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California 2003 Election Results

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California 2003 Election Results Powered By Docstoc
					        The Center for Latin American Studies
           University of California, Berkely
         Rio Branco Forum on Brazil



Challenges Facing the New Brazilian
           Government




                    A lecture by
                   Paulo Paiva
                January 31, 2003
     Challenges Facing the New Brazilian
                Government

• Election Results
• The Challenges:
  – Promote economic growth with stability
  – Conciliate macroeconomic stability with growing
    social demands
  – Build a Coalition with the National Congress
  – Maintain an equilibrium between the representative
    democracy and the “new corporatism”
  – Deal with the international agenda
• Public Opinion Poll
Election Results
              Presidential election
          First Round          Run Off                 Δ
                               (Thousands)       %
       (Thousands)     %
                               52,793   (61.3)       13,349
Lula    39,443       (46.7)

                               33,371 (38.7)         13,670
Serra 19,700         (23.3)
                               86,164 (100.0)        27,019
Others 25,347         (30.0)
      84,490         (100.0)
        Senate (81 seats)
Cardoso’s Coalition       Opposition's Coalition
         2002 2003                  2002    2003
PFL        17     19      PT            8      14
PSDB       14     11      PDT           5          5
PPB         2      1      PSB           3          4
PMDB       24     19      PL            1          3
PTB         5         3   PPS           2       1
                          PSD           -       1
TOTAL      62     53      TOTAL        19      28
Change: 9 seats (11.1%)
       House (513 seats)
Cardoso’s Coalition        Opposition's Coalition
         2002 2003                   2002    2003
PFL        98   85         PT          58      91
PSDB       94   71         PDT         16      21
PPB        53   48         PSB         16      22
PMDB       87   74         PL          22      26
PTB        33   26         PPS         12      15
                           PCdoB       10      12
                           Others      14      22
TOTAL 362 304              TOTAL      148     209
Change: 61 seats (11.9%)
       Major Challenges
Promote Economic Growth with Stability
           Major Challenges
  Promote Economic Growth with Stability

Option to maintain the same macroeconomic policy


Symbolic    Effective   Decisions of    Economic
Actions     Actions     Macroeconomic   Challenges
                        Policies
      Major Challenges
           Symbolic Actions

•Visited the Presidents of Argentina and Chile
•Visited President Bush
•Announced in DC the name of the Finance Minister
•Met with the WB and IDB Presidents
•Met with the Managing Director of the IMF
           Major Challenges
  Promote Economic Growth with Stability

Option to maintain the same macroeconomic policy


Symbolic    Effective   Decisions of    Economic
Actions     Actions     Macroeconomic   Challenges
                        Policies
       Major Challenges
                Effective Actions
•Named a Financial Market Executive to be President of
the Central Bank (Henrique Meireles)
•Maintained the previous board of directors in the
Central Bank
•Announced a new project of law sent to Congress to
increase the autonomy of the Central Bank (Monetary
Responsibility Law)
•Adopted the structural reforms program of the previous
government (social security, tax, and labor reforms)
           Major Challenges
  Promote Economic Growth with Stability

Option to maintain the same macroeconomic policy


Symbolic    Effective   Decisions of    Economic
Actions     Actions     Macroeconomic   Challenges
                        Policies
              Major Challenges
       Decisions of Macroeconomic Policies
• Maintained fiscal policy of austerity, expected primary
surplus of 3.75% of GDP in 2003 or even higher
• Did not accept to discuss the renegotiation of agreements
between federal and state governments (renegotiation of
state debts)
•Inflation-targeting policy. Price stability as main goal of
monetary policy. Economic growth due to lower interest
rates more difficult
•Maintained floating exchange rates
• Commitment to honor existing contracts and agreements
•Maintain the agreement with the IMF
•First monetary decision of the Central Bank: increased
annual interest rates from 25% to 25.5%.
           Major Challenges
  Promote Economic Growth with Stability

Option to maintain the same macroeconomic policy


Symbolic    Effective   Decisions of    Economic
Actions     Actions     Macroeconomic   Challenges
                        Policies
             Major Challenges
            Economic Challenges

•Restart economic growth in the short run
•Approve the structural reforms:
  •Social Security Reform – total Social Security
  deficit (private and public) is around 5.1% of GDP
  •Tax Reform – current tax burden is around 33%
  of GDP. If tax reform is not approved this year, the
  government must propose the maintenance of a)
  the taxes on checks (CPMF – Temporary
  Contribution on Financial Transactions) and
  b) the DRU (Elimination of ear-marked federal
  tax revenues)
  •Labor Reform
       Major Challenges
Promote Economic Growth with Stability

Conciliate Macroeconomic Stability with Growing
Social Demands
       Major Challenges
Conciliate macroeconomic stability with growing
                social demands


 Social                         Conciliate
 Expenditures                   macroeconomic
                                stability with
                                growing social
                                demands
                                         Social Expenditures

         Social Expenditures increased
            39% from 1994 to 1999

                                      132.1   137.6   137.5
                    120     124.6
                                                         14% of GDP

  93.3     98.6

          11% of GDP




 1993     1994     1995      1996     1997    1998    1999
Source: IBGE (1991 and 2000 Census)
       Major Challenges
Conciliate macroeconomic stability with growing
                social demands


