The relationship between conservative Chamber of Deputies speaker, Arthur Lira, and President Luiz Inácio Lula da Silva (a.k.a. Lula) is expected to be at the heart of efforts to pass new legislation over the next few months. Under previous Brazilian governments politicians holding these two posts have had a complex relationship casting them as part friends and part foes in the struggle to push forward and police the legislative agenda. Part of the current tension is ideological. Lula is of the centre-left while Lira is a member of the centrão which is the main centre-right political grouping. On some issues Lira worked as a close ally of Lula’s sworn enemy, former president Jair Bolsonaro, so the Lira-Lula partnership therefore could be potentially turbulent. 

Lira, along with various key state governors, attended the Brazil Summit on 10 May in New York that was sponsored by the Financial Times and other organisations. He accused the government of poor political coordination and argued that the relationship between the lower chamber — which he will lead for the remaining two years of his four-year tenure — and the Presidency ‘must be based on dialogue rather than the super-positioning of one government branch on top of another.’ He suggested that Congress was ‘coming back’ as a dominant political force with its members not yet fully aware of their true political leverage. 

This could be interpreted as a promise to encourage greater scrutiny of the executive and a more pro-active legislature. Rather more darkly, however, it can also be seen as serving notice of the continuation of pork-barrel politics with members of Congress demanding significant sweeteners in return for voting for government-sponsored legislation. Lula may also be irritated with Lira whose lack of support forced a delay in a vote on the Fake News Bill. Lira also played a role in the rejection of presidential decrees to modify the country’s water and sanitation framework that was approved in 2020. 

Lira would not give a detailed time scale for Congress’ consideration of the new government’s most important piece of legislation which is the fiscal framework bill. He did stress, however, that the bill should include mechanisms to ‘punish’ the government for any failure to meet its fiscal targets. Some such mechanisms are already in the draft including, for example, that expenditure growth is to be limited to 50% of revenue growth — down from 70% — if fiscal deficit targets are not met. Despite this, Lira may also be looking for tougher sanctions. The issue is important because financial markets are very focused on the need for tighter fiscal control and tax reform. A dispute over fiscal management and creative accounting led to the 2016 impeachment of President Dilma Rousseff (2011-2016) who was a leading member of Lula’s Partido dos Trabalhadores (PT). There have been reassuring statements from Cláudio Cajado, of the centre-right Progresistas (PP) party, who is the rapporteur for the fiscal framework bill. Speaking on 9 May he described the text of the bill as ‘mature’ and likely to be treated in a ‘tranquil’ session of the lower house before moving ‘rapidly’ to the Senate. 

The May 2023 issues of Brazil Focus also includes the following:

Politics

• Government under pressure, but has three important opportunities…
• Implications
• Fake news bill postponed 
• House Speaker marks out his territory
• What role will Bolsonaro play? 
• New Banco Central do Brasil appointments
• Just over half the population approves of Lula

Foreign Relations

• Lula seeks to update Brazil’s traditional nonalignment 

Security

• GSI head replaced as 8 January investigations continue
• Brazil launches production of Sweden’s Gripen fighter aircraft

Economy & Business

• So far, a technical recession is avoided
• Brazil remains key investment destination
• High interest rates impact bankruptcies
• Argentina is a possible wild card

Energy Sector

• Equinor greenlights US$9bn offshore gas project
• Lula wants want energy sector to spear-head development