Coordinator for Marina Silva Wants Former Presidents Lula da Silva and Fernando Henrique Cardoso as Allies

08/25/2014 - 08h52

On the morning of Friday, Aug. 22, economist Eduardo Giannetti da Fonseca was excited with the result of research done by the PSB and financial market institutions that suggested growth of electoral preferences of the party's presidential candidate, former senator Marina Silva.

The research indicates that Silva, who Giannetti met on the 2010 campaign trail, has settled into second place in the presidential race this year and has the potential to defeat Dilma Rousseff (PT) in the second round.

The possibility of victory tends to feed speculations of the purpose of Giannetti, who describes himself as a person "without political ambitions," in any future government. But he says he has no interest in being the next finance minister.

"I'm a collaborator, a counselor, not a person with the profile of an executive," he says. In an interview with Folha, he said that, if elected, Silva would seek people from the PT and the PSDB to form her government and to ensure support of her bills in Congress.

To Giannetti, even former presidents Luiz Inácio Lula da Silva and Fernando Henrique Cardoso could collaborate. "If [José] Sarney, Renan [Calheiros] and [Fernando] Collor [de Mello] go to the opposition, what do you govern with and with whom do you negotiate? Lula and FHC."

He said he would even try to rally members of rival parties. "The PSDB is a party with many technicians and little leadership," he said. "The PT also has excellent technicians who worked during Lula's first term, and we would love to bring them in. Our idea is to govern with the best in politics and public policy management."

What are the changes in the economy that Silva will feature in her campaign?

The Rousseff administration got into such confusion that we have to insist on something that should have already been overcome: restoring the macroeconomic tripod (floating exchange rate, inflation target and fiscal discipline).

Brazil has an agreement built around these principles. [The tripod] was established during Cardoso's second term and was not only accepted, but also reinforced by Lula in his first term.

Now we have high, artificially controlled inflation, and with an overvalued exchange rate, which is a bad path to go down and one that affects our industry poorly. In addition, we have an account deficit [in trade with other countries] of 3.2% of GDP, which puts us back in the external vulnerability of Cardoso's first term.

And this is with the lowest growth of the republican era, except for [the governments of] Floriano Peixoto and Collor. It's a very bad picture. It does not take us to the brink, but also doesn't give Brazilian society a view of the horizon.

How does the independence of the Central Bank fit in?

One element of the tripod is the autonomy of the Central Bank (CB). There are serious doubts regarding what it's worth in the Rousseff administration. While autonomy prevailed, there was a tactical agreement that the Executive would not interfere in the decisions of the CB seeking the fulfillment of the central goal [of inflation].

This autonomy could be reinforced when the independence of the BC is formalized. In other words, presidents and directors have fixed terms and are not subject to orders from the president. But you need to think carefully about the institutional design of this model.

Do you think you'll need a new Letter to the Brazilian People, like Lula presented during his 2002 campaign, to overcome the distrust of investors?

I don't think so. There is no fear in relation to Marina like there was with the PT. Now, any strengthening of credibility and trust is welcome.

And what should be done with someone considered an inflexible person?

There is no democracy without negotiation. The issue is the limits, as far as compromises. Marina's project separates her a lot from Dilma and Aécio. She wants to build new governance, which is not based on the bargaining of pieces of government to gain support in Congress.

Eduardo Campos had said - and Marina is in line with this - that if it were his administration, Sarney, Renan and Collor would go to the opposition. And with whom do you govern and negotiate? With Lula and Fernando Henrique. We have every interest in having them both as allies for projects that interest the country.

FHC is committed to economic stability, and so are we. Lula is committed to social inclusion, and so are we. Let's work together. I think it's possible. If Brazilian democracy has a reason for being, it is for this to happen.

Is it necessary to reduce or reshape social programs?

They are untouchable. Spending increased because the government gave tax breaks. The Dilma administration gave something around R$ 250 billion of tax exemption for select sectors. The BNDES incentive for a select group of businesses is greater than the amount spent on the Bolsa Família.

The PSB has proposed reducing the inflation target to 4% in 2016 and 3% in 2019. The government says this would generate unemployment.

There is no negative relationship between stability and unemployment. Inflation targets are like trench warfare. If you're afraid to adopt measures to keep inflation at 4.5% and accept a rise to 6.5%, the war remains the same. The only thing that happens is that you went from 4.5% to 6.5%. What is necessary is to have credibility and to make expectations converge to where you want, and 3% is better than 4%.

Could there be layoffs?

The cost of not doing it is greater than that of doing it. The creation of jobs has plummeted, the industry in laying people off.

What is the cost of doing this?

It is accepting that public rates have lagged behind, causing distortions in other sectors of the economy, and that public spending will have to be better controlled.

Economists say it will be necessary to either reduce spending or increase taxes.

Don't even consider the possibility of increasing taxes.

Does that mean spending will be cut?

That means we will have to be very judicious in terms of spending and understanding where this growth is coming from. The rule of thumb is that current spending cannot grow more than the GDP. It means reviewing tax exemptions.

The government meddled discretely in taxes because of pressure from business sectors that wanted to obtain benefits, not only on taxes like the IPI, but also on import tariffs.

With the economy returning to growth and public spending growing less than the GDP, in time, we can fix this. There won't be a crazy fiscal shock, a silver bullet.

It is a path of correction.

Translated by JILL LANGLOIS

Read the article in the original language

	Jorge Araujo/Folhapress
	Economist Eduardo Giannetti said that, if elected, Marina would seek people from the PT and the PSDB to form her government