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Weekly Political Landscape – August 21 – 25.08

WEEKLY POLITICAL LANDSCAPE

Scenarios, Analysis and Political Forecast at the Federal Capital

Week of August 21 to 25, 2017

 

Summary

Special:

  • No Power in Congress – Planalto Palace Moves Forward on Limited Reform Agenda that Resists Legislative Approval – On Wednesday, the federal government announced the decision to privatize several sectors in scope the Investment Partnerships Program (PPI), the area responsible for concessions and privatizations.
  • Autonomy of the National Congress and Co-opted Planalto – The Federal Constitution of Brazil gives the chief of the Executive broad powers and tools to control the Legislative and impose on him an agenda of interest of the own government.

Legislative Branch:

  • Political Reform Remains Indefinite in Plenary – Since last week, the Chamber of Deputies has tried to vote for the substitute of Deputy Vicente Cândido (PT-SP), adopted by the Special Committee (CESP) to analyze the Proposal for Amendment to the Constitution (PEC) 77 of 2003 amending the electoral rules, establishing a public fund for campaign funding and establishing 10-year mandates for judges of higher courts and the Court of Auditors of the Union.

Executive Branch:

  • President Michel Temer and the Director of the National Development Bank launched the BNDES Giro – It is a new modality of credit concession for micro and small companies this week in a ceremony in the Planalto.
  • Government proposes privatization of Eletrobrás – The Federal Government announced this week that it will propose the privatization of Eletrobrás to the board of the Investment Partnership Program (PPI). The intention of the Planalto is to diminish the role of shareholder of the Brazilian government in the company.

Judiciary Branch

  • Minister of the Supreme Federal Court, Gilmar Mendes, suspends execution of sentence after the second instance – The Minister of the Supreme Federal Court (STF) has granted an injunction to suspend the commencement of the provisional execution of the sentence of Vicente Paula de Oliveira, sentenced in second instance to the sentence of 4 years, two months and 12 days in prison for the crime of omission of information to the fiscal authorities. Mendes’s monocratic decision points to a shift in the Supreme Court’s understanding of its understanding of early detention and upset the Lava-Jato, an operation of the Brazilian Federal Police that investigates crimes of corruption, prosecutors.

 

SPECIAL TEMER GOVERNMENT – WITH an EMPTY POWER, THE PLANALTO PALACE resumes its activities on trying to ADVANCE IN MICRO-REFORMS THAT DO NOT DEPEND ON the APPROVAL of THE CONGRESS. WITH an early END OF THE GOVERNMENT, THE 2018 ELECTION IS ALREADY beeing PLAYED, INCREASING THE HIGH LEVEL OF POLITICAL UNCERTAINTY.

 

Without Power in Congress, the Planalto Palace Moves Forward on Limited Reform Agenda That Resists Legislative Approval – On Wednesday (08/23), the federal government announced the decision to privatize several sectors, under the Investment Partnerships Program (Programa de Parcerias de Investimento, the PPI, in Portuguese), responsible area for concessions and privatizations. On that occasion, a calendar was announced for a series of actions aimed at auctioning new public goods, such as airports, highways and port terminals, aside from the privatization of Eletrobrás. Implicitly, the priority objective is to try to give positive signals to the financial sector, given the failure of the fiscal adjustment led by the Minister of the Brazilian Ministry of Finance, Henrique Meirelles. Explicitly, the measures were being taken with the objective of “solving the issue of employment and income,” according to the Minister Moreira Franco, Secretary General of the Presidency and responsible for the PPI. Politically, the option of mini-reforms and sectoral agendas is the only one left to the government, since the possibility of progress in macro issues such as social security or tax reforms, which require approval by the National Congress, is less. It is worth pointing out that part of the measures announced this week by the economic team does not require Parliament’s participation, and only the autonomous Planalto Palace decision is necessary, via decrees, as it was this week, in the event of the extinction of RENCA (National Reserve of Copper And Associates), located in the States of Pará and Amapá, with the objective of attracting investments for the mining sector.

