FROM CARDOSO TO LULA: THE POLITICS AND POLICIES OF REFORM IN DEMOCRATIC BRAZIL

MARIA HERMNIA TAVARES DE ALMEIDA UNIVERSITY OF SO PAULO

From Cardoso to Lula: the politics and policies of reform in democratic Brazil Maria Hermnia Tavares de Almeida University of So Paulo mhbtdalm@usp.br Abstract The paper discusses the basic features of economic and social policies reforms, under Cardoso and Lula administrations. It sustains that both presidents shared the same agenda of reforms and that moderate reformism, instead of neoliberal radicalism, has been the rule. It sustains, also, that moderate reformism can be explained by the characteristics of Brazilian political institutions especially federalism and coalition presidentialism.

Introduction Reforming has been the name of the game in Brazil, since

democratization. Social protection reform began with the first civilian government, in 1985. Market oriented economic reforms came later. Although they broke into the governmental agenda under Fernando Collor de Mello (1990-1992) they gained momentum during the eight years Presidency of Fernando Henrique Cardoso (1995-2002). Social protection and economic reforms were both central to Cardosos policy initiatives. In both cases, changes in public sector roles and prerrogatives were at stake. Nevertheless, although the issues belonged to the neoliberal reform agenda international trade liberalization, privatization of public firms, regulatory reform, monetary reform, inflation target policies, tax

and fiscal reforms,

social security reform, targeted cash transfer

programs -- the script and the actors were not. In Brazil, moderate reformism prevailed instead of neoliberal fundamentalism. The ongoing administration of Luiz Incio Lula da Silva (2003-2006), against all odds, accepted the changes promoted by his predecessor and continued in the same moderate reformist path. Neither social-democratic, nor neoliberal reformist, governments, Brazil, moment under tight economic constraints, setting, a plural and diversified polity and in have been basically pragmatic, facing the challenges of the in a complex institutional political elites that favored

negotiation and arrived at a certain degree of convergence. This paper analyses the last ten years of reforms in Brazil, under Cardoso and Lula administrations. It sustains that both presidents shared the same agenda of reforms and that moderate reformism, instead of neoliberal radicalism, has been the rule. It sustains, also, that moderate reformism can be explained by the characteristics of Brazilian political institutions especially federalism and coalition presidentialism. In the firsts part, the evolution of social protection reform is presented. In the second, the same thing is done for economic reform. In the third, we discuss how institutions such as decentralized federalism and coalition presidentialism defined incentives and constraints to the reformist process. Reforming the social protection system Poverty and inequality reduction stood high in the agenda of democratic opposition against military rule. The fact that high rates of economic growth were insufficient to reduce poverty significantly and even increased income inequalities during the Brazilian economic miracle, under authoritarian government, was attributed to a particular choice of economic policies and regressive social policies1.
1

Major international organizations, such as UNDP and BIRD, recognized the need for development policies to include specific goals regarding poverty and inequality reduction in the 70s.

The opposition to authoritarian rule was fought in the name of civil liberties and democratic institutions, reshaping the federation through decentralization and paying the social debt, V.G., reducing poverty and inequalities. Prevailing social protection system was thought to be a perverse combination of excessive centralization at federal level, fragmentation and overlapping of programs and policies, inefficient social expenditures, clientelism and regressive distribution of benefit and services. The social protection system that came to age under the authoritarian regime could be considered a special case of conservative welfare regime (Esping-Andersen, 1990)2 . The criticism to it set the guidelines of reform. It should embody decentralization, participation of the beneficiaries, measures to shun clientelistic misuse of social programs, rationalization and increased efficiency of social expenditures, universalization of access and a more even distribution of benefits and services. At the same time, emergency policies aiming at extreme vulnerable groups were thought necessary until sustained economic growth and a reformed social protection system were put in place. As usually happens when social reform is at stake, epistemic communities (Heclo, 1974; Rimlinger, 1982; Weir, Orloff & Skocpol, 1988), gathering together university researchers, governmental institutions researchers, policy makers and international organizations, such as PHO, ILPES/CEPAL, IADB, were important for designing innovative reform blueprints. Changes begun with the first civilian government3 and acquired institutional form under the 1988 Constitution4. They pointed out towards
2

