Lula advances in the slow and complex transition of Brazil with the markets looking askance

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  • The president-elect takes office on January 1, but before that he must resolve core problems such as the constitutional reform that will allow him to promote his social policies

  • Another factor The disturbing thing has to do with his relationship with the Armed Forces, which were a kind of co-government with Bolsonaro

Lula advances in the slow and complex transition of Brazil with the markets looking askance

January 1 2023, the day the third presidency of Luiz Inácio Lula da Silva should begin., seems still far away in Brazil. Jair Bolsonaro is ready. for completing three weeks of an almost monastic silence. The impossibility of being re-elected has plunged him into the greatest of frustrations. A skin disease on one leg, known as erysipelas , and a subsequent hospital admission for abdominal pain, deepened his isolation. The retired captain is a ghost and all eyes are focused on what the transition team says or is silent, amid the first sparks between Lula and the markets, which do not stop expressing He expressed his discomfort at the decision of the leader of the Workers Party (PT) to fulfill his electoral promises and increase public spending strong> to guarantee social programs in a country with 33 million people in a hungry situation.

Before the second round, Lula proclaimed himself the leader. an advocate of “fiscal responsibility“. Victory at the polls allowed him to win. It is also worth talking about “social responsibility“. He remembered Furthermore, although he was voted in with the mandate to “govern for all, the priority is govern for those most in need The message to the world of money was clear. Is there always talk that it is necessary to cut expenses? Why? Why isn't the social issue talked about with the same seriousness in this country?” The alarms began to sound.

The brake on the budget

The ex-unionist strictly leads a diverse government in alliance with centre-right forces together with which it must promote a constitutional amendment that finances its programs, especially the payment of some 110 euros per month to the millions of Brazilians in need. When, in 2016, the president Dilma Rousseff was removed by Congress, the law was approved. At the same time and in a hurry, a norm that obliges any government to update the national budget just above the inflation of the previous year. If Lula wanted only to preserve the benefits that Bolsonaro granted for electoral reasons she needs some 20,000 million dollars that have not been contemplated in the 2023 accounts approved by the ultra-right and the legislature. The incoming authorities seek to resolve the obstacle. According to the Rio de Janeiro newspaper O Globo, “the PEC (reform) of the Transition” could generate “consecutive deficits” until 2026 and “would lead to problems” such as greater indebtedness in the coming years, the increase in inflation ;n and the reduction of investment. Vice President-elect Geraldo Alckmin, who is coordinating the change of government on Lula's behalf, said this Friday that Congress will have to decide. You will have the last word on the proposal. But the PT knows that it cannot afford to start the third presidency with a defeat. You need two-fifths of the votes of both chambers to avoid missteps.

For now, the amendment is being negotiated without the name of the future Minister of Economy being known. The limits between moderate programmatic aspirations and reality have also just been tested by Guido Mantega, Lula's former finance minister who had to leave the transition team due to the negative reactions in a market that in recent years has functioned as an unprecedented tutelary force.

The military factor

Two decades ago, after winning his first election, Lula took the plunge. It took more than a month to announce the first names of her ministers. But then, the transition was much smoother. President Fernando Henrique Cardosohe was a permanent interlocutor of the man who would occupy his post. This does not happen in present-day Brazil. Bolsonaro's has been a civil-military administration. The Armed Forces occupied from ministries to numerous secretaries of State, in addition to managing the Ministry of Defense. Aloizio Mercadante, a former minister of Lula who commands the transition teams, assured that he was in charge of the transition. So the new government will appoint A civilian was included in that strategic portfolio, as had happened in the past efforts of the PT. The same would happen at the Brazilian Intelligence Agency (Abin), who had been captured by Bolsonarismo. However, the media do not rule out that Lula may change his opinion regarding the role that she could assign to the uniformed officers. Mercadante himself recognized that He stated that there is an “institutional problem” with the Armed Forces that should be resolved shortly.

The military front is not one more for Lula. Last Wednesday, thousands of ultra-rightists took to the streets again to ask the uniformed officers for a coup d'état to annul the result of the elections and the presidential inauguration on January 1. Before the last Bolsonaro mobilization, the armed institutions were far from condemning those outbursts that caused chaos on the roads after the elections, and reaffirmed their condition as “moderators in the most important moments of our story”, a way of signaling that their role goes beyond the past. from the barracks. The ambiguity of the text has not escaped anyone.