International Worker's Day may change Dilma's tone in pre-campaign

Dilma will address the nation in the
International Worker's Day

It seems the recent bad numbers in the electoral surveys have finally hit the pre-campaign of president Dilma Rousseff.  Yesterday the president already changed the strategy and started attacking her opponents. She said during a speech that she does not believe the country will make a step back (meaning she believes she will be reelected). The tone is expected to be even more direct on her TV speech tomorrow on account of the International Worker's Day. She may address her main opponents Aécio Neves from the social democrat PSDB party and Eduardo Campos from the socialist party PSB stating clearly what her government has conquered to the working class in Brazil.

Today O Estado de S. Paulo published pieces of Dilma's government program draft. The text basically makes a direct reference on the benefits that the Workers' Party (PT) made for the country and tries to frame adversaries proposals as threats for the average Brazilian worker. One example is the adversaries defense of the Central Bank's independency. The text asks: "Independence from whom?", implying that without control the Central Bank would damage the workers income gains. It also refers to the past government of PSDB as a privatist government.

Both strategies proved to work well on the last two campaigns of PT (for Lula's reelection and Dilma's election). The question is if this is going to work again, specially when the government proved to be such a bad manager in the energy sector, and when the gains from the policy of increasing salaries and maintaining jobs are being eroded by an inflationary bubble that threats to damage the purchasing power of the country's lower classes for the years to come.

The attempt to frame adversaries as members of "evil market forces" is also a fallacy easy to deconstruct, because her government poured buckets of money to huge transnational companies using subsidized loans from the national development bank, BNDES.

The change of tone reflects the loss of 6,7 percentual points in Dilma's vote intention, from 43,7% to 37%. The president would be still reelected if the elections were held today, but if the trend keeps going, Dilma may loose.

Brazil approves new internet legislation

Brazilian senators vote on Internet Law

The Brazilian Senate has just approved the Civil Landmark of the Internet (Marco Civil da Internet), a subject that will for sure be on the cover of this wednesday Brazilian newspapers. The text of the law ensures net neutrality, even though it also opens the door for content discrimination in specific cases to be determined by presidential decree. The net neutrality -- the legal prohibition of discriminate data flow according to the type of content, such as slowing down Skype connections on mobile internet -- was the most sensitive subject of the law, a subject that now will be probably on the hands of the next Brazilian president to resolve.

The law also ensures the privacy of users and limits the liability of Internet Services Providers in cases of judicial process regarding third party's prejudicial content published online. There is an interesting mention that internet application providers (such as Facebook or Google) should not abuse in the use of private information of users (even if authorized by them). I would not be surprised to see in the future a civil lawsuit against one of the big internet companies in the country.

I'm curious to see how will be the coverage of the main newspapers tomorrow. The first time the text was approved on the Chamber of Deputies I noticed few of the criticism about the limited net neutrality (this I saw later on specialized publications). In fact, both O Globo and Folha were rather optimistic about it. In fact just now (as the subject is only on the online versions of the media, the attentions are focused to the victory of the government in surpassing the opposition maneuvers against the project.

-- update --

I just had a brief discussion with a friend  which was on the government during the public consultations of the internet law project. Basically the reason why they let the details of net neutrality to be determined by presidential decree was in order not to pass a rigid law that would have to be changed in the future due to technological developments. So net neutrality is still there as a principle and a set of rules which will have specific subsets of parameters and exceptions (Many thanks to Guilherme Almeida de Almeida).

As for the media coverage it was pretty modest, compared to the first approval. Since the text was not passed with many changes, newspapers sticked to describing the law and its concepts. Folha published an article from PSDB (opposition) senator Aloysio Nunes Ferreira arguing the law could be improved had the Senate more time to work on it. He said the privacy issue could be better defined, granting more protection to users.

-- end of update --

Catching-up

The Easter week I skipped publishing here was dominated by the Petrobras scandal (the refinery purchase that brought a billionaire loss to the company) and the presidential election forecasts, that again are dimming for Dilma. They both seem to be related, but in fact I hardly believe the average voter will put much weight on what is being done with the biggest company in the country.

On the Petrobras' front the most interesting development is a sort of discrepancy between the declarations of José Sérgio Gabrielli, Petrobras' former CEO and president Dilma Rousseff. Dilma said the Pasadena purchase was a bad business. This Sunday, in an interview to O Estado de S. Paulo, Gabrielli replied saying that Dilma was one of the board members and shared the same responsibility in the purchase. This was at least what O Estado de S. Paulo put in the headlines. I read the whole interview and could see Gabrielli saying the purchase was totally in acceptance with the 2006's context. But the contradiction surely was enough to be replicated by Folha de S. Paulo and O Globo on their monday editions.

