Page 5 - LatAmOil Week 10 2021

LatAmOil COMMENTARY LatAmOil

After all, Castello Branco had made his opposi- that the case can be taken to the full court for
tion to changes in pricing policy clear and had further examination.
asserted repeatedly that Petrobras was not at As such, there is a chance that the March 8
fault for the rising cost of diesel. But it has ruffled ruling will not stand. If it does not, Lula will see
feathers at Petrobras, where a number of direc- his conviction remain in force and his path back
tors have stepped down to express their support to the presidency barred. And even if it does, the
for the departing CEO. story will not end there, as the Supreme Court
It has also unnerved investors and market will send the former president’s case to a federal
analysts by raising concerns about the possibil- court in Brasilia that has been deemed to be the
ity of more state intervention in the Brazilian proper venue for legal proceedings.
economy.
Additionally, it has led political observers to Push and pull
ask whether the right-wing president is chang- But if Lula does overcome these hurdles – and
ing direction and moving away from the fiscally Debora Santos, a political analyst at Sao Pau-
conservative, market-oriented solutions that he lo-based XP Investimentos, told Bloomberg
has traditionally espoused. earlier this week that she put the former presi-
dent’s chances of running at 80-90% – Bolson-
Lula on the loose aro is likely to have a very difficult time gaining
More questions of this type are likely to arise re-election. He may therefore seek to improve More questions
over the next year. Bolsonaro is preparing to seek his chances by pursuing policies that might win are likely to
re-election in 2022, and he may have to compete over some of his rival’s supporters.
against one of his biggest political rivals – Inacio This has implications for Petrobras, given arise if former
Lula da Silva, a leftist who served as president that Lula has spoken harshly against the cur-
between 2003 and 2010. rent president’s efforts to liberalise Brazil’s President Inacio
Lula was effectively banished from Brazil’s fuel and energy sector and to eliminate the
political scene in 2017, when he was convicted NOC’s monopoly over upstream, midstream Lula da Silva
on charges stemming from Lava Jato (“Car and downstream operations in the oil and gas competes in
Wash”), a wide-ranging investigation of bribery, industry.
corruption and money-laundering allegations It may not mean that Bolsonaro will seek to the presidential
involving Petrobras. He served time in prison outflank Lula by reversing his stance in favour
and was released in 2019, but he was also dis- of, say, the privatisation of Petrobras’ refineries. election in 2022
qualified from running for office in the future. However, it may mean that he takes more steps
This may change now. On March 8, Edison to control retail fuel prices to appease constitu-
Fachin, a judge in Brazil’s Supreme Court, threw encies such as truckers.
out Lula’s conviction on the grounds that it had If so, he is likely to face a certain amount of
been made by a court with no jurisdiction over resistance from Petrobras. This resistance may
the matter. not be overt or immediate; after all, Luna is due
The former president has hailed Fachin’s to replace Castello Branco in the near term, and
decision, saying it vindicated his argument that he is not expected to push back against Bolson-
he had been framed. He has also given a number aro with respect to diesel prices. However, the
of fiery public speeches to great acclaim, leading fact that multiple members of the NOC’s board
political observers to speculate that he might be have resigned in sympathy with the outgoing
able to oust the incumbent in the next presiden- CEO is probably a sign of discontent with the
tial race on the grounds that his approval ratings president within Petrobras’ ranks. If so, Luna
are presently much more favourable than those may have difficulty bringing the company in
of Bolsonaro. line with Bolsonaro’s wishes in the run-up to the
next election. ™
Paths to the presidency
It is still too early to predict a loss for Bolsonaro,
however.
Certainly, the current president has drawn
heavy criticism for his handling of the corona-
virus (COVID-19) pandemic and other issues
over the last year. But there is still more than a
year and a half left until the next election, which
is set to take place on October 2, 2022. In theory,
then, Bolsonaro still has time to build up sup-
port among voters.
Moreover, Lula’s return to public office is not
guaranteed. The decision to throw out his con-
viction on corruption charges was made by only
one member of the Supreme Court, and Brazil’s
Attorney General Jose Levi do Amaral has said
he wants the court’s other 10 justices to rule on
the matter.
Likewise, the prosecutor-general’s office is
expected to appeal against Fachin’s decision so Brazil’s next election is casting a shadow (File Photo)

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