Brazil & Southern Cone - November 2010 (ISSN 1741-4431)

On 1 November, the president-elect Dilma Rousseff unveiled the main players in her transition team, which will oversee the handover process. The new cabinet won't be announced until mid or late November, after Dilma's trips with President Lula da Silva to the G-20 summit in Seoul and the next Union of South American Nations (Unasur) heads of state meeting in Guyana. Lula appears to be playing a close advisory role, to the extent of 'recommending' certain appointments, immediately prompting opposition sniping that Dilma is nothing but a stopgap until Lula's return in 2014.

Dilma's campaign manager, Antônio Palocci (Lula's first finance minister), who stood at her side during her victory speech on 31 October, was appointed to lead the transition team, along with the PT president, José Eduardo Dutra. Fernando Pimentel, a former mayor of Belo Horizonte and close to Dilma for decades, was asked to coordinate the institutional side of things along with Palocci.   Dutra and the PT secretary general, deputy José Eduardo Cardozo, is the liason officer for the 10 coalition parties. Marco Aurélio Garcia, Lula's foreign affairs advisor, was tasked with overseeing international relations. Others include Clara Ant, Lula's discreet former personal secretary. The team will have a budget of R$2.8m and a staff of 50 to 31 December.

A couple of things were immediately obvious. First, the team, which Dilma described as an “onion", is comprised at the innermost layer of her and President Lula da Silva's closest associates. However, these associates don't necessarily hail from the core of the ruling Partido dos Trabalhadores (PT).

Second, neither did it initially include anyone from the main coalition Partido do Movimento Democrático Brasileiro (PMDB). The PMDB vice president-elect, Michel Temer, initially took this on the chin, saying that he was at Dilma's disposal, but it soon became clear that Temer, a veteran political baron and the PMDB party president, wasn't happy. Temer is an interesting figure   - he promises to be the most powerful VP in some time in Brazil (Lula's VP since 2003, José Alencar, has been plagued with serious ill health). He will certainly be central to keeping the PMDB on side in congress and in the senate.

On 2 November, amid rumblings from the PMDB, José Eduardo Dutra and Temer sat down to iron out these early wrinkles. Hours earlier, Dilma had corrected her first mistake and belatedly invited Temer to play a key role in the transition team.

The two men apparently also agreed a deal whereby the PT and the PMDB will rotate the much coveted presidency of the lower house from 2011- taking two years each. There is method in this manouevre - not only does the PT want to avoid 'friendly fire' from its main coalition partner; both parties are also fearful that other coalition partners, led by the Partido Socialista Brasileiro (PSB), could mount a challenge to their hegemony within the coalition and potentially even challenge them for the lower house leadership.

It's unclear which party will take the first rotation from February 2011, when the newly elected senators and deputies take up their seats. The PT will argue, as per traditition,   that as the largest party it should have first dibs. In February this year, Lula imposed a political deal (over the PT) allowing the PMDB to assume the presidency of both houses, in return for its support of Dilma for the 2010 race. The PMDB, Brazil's largest political party and its traditional kingmaker, then also insisted on fielding Dilma's running mate. Temer was not Lula's preferred choice - he is too powerful, but he had no option but to acquiesce.

The PMDB, which has six ministries currently, including the all important energy ministry, is fully expecting key portfolios in the new government. However it didn't do as well as the PT in the elections - it lost 11 seats in the lower house, where the PT is now the largest party (with 88 seats to the PMDB's 79), and so its bargaining power has been slightly reduced. This has never deterred the mercurial PMDB. Ahead of the meeting between Temer and Dutra, there were rumours that Temer was already courting the opposition Democratas (DEM) from across the floor in a bid to secure sufficient votes to take the house leadership, prompting a countermove by the PT to round up the other coalition partners to stop it.

However, the PMDB is still the biggest party in the senate (taking 20 seats, a gain of three over 2006) and so presumably it will retain its upper house leadership. The current senate president, José Sarney, has said he's not interested in staying on.The PMDB will govern five states from 2011, including Rio de Janeiro (where the popular Sergio Cabral was re-elected) and the two Matto Grossos.

The PSB is one to watch moving forward. It did well this year, electing six governors, 35 federal deputies and four senators, which will give it more leverage within the coalition. Along with its traditional allies the Partido Democrático Trabalhista (PDT, 28 seats) and the Partido Comunista do Brasil (PCdob, 15 seats) it can field 77 votes. Adding in other smaller parties like the Partido Trabalhista do Brasil (PTB) and the Partido Renovador Trabalhista Brasileiro (PRTB), it could challenge both the PT and the PMDB. Key PSB figures include: Ciro Gomes, once touted as Lula's heir and now touted for an official position under the new Dilma government; Eduardo Campos, party president and the re-elected governor of Pernambuco; Ricardo Coutinho, newly elected governor of Paraí­ba; and Cid Gomes, Ciro's brother and the popular re-elected governor of Ceará.

The 'shadow' president ?
The conservative press is fuelling rumours that Lula is dictating the pace in the cabinet selection process. Several press reports have suggested that he has variously recommended that Dilma leave in the place the finance minister, Guido Mantega; the central bank president, Henirque Meirelles; the education minister, Fernando Haddad; and the defence minister, Nelson Jobim. Rumour has it that he has also 'suggested' that Dilma place Antônio Palocci away from the immediate centre of power in the health ministry, for fear that he could become a threat to her. Palocci, who has good links with the PT, had been touted as a possible cabinet chief. Lula apparently also reasoned that Palocci, a do-er, might bring some much needed vim to the health portfolio, an area in which the PT administration has achieved less to date. Palocci is also tipped for a position in the part public mining giant Vale. Its current president, Roger Agnelli, long since fell out with the Lula government over official pressure on Vale after it laid off staff in the 2008 global economic crisis.

It's also rumoured that Lula wants to leave the ground nicely prepared for Dilma by using his weight to push through tricky legislation between now and the end of the year, so that she won't inherit it in January. Lula's priorities are the congressional approval of the new regulatory framework for the offshore oil sector and approval of the 2011 budget, potentially taking the decision to make politically unpopular expenditure cuts now.

He is also preparing to take a decision on the purchase of a new fleet of 36 fighter jets for some US$4.0bn-US$6.0bn. Lula has long indicated a preference for French jets, a political decision in line with his stragegic defence deal with France, but the air force is rumoured to prefer a Swedish offer (and the US is also pushing its offer). Lula will also have to take a decision on the extradition of the Italian former militant Cesare Battisti, wanted in Italy on terrorist charges.

• 'All the president's men'

Other notables in Dilma's inner circle include: her ex husband, Carlos Araújo, with whom she has a daughter (and now also a grandson); Franklin Martins, Lula's communications minister, tipped for a post at the Planalto; and Rui Falcão, PT vice president. There aren't many women in Dilma's inner circle. One is Sonia Macedo, an old childhood friend. Another is the veteran PT politician and senator elect Marta Suplicy, who may be given a role in the tourism ministry ahead   of the 2014 World Cup and the 2016 Olympics.

• Media row

Lula is bequeathing Dilma a congressional bill on the proposed regulation of the electronic communications sector. His social communications minister, Franklin Martins, has drafted a reform to the existing regulatory framework which, he argues, is needed to address the advent of new digital and electronic media. Critics fear the bill is a covert effort to exert control over the new media. There are also questions over ownership - Brazilian law forbids any majority foreign participation in local media, however, many internet news sites operating in Brazil are wholly foreign-owned.