Dilma vote intentions keep falling as rumors of Lula's return arise

Ricardo Noblat, columnist for O Globo wrote this monday that Lula and Dilma are waging a secret battle for the right to be the Workers' Party (PT) next candidate to the elections this year. According to Noblat, Lula has always envisioned coming back to the presidential seat (no matter how many times he declared he was done with it)  and that was why he chose Dilma to be his successor, a political nobody until 2011 when she started appearing next to Lula in big cerimonies.

But now that Dilma has become used with power, Lula would have a hard time dissuading her from her rightful reelection, unless she keeps going down the vote intention polls, which is precisely what we are seeing in this year. Last saturday Datafolha (the research institute from Folha de S. Paulo) showed the vote intentions for Dilma went down to 38% from 44% on the previous poll, in a scenario where Aecio Neves (PSDB senator) and Eduardo Campos (PSB, and currently governor of the state of Pernambuco) would be the president's main challengers.

André Vargas asked for a removal from the vice-presidency
of the Chamber of Deputies after complaints

Truth or not, it seems the situation is getting worse to Dilma every week. Last week Globo Television showed PT deputy André Vargas (that until this monday occupied the vice-presidency of the Camber of Deputies) in what it seemed to be a  lobbying negotiation with a convicted money dealer, Alberto Youssef. The investigation started after Vargas was getting a ride on Youssef private jet. This monday, Vargas asked for a 60 removal from his position as vice-president.

In the World Cup front, the news are not positive also. In Rio, an union from the workers of the constructing business started a strike and stopped the already delayed work for the World Cup and the Olympic Games this monday. In São Paulo the work in the World Cup stadium were stopped last month after the third death of a construction worker on the site. The stadium may be inaugurated in the end of this month.

Bad news for Dilma were again good news for the market. This monday, following the wave of popularity decrease the dolar hit a five month low against the real. Economists heard by O Estado de S. Paulo interpreted this as a sign that investors see a chance of change for better in the Brazilian government -- in a similar reaction to what happened when the president suffer a popularity decrease. Of course the market may be also responding to the 25 basis points increase on the country's interest rates decided by the Brazilian Central Bank on april 3rd.

Dilma faces turmoils as election agenda gains the media

President Dilma inducted six ministers this Monday,
two of them were nominated to make amends with PMDB

From now on no news on the politics section is unrelated with the election for presidents, governors, deputies and senators on october. Every announcement, every quote from a political personality has now a direct reference to the dispute between Dilma and so far the two other possible candidates (Eduardo Campos from PSB and Aécio Neves from PSDB).

The electoral tone was all over two stories that represented a downturn to Dilma on the last couple of weeks: the mess in the energy sector and the dispute with PMDB, the major allied party of Dilma. In the first case, Rui Falcão, president of PT (Worker's Party, the PT of Dilma) declared that PMDB was only interested in positions in the government and not as much in reaching the greater good for the country. Eduardo Cunha, the leading deputy of PMDB in the Congress started a rebellion and threatened to go against some of the most important projects of the government such as the Marco Civil da Internet (the Civil Landmark of the Internet -- a set of rules for the internet business in the country), due to be voted this week.

Initially Dilma tried to ignore the opposition inside her own allied base. But after realizing the power of the unpleased allies she decided to nominate two of PMDB approved names for the ministrers of Agriculture and Tourism. Ironically the crisis that started with a critic of the PMDB greediness for positions inside the government is being solved by providing PMDB with positions in the government.

Another setback for Dilma was in the energy area. Briefly put, the government decided to anticipate the end of some of the energy contracts last year (this way provoking a cut in the energy prices for the end consumer, that would represent a discount of 28% for residential users). The project backfired as it stimulated energy consumption in a time of the year where the hydroelectric dams were not getting as much rain as in the previous years. This forced the electric system to turn on the thermoelectric plants that are more expensive. In order to keep its promise of a cheaper energy, the government decided to subsidize the energy bill by putting billions to pay the extra cost of thermoelectric energy. After denying for several weeks that that was a crisis in the sector, the government decided to acknowledge the problem and promised to not interfere in future contracts at the same time it waved with a tax increase to cover the future costs of the more expensive energy. It was one perfect example of how not to manage a country, given by a president that sold an image of a great manager in the energy department.

Both situations show how bad the current government, and I would dare to say the current president, deal with this sort of conflicts. When faced with a situation where there is a need for negotiation the government usually try to impose itself first and end up being obliged to step back and offer a much more costly and inefficient solution in the end.

Dilma is still ahead in election poll

Even with all the protests, president Dilma would be elected in the first round of the presidential elections this year, according to the latest survey from Datafolha published this sunday. Dilma ranks first with 43% to 47% of the votes in different scenarios with different competitors, making more than the sum of all the other candidates for president. The result points to a stable perspective from the last evaluation of Dilma electoral performance and according to Folha analysis means that it is Dilma that should run as a candidate for PT (the Worker's Party) and not former president Lula. This was received as good news to the government because it shows that president Dilma's popularity recovered from the past results on october lat year when her vote intention was in 42%.

