Ciro GomesCiro Gomes — third among eligible candidates in presidential polls and one of four candidates who is believed to have a fair chance at winning October elections — has said that he would move to expropriate the giant pre-salt offshore oil leases sold to foreign companies at auction over the last two years by the government of President Michel Temer after taking office.

In recent days, Gomes — a former Ceara State governor, former congressman, and minister of national integration during the 2003-2010 Lula government — said that the sales which have provided billions in revenue to the cash-strapped Treasury amounted to a BRL1,000 billion (US$291 billion) giveaway of Brazilian natural resources to the foreign IOCs. He not only accused the government of selling some of the world’s most promising oil reserves on the cheap, but also attacked the government for amending a 2010 law that allow companies other than state-led Petrobras to direct exploration and manage operations of any fields discovered in the country’s offshore Pre-Salt Polygon, that is home to some of the world’s largest oil discoveries in decades. Previously IOCs were only allowed to bid for areas as financial investors, leaving ultimate control of development decisions to Petrobras.

Gomes’ comments come only weeks after the Partido Democática Trabalhista’s (PDT) candidate had sought to transform his left-wing coalition — with the Partido Socialista Brasileira (PSB) and Partido Communista do Brasil (PCdoB) — into a centrist ‘big-tent’ alliance by convincing centrist, and right-wing parties to join his alliance. He did this by openly suggesting that he would choose a prominent businessman as his vice-presidential candidate. The most likely name is that of Benjamin Steinbruch who is president and CEO of Cia Siderurgica Nacional which is Brazil’s third largest steelmaker.

While the move did little to change his support in the public-opinion polls — he remained stuck in third among eligible candidates with just under 10% of decided voters — his tack to the right quickly sparked talks with the right-wing Democratas who were part of President Fernando Henrique Cardoso’s 1995-2002 centre-right government formerly known as the Partido Frente Liberal (PFL) and Partido Popular (PP). The right-wing and populist-leaning party has support from middle-class business people, farmers, independent professionals and non-ideological social conservatives.

The big-tent gambit — even though it failed to result in any immediate poll increase — offered a compelling chance to aggregate legally allotted television time during the strictly regulated two month campaign period. This is one of the most important means of building public support to boost the chance of winning at least 250 seats in the 513-seat Chamber of Deputies in the first-round of voting and create enough momentum to propel Gomes to victory in a presidential election in the anticipated second-round runoff. The election calculus of a big tent centrist coalition probably offered him the only chance at winning without having to seek the support of Temer’s unpopular and corruption-tainted Movimento Democrático Brasilerio (MDB) — which with 65 seats has the most members in Congress — or the Partido dos Trabalhadores (PT), with 58, that has the second largest number of lower-house deputies.

But his tack back to the left is hedging his bets and probably means several things. First, now that Lula’s latest legal gambit has failed — making it near impossible he will be able to convince a judge to let him out of jail and on to the ballot before the registration deadline — Gomes has decided he has a better chance to make a deal to share power with his old friends in the PT, than try to get the support of ideologically less compatible politicians on the right and then have to govern dependent on the support of an alliance of natural and long-time enemies.

And for the PT, an alliance with Gomes offers probably the best chance to win considerable power in the next government. Lula, despite his conviction, remains immensely popular, but the long uncertainty about his eligibility means the PT has been unable to use their base to build the necessary alliances to win outright. And, while Lula’s supporters are fervent, a roughly equal number of Brazilians revile him. That increases the chance that, even if he made it to the second round, his opponents might find it more appealing to rally against Lula than try to gain his support, forcing the PT into opposition for at least four years with little access to the public money and favours needed to be a first-rate force in Brazilian politics.

In the end it probably also means Gomes’ tack to the right was probably a double gambit. If Lula did run it would increase his chance of doing well in the first round and gain more power to build alliances or if he made it to the second round. If Lula didn’t run, he could stop talks with the right and join with the PT and distract his right-wing rivals from signing up with natural allies by offering them a real taste of power at a crucial time. The best sign of this was Gomes suggesting he might pardon Lula if he won. Lula immediately responded by telling the PDT not to attack him or his candidacy.

Even if Lula ran and Gomes lost in October, he would lead a coalition that could barter support and influence with one of the two front runners in the second round. If, in the second round a left-leaning coalition candidate won, he could dump his right-wing election allies and still have political clout to trade for real power. If not he might still position himself as the leader of a swing block in Congress bartering support for legislative concessions.

The attacks on the oil-rights auctions probably mean that Gomes has decided to bet on Brazil’s left. His position on oil sector policy is solidly in line with what the PT’s support base likes to hear. The pre-salt auctions under Temer were only possible because he won changes in key legislation passed under the PT in 2010, and just about the only thing that PT supporters have been nearly as angry about in recent months as Lula’s conviction, which they consider politically motivated, are Temer’s efforts to get more foreign investment in the Brazilian oil industry. That means that Gomes now has a good shot of picking up the largest single chunk of party support in Brazil without having to ask for it. Not only are the PT party elite interested in an alliance, but their rank and file supporters are already cheering him for his oil comments. Without Lula at the top of the ticket, and the alternate PT candidate Paulo Haddad way behind, the PT will probably be begging Gomes to allow the party to join him. So hedging his bets could prove fruitful.

this article was taken from our Brazil Politics & Security publication. If you would like to discuss the contents of this article, or if you have any questions for our experts with regards to your business activities in Brazil, the please contact us.