Draibe & Aureliano prefer to call it a particularistic-meritocratic system (1989) while Werneck Vianna (1998) prefers to classify it among the liberal or residual welfare regimes. I tend to agree with Draibe & Aureliano. 3 As discusses e primeiras iniciativas de reforma do sistema de sade tiveram incio no governo Sarney. So deste perodo, tambm, as primeiras experincias de reforma descentralizadora da educao feitas por governos estaduais. Programas emergnciais destinados aos mais pobres foram montados pelo governo federal. Entre eles, destacou-se o programa de distribuio de leite. 4 Draibe (1999:10) resumiu as mudanas introduzidas pela carta constitucional em termos de: a) ampliao e extenso de direitos sociais, b) concepo de seguridade social como forma mais abrangente de proteo, c)um certo afrouxamento do vnculo contributivo como princpio estruturante do sistema, d)universalizao

a social protection model granting universal access to social security, basic health care services and basic education. Competences and duties among federal levels were reshaped bringing to the fore a decentralized and cooperative model with significant expansion of municipal responsibilities and decentralization of fiscal resources. In the 1990s, those reform guidelines were implemented through a slow process of decentralization of responsibilities and resources and the expansion of the provision of social benefits and health, education a social welfare services. Two issues have been especially important to a successful decentralization. The first was monetary stability that came with the Real Plan, in 1994 granting predictability to the flux of resources from national to state and municipal administrations. The second was institutional and policy learning allowing for the definition of a set of incentives for redistributing responsibilities, as much as for cooperation among governmental levels in providing social services. Around the middle of the decade, municipalization of social assistance and basic health care was completed5 and a lot had been accomplished regarding the first for years of education. On the other hand, access to basic education and health care became, at last universal. Social welfare was expanded with the creation of cash transfer programs for elder and disable persons. During Fernando Henrique Cardoso`s first term (1995-1998), social security reform began to tackle the distortions of a system with highly regressive distribution of benefits. A constitutional reform was necessary to allow for a moderate reform of private sector retirement and pensions scheme. Nevertheless, due to fierce opposition of powerful unions and

do acesso e expanso da cobertura, e) recuperao e redefinio dos patamares mnimos dos valores dos benefcios sociais, f) maior comprometimento do estado com o sistema, projetando um maior grau de proviso estatal pblica de bens e servios sociais. 5 Em 2001, 90% dos 5.531 municipos brasileiros j havia assumido a gesto plena da rede de ateno bsica sade.

opposition politicians, the government failed to change the rules for the civil service employees.6. Last but not least, the federal government created new and innovative policies targeting the poor. Four conditional cash transfer programs aiming at different vulnerable groups were established: Bolsa-escola, Erradicao do Trabalho Infantil (PETI), Bolsa-alimentao, Auxilio-gs, and Agente Jovem. Together with other special programs, they were meant to create a social safety net7. The choice for cash transfer programs, instead of expanding governmental services, was thought to circumvent bureaucracy and trim clientelism. lady Ruth Comunidade Solidria, conceived and commanded by first Cardoso, searched new forms of bringing together

governmental ministries and agencies and NGOs. In order to reduce political exchange and pork barrel, the Cardoso administration established formulae to calculate the values to be transferred to subnational governments in the case of grant-in-aid programs. The administration failed in the areas of crime and public security, housing and sanitation, where no innovative initiative came out. Although social safety net programs gained importance, during Cardosos second term in office, universal policies such as education and basic health care continued to be central to the federal government agenda. In this sense, Cardosos social policies did not broke up with prevailing conceptions of social protection aiming at achieving equity and universalizing citizen access8. In brief, when the PT won the national elections, in 2002, an important part of the social reform agenda had already been implemented with
6 7

