What next for Brazil?

20 Dec, 2014

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By Ed Oai??i??Brien

Dilma Rousseff was re-elected President of Brazil on Sunday in the countryai??i??s closest and most dramatic election since the return of full democracy in 1989. The Partido dos Trabalhadores (PT) incumbent secured 51.6 percent of the vote against challenger AAi??cio Neves of the Partido da Social Democracia Brasileira (PSDB). The highly polarized election, which exposed the growing regional rift in which poorer northern and northeastern states favoured the PT and the wealthier centre-west, south and south-east favoured the PSDB, has been noted for its bitterness. Rodrigo Leite, psychiatrist at Hospital das Clinicas, University of SA?o Paulo, commented that ai???the myth of the cordial Brazilian has gone,ai??? whilst The Diario de Pernambucoai??i??s headline on Monday of ai???One President, Two Brazilai??i??sai??i?? was apt.

Given the mass street protests in 2013 which saw approval ratings of the governmentai??i??s performance plunge to as low as 31 percent in July of that year, Dilmaai??i??s re-election may seem surprising to some observers. The key reason for this however is that the protest movement, which at its height on the 20^th June brought over a million people onto the streets in protest across 80 cities, struggled to identify with any political party. Initially, as she soared in opinion polls, it looked as if Marina Silva of the PSB would provide the ai???protestai??i?? vote through her politics of the ai???third wayai???. Yet her campaign faded badly by the first round as it came under greater scrutiny and she failed to progress after only securing 21 percent. The result is that despite the strong desire for change in Brazil, the election was primarily disputed between the PT and PSDB as has happened on all five previous occasions since 1989. Especially given her very fine margin of victory, Dilma faces a number of challenges in her second term:

Reconciliation
The election campaign featured lurid accusations between the PSDB and the PT and also in their deconstruction of Marinaai??i??s PSB. It reached a height when AAi??cio compared the PTai??i??s campaign manager to Joseph Goebbels, to which Lula replied that the PSDBai??i??s persecution of the northeast is reminiscent of Nazi persecution of the Jews during World War II. Yet behind the outrageous rhetoric, there are in fact common interests between the parties in their desire to continue social programmes that have lifted millions out of poverty, and to improve public services, infrastructure, and the economy. In her victory speech Dilma called ai???without exception on all Brazilians to unite in favour of the future of our country and of our people.ai??i?? Reconciliation is needed because the PT lost 18 seats in the Chamber of Deputies and yet requires support to push through urgently needed reforms such as tax overhaul. Dilma will therefore need to build coalitions, something she not been successful in doing so far, as without them reform in areas in urgent need is unlikely to be achieved.

Economy
The biggest difference between the PT and the PSDB is their approach to the economy: the PSDB is pro-business while the PT under Dilma has become very state interventionist. At 6.75% inflation is a concern at the moment – Brazil has profited from the macroeconomic stability achieved under Cardoso and mustnai??i??t lose it. According to Jonathan Wheatley writing in the Financial Times, ai???the main index on the SA?o Paulo stock exchange fell more than 6 percent in its first half hour of trading on Mondayai??i??, and growth is expected to be close to 0% this year. Dilma intends to announce a new finance minister as a replacement for Guido Mantega, who may appeal to the markets more, but the replacement has not yet been announced. All economic indicators have worsened since Dilma took office and this does put some of the social advances the country has made under threat. Yet unemployment is currently low and social programs are diminishing number of those in poorest categories. If economic performance does worsen however, street protests could occur again, especially in protest at the $15bn cost of the 2016 Olympics.

Corruption
The recent revelations about a huge systemic corruption scandal at Petrobras could have been enough to sink most presidents in an election campaign. However AAi??cio has also been accused of corruption and nepotism and so the scandal did not significantly damage support for Dilma. A survey in 2010 by FIESP (Federation of Industries of SA?o Paulo State) estimated that the annual cost of corruption is between 1.38 percent and 2.3 percent of Brazilai??i??s GDP. Some progress has been made as senior figures that had served in Lulaai??i??s government were jailed in 2013 for their involvement in the mensalA?o and Dilma dismissed 6 corrupt ministers from her cabinet in her first year.

Deforestation
Whilst deforestation has not dominated the elections, itai??i??s significance both to Brazil and the world is undeniable. Dilma has not been tough on deforestation, having only partially-vetoed a controversial new forest code in 2012 and refused to join a UN initiative to end deforestation by 2030. Deforestation between August 2012 and July 2013 reached 5,843 sq km, a 29% increase. Antonio Nobre has drawn attention to how the rainforest is key to maintaining the climate of the south of Brazil as vapour clouds from the Amazon bring rain to the region, an issue more pressing than ever given the severe water drought in SA?o Paulo. In 2009 he stated that ai???SA?o Paulo has a natural inclination for being a desert…destroying the Amazon to advance the agricultural frontier is like shooting yourself in the foot.ai??? Tougher measures have worked in the past and they need to be re-introduced and enforced more rigorously.

Education
Dilma spoke about education in her victory speech as it still requires improvement despite the introduction of programmes such as Science Without Bordersand Pronatec. Huge progress has been made in the funding of public education yet as the OECD has reported: ai???when calculated per student, annual public expenditure on public institutions for all levels of education combined was of USD 2,985, which is considerably below the OECD average of USD 8,952 in purchasing power parity terms.ai??i?? Tackling teacher absenteeism will be an important issue, as well as the productivity of lessons. Congress has already passed legislation to invest 75% of pre-salt oil royalties in education and that could make huge improvements. An educated workforce is essential for growth and of Brazilai??i??s success in the future.

In my opinion a rigorous debate is needed in Brazilian politics to resolve these issues and in order to unify brazilians and ensure that the issues raised by the protest movement are tackled. Although Dilmaai??i??s presidency has not been marked by one decisive achievement in the way that Cardoso controlled hyperinflation or Lula raised millions out of poverty, there are positive signs from her victory speech. Letai??i??s hope that as she said in the closing comments of her speech that she is ai???much stronger, more serene, more mature and more ready for the taskai??? ahead.