BRAZIL: Lula focuses on social promises and climate change agenda
Thank you for reading LatinNews' chosen article from the Latin American Weekly Report, produced since 1967. The full report can be accessed here: Latin American Weekly Report - 3 November 2022
With political tensions still high in Brazil, after one of the most polarised elections in the country’s recent history, president-elect Luiz Inácio Lula da Silva, of the leftist Partido dos Trabalhadores (PT), is rushing to make arrangements to ensure the sustainability of his future government, which will be inaugurated on 1 January. Facing the challenge of uniting a deeply divided country after narrowly defeating President Jair Bolsonaro of the right-wing Partido Liberal (PL) in the 30 October run-off, former president Lula (2003-2011) started work on two fronts this week. First, to find resources to finance his campaign promises, particularly in the social arena – a daunting challenge given Brazil’s dire fiscal situation. Second, to increase the country’s engagement in the global fight against climate change – which in the view of Lula’s allies could boost international support for his government.?
Lula’s victory unleashed a wave of protests in the election’s aftermath, with Bolsonaro supporters blocking roads and rallying in front of army headquarters to call for a military coup to prevent Lula’s inauguration. Although a few of the protests persisted this week, they were a fraction of the size of the movements that had taken to the streets soon after the 30 October vote [WR-22-44].
The declarations of the president of Brazil’s top electoral court (TSE), Alexandre de Moraes, that the anti-democratic movements are a “crime” and participants could be investigated, may have helped to curb attendance at the most radical rallies. Pro-Bolsonaro activists continued to use social media, however, to call for protests, falsely claiming that the election was rigged.
Despite the campaign threats that “only God” could remove him from the presidency, after the election Bolsonaro vowed to follow Brazil’s constitution and seems resigned to the fact that his arch rival will take office. On 4 November, vice-president-elect Geraldo Alckmin (Partido Socialista Brasileiro, PSB) kicked off the power transition after meeting Bolsonaro, his chief-of-staff Ciro Nogueira, and the secretary-general to the presidency, Luiz Eduardo Ramos, who are collaborating with a transfer of data and information to the new government. “[Bolsonaro expressed] the government’s readiness…to help. We have a transition guided by the public interest,” Alckmin said in an effort to provide reassurance.
Alckmin, who is leading Lula’s transition team, also met federal senator Marcelo Castro (Movimento Democrático Brasileiro, MDB), who was responsible for the 2023 budget bill in the senate. Alckmin and Castro discussed the possibility of approving an emergency measure in congress to allow Lula to spend more than the sum that is provisioned for in the 2023 budget to finance some of his campaign promises.
On 7 November, after a few days resting in the north-eastern state of Bahia, Lula joined his transition team in planning the best strategy to pursue to obtain this extra spending power. His allies estimate that he needs R$175bn (US$33.9bn) in resources to finance his most basic campaign pledges, according to Brazilian newspaper?Folha de S. Paulo.
Out of these resources, R$52bn would be used to keep Auxílio Brasil’s welfare programme at R$600 (US$120) per month; R$18bn to give beneficiaries a new extra payment of R$150 per child of up to six years of age; and R$3.9bn-R$6bn to finance an above-inflation minimum wage increase.
Lula needs to seek an emergency measure allowing him to spend more because a 2016 reform limited the yearly growth of government expenditure in Brazil to the rate of inflation, creating the so-called ‘spending ceiling’. In June, congress gave Bolsonaro a waiver to spend beyond this cap, allowing him to rise Auxílio Brasil from R$400 to R$600. To finance his pre-electoral spending spree, Bolsonaro also counted on one-off revenues from privatisations and cut education and health spending.
Lula has promised that fighting poverty and hunger is going to be the number one priority of his government, but now he needs to find resources to make good on these pledges, having limited room for manoeuvre due to the government’s difficult fiscal situation. To get a waiver to circumvent the spending ceiling through a constitutional amendment (PEC), as Bolsonaro did, Lula needs the support of 309 of Brazil’s 513 federal deputies and 49 of the 81 senators. This seems to be the president-elect’s ‘plan A’, but with congress set to be dominated by centre and right-wing forces, negotiations will be arduous.
Another option would be to change the 2023 budget, convincing legislators to give up on some of their projects to funnel resources to the new government’s priorities – but this will not be easy either. Finally, a third option would be to allow the new spending through executive decrees, after gaining approval from the federal court of accounts Tribunal de Contas da Uni?o (TCU).
Auxílio Brasil is a conditional cash transfer programme in which poor families receive payments provided that all family members comply with key human development conditions. All the children must be enrolled in school and fulfil their vaccination requirements, for instance, and pregnant women must complete their prenatal visits. Called Bolsa Família under PT administrations, the programme amounted to 0.5% of GDP from 2003 to 2019, but now its total costs could have escalated to 1.5% of GDP, with more than 21m people receiving the benefit, according to Mansueto Almeida, a former national treasury secretary (2018-2020).