Para uma anlise da reforma da previdncia ver, Melo (2002). The other were: previdncia rural e dos programas no contributivos da assistncia social, p os seguintes:, Programa de Sade da Famlia, Programa de Apoio Agricultura Familiar, alm do Projeto Alvorada para os 2.361 municpios onde era maior a concentrao de brasileiros situados abaixo da linha da pobreza. 8 Para um exemplo dessas concepes, ver o documento oficial do governo brasileiro para a Conferncia Copenhagen+5, das Naes Unidas: Ministrio das Relaes Exteriores (2000).

modest success in reducing poverty, improving education and health, although it failed in diminishing income inequalities. Tables I and II show data on some chosen social indicators. Table I BRAZIL SELECTED SOCIAL INDICATORS 1991-2002 Illiteracy rate (people 15 years old and more) Infant illiteracy rate Children 7-14 years old, in school Mean Gap between age and level, in years (children 10-14 years) Children 10-14 years old, in school, with more than 2 years of educational gap(%) Mean of years in school (adults 25 years old or more) Adults with 8 or more years of education (%) Infant mortality (1/1000) Unemployment rare (people 15 years old or more) People bellow poverty line (%) People bellow misery line (%)
Source: Pesquisa Nacional por Amostra de Domiclios (PNAD), apud IETS. Note: poverty line = R$ 125/month ( in real september/2002 or approx. US 128 PPP) misery line = R$ 62/month ( in real september/2002 or approx. US 63,5 PPP)

1992 17,2 12,4 81,9 2,1 37,3 4,9 28,6 45,2 6,6 40,8 19,3

2002 11,9 3,8 94,5 1,1 16,1 6,1 39,5 27,8 9,2 32,9 13,4

Table II BRAZIL SELECTED INEQUALITY INDICATORS 1992-2002 1992 Gini Index 0,58 House income participation of the poorest 2,36 20% (%) Illiteracy rate (white people, 15 years old or 10,6 more) Illiteracy rate (black and mulatto, 15 years 25,8 old or more) 5,9 Mean of years of education (white people) Mean of years of education (black and 3,6 mulatto) 6,0 Unemployment rate (white people) 7,4 Unemployment rate (black and mulatto) Unemployment rate (male) Unemployment rate (female) Percentage of people (North) Percentage of people (Northeast) Percentage of people (Centerwest) Percentage of people (Southeast) Percentage of people (South) bellow poverty line bellow poverty line bellow poverty line bellow poverty line bellow poverty line 5,5 8,2 52,8 65,7 33,8 27,5 32,3 2002 0,59 2,52 7,7 18,2 7,0 4,9 8,2 10,4 7,4 11,7 45,2 56,5 23,5 21,0 21,8 2004 0,57 2,75 7,1 16 7,7 5,9 8,2 10,5 7,1 12,1

Source: Pesquisa Nacional por Amostra de Domiclios (PNAD) apud IETS. Note: poverty line = R$ 125/month ( in real september/2002 or approx. US 128 PPP)

The PT arrived at federal government denying all previous improvement in social conditions. Nevertheless, its actual policies did not depart significantly from the previous government agenda. One of Lulas first move was to continue social security reform attacking the benefits of civil services employees, succeeding where Cardoso had failed. A new bill was approved, in the PT first year in government, trimming the civil servants benefits and establishing the same retirement scheme for both the private and the public sectors. Although the government could justify it in the name of fighting inequality and statutory privileges, the social security reform was also a topic of servant unions. On the other hand, the rise of PT to federal government brought poverty and hunger to the forefront of the national agenda. And in-cash benefits programs became synonym of social policies. In his Inauguration address, President Lula assured that at the end of his administration every Brazilian would enjoy three meals a day, and hunger would be banished from the national scene. The Hunger Zero program was launched as the great innovative anti-poverty action. It was meant to mobilize government and society in a crusade to eliminate hunger9. Hunger Zero was rather a misconceived and misguided multi-sector policy package aiming at wrapping together structural policies, such as agrarian reform and job creation, and target actions such as in-cash transfers available to poor families exclusively for buying food, direct food distribution, popular restaurants with subsidized meals, measures against child malnutrition, financial support to family agriculture and to construction of wells and small dams, and so forth. The new program
9

the

neoliberal agenda and was claimed to be so by PTs left wing and civil

By the time it was put forward, specialists, based in academic research, had concluded that, due to the expansion universal policies, like health care and education among others, hunger no longer was a national problem. Malnutrition was circunscribed to some areas, most of them rural, located mostly in Northeastern Brazil (Monteiro,2003).