 

Autonomy of the National Congress and Co-opted Planalto – The Brazil’s Federal Constitution gives the chief of the Executive broad powers and tools to control the Legislative and impose on him an agenda of interest of the own government. This institutional configuration is known as “Hyper-presidentialism”. However, in a period of 30 years of democracy, it has been observed that presidents of the Republic with problems of political legitimacy (read popular support) have faced governance problems. See the cases of Fernando Collor and Dilma Rousseff, where the lack of political ability – and other factors – resulted in an open confrontation with Congress, leading to the anticipated end of the government. President Temer’s case, however, differs from previous ones, for even in the face of a similar situation to that of Collor and Rousseff, in which low popular legitimacy prevails amidst a political-economic crisis, the current president is a able politician who understood that the survival of the government itself would be only possible by not blocking the interests of parliamentarians and powerful sectoral groups, such as the Parliamentary Front of Agriculture. Temer thus allowed his government to be co-opted by Congress, even if this implied an evident power dissipation, in which the political agenda no longer belongs to the Executive.

 

2018 is already here – Every Political Decision Prioritizes the Calculation of Parliamentary Reelection and Presidential Succession – If the rightful president is still Michel Temer, in fact, the Planalto Palace is empty and the dispute to occupy this space of power is already open, a fact that considerably increases the anxiety and uncertainty in the political, social and economic anxiety. The discussion of political reform remains locked in the face of the uncertainties and divergence of interests between different groups and parties within Congress. The priority is to format the legislation that benefits current incumbents and allows for the long-awaited re-election and maintenance of the privileged forum. However, nobody knows what would be the political-electoral effect of the so-called “district”, supported by large groups such as PSDB, PMDB, PSD, and PR. If the measure benefits the big ones, it naturally generates opposition in the middle and small parties, who see the new rules as a threat to their survival. From this divergence, the deadlock in National Congress is natural and no one knows what the outcome of the reform will be. On the side of the presidential succession, the dispute is now divided into three areas: a) Jair Bolsonaro – Appears as competitive, but lacks party structure, political alliances and strategic resources, such as partisan fund and radio and TV time – to illustrate the structural precariousness of the candidacy, it is worth mentioning that nobody knows yet through which political party the deputy will contest the presidency. Bolsonaro, like the famous “pangaré horse” (a Brazilian saying that represents someone who cannot decide which way to go), can start the race well toward the Plenary, but he does not have physical rest in the strategic time of the definition, when the true campaign begins, a few weeks of the first round of elections; B) PSDB / Alckmin / Doria – Alckmin controls the party machine, but has less charisma and popular appeal than Doria, a modern and mediatic figure of politics who dominates social networks. Through this resource, Doria intends to maintain this competitive advantage, reflected in the surveys today. Doria’s intention is to win national status as a presidential candidate and to force the PSDB to abandon Alckmin, opting for the natural name that would have real potential to be able to take the Toucans back to the command of the Planalto Palace; And c) PT / PDT / Lula / Ciro – Like Doria, the future and political viability of Ciro’s candidacy depends heavily on the political impenetrability of the “internal” competitor, in this case, Lula and his judicial destiny. Less mediatic than Doria, but excellent debater, the particular election of 2018 can turn into an opportunity for Ciro’s political sincerity, always criticized for speaking without measuring words. The game began and is being played, in a field whose limits are marked by anxiety and uncertainty. The 2018 election will once again be a contest that promises emotions.

 

LEGISLATIVE BRANCH

 

Political Reform Remains Indefinite in Plenary – Since last week, the Chamber of Deputies has tried to vote for the substitute of Deputy Vicente Cândido (PT-SP), adopted by the Special Committee (CESP) for the analysis of the Proposed Amendment to the Constitution (PEC), which amends the electoral rules, establishes a public fund for campaign funding and establishes 10 year terms of office for judges of higher courts and the Court of Auditors of the Union. The lack of consensus on the proposals for political reform has prevented a clear definition of what measures will be taken in the next elections. In order to be valid in the elections scheduled for 2018, the National Congress would need to enact a constitutional amendment until October 7 of this year, a very tight deadline given the deadlock among parliamentarians. During the three plenary sessions of the Plenary, the members decided to vote the text in parts and were able to approve only the decoupling of the Union’s Current Financing Fund for Democracy (which would allocate around R$ 3.6 Billions of public resources to fund campaigns) and the deletion of the article mandating judges. The rejection of the link between the fund and the Union’s revenue does not, however, guarantee that another measure cannot be included to increase the amount of resources allocated to the campaigns, nor does it prevent a higher or smaller order for judges from the courts Higher. In this way, the final text that will leave the House remains open.

