During a closed-door meeting with international investors in São Paulo in November last year, a Brazilian speaker described the main political scenarios for the coming year.
The good scenario included Henrique Meirelles or someone equally fiscally orthodox as Finance Minister. In this scenario, President Luiz Inácio Lula da Silva would govern as a centrist, just like he had during his first presidential term that began in 2003.
Last November, rumors abounded on Faria Lima (Brazil’s equivalent to Wall Street) that Lula would invite Mr. Meirelles to head the economy, a hope Mr. Meirelles himself seemed to share when he responded to the rumors by saying that “this conversation [of Lula inviting him] has not happened yet.”
The bad scenario included a Workers’ Party politician in the job, someone like Fernando Haddad, who had just lost the race for São Paulo governor.
Given how close the result in the presidential runoff election had been — and thus how important the support of centrists was to assure Lula’s victory — most expected a choice that would soothe markets, a perception fueled by news that the president-elect had actively sought to woo banker Luiz Carlos Trabuco (of Bradesco, one of Brazil’s top financial institutions) for the job.
So when Mr. Haddad was confirmed, early in December, his name was met with a snarl.
The call Mr. Meirelles had been hoping for never happened. Neither did orthodox economists Armínio Fraga or Pérsio Arida, both of whom had declared their support for Lula during the campaign, join the incoming government.
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