ignored the recent past experience in anti-poverty programs and tried to start from scratch. In spite of of intense government propaganda and the open support it received from public opinion, Hunger Zero proved to be unfeasible and, by the end of President Lulas first year in power, was phased out. It was replaced by the Family Grant program, which, instead of concocting an additional in-cash grant, promoted the merge of School Grant, Food Grant and Gas-Aid, changed some of their rules and expanded their coverage up to 8,5 million families bye the end of 200510. Family Grant, still in the making, is meant to cover the whole poor population in the next few years. As of today, targeted anti-poverty policies, in government rethoric and in government action, seemed to be kept apart from other social policies and to have lost connection to any broader social development proposals. The Family Grant embodies the PT conception of how to fight and eventually eliminate poverty. Especially after the social security reform, social protection reform is no longer in the governmental agenda. The social Ministeries either directly continue the previous policies or Cardoso s era or try to improve upon them11. Finally, Lulas administration also brought to the fore front affirmative action as a way to dealing with ingrained inequalities. The federal program PROUNI established quotas at private universities for poor students that came from public high schools and for ethnic minorities. Quotas are also part of government bill on Federal University System reform that is still in Congress.

10

The Grant consists of two components: the first is due to every family below the poverty line and is free from conditionalities and the second is conditioned to children school enrollment. The program size and the lack of adequate monitoring tools makes the control of school attendance an impossible goal. 11 The establishment of FUNDEF, a fund to spurr municipalization of fundamental education and improve teachers salaries, has been one important innovation of Cardosos administration. Lulas government is proposing to expand the fund to encompass also secondary education.

In brief, in spite of of the strong symbolic association between Lula and the PT and the promise of social reform their government did not have an innovative approach to the issue. Rather than change, Lulas social policies show significant continuity with those of previous government and an unexpected affinity to the neoliberal agenda. Economic reforms The issue of economic reforms, understood as market oriented reforms, broke into governmental agenda under Fernando Collor de Mellos administration, as a result of the international influences but also of political elites policy learning, after almost a decade of economic crisis and failed efforts to curb inflation. Reckoning the importance of reforms and its relations to monetary stabilization was a process that marched in slow pace. Previous consensus over the virtues of state-led development and the import substitution model of growth has been strong, extensive and therefore difficult to break12. Under Collor, economic reforms began with efforts to liberalize trade and with an essay in putting forward a program of privatization of public firms. Non tariff barriers to import were reduced along with a schedule of cut in tariffs themselves. Graph I shows the evolution of the weighted mean tariff, from the end of Sarneys administration to the beginning of Cardosos second term. From then on Graph I Brazil Evolution of Import tariffs (weighted mean) 1988-1998 no big changes occurred. The hugest slash took place under Collor and Franco.

12

For a discussion of factors leading to it see Tavares de Almeida (2004).

Source: Fundao Getlio Vargas, apud Patri (2000) On the other hand, during Collors short period in government, privatization of public firms began for real. Law 8.031/90 created the Programa Nacional de Desestatizao (National Program of Divestiture)
13

Steel, petrochemical and fertilizer public firms were sold. After his resignation, the program continued, albeit reluctantly, under former vicepresident, then successor Itamar Franco (1993-1994). The process gained momentum in the following Administration, led by Fernando Henrique Cardoso (1995-1998). The new president introduced important institutional changes. Law 8.031 was reshaped and constitutional reform, in 1995-96, allowed previous State monopolies in telecommunications, electricity, coastal and domestic navigation, gas and oil, to be included in the privatization program. Legislation creating regulatory agencies to supervise privatized companies in telecommunications, oil and electricity sectors was also approved by the Congress. During Cardoso's second term in office (1999-2002) privatization continued, although at a much more moderate pace. In a matter of fact, privatization of federal electricity firms came to a halt due to political pressures and, above all, to divergent
13

