In March 2019, Economy Minister Paulo Gedes spoke about what, in his opinion, distinguishes Jair Bolsonaro’s management strategy. “It is useless to accuse the government of not wanting to pursue politics the way it used to be. We were chosen not to do this. This way of doing politics is prison and electoral defeat, ”he said. More than two years later, not only the minister, but the entire government abandoned this rhetoric. From a super minister who brought the financial market closer to a former army captain, Gedes became part of the presidential re-election mechanism. And along the way, the former Gedes, holding firmly to his positions and imposing his agenda, has acquired the flexibility and even some ingenuity to resist the market.

Criticized for not knowing or liking to get involved in politics, the Minister of Economics worked to appoint the representative of Centrão Ciro Nogueira (PP-PI) as Minister of the Civil Chamber and joined the President of the Chamber, Arthur Lear (PP-AL), to validate his projects. A symbol that this transformation was complete was the image of Guedes arriving in an embrace in Nogueira and next to Bolsonaro on Monday 9 to hand over to Lyra a project to reconstruct the Bolsa Família and a Constitutional Amendment Proposal that defers payment of debts. The union has already been filed in a non-appealable, so-called precatorio. This second project was created precisely to make way for funding programs that increase the popularity of the president.

Both measures are causing a cold snap in the financial market. In an attitude unthinkable for Guedes in the past, the Auxílio Brasil project, which will replace the Bolsa Família, was presented without a benefit assessment and without regard to how much it would cost the public treasury, and Congress left the choice of the cost. The PEC, which sends out court orders, includes a plan to create a fund from the sale of federal assets that will serve to make part of the payments that go beyond the cost ceiling. Many economists criticize this resolution as an attempt to circumvent spending controls. In response to two projects, Ibovespa fell below 123,000 points last week.

Surprisingly, this transformation of the minister follows rationality. Coming from the private sector, Gedes confesses to his secretaries that he has faced much more opposition to the liberal agenda than he expected. He saw that some of his plans had been undermined by the government itself, and he lost virtually all of the top echelon of his original team, either to fatigue from Bolsonaro or fatigue from the Brasilia environment. “In the second half of the government, the political element naturally takes on more importance than the technical aspect. But we cannot neglect this because we have a very high level of spending, ”says Valderi Rodriguez, a former finance minister who just left the Ministry of Economy.

The strategy for now is to take a few steps back in order to move further. By obeying his convictions, Gedes hopes to get more time to implement his projects when the political environment is less volatile. And this, of course, without completely losing control. In a recent meeting with Bolsonaro, Gedes said simply pushing forward the reform agenda would pull back the central voter, who is now looking for a third route to elections next year. With this move, the minister is trying to give way to privatization and reforms, which he says were part of the votes the president had in the 2018 election.Already negotiated with the lira has guaranteed some recent victories, such as the approval of the Eletrobras and Posta privatization projects. This is a risky bet with no guarantee of success, but it can still work.

Published in VEJA on August 18, 2021, issue # 2751.