holy Week, in the first session of Congress this year.

Likewise, the articulation between the minister of institutional relations, Alexandre Padilha, and the government leaders failed to prevent 16 of Lula’s ministers from being called to give explanations on different controversies in the Chamber. The main highlights are testimonials that should take place in the Chamber’s Inspection and Control Commission (CFC), led by the opposition.

Flávio Dino was invited to explain to the deputies his visit to Complexo da Maré, in Rio de Janeiro; Carlos Lupi, Minister of Social Security, will speak about unauthorized union discounts on payments to retirees; Carlos Fávaro, who heads Agriculture, was invited to speak about invasions of productive private lands by the Landless Rural Workers Movement (MST); and Marina Silva, from the Environment, on having said at an event that 120 million Brazilians are starving and on the record of deforestation in the Amazon, in February.

“They will come to the collegiate in April, with the exception of Marina, who should speak in May”, informed the president of the commission, deputy Bia Kicis (PL-DF).

Tension in the market with Planalto’s attack on the Central Bank expands

Lula and his close allies, such as the president of the PT, Gleisi Hoffmann (PR), also embarked on an ostensive campaign against the actions of the president of the Central Bank (BC), Roberto Campos Neto, demanding an immediate cut in interest rates. However, the Monetary Policy Committee (Copom) of the body decided on Wednesday (22) to maintain the basic rate at 13.75% per annum.

The note released by the BC after the decision firmly warned that, in order to contain inflation, perhaps this high level will continue for a “prolonged” period. This tension between the government and the monetary authority has been causing negative impacts on Brazilian assets in the financial markets.

On Thursday (23), the main index of B3, the Brazilian stock exchange, collapsed 2.29% and closed the day at the lowest level since July 2022, at 97,926 points. The dollar rose 1.17%, to R$ 5.299, and futures interest advanced.

This pressure from the political wing of the government against Campos Neto hinders the interests of the Minister of Finance, Fernando Haddad (PT). The head of the economic team, even echoing the complaints, seeks to establish institutional dialogue with the president of the BC and with leaders of Congress, with an eye on the economic reforms under his responsibility.

But Haddad is already showing signs that he may be missing the chance to find a negotiated exit. “I considered the Copom communiqué to be very worrying, because it even signals the possibility of raising interest rates, which are now the highest in the world”, lamented Haddad.

Crises also thrive when many of the solutions suggested by Lula’s allies to deal with them are being postponed or rejected by the president himself, making the scenario even more complicated.

Institutional crisis between Senate and Chamber

In addition, the Lula government is having to deal with an open war between the presidents of the Chamber, Arthur Lira (PP-AL) and of the Senate, Rodrigo Pacheco (PSD-MG), over the rite of processing the provisional measures (MPs ). The confrontation escalated last week, with Pacheco’s decision to force the immediate installation of commissions to analyze the MPs. Lira’s prompt reaction, who spoke to Lula on Friday (24), will unfold in new episodes, without knowing Planalto’s real ability to cool down.

Lira defends that the texts of the provisional measures be taken directly to the plenary of the Chamber and, if approved, go to vote in the Senate. This configuration, adopted since the beginning of the pandemic, gives more powers to the mayor, who has control over when and which MPs will be voted on.

Pacheco, in turn, defends that the processing of an MP be done through a mixed commission, where deputies and senators debate the text sent by the Executive, to be later voted by both houses – as provided for in the legislation.

The Lula government is divided on the issue, as it does not have enough support in the Chamber and is concerned about the risk of losing the validity of the measures edited since January. They are valid for 120 days and expire if not approved within the deadline.

These MPs include the government’s most important actions so far, such as the recreation of ministries, the new Bolsa Família values, the Minha Casa Minha Vida and Mais Médicos programs and the initial efforts to reduce the fiscal deficit of more than R$ 200 billion scheduled for 2023.

The solution to the institutional crisis seems distant if you consider the degree of animosity between the two Houses of Congress. “It is not the president of the Chamber who has space in the government and needs to satisfy. If there is someone who has space in the government, it is the Senate, which cannot disturb the life of the government or the country”, challenged the president of the Chamber, revealing the level of antagonism between the two houses of Congress. Lira has been pressuring Lula to assign more resources for amendments to deputies, which were previously allocated in the so-called “secret budget”, in addition to appointments to positions on the Esplanada, autarchy and state.

In parallel, discussions continue around a Constitutional Amendment Proposal (PEC) to change the rite of MPs. The idea of ​​alternating the final word between the Chamber and the Senate was not accepted by Lira. He wants to maintain the current scheme or raise the proportion of deputies in the joint commission in relation to senators. An agreement is yet to be built, now in a more tense climate.

Internal government fights nullify political articulation

Rodrigo Pacheco, who was to accompany Lula on the trip to China, also stayed in the country and will have to face one of the crises, that of the impasse in the votes for MPs. Arthur Lira has already informed the Federal Supreme Court (STF) and the Senate itself that there is no reason to vote in two different ways at the same time, in the form used in the pandemic and in the form that existed before, defined by the Constitution. He challenged Pacheco to call a session of Congress to debate the issue.

Weeks ago, Lula believed that he would be able to travel to China with Pacheco, Lira and leaders of the Chamber and Senate, an opportunity to alleviate crises and accelerate priority government projects, such as tax reform and the processing of the mechanism that will replace the spending cap of the government.

In addition to having thwarted this plan, Lula does not seem interested in at least guaranteeing the autonomy of his finance minister. Haddad wanted to present a proposal to limit spending before the Copom meeting and Lula’s trip, but he encountered obstacles within the Planalto itself, created mainly by the Minister of the Civil House, Rui Costa. This generated uncertainty on the economic horizon and reduced the room for negotiations in Congress. Behind the scenes, there are rumors that the clash between Haddad and Rui Costa may reflect the search for a future nomination as a presidential candidate.

According to political analysts interviewed by the People’s Gazette, Lula became the main factor destabilizing his government as a result of not having yet left the electoral platform and having ignored the urgencies of the moment. Lula’s challenge will be to defuse these crises.

“From an administrative point of view, the president seemed to have formed a composition capable of combining party support and technical capacity, in addition to restarting a routine of formulating public policies through councils, interrupted in the Bolsonaro government”, evaluates Arthur Wittenberg, professor of Institutional Relations of Ibmec-DF, which says it is intrigued by how Lula’s “unfortunate” statements are rapidly consuming the political capital that the president has managed to carry out his first government plans.

“Even the 8th of January, which earned him virtually unanimous solidarity and support on an international scale, was wasted with disruptive gestures,” he said. For Wittenberg, the big question to be answered today is whether Lula’s political statements that have generated crises reflect some strategy or are merely grudges. The near future will tell.