The law established an initial list of firms to be privatized, put the program under the National Development Bank (BNDES) management and gave the Executive the authority to add or exclude firms from the list. Complementary legislation defined privatization currencies, allowing for the use of several kinds of Federal debt certificates acquired by the financial markets in order to buy shares of auctioned enterprises.

views about the best privatization model inside Cardosos coalition parties14. From 1991 to 2001, 68 enterprises owned by the Federal government have been privatized. Among them almost all steel, chemical, petrochemical and fertilizer public companies, Brazilian hugest Mining Corporation, the railway system and several electricity enterprises. From 1998 to 2001, the whole telecommunications system was auctioned. Some important privatizations also occurred at State-level15. As shown elsewhere (Almeida & Moya, 1997; Almeida 2004), the Presidency took Congress' preferences into account when establishing the list and the order of corporations to be privatized. Privatization began in areas where an early and firm majority of legislators favored its transfer to private hands: steel, chemical, fertilizer and petrochemical firms. Constitutional amendment to allow for the privatization of coastal navigation, gas, iron- ore mining, telecommunications and electricity came after privatization policy in general had won some degree of legitimacy. And although State monopoly of oil was broken, Petrobrs, the hugest Brazilian company and the icon of State-led development, was not included the privatization program. Under Cardoso, economic reforms such as privatization and trade liberalization became part and parcel of the successful effort towards monetary stability and fiscal adjustment. Those goals were pursued through an array of policies that changed in time and included: monetary and exchange rate policies, inflation target rules, increase in taxes and

14 15

On Cardosos policies for this sector see Goldemberg & Prado (2005)

As of the end of 2001, the Federal program reached the US$ 37,705 billion mark, including debts transfered to the new owners. This sum goes up to US $ 68,623 billion when the telecommunications sector is added.

other compulsory contributions16, limiting different level of government17

rules for expenditures of the

Those policy initiatives demanded a significant mobilization of political resources. Some of them required constitutional amendment and the Congress approval. Therefore, the institutional designing and institutional building, under Cardoso administration, was far from trivial. On the other hand, some issues pertaining to the international reform agenda, although present in Brazilian public debate never were really included in the governmental agenda. This is the case for tax reform and labor reform. Finally, other reforms failed or acquired a limited scope such civil service and administrative reform. While out of government, the PT made a fierce opposition to Cardosos economic and reform policies, thought to be neoliberal, subdue to the international organizations agenda and contrary to national interests. Nevertheless, Lulas government did not brought any significant change regarding economic policies, which have been in clear continuity to those implemented in the four previous years: inflation targets, high interest rates, free exchange rates, high tax burden and compliance to international financial compromises and agreements. Despite internal dissent and critics from its allies, continuity rather than change has been the hallmark of PT government economic policies18. Although opposed to Cardosos privatization policy, the PT government did not tried to reverse what have been done, but did not proceed

16

Tax as percentage of GDP grew from 19,88 % in 1988 to 35 % in 2002. On the subject see Afonso (2004), Melo (2005). 17 For a good overview of economic policies, specially during Cardosos second term see Oliveira & Turolla (2003) 18 The Finance Minister and his staff , always supported by Lula, are the garantors of continuity while critic from other important PT ministers and party leaders, supported by the Vice-President, have stressed the necessity of putting growth instead of stability in first place. The debate inside Lula government reproduces the cleavages present during the two Cardosos terms between the so called neoliberals and developmentalists. On this see, Sallum Filho (1999).

