The Week Ahead in Brazil #60

The Week Ahead in Brazil #58 - Political trend stays neutral (Eletrobras vote, CPI, FHC and Lula). Economy advances (GDP, reforms advance). Management starts to suffer (Salles and Bolsonaro).

#politicapublica #analisisepolitica #gestaopublica #economiapolitica
Short term

What is happening in Brazil? 

1. Politics – Senators in the parliamentary inquiry committee (CPI) heard on Tuesday (1) from physician Nise Hitomi Yamaguchi, who confirmed she had attended several meetings in Brasilia to address issues related to Covid-19, including drug use and early treatment. On Wednesday (2), the senators heard from the doctor Luana Araújo, who was invited to lead the Extraordinary Secretariat for Confronting Covid-19, but was not approved by the president’s Chief of Staff. Senators questioned her whether the reason for her non-appointment was her stance against the use of chloroquine, but Araújo said she did not know why she was not given the position.

On Tuesday (8), the CPI will again receive the Minister of Health, Marcelo Queiroga. On Wednesday (9), the former executive secretary of the Ministry of Health, Antonio Elcio Franco Filho is scheduled to testify before the CPI. The appearance of the governor of the state of Amazonas, Wilson Lima, is planned for Thursday (10), and the hearing of two health experts to provide clarification should occur on Friday (11).

President Jair Bolsonaro made a statement on national radio and TV network on Wednesday (2). Mr Bolsonaro said that all Brazilians could be vaccinated by the end of the year, but criticised social isolation measures and the shut down of commerce, churches and schools. The president also said that Brazil will host America’s Cup with all the sanitary protocols, mentioned the growth of the economy and stressed the allocation of resources for emergency aid.

On Monday (31), senator Flávio Bolsonaro joined the Patriot party. Analysts anticipate that the president may go to the same party.

The Economist, in its latest issue, carried a special report on Brazil under the title “Brazil’s gloomy decade”. The article presents a negative balance of political, economic and institutional issues in the country, addressing specific issues such as the environmental question and the fight against Covid19. The week before, the English magazine had already reported explaining Bolsonaro’s political situation.

2. Economy – The recorded growth in Gross Domestic Product (GDP) from January to March was 1.2% compared to the fourth quarter of 2020, beating market expectations.

President Bolsonaro said during the Brazil Investment Forum on Monday (31) that he expects Brazil to receive U$50 billion in foreign direct investment next year.

The Ibovespa has surpassed 130,000 points, and the dollar closed the week at R$5.03, the lowest of the year.

The government has resumed the debate to extend the emergency aid and reformulate Bolsa Família. The decision comes with the possibility of budget slack within the spending cap.

The report of Provisional Measure 1031/2021, which deals with the privatization of Eletrobras, may be presented by Senator Marcos Rogério (DEM-RO) on Wednesday (9) and voted on the following day. There is a possibility of keeping the text approved in the House of Representatives.

3. Public administration – General Eduardo Pazuello, the former Minister of Health and newly appointed for the Secretariat of Strategic Affairs of the Presidency of the Republic, was exempted by the Army in the administrative procedure to ascertain disciplinary misconduct related to his participation in a political demonstration alongside President Jair Bolsonaro. Officers fear a wave of insubordination in the Armed Forces.

Justice Alexandre de Moraes from the Federal Supreme Court (STF) consulted the Attorney General’s Office (PGR) on the possibility of arrest and detention of the Minister of the Environment, Ricardo Salles, in the case in which he is investigated for favouring companies exporting illegal timber. Justice Cármen Lúcia granted a request of the Attorney General’s Office (PGR) and authorized the opening of an inquiry to investigate Salles in another case, in which he is accused of obstruction in the investigation into a gang of loggers.

After the testimony of doctor Nise Yamaguchi, several senators said they believed the existence of parallel counsel to President Bolsonaro in the Covid-19 fight. Yamaguchi and others appear in a video in which Bolsonaro discusses vaccines and chloroquine, without any representatives of the Ministry of Health present.

How to read it.

1. The impact of politics on the policymaking process remains on a neutral trend. Despite being a salient issue, revealing government failures and causing some tension, the political effect of the CPI remains limited. This is mainly due to three factors: first, the government’s popular base, preserving a fair popularity rate–which explains why the rejection level has increased, but the approval ratings remain stable; second, the increase in the vaccination rollout, the economic activity–including the emergency aid effect–and the easing of lockdown measures across the country. It was a possibility that the potential political damage of the CPI would be neutralised by these factors, which, effectively, was the case.

The affiliation of Flávio Bolsonaro to Patriotas should cause accommodations among the parties of the government’s base, including in the Centrão, but it is still early to think of major impact changes in the coalition, which remains solid. There was minor tension around the decision to host Copa America in Brazil, something that Bolsonaro’s statement explored, along with economic and vaccination issues. It was not a thoughtless act. On the contrary: the president reached out to football lovers and signalled his support for the service sector, such as tourism.

2. The economy remains on a positive trend. Monetary policy remains attentive to signs of inflation. The flow of foreign resources into the country, and the consequent appreciation of the Real, continues to increase by various means, including the Ibovespa and direct investments. From the fiscal point of view, the accounts seem to be more adjusted than forecast last year. Public indebtedness was positively impacted by GDP growth, as the debt/GDP ratio continues to decline. The progress in the privatization of Eletrobras in economically encouraging, and also is contributing positively.

3. The public management factor remains in a negative trend. The episodes about Pazuello and Salles, and the management of the pandemic, although distinct on the surface, reveal similarities that show weaknesses in public management. Bolsonaro contributes to the regression of the public service, by pressuring and achieving the non-punishment of Pazuello, by keeping Salles and by excessively interfering in the management of the pandemic.

In the framework that I developed to evaluate the tendency of public administration, one of the factors is the analysis of the paradigms of public management. These are important indicators that show how procedures and the relationship between ministries and the president’s office have evolved in order to better serve the public interest. The objective of this parameter is to get an idea of the paradigms that prevail in public institutions, since there is no objective standard that would allow us to identify them precisely, and they are not homogeneous in all departments.

The preponderance of paradigms in public administration varies according to the period and the development of society as a whole: Until 1930, patrimonialism reigned, in which private interests prevailed over the public interest; then, with president Vargas, the bureaucratic paradigm was introduced, in which state careers were structured and charged with implementing political decisions in the best possible manner; more recently, in the 2000s, came the model of management for results, a sophisticated idea of integrating the fragmented bureaucratic administration and pointing politicians and bureaucrats in the same direction; finally, there is the new public governance model, in which public solutions are built with the inclusion of other stakeholders, such as civil society and businesses.

Bolsonaro seems more inclined to “impose a decision” alone, rather than to “build a decision” with politicians, bureaucrats and civil society. Moreover, the paradigms coexist in a more present or less present form in the institutions. My assessment is that, in the current administration, there is a preponderance of the bureaucratic model.

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