Minister Paulo Guedes (Economy) reaches the final stretch of Jair Bolsonaro’s (PL) term with more power. After a succession of defeats and victories in the execution of a liberal agenda, he has expanded his influence in the government, balancing between what his booklet preaches and the effort to fulfill the boss’s wishes.
The choice of two members of his team to command a strategic theme in 2022 such as fuel sums up the scenario. Adolfo Sachsida went to the Ministry of Mines and Energy and Caio Mario Paes de Andrade was appointed to the command of Petrobras.
Trusted names in the minister’s team, both were part of Guedes’s first-line team (Paes de Andrade is the current special secretary for Debureaucratization of the portfolio, while Sachsida held the positions of secretary of Economic Policy and special advisor).
Guedes’ position today – commanding a ministry and having direct influence on another – is seen by government officials heard by the Sheet as a demonstration of the president’s confidence as the country goes through a challenging time to control inflation, generate employment and ensure growth. These tasks to be performed in the midst of an electoral campaign.
Guedes’ current status as “super-minister” contrasts with previous episodes. The minister has kissed the canvas several times since he took office with the promise of making a revolution in economic policy.
The Chicago School economist achieved different achievements, but the losses sounded more strident at different times, with his departure being raised on several occasions – including by himself.
Among these defeats is the burial of a tax along the lines of the former CPMF (an idea defended until today by the minister), the “red card” with which Bolsonaro indirectly threatened him if ideas such as freezing pensions arose, a stampede in his team given the government’s contradictions with the liberal discourse and the loss of influence over Petrobras in 2021.
The accumulation of these episodes made the minister show that he could set aside part of his convictions and continue to side with the president.
In October last year, he even accepted changes in tax rules to fit a monthly payment of R$400 from Auxílio Brasil into the Budget – a demand by Bolsonaro in light of the upcoming elections.
To execute the plan, the minister put into practice a mega operation that demanded an amendment to the Constitution to circumvent the spending ceiling – a rule that he and his team had consistently defended until then. The measure generated revolt in his team, which suffered another stampede.
Afterwards, Guedes started to defend the initiative. “[É] perfectly understandable. I hope the markets understand this rather than taking a slightly more childish position that ‘the symbol is the roof’, ‘the roof or death’, the minister said in November.
This year, there are new flirtations with unusual measures in the face of electoral proximity. Although on the one hand it still defends Petrobras’ price freedom, the Ministry of Economy privately understands that the current moment is exceptional and that measures can be adopted to contain the volatility of prices at pumps.
The vision is shared by different members of the economic team and it is the same type of understanding that catapulted two of Guedes’ advisers to the command of fuel decisions. Sachsida, for example, was chosen by Bolsonaro after presenting suggestions for price changes directly to the president – with the minister’s approval.
Measures still under study were mentioned by government officials recently, as shown by the Sheet. One of them would establish ranges for the international price of oil – and, if the price of a barrel varies within the delimited values, the company would not be able to make readjustments. Another suggestion is to create a minimum interval of 100 days for readjustments.
Whichever option is chosen, the moves are made while the government gives frequent indications behind the scenes that it wants to avoid Petrobras’ readjustments at a delicate moment in the electoral race – in which Bolsonaro is suffering wear from inflation while former president Luiz Inácio Lula da Silva (PT) extends its leadership in the polls.
The view is that it would even be more advantageous for Petrobras shareholders if the company holds back prices now to avoid the return of Lula, who –in the expressed view– would end the company from 2023 onwards.
Last week, economic advisers joked that they would make a “War” of the Esplanade, in reference to the board game in which players need to advance over territories. The idea is to show how Guedes managed to progress, with his portfolio being even compared to a training school for ministers.
The minister has been successful, so far, in holding back pressure from sectors of the government and the Legislature for more drastic ideas – such as the creation of subsidies to contain the rise in the price of diesel and gasoline.
The ongoing pressure between ministers in the political area, with complaints that decisions on the subject are now too concentrated on Guedes’ desk. Paes de Andrade, coming from Guedes’ team, was even refuted by names like Arthur Lira (PP-AL) – who had defended someone with more experience in the sector the first time he had been quoted for the position.
But the perception in the government, and especially Bolsonaro, that the economy will be a determining factor in the presidential race has spoken louder. This has led the president to listen more to the economic area and to limit matters to Guedes’ portfolio.
On the political wing, the strengthening of the minister has been interpreted as a rebalancing of forces, given the increasing influence of the centrão on government decisions since Bolsonaro joined the grouping of parties in 2020.
In this sense, the movement to dehydrate the center has been driven by the military who orbit the office of Jair Bolsonaro. They began to consider more the positions of Guedes and his team to the detriment of the demands of the political wing.
According to Planalto advisers, Guedes has also stopped looking back – as he has failed in his bold promises of privatization, economic opening and structural reforms – and has started to focus even on plans for a possible second Bolsonaro term.
These advisors cite, for example, the minister’s idea of creating a fund with privatization resources to work on reducing inequality. The minister sees this as a killer argument against the PT’s accusations that it wants to hand over public resources to the private sector – now, it would be to fight poverty (instead of being in the hands of parties).
After several opposing ministers left the government to seek solo trajectories in regional candidacies, Guedes arrives at the end of Jair Bolsonaro’s term with the chance to control the economic area more than ever.
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