Since the election of Luis Inacio Lula da Silva, at the end of October 2022, a real whirlwind of decisions, movements and negotiations has begun that precede the real start of the presidential term, which will take place on 1-1-2023 .

The incumbent government practically stopped working immediately after the election result. Bolsonaro retired to his residence at Palazzo dell’Alvorada, without formally accepting the result of the polls and falling into an almost autistic silence. His loyalists have organized roadblocks and coup leaders outside the barracks, to ask for an intervention by the armed forces and prevent Lula from assuming the presidency in January. To this day I am still waiting for a signal from Bolsonaro. That signal won’t come, because the incumbent president has too much to lose by inciting an unlikely coup.

On the Lula side, a battle is underway on several fronts, involving Congress and the Federal Supreme Court (STF). It all starts from Lula’s desire to:

Secure the necessary resources to finance Auxilio Brasil, which will once again be called Bolsa Familia (R$ 600.00 per month for the most needy families + extra contributions for each school-age child) and other investments

Politically control state-owned companies (BNDES, Petrobras, Banco do Brasil, etc.) and therefore their resources

Ensure governance over the next four years, given that the parties that supported his election do not have a majority in either the Senate or the Chamber of Deputies

The paradoxical side is that Lula is not yet President in office and that the members of the current Congress will only remain in office until December 31, 2023 (even if many of them have been re-elected).

Why all this hurry? Why not wait for the official start of the new legislature?

For senators and deputies who have not been re-elected, it means in any case guaranteeing control of the funds of the parliamentary amendments approved in 2022. Even those who will no longer be a parliamentarian from 1 January 2023 have the right to manage the money already allocated.

Lula is well aware that without the support of Congress he would have many difficulties in governing and wants to pave the way in advance, with the old and sad – but realistic – “do ut des”. If the Fiscal Responsibility Law prevents the budget ceiling from being exceeded, the Constitution is changed (PEC da Transiçao); if the State Enterprises Law prevents non-technical politicians from running state-owned companies, the law is changed. In exchange, ministries, undersecretaries, seats in key public bodies and with portfolios.

The STF then shuffled the cards on the table in the last few days with two important decisions:

By decreeing the possibility of excluding from the State spending ceiling the funds necessary to finance Bolsa Auxilio/Bolsa Familia

Declaring the Orçamento secreto (secret budget), created by the Bolsonaro government, unconstitutional

With the exclusion of Bolsa Familia from the spending ceiling, Lula gains power over Congress, not being forced to resort to the support of opposition parties for a change to the Constitution.

Regarding the “orçamento secreto”, it is another, yet another, sad story of Brazilian politics. Thanks to the allocation of funds (without any type of control over their destination) to parliamentarians, the Bolsonaro government was able to guarantee parliamentary support in the promulgation of populist laws – and devastating for the state coffers – with the main purpose of re-electing. This ghost budget was also planned for 2023 (about 20 billion reais!!!), but the STF “canceled” it. Panic broke out among the parties and this turned into an extra weapon in the hands of Lula, who inserted these 20 billion reais into the PEC da Transiçao, guaranteeing himself even more the support of parliamentarians and parties.

In practice, it is an attempt to dismantle the set of laws and regulations built during the Temer Presidency to prevent reckless administration of state finances and the mismanagement (or even the looting, as occurred during the PT governments) of state enterprises.

The situation is at least alarming: it seems to be witnessing a deja-vu of Dilma Rousseff’s incredible presidential term, which brought Brazil to its knees and led to her impeachment. But Lula is an experienced politician and knows that repeating the mistakes of the past would lead Brazil into the abyss and serious consequences in terms of public order. All that remains is to wait and watch.