BRAZILIAN-AMERICAN CHAMBER OF COMMERCE | POLITICAL LANDSCAPE

JANUARY 27, 2021 POLITICAL LANDSCAPE MOST IMPORTANT SPEAKERSHIP ELECTION SINCE 2015. SENATE LIKELY TO ADOPT A MORE MODERATE PROFILE

CÂMARA DOS DEPUTADOS (FEBRUARY 1ST)

• Two-year term. Re-election allowed in 2023. WHAT IS AT • 2 competitive candidates STAKE? • (MDB/SP) is backed by current Speaker, whereas Arthur Lira (PP/AL) is backed by Bolsonaro • Influence over the legislative agenda

• Runoff on the same day if no candidates reaches qualified majority • Future of the administration’s economic policy

SENADO FEDERAL (FEBRUARY 1ST) • Clues for the 2022 General Election • ’s political strenght • Two-year term. Re-election allowed in 2023. • Cabinet reshuffle as of February • 2 competitive candidates

• Rodrigo Pacheco (DEM/MG) is backed by Bolsonaro, whereas Simone Tebet (MDB/MS) has support from anti-corruption caucus (“Renova Senado”).

• Runoff on the same day if no candidates reaches qualified majority STANCE ON KEY ECONOMIC AGENDAS BALEIA ROSSI (MDB/SP) ARTHUR LIRA (PP/AL) ROSSI LIRA

Spending cap

Public Management Reform -

PROFILE PROFILE Pension reform

Technical Political Technical Political Labor Reform LEVEL OF INFLUENCE LEVEL OF INFLUENCE - + - + Emergency Amendment

• 2nd term. Party leader since 2016 • 3rd term. Leader of the so-called Mansueto Plan • Good leverage with industrial “centrão” caucus segments • Good leverage with lawmakers and New Emergency Aid - • politicians from the Northeastern Sponsor of the tax reform (VAT) Autonomy of the - • Supported by current Speaker region Central Bank • Supported by the Bolsonaro administration Favorable NA Against - 4 POSICIONAMENTOS NAS PRINCIPAIS AGENDAS RODRIGO PACHECO (DEM/MG) SIMONE TEBET (MDB/MS) ECONÔMICAS PACHECO TEBET

Spending cap

Public Management Reform -

PROFILE PROFILE Pension reform

Technical Technical Political Political Labor Reform LEVEL OF INFLUENCE LEVEL OF INFLUENCE - + - + Emergency Amendment -

• 1st term senator (1st Half) • 1st term senator (2nd Half) Mansueto Plan - • Chaired the Constitution Committee of • Chairs the Constitution Committee New Emergency Aid the House (2017); of the Senate Autonomy of the • Backed by Bolsonaro and the current • High-profile lawmaker, daughter of a Central Bank President of the Senate former Senate President;

• Former Lieutenant Governor Favorable NA Against - 5 BOLSONARO LIKELY TO SERVE OUT REMAINDER OF HIS TERM. FRAGILE GOVERNABILITY

• Pandemic management: recent events in Manaus and difficulties in • Reforms: vaccine rollouts have exposed the administration’s chaotic crisis management. o Lira likely to favor short-term fiscal budget reform and public management reform (PMR) • : despite Bolsonaro’s low approval rating (26%), continuity remains the most likely scenario due to o Regulation of the PMR Amendment unlikely before 2023

o Dispersed opposition o Structural tax reform unlikely in the near future. Should be replaced by financial transaction tax and extension of payroll tax o Distrust among lawmakers of the Vice-President exemptions o Possible albeit timid short-term economic recovery • Worth keeping an eye on: o Time consuming ousting procedures o New Railroad Framework • Governability: Bolsonaro would not gain total control over the agenda in a scenario where Arthur Lira wins the speakership: o New Cabotage Framework

o 2020 elections: center-right parties less dependent on Bolsonaro o Gas Law

o President’s low approval rating favors increase in barganing o Changes to the Electoral Code

o Unlikely 2018, Bolsonaro will rely heavily on traditional parties to o Electricity Sector Modernization win reelection in 2022 6 AGENDA OF THE 1ST QUARTER DOMINATED BY LEFTOVER 2020 AGENDA

Source: House of Representatives and Federal Senate. Prospectiva

7 • Brazil needs to play catch up with the United States, Europe and China COVID SECOND WAVE simultaneously o New social restriction measures

• No clear sign that Bolsonaro is willing to drastically redirect his foreign o Some states already experiencing a collapse of their health systems policy VACCINATION ROLLOUT

• Foreign policy has become the last stronghold for Bolsonaro’s extreme- o Possible new conflicts with the federal government over right ideologues ineffectiveness of vaccination rollout

• Changes in the Foreign Affars Ministry unlikely to yield positive results ECONOMY

• Rapprochament with the Chinese by allowing companies to resort to • Adherence to the new fiscal budget regime Huawei’s 5G infrastructure • Difficulties in maintaining fiscal incentives and subsidies

• Approximation with the Biden administration will depend on Bolsonaro’s • Tax and public management reforms willingness to shift Brazil’s environmental policies • Privatizations • Regionally, Brazil likely to maintan self-isolation due to POLITICS AND CIVIL SOCIETY o Lack of real interest in fostering regional integration • Social unrest due to collapse of basic public services and tax hikes o Pandemic needed to balance the fiscal budget • Indictement and impeachment of public managers/politicians o Local and national elections (Ecuador, Peru, Argentina, and Chile) involved in poor crisis management (pandemic) 8 BRASÍLIA SÃO PAULO

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