2017’s first quarter is over. So far, though, the Brazilian government hasn’t done much. Michel Temer’s administration has proven to be incapable of leading the country out of the recession. And while there might be some signs of a slow recovery, investors are still afraid of putting their money in Brazil.
Indeed, we currently don’t know if the easing of inflation and interest rates is due to the Ministry of Finance. Perhaps it’s the actions taken by the team, or maybe it’s simply due to the fact that people are afraid of consuming.
The country is in dire need of reforms, but the government will have trouble passing them. Long gone is the euphoria created by the ousting of Dilma Rousseff.
But who is to blame for the government’s shortcomings? The destabilizing Operation Car Wash? Maybe, but only to a certain degree. The opposition? Frankly, there isn’t any.
No unity in the coalition
The problem is within Michel Temer’s camp. His allies show little regard for the country’s needs – or even for the government’s needs. After all, this administration won’t last for long.
Despite the money spent on marketing, Temer has not managed to make himself into a likable figure. Only 10 percent of voters approve his administration, on par with Dilma Rousseff.
Temer lacks both charisma and energy, and fails to represent a rupture with the establishment. And that’s why he has trouble consolidating his coalition, which is already thinking about the 2018 presidential election.
Next year’s race is yet another obstacle for the embattled president. His reforms are widely unpopular, and congressmen fear that sponsoring such bills will hurt their electoral stock.
More than the struggle for power, politicians need a mandate for one simple reason: they want to avoid Federal Judge Sérgio Moro, the overseer of Operation Car Wash. As elected officials, politicians enjoy legal privileges and can only stand trial in the slow-paced Supreme Court. If they lose the election, they go to Moro’s jurisdiction.
The pension system reform is not an option
We agree that nobody is happy with the pension system reform, but we can’t deny how urgent it is. As the economist Marcos Lisboa once wrote, “we got old before we got rich.”
Projections show that, if nothing is done, the pension system will account for a progressively larger chunk of the federal budget, until no money remains for investments.
Let’s face it, though. No government is capable of promoting such a drastic overhaul in such a short span. Even dictatorial regimes promote a gradual transition from one regime to the next. Temer and his crew, however, sold the dream of a major and quick reform to the markets – a mistake that created a dichotomy: we either approve everything or nothing.
To make matters worse, almost all of Temer’s top negotiations were hit by Operation Car Wash.
In an effort to bring together coalition parties, the government’s marketing team decided to promote Michel Temer as “the right president at the right time.”
But instead of galvanizing allies around Temer, it further alienated them. Many political families, such as the center-right PSDB, want to present their own candidates and aren’t willing to concede all credit for the government’s eventual accomplishments to Temer.
The coalition is becoming increasingly fragmented, and it just might lead Temer’s government into a downward spiral.