The move, which surprised the Brazilian political system, is seen as the first truly Dilma personal and direct nomination since most of her cabinet is a continuation from the Lula administration, and the new chief of staff will then be full soldier of the president.
Belonging to a family of German origin, Ms Hoffmann is Senator for the southern state of Paraná, studied Law and Government Financial Management and joined the Workers party in 1989. She held a cabinet post in the State of Mato Grosso do Sul and in 2002 was part of the transition team of President Lula.
Ms Hoffmann was named Brazilian financial representative at the huge Itaipu dam complex, shared with Paraguay, and in 2006 run for a Senate bench but lost. In 2008 she became chairperson of the Workers Party in the state of Paraná and in 2010 was elected Senator for her state with the most votes.
“A Lula man steps down and a Dilma woman moves in”, is how a Brazilian political columnist described the situation, adding that President Rousseff had an ‘excessive dependency’ on Palocci for most major decisions.
“Dilma is betting Gleisi will play the same role the president exercised as cabinet chief of Lula; not even in her wildest dreams could Gleisi have imagined the post of such importance as chief of staff”.
According to a presidential advisor, “now in fact begins Dilma’s government, with someone who owes her and only her, the nomination for the post that implements government programs”.
However the simple change will not solve the problems that the Rousseff administration has been piling up in such a short time (five months). The inner circle hopes the president has learnt from the Palocci crisis that was considered the administration’s most articulate communicator with the political and business worlds.
“Dilma overloaded Palocci”. The president wanted Palocci present at all meetings, and his opinion in all decisions to be made which ended neutralizing her main minister since Palocci had less time to meet with politicians, congress members and business leaders. This only aggravated his personal stance with the Workers Party main ally in the ruling coalition, the PMDB, which has never been particularly cordial.
“When Palocci’s personal finances crisis exploded, he was debilitated before the political system and specifically with his own Workers Party that let him on his own in the midst of the turmoil making things worse”.
Finally the President needs to look back at the incident and according to her close aides “must change her attitude: show more care for allies; hold more meetings with members of Congress and learn to contain her furies and not let them out on her staff”.
“If not, one day she may be the direct impact of a crisis and will have to live through the same solitude experienced by her former chief of staff,” concludes daily newspaper Folha de S. Paulo.
The new minister is a 45-year-old lawyer and is married to Dilma’s minister of Communications, Paulo Bernardo (he was Lula’s minister of Planning). They have two children.
The Fall
Antonio Palocci described by fellow ministers as the most influential official in President Dilma Rousseff’s government resigned on Tuesday to prevent a scandal over his finances from becoming an ongoing distraction for the administration.
Palocci’s departure deprives Rousseff of an articulate political negotiator and a strong reference for investors in Brazil based on his stern defense of responsible fiscal and monetary policies in a party with strong roots in trade unionism.
Palocci’s work as Finance minister in the first government of former president Lula (2003/2006) helped build his reputation and together with the Central bank governor Henrique Meirelles adopted the most orthodox approach to inflation, balanced budget and monetary policy.
His departure is not likely to result in any immediate policy shifts, as Rousseff and other senior officials have repeatedly voiced their commitment to keeping inflation low and budget spending under control.
The pillars of Brazil’s economic stability have remained largely unchanged for over a decade when the Real reform implemented in the mid nineties by former president Fernando Henrique Cardoso.
However Palocci’s absence over time could very well empower other officials in Rousseff’s government who are pushing for greater government intervention in key industries such as oil and manufacturing.
Palocci had lost support in Congress following allegations that he had used his political influence to expand his net worth by a factor of 20 since 2005, particularly in the last year as the coordinator of candidate Rousseff’s presidential campaign.
No criminal charges have been filed against him and the chief public prosecutor shelved a formal investigation on Monday. But opposition leaders and even some ruling party allies pressed for Palocci to step aside. Some of them alleged he had made millions by influencing government decisions on behalf of clients of his economic consultancy.
Palocci denied any wrongdoing. But the scandal threatened to dominate the government’s agenda, distracting it from making needed reforms in the tax regime and elsewhere.
This marked the second time Palocci has resigned under a cloud. His tenure as finance minister ended in May 2006 amid a separate ethics scandal. The political career of one of the Workers’ Party’s brightest young stars may now be definitively over.
“There’s a bit of a vacuum surrounding economic policy-making now. Palocci was a key player,” said Alexandre Barros, a political consultant.
It was shortly after 6 pm Tuesday when minister Antonio Palocci submitted his letter of resignation to president Dilma Rousseff. The president promptly accepted his resignation.
According to a note from the Casa Civil, Palocci believes that the decision by the head of the Office of Federal Prosecutors, Roberto Gurgel, not to begin a criminal investigation “confirms that his activities were legal and his behavior correct.”
On May 16, the newspaper Folha de S. Paulo reported that Palocci, during the period he was a representative (PT-SP) and the Dilma Rousseff presidential campaign manager, that is, between 2006 and 2010, worked as a consultant and made an amount of money that increased his worth some 20 times.
After the campaign, Palocci became a member of the transition team that prepared for the new government to take office in January. He was appointed Chief of Staff at that time.
Palocci is the first member of president Dilma Rousseff’s cabinet to resign, 158 days after the new administration took office.
This is the second time Antonio Palocci has been forced to resign from a prominent and powerful position in the federal government.
In March 2006 he resigned as minister of Finance in what became known as the scandal of the violation of the gardener’s bank account. A whistleblower gardener had revealed that Palocci lied about his relations with lobbyists.