BRASÍLIA PAPER POLITICAL SCENARIOSApril 2006 Year XI – No. 117 - Brasília - Federal District ARKO ADVICE Political Analysis Arko Advice Ltda. — Political and Public Policies Analysis IN THIS EDITION PROSPECTIVE INSIGHT April: resumption of articulation PMDB and the presidential 02 February was a month of articula- market as to the new Minister’s capa- both PT and PSDB are negotiating succession tion. March. one of decisions. The bility to defend a consistent agenda intensely. The PT continues to insist most unexpected of these was the of reforms in an eventual Lula second on having the PMDB on its ticket. It is firing of Antonio Palocci. We already mandate. also working on other critical issues Political 04 expected deterioration of the political Returning to decisions confirmed for Lula: What will the coalition’s Radar crisis. Allegations made after Carnival in March, the PSDB and PMDB chose scope be? Who will be the candidate involving Paulo Okamotto and Anto- Geraldo Alckmin and Anthony Garot- for the vice presidency? How will the International nio Palocci indicated new problems. inho as presidential candidates re- campaign team be composed? Agenda 05 What was surprising however was spectively. The PSDB went even In Geraldo Alckmin’s PSDB, the the way in which the Palocci episode further and chose José Serra to run issue is more advanced. evolved. for the São Paulo Government. Ap- The PFL should nominate a candi- Annexes 06 As far as CPIs are concerned, Rep. parently, wounds caused by the dis- date for Vice President and have Provisional Osmar Serraglio’s (PMDB/PR) final pute between them are curing and several names in the running: José Measures 06 report on the Mail Service CPMI without doubt, Serra’s presence in Agripino, José Jorge, José Thomaz caused a strong dispute between the São Paulo strengthens Alckmin in Nonô, Paulo Souto and Roseana Succession in Government and the Opposition. the presidential race. Sarney. None of these are very excit- the States 07 Nonetheless, nothing bombastic sur- In the PMDB, as expected the ing. The predominant trend is that faced besides the indictment of im- choice of Anthony Garotinho in the the candidate will be from the North- National portant PT figureheads and the con- party’s primaries did not unite the east where Lula must be defeated. Electorate 08 firmation of the existence of a slush party. Besides heated questioning by One definition seems clear: Alckmin fund. The Bingo CPI will continue to the pro-government faction, he does has decided to have a northeastern operate until mid-year and may be- not thrill Oppositionists, who have campaign coordinator to afford more come the main focal point of friction already prepared a formal invitation political weight to the region. Per- between the PT and PSDB. for Itamar Franco to enter the run- nambuco PSDB’s Sergio Guerra was Notwithstanding those stepping ning. Franco is prepared to accept chosen. down from office to run in the elec- the invitation should it be made at his Lula initiates April weaker than in tions, the ministerial reform did not home and with total Minas Gerais March. The loss of Antonio Palocci, as imply a profound change for the PMDB support. However, the fact well as circumstances surrounding his Government. The worst change, due that the majority of the party at state exit, loss of fiscal policy performance to the political crisis, was in the Min- level prefer agreements with the and the perception of Guido istry of Finance. Substitution of PSDB and PFL, complicates their own Mantega’s fragility accrue difficulties Antônio Palocci for Guido Mantega candidacy. Political negotiations in- for Lula’s campaign. Nonetheless, it is generates doubts within the financial crease in April. At the electoral level, still early to write him off. Political Assessment of the Government (March) MANAGERIAL PERFORMANCE: Antonio Palocci’s (Finance) and Joaquim Levy’s (National Treas- Atmosphere ury) exit, criticism of economic policy by presidential aide Marco Aurélio Garcia and new criticism Everything indicates that the political directed at economic policy were signs of lack of unity and managerial fragility. temperature in April will remain high in light of a few variables. Considering the deadline POLITICAL PERFORMANCE : Allegations made against Minister Antonio Palocci have rendered to leave office in order to run (March 31), the Government incapable of mobilizing its base in Congress targeting the resumption of impor- negotiations targeting Octobers elections tant votes. step up a notch. Several ousting procedures ECONOMIC PERFORMANCE : An increase in industrial production was recorded in January. should be voted in the House of Representa- tives. Voting on the Union Budget may finally Sales also increased. be concluded in Congress. Allegations involv- TRADE PERFORMANCE : March closed with a primary surplus of US$ 3.681 billion, an increase ing former Finance Minister Antonio Palocci of 30.48% in comparison to the previous month and 10.11% in relation to March last year. The will also continue to have repercussions. His accumulated amount for the year is US$ 9.346 billion. ☺ exit has weakened the Government bearing in mind that Justice Thomaz Bastos may also FISCAL PERFORMANCE : Public sector economy for the first two months of the year was R$ be investigated regarding the removal of 7.79 billion compared to R$ 15.41 billion for the same period in 2005. banking confidentiality from housekeeper SOCIAL PERFORMANCE : Formal employment achieved a historic level in February. MST land Francenildo Santos Costa. Another pertinent issue is the dispute between factions of the invasions also increased throughout the country. PMDB regarding the party having its own REFORMIST PERFORMANCE : Nothing important was approved in Congress. The Union Budget presidential candidate. was not voted. April 2006 PMDB AND THE PRESIDENTIAL SUCCESSION Within the current political-electoral scenario, the PMDB’s political Paraíba, Paraná, Rio de Janeiro, Rio Grande do Norte, Rondônia, Ro- alliance strategy at State level constitutes an immense and almost un- raima, Rio Grande do Sul, Santa Catarina and Tocantins. surmountable barrier for the party to have its own candidate for the Presidency of the Republic. The expectation is to elect between 8 and 11 Governors and from 100 to 115 federal representatives. However, to have its own candidate However, this has not impeded the PT and PSDB from trying to offi- or a coalition at the federal level could make alliance negotiations be- ciallize a national alliance with the PMDB. Furthermore, factions of the tween States unfeasible and consequently compromise the PMDB’s party are attempting to place other names in substitution of Anthony electoral performance expectations. Garotinho. Orestes Quércia is talking about former President Itamar Franco. These are clear signs that Garotinho still has serious hurdles Despite the PMDB being part of the Government’s base in Congress, ahead. its preferential ally in the majority of the States is the PSDB. There is a possibility of a coalition with the PSDB in the following States: Acre, Lula has a lot to offer the PMDB, especially space within the admini- Alagoas, Bahia, Federal District , Minas Gerais, Mato Grosso do Sul, stration and funds. The PSDB may offer the vice presidency on its ticket Pernambuco, Paraná, Rio Grande do Norte and Santa Catarina. – the PFL would accept to decline from the position as long as it is not awarded Anthony Garotinho – and make a few State concessions. With the PT, there is a possibility of an alliance in 9 States: Ama- zonas, Espírito Santo, Goiás, Paraíba, Piauí, Roraima, Rondônia, Ro- raima, Sergipe and Tocantins. PMDB: divided between the PT and PSDB at State level In São Paulo, Paraná and Santa Catarina, where the PMDB is strong- est, the trend is an alliance with the PSDB. Even if the possibility of a The PMDB has shown itself to be competitive in at least 14 States of coalition with the PT at the federal level is put to the vote in these the Federation: Acre, Amapá, Espírito Santo, Goiás, Mato Grosso do Sul, States, there is a chance that the alliance with the PSDB theory will win. Other situations Alliance with the PSDB: AC/ or undefined: AL/ BA/ DF/ MG/ MS/ PE/ AP/ CE/ MA /MT PR/ RN/ SC/ SP PA/ RJ/ RS Alliance with the PT: AM/ ES/ GO/ PB/ PI, RO, RR, SE, TO Thus, within the current scenario, most likely is that the PMDB will Alckmin’s consistent growth in the polls, which could culminate in the not launch its own candidate or will enter a coalition at the federal level. formation of a triple alliance – PSDB-PMDB-PFL; (c) consistent growth The choice of an electoral partner in each State will define which presi- of Anthony Garotinho, which could strengthen his candidature within dential candidate will have the party’s support in the State. the party; (d) the surfacing of a group within the PMDB capable of en- couraging and uniting the party. Some vectors may change this scenario; (a) consistent improvement in the assessment of Government, accompanied by Lula’s strong recu- The following diagram is an objective x-ray of the PMDB’s situation in peration in the polls could pull the PMDB closer to the PT; (b) Geraldo the 27 States: Page 2 April 2006 X-RAY OF PMDB’S SITUATION IN ALL 27 STATES Rep. Eunício Oliveira No candidate No candidate for intends to run for a seat for State State Govern- in the Senate with PT or The Government ment but would PSDB support. but is willing support Senator PMDB to make an Roseana Sarney would support alliance with (PFL). Rep. Eunício Oliveira Rep. Jader Barbalho should be the party’s candi- the PT. date for the Senate.