 

Lack of consensus about the system to be adopted by 2018 has contaminated points previously considered consensual – Part of the impasse formed in the discussion of political reform began with the approval of the majority system for the election of federal, state and city deputies, a model known as “district” for the Elections of 2018, included in the substitute adopted by CESP of PEC 77/03, reported by Vicente Cândido (PT-SP). The Reporter disagreed with the adoption of this system but was defeated by the collegiate body, which approved a bench stand proposed by the PMDB, altering its text. The model was heavily criticized, including in the major media outlets, which accused MPs of proposing a system aimed at their re-election. As a result, the debate on the merits of the proposal was heated, and even points that were previously considered more consensual, such as the establishment of a public fund to finance the campaigns, began to be severely attacked.

 

“Check Financing” Model – With the decision of the Federal Supreme Court in 2015, which understood that campaigns donations made by companies are unconstitutional, there was an urgent need to find measures that reduce the costs of the electoral race and rethink funding models. However, opposition to the fund established in Candido’s substitute, even those who support the public financing of the campaigns, criticized the amount of resources that would be destined to him. Taking advantage of the wave of popular rejection of the creation of the billionaire fund to finance the 2018 campaigns, presidents of the Superior Electoral Court (TSE), Gilmar Mendes, and the Chamber, Rodrigo Maia (DEM-RJ), showed signs of articulating the return of business financing. Resumption of the practice is the subject of a PEC that is being dealt with by the Senate Committee on Constitution and Justice (CCJ), whose president, Senator Edison Lobão (PMDB-MA), has promised to appoint a reporter to progress. Meanwhile, the matter must meet with strong resistance, including the president of the House himself, Senator Eunício Oliveira (PMDB-CE), who declared himself against the resumption of business donations. Although there is no consensus on the model of funding to be adopted, all parliamentarians recognize the urgency of this pattern.

 

Joint District Model May Be the Most Consensual Point of Reform at Moment – Apparently, at present, the only point of political reform that has not yet been criticized was the adoption of the mixed district system for the 2022 elections. The model dictates that voters submit two votes for the positions of federal, state and city councilmen, one in the candidate and the other in the party of his preference, with half of the seats allocated to the most voted and the other to those indicated by the predetermined party. The measure seems to reach a middle ground between those who want to strengthen traditional political parties and those who yearn to favor new forces and political leadership.

 

Similar Proposals Offer Alternatives to Parliamentarians – The Special Committee of PEC 282/16 finalized this week the vote on the matter, which is now ready for analysis of the House Plenary. The proposal prohibits partisan coalitions in proportional elections and establishes a performance clause so that parties Access to party fund resources and free advertising on radio and TV. It also provides for the possibility of political parties with ideological and programmatic affinity to join in federations, with the same rights and attributions of the other parties in the legislative houses. The college, which was studying the proposal, approved, by 18 votes favorable to 11 opposing, the anticipation of the coalition fence already for the proportional elections (federal and state representatives) of 2018. On Thursday (24th), the mayor and responsible for the agenda of the Plenary, Deputy Rodrigo Maia (DEM-RJ), who already seems exhausted by the lack of consensus among the leaders, a fact that has favored obstruction maneuvers by the opposition, stated that he considers the possibility of PEC 282/16 before the proposal establishing the public and district electoral fund. Maia’s goal would be to achieve some tangible result in the impasse surrounding the theme. President of the Chamber of Deputies, Deputy Rodrigo Maia (DEM-RJ).

 

Committee on the Infraconstitutional Political Reform Suspends Meeting without voting the Base Text – Another House special committee which analyzes proposals to regulate political reform has suspended its works without the approval of a base text. Rep. Vicente Cândido (PT-SP), who is also the reporter in this Committee, has already presented several amendments and supplements to the vote in his third Partial Report, welcoming suggestions from other parliamentarians in an effort to find a text that. The majority of members of the Collegiate. But the discussion in this committee also had moments of tension. Candido’s report touches on a delicate part of the reform that deals with the distribution of public fund resources to fund campaigns between the parties. The Rapporteur defends the allocation of 2% for all parties, 15% according to the total number of senators on 08/01/2017, 34% according to the total of federal deputies holding the same date and 49% according to the last vote for the Chamber of Deputies. However, some Provisional Measures (MPs) argue that the entire fund should be distributed according to the vote of the parties in the last election and others point out that the measure tends to strengthen the large traditional parties and to discourage the emergence of new leadership and alternatives in politics.