privatizing what was left of Brazilian public sector: the federal energy companies and Petrobrs. On the other hand, Lula administration got congressional approval for a law allowing for public-private partnership in utilities and public services sectors that was meant to attract private investment to develop much needed Brazilian infrastructure systems. At same time, as previous said, the PT government send to Congress and got the approval for a moderate social security reform bill that continued Cardosos effort to cope with social security increasing deficits. As much as Cardoso, Lula tried to formulate a blueprint for reforming tax and fiscal systems but failed, due to the difficult of overcoming fragmented and opposed interest of different economic subnational governments, either states or municipalities, ministries and agencies (Melo, 2005). The continuity of economic policies between the two adversarial presidencies expresses the convergence of Brazilian political elites on the value of currency stability and on the policies adequate to sustain it. International constraints were surely important but they would not be effective if a new consensus had no emerged. This was not an ideological neoliberal consensus, but rather a pragmatic convergence molded inside a specific institutional set of decentralized federalism and coalition presidentialism. Reforming under coalition presidentialism Party government never existed in democratic Brazil. The combination of federalism, proportional representation and rules that facilitate the organization of new parties and their participation in electoral competition have produced a very fragmented party system and the necessity for presidents to govern with huge multiparty coalitions. the sectors,

and federal

Brazilian coalition presidentialism19 is a complex political arrangement, similiar to parliamentarianism in the mode of government formation. Ministries and other important positions in the Executive, such as directories of public enterprises and governmental agencies, are divided among parties belonging to governmental coalition in Congress. When parties have important basis all over the country, the distribution of ministries and first rank governmental positions must oblige its different state level factions. Therefore, huge instead of minimum party coalitions have been rule, especially under Cardoso and Lula. Table IV shows the governmental Brazilian presidents. party coalitions under different

Table IV
Governing coalitions in Brazil 1988-2004 Presid ent Preside nts party Period Parties in Begining End of govern Of the the ment coalition coalition Day Mont coalition s hs PMDB-PFL PMDB-PFL 15/03/19 85 30/09/198 8 14/03/199 0 31/01/199 1.2 95 % of Chamber of Representativ es (in the date of its begining)

Sarney 1

PMDB

42,5 64,40 29,70

Sarney PMDB 2 Collor 1 PRN

19

06/10/19 88 PRN-PDS-PFL 15/03/19

529 17,5 322 10,5

Sobre o tema ver Abranches (19 ), Amorim Neto ( 199 ), Figueiredo & Limongi (2000), Santos & Amorim Neto (200), Figueiredo, Limongi & Cheibub (200 )

Presid Preside ent 2 nts Collor PRN Collor 3 PRN

Period Parties in Begining End of 90 1 govern 01/02/19 the the 14/04/199 438 14,5 PRN-PDS-PFL Of (BLOCO1)* 91 2 PDS-PTB-PLPFL (BLOCO2)* PSDB-PTBPMDB-PSBPFL (BLOCO3)* PSDB-PTBPMDB-PP PFL (BLOCO3)* PSDB-PPPMDB -PFL (BLOCO4)* PSDB-PTBPMDB-PFL PSDB-PTBPMDB-PFLPPB (BLOCO5)* PSDB-PMDBPPB-PTBPFL (BLOCO6)* PMDB-PSDBPPB 15/04/19 92 01/10/19 92 31/08/19 93 25/01/19 94 01/01/19 95 30/09/199 2 30/08/199 3 24/01/199 4 31/12/199 4 25/04/199 6 168 5.5

% of Chamber of Representativ 34,59 43,54

Itamar 1 Itamar 2 Itamar 3 FHC I 1 FHC I 2

Nonpartisan Nonpartisan Nonpartisan PSDB PSDB

333

11

60,04

146

55,64

340

11

55,27

449 16 979

57,26 77,19

26/04/199 31/12/199 6 8 01/01/19 99 06/03/20 02 05/03/200 2 31/12/200 2 22/01/200 4** 31-122004

