Four More for Dilma
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Tags: Brazil, Brazil World Cup, Dilma Rousseff, Elections, Elections 2014, Neves, Petrobras, Workers Party
The votes are in, and Brazil has made a decision. After no candidate manageed to win a majority of the votes during the first round of general elections on October 5th, 2014, Brazil took to the polls again this past Sunday as a runoff took place between the two candidates with the highest number of votes. In one of the tightest presidential races in Brazil’s election history, Dilma Rousseff of the Workers Party (PT) won re-election with 51.6 percent of the votes in the second round runoff, defeating her opponent, Minas Gerais Senator Aécio Neves of the Brazilian Social Democracy Party (PSDB), who fell short with 49.4 percent of the votes.
Marina Silva of the Brazilian Socialist Party (PSB) finished a distant third in the first round of elections, putting her out of the race for the presidency. Polls conducted before the first-round vote suggested that 60 to 70 percent of Silva’s supporters would choose to back Neves in a runoff with Rousseff. Neves received a crucial boost in Brazil’s presidential election when Silva publically announced her support for Neves two weeks before the runoff. Silva’s announcement did not come as much of a surprise given
the pro-market economic platform she shared with Neves. In return for her support, Silva demanded policy commitments including land reform measures and better protections for indigenous communities. She also requested for Neves to drop plans to reduce the age at which minors can be tried as adults for serious crime. Neves showed flexibility on land and indigenous issues but refused to balk on the anti-crime measure that had been backed by conservatives.
The economy was a key issue throughout these presidential elections, and Neves—a centrist economist—ran a campaign promising to restore growth in a slowing economy. The economic coordinator for the Neves campaign, Arminio Fraga, proposed tightening the budget and lowering the government’s inflation target in order to restore foreign investors’ trust in Brazil’s economic policymaking. Neves and Fraga also wanted to give the Central Bank more political independence to practice sound, unbiased monetary policcy. Their critics claimed that this would make the Central Bank more willing to sacrifice employment, poverty reduction and industrial policy to the interests of the financial sector in pursuing a lower inflation rate. In addition, Neves promised to cut government bureaucracy, make Congress more accountable, and reform Brazil’s tax system.
Branded as a pro-growth, market-friendly candidate Neves had won over many investors and business leaders, attracting large amounts of campaign contributions from the industries that were unhappy over what they perceived as Rousseff’s heavy-handed policies. Ethanol producers, for example, have protested for years for being unable to compete against gasoline at the pump because Rousseff’s government has kept official fuel prices artificially low and scrapped a traditional gas tax to control inflation. In fact, on October 22nd, business barons and financiers took to the streets to support Neves, participating in what had been dubbed the “cashmere revolution”.
As for Rousseff, much of her campaign was centered on reminding the Brazilian people of the Workers Party’s successes in poverty reduction and promising to continue social programs that have achieved real results. She also cited several of her presidency’s contributions to Brazil’s poor, such the expansion of the Bolsa Família program from 16.2 million to 57.8 million people, a real increase in the minimum wage, and near-record low unemployment rate. In effect, Rousseff won widespread support among the poor, who make up the majority of the population in Brazil. Wealthy Brazilians, on the other hand, were against Rousseff’s interventionist economic policies such as petrol price controls and high taxes. In all the debates, Neves accused Rousseff of leading the country into recession, as annual growth in GDP has plunged from 7.5 percent to near zero. Inflation became a dangerous distraction and industrial production didn’t grow as much as it should have. Rousseff defended her position by noting that Brazil had been one of the few countries that still managed to create jobs and lift people out of poverty despite adverse international conditions. Few efforts, however, have been made to tackle Brazil’s structural problems, including its poor infrastructure, high costs, punitive tax system, and a rigid labor code. In addition, a corruption scandal at Brazilian oil company Petrobras had further tainted Rousseff’s image.
If the mass protests at the FIFA World Cup this past summer were of any indication, it is that there is an appetite for change among the Brazilian people with the government’s policies. While Rousseff’s victory in these elections reflects the Worker Party’s success in advancing its social agenda, it is uncertain whether Rousseff will be able to achieve the structural reforms necessary to put Brazil on a sustainable growth path in the coming years. In addition to facing a troubled economy and financial market, Rousseff will also have to deal with the scandal at Petrobras, which has eroded confidence in the Worker’s Party in a country all too familiar with corruption scandals. In terms of both population and economy, Brazil is the largest nation in Latin America, and Rousseff’s policies in her upcoming term will have an impact for the region as a whole. With Brazil looking at another four years under the leadership of Rousseff, only time will tell whether or not the nation will be able to move forward with both its economic and social agenda.