As Lula will govern a divided country, his team sees the budget cap waiver as crucial to sustaining his approval rating at the beginning of his government, when he will probably face fierce political opposition, and potentially protests. Without the waiver, Auxílio Brasil would return to R$400 in January, and, according Alckmin, Brazil could see the “interruption of services and construction works”.?
It is true that a ‘licence to spend’ might not play well to the financial markets, which will be monitoring the incoming left-wing administration closely for any signs of mismanaging spending. On the other hand, Lula has signalled that he may appoint an economic team committed to fiscal prudence for the new government.
On 8 November, Lula designated several members of his government’s transition team, including the coordinators of the economic group – among them liberal economists Pérsio Arida and André Lara Resende, two of the architects of the plan that stabilised Brazil’s economy in the 1990s, beating hyperinflation. The main index of Brazil’s stock exchange (Ibovespa) climbed 0.71% on the same day.
“The nominees seem to be leaning to the centre,” Geizebel Schieferdecker, of the Brazilian investment firm Squad Capital, said to?Folha de S Paulo.?The transition team will assess the data handed over by the current administration and make plans for the new government. Its members will not necessarily be in the new cabinet, but this is likely to be a ‘test’ of those involved in the team and an indication of where the new government is going.
Twitter. Twitter’s new owner, Elon Musk, has promised to check why the accounts of some political personalities were blocked in Brazil. Following decisions by Brazil’s top electoral court (TSE), Twitter Brasil suspended profiles of several pro-Bolsonaro politicians and influencers accused of attacking democratic institutions and spreading fake-news about the elections. Paulo Figueiredo Filho, a commentator at the right-wing media group Jovem Pan posted a complaint about these suspensions on social media. “Hey @elonmusk, your company has been imposing a draconian ideological censorship of the Brazilian people’s right to free speech,” Figueiredo tweeted. “We thought you bought Twitter exactly for this reason! Rise and lift the censorship now!” Musk replied that he “will look into this”.
New environmental minister? The fact that environmentalist and former presidential candidate Marina Silva (Rede Sustentabilidade) will attend COP27 as part of Lula’s delegation has fuelled rumours that she could head Brazil’s environment ministry under the new government. Silva served as environment minister (2003-2008) under Lula’s government, and as a senator from 2008 to 2011. She was previously a PT member but after 2014 grew estranged from Lula’s party after the campaign of former PT president Dilma Rousseff (2011-2016) – then seeking re-election – helped destroy her chances in the presidential race with harsh criticism of her policies and character. Recently, she was reconciled with Lula, supporting him in the 30 October election.
Climate change agenda. As Lula joined his transition team in S?o Paulo, the PT confirmed that one of his first engagements as president-elect would be to travel to Sharm el-Sheikh, in Egypt, in order to take part in the United Nations (UN) COP27 climate summit, on 14 November. A group representing the PT already arrived at the meeting this week.
Since his campaign, Lula has pledged a radical shake-up of Brazil’s current environmental policies, which have defended development over conservation in the Amazon region.
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Bolsonaro’s administration has reduced the budgets and forced out qualified staff from environmental agencies. NGOs and scientists say that, partly due to such policies, deforestation soared to a 15-year high in Brazil in 2021 and there was also an increase in illegal activities in the Amazon, such as logging, mining, and land-grabbing.
Lula has promised to protect the Amazon and to reach net zero deforestation through reforestation programmes. He has also defended indigenous rights and vowed to give Brazil a leading role in the global response to the climate crisis – which explains why he was invited to COP27. The president-elect will participate in the meeting as part of the delegation of the state of Pará, in the Amazon region, which is governed by one of his allies (Bolsonaro’s government will also send a delegation). Still, he is expected to hold bilateral meetings to discuss his future administration’s environmental policies.
During the COP27, the international community will be able to glean a clearer idea of how fast and how far Lula intends to go to fulfil his environmental pledges.
“[Lula] should commit to rebuilding the capacity of federal agencies responsible for environmental protection and upholding indigenous rights,” Maria Laura Canineu, Brazil director at the NGO Human Rights Watch (HRW), said.
Environmental laws. NGOs support the idea that the Lula administration should re-start the demarcation of indigenous territories and protected areas, as well as improve the capacity of state agencies to enforce environmental laws. Former US vice-president Al Gore (1993-2001) seemed optimistic: “Brazil chose to stop destroying the Amazon,” he said during his COP27 speech, referring to the results of the country’s elections.
Thank you for reading LatinNews' chosen article from the Latin American Weekly Report, produced since 1967. The full report can be accessed here: Latin American Weekly Report - 3 November 2022
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