Brazil: Implications of Dilma’s Victory

By Eric Hershberg and Matthew Taylor

Sala de Imprensa / Flickr /  CC BY-NC 2.0

Sala de Imprensa / Flickr / CC BY-NC 2.0

President Dilma Rousseff’s reelection – by a tight 3.28 percent of the vote – sets the stage for a period of challenges and political uncertainty.  The Social Democratic Party (PSDB) candidate, former governor Aécio Neves, was truly a formidable contender, and Dilma and the Worker Party (PT) showed new weaknesses.  The battle was marked by a strong desire for change – even Dilma’s campaign slogan was “Governo Novo, Ideias Novas” (New Government, New Ideas) – and the big question now is what sort of change will come from the PT’s fourth consecutive turn in office.

  • Dilma lost overwhelmingly in the Worker Party’s (PT) old stomping grounds of the southeast (by 2-1 margins), but picked up support in Neves’s state of Minas Gerais and thoroughly dominated the northeast (by 3-1 margins in many places), including Pernambuco, which had gone to Marina Silva in the first round.
  • The lower middle class, known widely as Classe C, ultimately appears to have thrown its lot to Dilma – apparently driven by the PT’s relentless message that only it could be trusted to protect their interests and social programs like the Bolsa Família.
  • The PT emerges from the battle bloody and bruised. The Rousseff campaign’s systematic deconstruction of Marina Silva in the first round buys the resentment of a solid fifth of the electorate.  Former president Luiz Inácio Lula da Silva was an uneven participant in the campaign, inexplicably absent at critical moments and losing his cool at others.
  • The PT won 19 of 27 governorships, and Dilma’s alliance did well in the Chamber of Deputies and Senate, but the opposition is likely to be far more assertive, as the combined issues of the economy, public services and corruption proved during the campaign to be useful wedges to drive between the middle class and the PT. A newly combative and forceful Aécio will be the clear leader of the opposition.

Dilma faces formidable challenges.  The economy was moribund for almost all of her first term, and fairly urgent work is needed to cope with a deteriorating current account, the weak fiscal results, resurgent inflation, and declining personal credit, especially among the politically influential Classe C.  Management of public services – theoretically manager Dilma’s strong suit – needs attention, and she actually has little hope of driving meaningful change singlehandedly.  The corruption story, moreover, is an immediate threat.  If the testimony of foreign exchange dealer Alberto Yousseff, who was given whistleblower protection in exchange for testifying to the police, is to be believed, this is an enormous scandal that may shake the administration to its core.  In light of this political scenario, it is perhaps not surprising that Dilma’s victory speech focused on building consensus, suggesting she would push political reform via plebiscite, promising anti-corruption reforms, and suggesting, after largely downplaying the issue on the campaign trail, that inflation and fiscal balance will be key priorities during her second term.  Whether she can actually accomplish these goals on her own timetable is a big question.

October 27, 2014

Elections in Brazil: The Force of the Latin American Left

By Eric Hershberg and Luciano Melo

Aécio Neves – Senador & World Economic Forum / Foter / CC BY-NC-SA

Aécio Neves – Senador & World Economic Forum / Foter / CC BY-NC-SA

The first round of Brazil’s presidential election has set the stage for a runoff playing primarily to class differences.  By the eve of the election, polls hinted at the real possibility that the center-right candidate Aécio Neves of the Brazilian Social Democratic Party (PSDB) would edge out the other principal opposition contender, former Minister of the Environment Marina Silva.  Silva enjoyed a spike in the polls after she replaced the late Eduardo Campos, who perished in a plane accident in August, as the Brazilian Social Party (PSB) candidate.  Sunday’s results confirmed Silva’s decline, as she captured only 21.3 percent of the votes compared to 33.5 percent for the PSDB and 41.6% for incumbent President Dilma Roussef of the Worker’s Party (PT).  The PT used its potent propaganda machine to portray Silva as a potentially dangerous candidate – an indecisive leader who could not be trusted to sustain popular social programs such as the Bolsa Familia conditional cash transfer program, which has helped lift millions of Brazilians out of poverty.  Also, Aécio and Rousseff built their images upon two iconic ex-Presidents – the former on Fernando Henrique Cardoso (FHC) – seen by the middle and upper classes as the leader who managed to defeat hyperinflation and putting Brazil on track for economic growth – and the latter on Lula, Rousseff’s mentor, who is idolized among the most disadvantaged parts of Brazilian society as the President who helped the poor become less poor.

To win the runoff on October 26, Aécio needs at least 70 percent of Silva’s votes – she has only hinted at supporting him – while Rousseff would succeed with only half of that.  It is clear that Dilma and the PT will double down on their negative advertisements, now aiming at Aécio rather than Marina.  The PT’s barrage over the airwaves will highlight the risks of abandoning the course set out by Lula and followed by Rousseff.  Voters will be told that the opposition may underfund cash transfers, privatize the state oil company Petrobrás or treat it as a profit-making enterprise rather than as a development bank, thus increasing unemployment as occurred during the Cardoso years.  And the PT will no doubt remind voters of its consistent efforts to boost minimum wages and chip away at the vast inequalities that had long characterized Brazil.  Surely they will portray Neves as an elitist out of touch with the majority that has benefited from the PT’s redistributionist agenda.  Aécio and the PSDB, by contrast, will highlight the worrisome slowdown in growth under Rousseff, the failure to significantly improve public services – it was frustration over health, education and, particularly, urban transportation that drove the social protests that began in mid-2013 – and the over-regulated and over-taxed economy.  Most of all, Neves’ campaign will harp on the persistent scandals that have bedeviled the PT over the past decade and that have helped to fuel popular disdain for politicians.

The election results in Brazil are likely to become increasingly polarized in terms of class.  Dilma appears poised to prevail in the poorest states of North and Northeast, where Bolsa Familia and other cash transfer programs, subsidies, wage increases and Lula’s image are compelling.  In turn, Aécio should come out ahead in the richer states such as São Paulo, which offer the largest pool of voters and where highly educated and middle- and upper-income Brazilians are concentrated.  We make divergent predictions: Hershberg anticipates a PT victory, since for all the speculation about the travails of the Latin American left, it has built very substantial foundations of support in societies that credit the left with finally making some advances to tackle Latin America’s yawning inequalities.  Warnings that Aécio represents a return to elite rule will resonate among the PT’s electoral base, and the PT’s success will be nourished by its powerful organizational capabilities.  Melo, by contrast, anticipates a PSDB triumph.  In this scenario, the corruption, disappointing growth rates over the past two years as the commodity boom has slowed, and widespread frustration about the quality of public services will generate an anti-incumbent dynamic that will bring to an end a dozen years of PT rule.

October 10, 2014