32

FHC II 1 PSDB

1.1 59 300 355

38

76,61

FHC II 2 PSDB Lula 1 PT

10 12,5

45,22 41,91

PT-PL-PCdoB- 01/01/20 PDT-PPS03 PSB-PTB-PV PT-PL-PCdoB- 23/12/20 PPS-PSB-PTB- 04 PVPMDB(BLOCO7)*

Lula 2

PT

343 11,5

61,21

Sources: www.planalto.gov.br; Meneguello, 1998; Legislative data base, Cebrap. Organized by Argelina Figueiredo e Fernando Limongi. Criteria: 1end of the term and change in party composition of Ministry (exit or entry of Minister from a new party in the coalition); 2. Beginning of a legislature or of a parliamentary bloc, changing the % coalition seats in Congress.
* Composition of parliamentary blocks: BLOCO1 = PFL, PRN, PMN, PSC e PST; BLOCO2 = PFL, PSC, PRN e PL; BLOCO3 = PFL, PSC e PRN;

BLOCO4 = PFL, PSC e PRS; BLOCO5 = PPB, PL e PMDB, PMN, PSC, PSD e PSL; BLOCO6 = PFL, PL, PMN, PSC, PSD, PSL e PST; BLOCO 7= PL, PSL. Number of seats of parties forming a block is considered only when the party remains in the block for the whole period of the coalition. ** The PDT left officially Lulas government and his base in Congress on 12/12/2003. Nevertheless, the criterium used was the exit of Minister Miro Teixeira on 01/ 23/2004.

Fernando Henrique Cardoso presided to a huge center to the right congressional coalition and Lula to an odd left to the right one. The 2002 elections excluded the possibility of a PT government or a government supported only by leftist parties. Lula won 46, 4% of the ballots, in the first run, and had confortable 61, 3% majority in the second run. Nevertheless, his electoral coalition20 won only 25,3% of the House of Representatives seats and 22,2 % of Senate. O PT obtained 17,7% e 18,5% of the seats in the House and Senate. Even if we add to Lulas coalition those seats controlled by other leftist parties the leftist block would come short of a majority with its 37, 6% of the representatives and senators. Under these circunstances, the PT and its allies had three options. The first was to build up a minority left coalition and negotiate issue by issue the votes of the parties ate the center. This option, hazardous as it could be, was not impossible the moment Lula administration marched towards the center. The second possibility was building a majority attracting the centrist PMDB to the governmental coalition. The third was going far beyond the center including small right wing and patronage parties. Lula and his party chose this third way and build up a huge left-right coalition that included center-to-the right parties like the Partido Liberal (PL), and rightist small parties such as the Partido Trabalhista Brasileiro (PTB) and Partido Popular (PP). In a matter of fact, this was a coalition very similar, at its right wing,
20

35, 5 % of the

to the one that supported Cardoso, who also counted

O Partido dos Trabalhadores coligou-se com Partido Liberal (PL), Partido Comunista Brasileiro (PCB), Partido Comunista do Brasil Pcdo B) e Partido Municipalista Nacional (PMN).

on the PTB and the PP. Nevertheless, it was more incongruous 21 and more liable to small patronage parties. Table IV shows that several parties participated in both governments. Nevertheless, while Cardoso had a huge majority during his two terms, except for his last 9 months in office, Lula lead a minority coalition in his first year in government. The complexity of building and keeping together a majority coalition from a fragmented party system is not the only challenge faced by whoever wins the federal government. Besides that , Brazil is a quite decentralized federation, where governors can be important actors22, although lacking of formal veto powers. Their - and not presidential - elections are pivotal to organize electoral competition and explain electoral results. This is so due not only to the coincidence of electoral cycles (Shugart & Carey,1992: 207) for federal and state level executives and legislatives, but also due to the coincidence between states limits and multinominal electoral districts for Congress and State Legislative Assemblies (Lavareda, 1991; Piquet Carneiro & Tavares de Almeida, 2006). In brief, institutional rules account for a decentralized political system with several potential veto points and veto players. On the other hand, recent research has shown that veto points can be circumvented and veto players neutralized. The legislative powers of the Executive and Congress internal rules have guaranteed Executives predominance over the Legislative and a disciplined governmental coalition in Congress, in spite of party fragmentation produced federalism and electoral rules and politicians autonomy granted party rules ( Figueiredo & Limongi, 2000). Table V, presented by Figueiredo & Limongi (2005), shows that the Executive has been highly successful and has exerted significant influence
21

