Brazil’s Presidential Election

Ministry of Technology and Innovation / CC BY-SA 2.0

The Atlantic Council and The Dialogue convened on Tuesday, October 28th to interpret the results of the Brazilian presidential elections. Dilma’s very narrow margin of victory, a mere 3 points, speaks to the increasing political fragmentation her coalition will continue to face throughout her second term. Andrew Gunther, Managing Director for Global Infrastructure, John Prideaux, Washington Correspondent for The Economist, Ricardo Sennes, Nonresident Senior Brazil Fellow at Adrienne Arsht Latin America Center, and Peter Schechter, Director of Adrienne Arsht Latin America Center shared their expectations for Dilma’s Workers' Party (PT) continuity in power. Speakers also voiced their doubts on Dilma’s commitment to macroeconomic reform and her ability to stimulate the economic growth needed to increase Brazilian competitivity and lift Brazilians out of recession. The discussion was moderated by Adrienne Arsht Latin America Center’s Deputy Director Jason Marczak.

In his opening remarks, Shifter laid out the high expectations Brazilians have for Dilma’s second term, and the challenges she will face in both building a coalition and sustaining popular support. While Dilma’s re-election was ultimately attributed to the middle class’ vote, Ricardo Sennes argued that this dynamic of support will be short-lived. He warned that Dilma’s victory would be the last for the “PT cycle.” A “third way,” a political alternative to both Dilma’s Workers' Party and the Brazilian Social Democracy Party, would play a more significant role in the next elections. Sennes also pointed out that despite the virulent and polarizing campaigns between both finalists, political fragmentation extends far beyond this mediatized dichotomy. Sennes explained that the Workers’ Party is only a “minority political force:” even though the PT has managed to lead the coalition that controls congress, it does not control local level governance. Schechter echoed Sennes stressing that in this fractionalized environment, the challenge for the PT will be to build a consensus over widening fault lines. The urgency of coalition-building is evident: since 2010, the PT coalition has already lost 25% of its Congressional influence now that it holds only ¼ of the current seats.

The panellists also discussed the prospects of Brazil adopting more market-oriented policies. Michael Shifter captured the uncertainty of Dilma’s economic management describing two analytical camps: the skeptics who presume Dilma unable to restore credibility and investor confidence, and the optimists who believe Dilma knows that her consumption-based model has reached a limit and that some adjustments are necessary to spur growth. On the skeptic side, John Prideaux stated that there is no reason to think that Dilma has seen in her re-election a mandate to open Brazil to foreign capital. Prideaux argued that Dilma “will focus on bureaucratic reform, to get the machinery of government functioning” and that when it comes to a market friendly direction, “her heart isn’t there.” Ricardo Sennes disagreed reading Dilma’s replacement of Finance Minister Guido Mantega as an indication that the president is moving to implement more strategic, and perhaps even orthodox measures. For Andrew Gunther, the next finance minister will be more of a clue as to how Dilma plans to move Brazil forward.

Despite these ambiguities, Brazilians have been pressing the government for lower inflation, less corruption and better public services. Andrew Gunther emphasized, however, that the 1-2% growth rates do not suffice in meeting these demands. “If you want to make inroads in improving people’s life and reducing poverty, the economy needs to grow at least 5%.” Gunther identified infrastructure as a sector in which there are huge gains to be made to increase Brazilian productivity and subsequent growth. Gunther also explained that the current rate of Brazilian investment in infrastructure which has hovered at around 2% of the GDP for over 25 years is “too low,” especially because infrastructure is “a place where there is some relatively low hanging fruit.”

In addition to infrastructure, improving education was also discussed as means to both shaping and responding to the needs of a growing Brazilian middle class. Over the past 12 years, approximately 40 million people have been lifted out of poverty. John Prideaux explained that the government ought to increase access to quality education by improving existing public schools. For educational investments to benefit more than the children of the wealthiest, investments also need to shift from higher education to primary and secondary education, explained Prideaux.

Even though the presidential victory has been secured at last, it is clear from the discussion that Brazilian politics continue to build suspense. Relations with the U.S. are unlikely to change, but from Washington, Brazilian politics are wrapped in the haze of another PT mandate. Despite the uncertainties, Prideaux highlighted that “Dilma’s continuity is not a disaster.” Similarly Schechter concluded that “by and large, things are doing well in Brazil: 40 million have entered the middle class, there’s the rule of law, and democracy is strong.”