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August 24, 2020

BRAZIL: Greater governability now hinges significantly on Guedes

BY Mario Marconini

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( 4 mins)
  • Economy Minister Paulo Guedes insulted the Senate and now has to make amends.
  • A presidential veto overturn showed that the government still needs to improve its Senate leadership.
  • A new House leader in the House has already made significant progress.
  • Guedes will now talk less and propose more.

President Jair Bolsonaro has given proof of loyalty towards Economy Minister Paulo Guedes following recent public reassurances. In the battle of presidential vetoes currently taking place in Congress, the president reacted viciously against an overturn in the Senate on 19 August that would allow federal and sub-federal public servant salaries to be adjusted until the end of 2021 for certain Covid-19-relevant functions and activities. Guedes said that the Senate had committed a crime against the country by preventing an alleged savings of BRL 120-130bn (USD 21-23bn). Such savings had been the price he had exacted in previous negotiations in exchange for accepting a BRL 60bn transfer to states and municipalities along with another BRL 65bn in debt suspensions and treasury-backed loans.

Senate shortfalls

Contrary to widespread expectations, the veto was not overridden by the House on the next day, 20 August. In retrospect, the senate vote would therefore seem fully non sequitur but it served to show a couple of important things: that Guedes still commanded respect from the president and that the president, given the right conditions, still commanded respect from Congress. The confusion in the Senate can be attributed to the generalized lack of leadership in the chamber, whether from the government or from its chairman, Davi Alcolumbre, who seems to be increasingly erratic as he searches for the best path towards his re-election in February 2021.

House dynamics

The confirmation of the veto in the House was not only surprising for its content but also for the form in which it was achieved. House Speaker Rodrigo Maia, who has had difficult relationns with the government and Guedes, left his chair and took to the pulpit on behalf of his party, the DEM, to give a strong speech in favor of the presidential veto, exhorting the virtues of a modicum of austerity on the part of public servants who have been suffering significantly less during the pandemic than their private counterparts.

Maia also has an eye on the February 2021 House Speaker elections but contrary to Alcolumbre has staked his political future on showing prowess and leadership, particularly on matters that make sense in general – and economic sense in particular. Maia is not an especially popular politician but is well respected by both Right and Left within the political establishment – which can render him political dividends in the next gubernatorial or presidential elections (2022).

Governability dividends

Had it not been for the Senate, the government’s victory in the financial assistance to states and municipalities package could be attributed to an overall significant improvement in the governability of the Bolsonaro administration. It may not have been overall just yet but the reversal of the senate vote in the House was indeed a strong sign of improvement in the way Bolsonaro deals with Congress. That improvement is called Ricardo Barros, the newly appointed leader of the government in the House, a prominent Centrao politician who has the stature and the capacity to do what it takes to advance important government mandates. The Senate is still missing this kind of government leader. The president may have decided to play ball with the Centrao to avoid an impeachment trial but related benefits for governability are undeniable.

Guedes’ verbiage

Ironically, Guedes may now need to follow the example of the president and control his own verbiage. With the exception of his persistent defense of hydroxychloroquine, Bolsonaro has gone from provocative to collaborative in a heartbeat once it became necessary for his own reasons. The economy minister henceforth needs to think twice before shooting his mouth off. Maia did not work to confirm the veto because but in spite of Guedes’ comment. He even said as much in his speech from the chamber. Guedes may even go to the Senate this week to apologize, in a move that recognizes that calm and collection on his part, not only economically sensible proposals, may secure the governability the reform agenda requires.

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