 

EXECUTIVE BRANCH

 

Government proposes the privatization of Eletrobrás – The Federal Government announced this week that it will propose the privatization of Eletrobrás to the Council of the Investment Partnership Program (PPI). The goal of the Government is to decrease the shareholder role of the Brazilian government in the company. The government has not yet established which model or the proportion of its share in the collection with the process. The Minister of the Ministry of Mines and Energy, Fernando Coelho Filho, also announced that the Itaipu hydroelectric plant and Eletronuclear (the three nuclear plants, Angra 1, 2 and 3) will be subject to a separate process in privatization, even though there is constitutional determination regarding the Union’s dominance under the nuclear energy companies. Currently, the Federal Government owns 51% of Eletrobrás shares. The expectation is, in a more optimistic perspective, to raise about R$ 30 billion with the measure, which could be used to contain the deficit in public accounts next year.

 

Brazil and Paraguay discuss the battle against organized crime – President Michel Temer has met with the President of Paraguay, Horacio Cartes, on Monday to discuss the quality of life at borders, public security, investments and the commercial relationship between countries. The highlight of the official visit was the battle against organized crime on the border between the two countries, based on a cooperation agreement signed previously between the National Anti-Drug Secretariat of Paraguay and the Federal Police of Brazil on the effective battle against drug trafficking and related crimes, such as money laundering and contraband. The meeting also considered the relationship between the two countries in Mercosur that currently corroborate to intensify negotiations with the European Union, as well as dealing with Venezuela’s suspension of the economic bloc that occurred due to non-compliance with the agreements signed in the Protocol of Accession to the bloc.

 

President Michel Temer and the Director of the National Development Bank launched BNDES Giro – “Giro” is a new modality of credit concession for micro and small companies this week in a ceremony in the Planalto. The new model aims to expand the credit portfolio for micro, small and medium enterprises. BNDES president, Paulo Rabello, said that the goal is to double the credit granted to micro and small companies, which today is R$ 26 billion per year. The new model contemplates reducing bank spreads by 30% to at least 1.5 percentage points, initially, the new credit line will have R$ 20 billion for eventual concessions, with a cost based on the Long-Term Interest Rate (Taxa de Juros de Longo Prazo, the TJLP, in Portuguese).

 

JUDICIARY BRANCH

Justice Gilmar Mendes suspends execution of sentence after the second instance – The Minister of the Federal Supreme Court (STF) has granted an injunction to suspend the commencement of the provisional execution of the sentence of Vicente Paula de Oliveira, sentenced to four years and two months of imprisonment for having, as legal representative of the company Koji Empreendimentos e Construtora, omitted information to the tax authorities in order to suppress or reduce tax and social contribution. In the Habeas Corpus, the defense argued that the arrest was issued after the second instance’s ruling, but he was unlawfully embarrassed. Mendes, in turn, pointed out that the Supreme Court established a jurisprudence to allow the execution of the sentence after the second instance, but that in the last court judgments had already shown an intention to change their understanding.

 

Possible Change of Understanding of the Supreme Court – In 2016 the STF understood that a conviction by a collegiate court (appeal court) could be arrested before the sentence becomes final. For the first time since the establishment of this understanding, Justice Gilmar Mendes granted Habeas Corpus in a different sense: he pointed out that the conviction should only have an effect of final judgment after a decision of the Superior Court of Justice, understood by Justice Dias Toffoli on the day the Plenary of the court accepted the fulfillment of the sentence before the final sentence. Mendes’s monocratic decision is a step for the Supreme Court to alter its understanding of the early jail, which has become one of Operation Lava-Jato’s trademarks.

 

Reaction – In response to Minister Gilmar’s decisions releasing detainees from operations investigating corruption schemes, as well as dissident declarations to institutions and members of the Judiciary and the Public Prosecutor’s Office, all the instances that usually accompany these decisions, the National Association of Public Prosecutors Republic (ANPR),  sent a letter to the ministers of the Federal Supreme Court criticizing the position of Minister Gilmar Mendes. The organization defended the work of the Lava-Jato Task Force and attacked Mendes’ involvement in the political debate, calling for action to contain the minister.

 

 


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