O eixo da coalizo de Cardoso foi a aliana entre um partido de centro (PSDB) e um partido de centrodireita (PFL) que compartilhavam uma agenda de reformas econmicas liberalizantes. 22 On the subject see Abrcio,1994,1998; Abrucio & Samuels,1997; Abrucio & Costa, 1998; Santos,2001, Souza,2003, Tavares de Almeida (2005, 200.)

on the outcomes of the legislative process, even when it lacked a majority of seats in Congress, as has been the case under Collor. It also shows that Cardoso and Lula had both very positive results in circumventing their opposition.

Table V Brazil - Legislative production in different administrations Ordinary laws ( 1989-2004) Presidents party Governmental in Administratio n Subtotal Sarney Collor Franco Cardoso I Cardoso II Lula Subtotal Chamber of Representatives (% of seats) 24,3 36,8 8,0 0,0 15,3 18,5 17,5 14,7 coalition in Chamber of Representatives (% of seats) 77,1 64,4 34,8 58,7 73,4 72,8 50,4 59,1 (%) 29,5 71,3 65,0 66,0 73,0 70,4 79,8 70,7 Executive success ** Executives dominance *** (%) 38,5 77,9 76,5 91,0 84,6 84,4 95,6 85,6

Apud Figueiredo & Limongi (2005) Source: Legislative data base, Cebrap. ** Percentage of the Executives projects presented and approved during the same term. *** Percentage laws of all approved that resulted from Eexecutives initiative.

Nevertheless, these results rely significant on the President itself and on the governments congressional leadership capacities for negotiating and making room for different interests. Although the President controls important resources and can distribute an array of benefits to his allies in order to get compliance, it is also true that he must be open to negotiate his positions and must take into account what he can and what cannot sensibly expect to approve, before sending a proposition to Congress. In a

matter of fact, succesfull proposals must be accepted by the median representative of the governmental coalition (Velasco, 2005), depending, therefore, on the distribution of preferences regarding each issue at stake. In other words, Brazilian institutional arrangements as long as it stimulates broad multiparty coalitions, do not favor radical strategies of change. Given the voters preferences, the governmental coalitions must include the political center, therefore favoring negotiated policies and moderate reforms. The prevailing institutional set gives powerful incentives to moderation and continuity of governmental policies. Under Cardosos administration it benefited the moderate reformers against neoliberal radicals. Under Lula, it has strengtened the position of the moderate and pragmatic group that already controlled the PT machine. Bibliography ABRANCHES, Sergio (199 ), Presidencialismo de Coalizo, Dados, Rio de Janeiro:Iuperj. ABRUCIO, Fernando & Costa, Valeriano (1998). Reforma do Estado e o contexto federativo brasileiro, Srie Pesquisa n 2. So Paulo: Fundao Konrad Adenauer-Stiftung. ABRUCIO, Fernando & SAMUELS, David (1997). "A nova poltica dos governadores" in Lua Nova 40/41, So Paulo: Cedec. ABRUCIO, Fernando (1994). "Os bares da Federao". In Lua Nova 33, So Paulo: Cedec. ABRUCIO, Fernando (1998). Os bares da Federao - os governadores e a redemocratizao. AFONSO, Jos Roberto (2004) AMORIM NETO, Octavio & SANTOS, Fabiano (2001). The Executive Connection: Presidentially-Defined Factions and Party Discipline in Brazil. Party Politics, Londres, Reino Unido, v. 7, n. 2, p. 213-234,. AMORIM NETO, Octavio ( 1994) . Formao de Gabinetes Presidenciais no Brasil: Coalizo Versus Cooptao. Nova Economia 4 (1), Belo Horizonte, p. 9-34 CAREY, John M. & SHUGART, Mattew S. (1992), Presidents and Aseemblies.

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