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BRAZILIAN-AMERICAN CHAMBER OF COMMERCE BRAZIL | 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? • Baleia Rossi (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 • Jair Bolsonaro’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) • Impeachment: 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 +55 61 3344-3780 +55 11 3816-3636 SBS Q. 2, Ed. Prime Business, Sl. 1110 Avenida Brigadeiro Faria Lima, 201, 9º andar, cj 91, Ed. Tomie Ohtake 70070-120 05426-100 WASHINGTON D.C BOGOTÁ +1 202 710 9000 +57 3108 129 860 1440 G St. NW, Washington, DC 20005, Cl 93B, no. 13-92, Sala 404, United States 110221.

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