Dilma will face the challenge of keeping the economy
growing while avoiding inflation

In spite of the good numbers, Dilma still has some challenges ahead. Her negative evaluation went up from the previous survey, showing that her current popularity might fall in the future. The risks with the economy downturn (with the current strategy from the Central Bank to reduce the economic growth in order to control inflation) and the possible negative impacts of protests in the World Cup may force a second round of the elections in the end of October.

Former president Fernando Henrique Cardoso, from the social democrat party (PSDB), the biggest rival of PT, bets against Dilma in an interview published this weekend in El País Brasil, given to my former  boss Carla Jimenez and to Luis Prados. Cardoso makes an interesting diagnosis of the current state of affairs in Brazil: PT has lost the momentum to carry on the reforms when the country faced a window of opportunity -- as a matter of fact, the government never saw it as a window of opportunity but rather as a permanent state that, as we all know, already passed. He says, though, that if it was not the case that the country was as good as international investors thought it was in the past, it is not as bad as they think now. He claims we need a better positioning in Latin American politics (which now has an all new economic bloc: the Pacific Alliance) and expects the current dissatisfaction now common in the middle class and businessmen will be also passed on to the greater part of the population as the campaign goes on.

Protests
Enough with politics. Now back to the protests. This weekend a new set of protests against the World Cup and now the new wave of hikes in the bus tariff (that should happen in all major capitals by the end of the year) has again ended in violence. This time the controversial attitudes came out of São Paulo police and its new "ninja force"(policemen that know their ways in martial arts, and carry no guns) when they started to arrest and remove protesters based only in suspicions -- this was criticized by some lawyers because it would go against Brazilian Constitution that only allows police to act based on facts. Five journalists were taken down by these same policemen, carried out of the protests and later let go when the Police chief found out they were working to cover the protests. Among them was my former O Globo colleague and friend, Sergio Roxo. Interesting enough, as Roxo wrote in O Globo, the the protest in São Paulo ended with 6 injured people, among them 4 cops, one of which broke his arm while trying to immobilize a protester.

The general tone around Dilma Rousseff

Nobody yet knows at what extent this year’s protests will have an effect on the next year’s presidential elections. There were those who said it would impede Dilma from being reelected and I certainly believe it was one thing that gave Eduardo Campos and the its party the PSB the final push towards moving out of the government and launching a presidential candidacy for president.

One thing is for sure, the tone of the press around Dilma could certainly be one indicator that preceded the protests. Initially the press was very positive around Dilma. The president got compliments from O Estado de S. Paulo in her first interview. Dilma was somewhat protected by the press during her first year as a president, when she had to cut six ministers accused of corruption.

The honeymoon started to end throughout the second year and definitely ended in the end beginning of this year, when it became clear that the country’s economy stability had been thrown away by the president, in the name of maintaining (artificially) the unemployment low and the president’s popularity high. The main indicator that this was the case was the lost of the grip in inflation, that obliged Dilma to push back one of her main objectives in the economic policy (of bringing the Brazilian interest rates to international levels).

Today, Ricardo Noblat, columnist of O Globo, elevates even more the tone against the president, siding her with two other Brazilian contradictions already unmasked: the former senator Demóstenes Torres (that was a symbol of honesty until he was linked with Carlos Cachoeira, a criminal that run illegal gambling business across the Brazil’s center-west region) and Eike Batista (a Brazilian billionaire, featured as one of the richest men in the world, and now facing bankruptcy). Noblat says Dilma’s contradiction is her fame as a tough manager, highly promoted by Lula. Since none of the big infrastructure improvements were launched due to a lack of managerial and political abilities, Noblat says it is a big contradiction that Dilma still has a chance of being elected for a second term.

This certainly gives another glimpse of what will be the general tone against the president next year, and again can also indicate that the amount of effort, and money, that PT will have to spend for this reelection will be much more than expected two years ago.

Economic stability as a big issue on next year's presidential elections

The pre-salt auction has again gained the main pages of Brazilian newspapers today, but I’ll leave the subject for tomorrow’s post. For now, it’s suffice to say that there are occurring some protests and that according to Folha de S. Paulo and Valor Econômico, this probably could be the first and last auction in which Petrobras will be obliged to participate with at least 30% of participation in each area. As mentioned in a previous post in this blog, the state controlled oil company is short on cash, crippled by the government’s policy.

What I would like to call attention to is the interview of Eduardo Giannetti, economic advisor of Marina Silva to Folha, saying that she would stand for a lower state presence in the economy. It does not mean that she will take the liberal path, but probably that she would be more market friendly.

The interview is also another way of saying that the economy is going to be a big topic in next year presidential election. Giannetti praised the last term of Fernando Henrique Cardoso as a president (1999-2002) and the first term of Lula (2003-2006). After that the macroeconomic tripod (fiscal responsibility, inflation control and floating currency) was somewhat abandoned, he said.