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Brazil: Palocci’s exit suggests new model

Article by Foreign Policy Centre

June 9, 2011

Especially due to the fact that the episodes that involved Antonio Palocci were not factors as far crises within the pro-government base were concerned. The crisis came from before and was only more vigorously exposed due to the allegations against the minister.

According to Arko Advice surveys, support for the government in Congress already began to decline in April. In May, amidst the Palocci issue, there was the polemic voting on the Electoral Code with dissatisfactions amongst all involved. The government was defeated, confirming its fragility and problems related to the allied base.

Thus, Palocci fell due to his own errors and those of the government itself. Even though exempted by the Attorney General of the Republic, allegations would continue to place the government in a more fragile situation, both due to poorly resolved issues as far as ally participation in the ministries is concerned and also due to the alleged issues.

However, the larger source of problems during the Palocci episode originated from his closest allies. Initially, defense of the Minister was timid and disarticulate. Following that, despite the effort to protect him, some voices within the party questioned his permanence in the position. Governor of Bahia, Jaques Wagner (PT), stated that Palocci’s wealth growth “sparked attention”.

Behind-the-scenes, Palocci’s situation was considered very bad and his fall only a question of time. Some people criticized his silence and his delay in going public to render explanations. They felt that this posture worsened wear and tear on the government; and, as an extra generated significant irritation.

Others even said that it would be better for Palocci to go to Congress to explain himself and take advantage of fact that important sectors of the press were saving him from harder attacks. The interview given to the Jornal Nacional was reasonable, but not sufficient to reduce pressure. However, news headlines over the weekend were mortal. Even though the minister can’t be accused of illegal conduct, to live in an apartment that belongs to a “front company” is extremely bad.

Palocci’s exit is a big loss for everyone in light of his experience, capability and, even, for the pragmatism he always demonstrated in orchestrating economic policy and as a federal representative. Both the financial market and business community considered Palocci as a guarantee that there would be no craziness within the economic sphere. He was seen as a center of sensibility within government.

On the other hand, based on her attitudes and statements since taking office, Rousseff has demonstrated being the proprietor of the government’s economic credibility. Without Palocci, her responsibility will tend to increase. We don’t really believe there will be any problems with economic management.

However, from a political point of view, a few changes are necessary: in posture, perspectives and expectations. The government must be more proactive in seeking a more permanent form of dialogue. The government must understand that its closest allies are more than just allies: they are co-managers of a cohabitation government. Dialogue has to be ample as does access to the main ministers.

The expectations of all must also be seriously taken into consideration. It is necessary to understand that the success of the allies increases the possibility of continuity of the current political project and offers better conditions for the ability to govern. After all, Palocci’s exit imposes serious reflection and a re-beginning.

The opposition will continue to insist on the issue, even following Antonio Palocci’s stepping down from the position. The reason being, that it is interesting to keep the government backed into the corner to strengthen the perception of a government in difficulty and on the defensive.

With this, the opposition hopes to weaken not only President Dilma Rousseff, but also president Lula, who was the main person responsible for her election. The effort to convince the minister to render clarifications to Congress continues. Furthermore, the effort to create a CPI to investigate the former minister also continues but with small chances of becoming reality.

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