 Social                      Conciliate
 Expenditures                macroeconomic
                             stability with
                             growing social
                             demands
  1.     To conciliate macroeconomic stability
             with growing social demands
                          2003 budget
- primary surplus                              2.8%(GDP)
- discretionary expenditures:                  2.1%(GDP)
  distribution of discretionary expenditure:
  social development                           72%
  infrastructure                               13%
  production                                    5%
  defense                                       2%
  administration                                5%
  environment                                   1%
  knowledge and information                     1%
  others                                        1%
  TOTAL                                        100%
•Social demands
  •minimum wage
  •increase of civil servant's salaries
  •Fighting Hunger Program

• Risks
   •on the economic side
      •No compliance with fiscal Targets
      •Higher inflation
      •Debt default
   •on the social side
      •Unable to meet social demands and
      expectations
        Major Challenges
Promote Economic Growth with Stability

Conciliate Macroeconomic Stability with Growing
Social Demands

Build a Coalition with the National Congress
    Major Challenges
    Coalition with Congress


Senate     House of           Strategy to
2003       Representative     built a
           2003               majority
To build a coalition in the national congress
Senate 2003 81 seats

Opposition                 Lula's Coalition
  PFL               19   PT                        14
  PSDB              11   PDT                        5
  PPB                1   PSB                        4
  PMDB              19   PL                         3
                         PPS                        1
                         PSD                        1
                         PTB                        3
  TOTAL              50  TOTAL                     31
 Seats missing to:
  Simple majority (50%) 41-31= 10

  Approve constitutional reforms (2/3) 54-31=23
    Major Challenges
    Coalition with Congress


Senate     House of           Strategy to
2003       Representative     built a
           2003               majority
House of Representatives 2003 513 seats
 Opposition            Lula's Coalition
PFL            77           PT               91
PSDB           63           PDT              18
PPB            43           PSB              29
PMDB           70           PL               34
                            PTB              41
                            PPS              19
                            PCdoB            12
                            Others             9
TOTAL          253             TOTAL         253
Seats missing to: (7 seats: independent)
 Simple majority (50%) 257-253= 4
  Approve constitutional reforms (2/3) 342-253= 89
    Major Challenges
    Coalition with Congress


Senate     House of           Strategy to
2003       Representative     built a
           2003               majority
         Major Challenges
           Strategy to built a majority

•Composition of the Cabinet
•Composition of Congressional Committees and election of
Presidents of Senate and House of Representatives
    •Alliance with conservative regional leaderships: José Sarney
    and Antonio Carlos Magalhães
    •In the National Congress, regional leaders have great
    influence
•Elected politicians changing parties common practice in Brazil)
•Majority will need to be built for each important project
        Major Challenges
Promote Economic Growth with Stability

Conciliate Macroeconomic Stability with Growing
Social Demands

Build a Coalition with the National Congress

Maintain an Equilibrium Between the
Representative Democracy and the “New
Corporatism”
      Major Challenges
    Maintain an Equilibrium Between the
   Representative Democracy and the “New
                Corporatism”


Neo-              Potential Conflicts between
Corporatism       Representative Democracy
                  and Direct Democracy
     Major Challenges
          Neo-Corporatism

•Composition of the Cabinet
• Economic and Social Development Council
subordinated to the Federal Government
      Major Challenges
    Maintain an Equilibrium Between the
   Representative Democracy and the “New
                Corporatism”


Neo-              Potential Conflicts between
Corporatism       Representative Democracy
                  and Direct Democracy
        Major Challenges
  Potential Conflicts between Representative
  Democracy and Direct Democracy

•Representative democracy versus direct democracy
•Need to Strength Institutions (Congress, Political Parties,
Judiciary, etc.)
•Conflict between Representative Democracy and the
practice of direct dialogue between the Executive Branch
and the population
•Popular Support – For example, trip to Northeastern
States
• To use organizations of the civil society (councils, for
example) to lobby and pressure Congress
        Major Challenges
Promote Economic Growth with Stability

Conciliate Macroeconomic Stability with Growing
Social Demands

Build a Coalition with the National Congress

Maintain an Equilibrium Between the
Representative Democracy and the “New
Corporatism”
Deal with the International Agenda
     Major Challenges
Deal with the International Agenda
Strength the Brazilian leadership in Latin America

Strength the democracy and peace in Latin America
Mercosur - Rebuilt it within an environment of
economic instability

             A timeframe from 2003 to 2005
FTAA
              Co-presidency Brazil/USA
European Community – Negotiations on barriers to
agricultural goods
Public opinion results from
        recent poll
        (CNT-Sensus: Jan. 19 to 23, 2003)

     Country’s Satisfaction Index
     0ct.02: 24.3% Jan 03: 56.6%

     Social Economic Satisfaction
   Evaluation: 34.0% (last 6 months)
   Expectation: 63.6% (next 6 months)

       President’s Performance
 Approve: Oct 02: 34.7% Jan.03: 83.4%
 Disapprove: Oct 02: 53.9% Jan.03: 6,8%
Expectations regarding Lula’s
        Government
 Promises will be fullfilled: 69.9%

 It will be a good government: 92.6%

 Priority to Zero Hunger: 87.3%

 Unemployment will decrease: 78.2%

 Inflation will decrease: 63.9%

 Interest rates will decrease: 61.4%

 New minimum wage: R$ 266.00
   Major Reforms
            (Priorities)

Labor Reform:             44.0%
Land Reform:              11.5%
Social Security Reform:   11.2%
Political Reform:         10.3%
Tax Reform:                4.1%
Mercosur and FTAA
Importance of Mercosur: 62.3%

FTAA:
  in favor:   30.8%
  against :   38.9%

				
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