Photo Jonathan Blair

Tuesday, August 19, 2014

Brazilian elections monitor (1): the stakes

This is the first instalment of what I intend to make a weekly analysis of the ongoing Brazilian election campaign. Each post will analyze recent events and polls, as well as one or two particular themes (candidate profiles, regional dynamics, congressional elections, as well as state elections in the country’s three largest states: São Paulo, Rio de Janeiro and Minas Gerais). The series will end roughly a week after the final results are in, i.e. after October 5, if there is only one round, or after October 26, if none of the candidates gets an absolute majority in the first round.

In this post, I will introduce the basic stakes of these elections, along with the most recent polling results, which have been affected by the death of Eduardo Campos, who was running in third place in the presidential race when he died in a plane crash, on August 13.

So, what is at stake?

Let’s start with reasons for the world to be interested in these elections. By any measure, Brazil is huge: fifth largest country in the world and fifth most populous. Seventh largest economy (after France and the UK, but before Russia. Canada is eleventh), fifth largest industrial and agricultural producer, sixth largest car industry, and so on. Regionally, it looms even larger, with about 40% of the territory, population and GDP of South America and almost half of the region’s military spending.

For much of its history, Brazil has punched well below its weight. A gentle giant protected by the American strategic umbrella and completely devoid of territorial ambitions, its raw size along with a clever and effective diplomacy have made it an anchor of regional stability in South America but essentially a non-entity at the global level. Decades of economic instability and hyper-inflation, along with a quasi-universal consensus around the development and protection of its domestic industry, dating back to the 1930s, have also kept it at the margins of the global trade and economic game. However, its huge market and formidable agricultural and mining potential have long sucked in large flows of foreign investments. Since 1994, moreover, economic stabilization, a degree of trade and investment liberalization, aggressive public investments, innovative social policy and an increasingly activist foreign policy have greatly enhanced Brazil’s visibility, status and influence in the world. It is now a prominent member of the most powerful global clubs and a player in most important negotiation venues (G20, BRICS, WTO), as well as an influential actor in global governance institutions, particularly the United Nations (where it is a perennial candidate to a permanent seat in a reformed Security Council) and the IMF.

As it rose to prominence over the last 20 years, Brazil has mostly played ball, nudging here and there but generally playing a constructive role in the chaotic redefinition of global governance that has accompanied the US slow retreat from prominence. Under incumbent Dilma Rousseff and her Workers’ Party (PT) predecessor, Luiz Inacio Lula da Silva (Lula), however, the country has taken increasingly confrontational stands towards the West generally, from its support of Iran’s claims to a “civilian” nuclear program, to its refusal to condemn Russia’s policy in Ukraine--which secured it a larger market share of Russia’s agrofood market following Moscow’s counter sanctions against the EU and the US). At the same time, however, Brazil’s taking this or that position, or taking this or that side would by no means be a game changer. With the marginalization of multilateral trade negotiations--where Brazil has become a formidable architect of veto coalitions--and as its complete absence from the discussions of the Ukraine and the Middle East crises has shown, moreover, Brasilia is not yet a major global player.

Regionally, and most obviously in the face of the deepening crisis in Venezuela, Brazil has abandoned the more neutral pro-democracy stand that had characterized its foreign policy since the end of the military regime in 1985. This has led to its virtual disappearance from the informal management of regional issues, leaving the space open for Colombia’s Santos, Mexico’s Nieto and Chile’s Bachelet, on the centre and centre-right, and for Ecuador’s Correa and even Venezuela’s Maduro on the left. Overall, the clever and effective regional governance led by Brazil’s foreign ministry and by activist presidents Cardoso and Lula has been replaced by a much messier regional game nobody is really in charge.

While it would be a wild exaggeration to say that the election could determine how pro- or anti-West Brazil’s policy could become, it is quite clear that the reelection of Dilma Rousseff would reinforce current orientations while an opposition victory would make Brazil once again the soft ally of the West that it had been well into Lula's presidency. Regionally, it would probably also mean a cooler attitude towards Venezuela’s current regime. Most importantly, however, it could open the way for progress on free trade with Europe and, in the same movement, for the further weakening of Mercosur, the trading bloc that Brazil forms with Paraguay, Uruguay, Argentina and Venezuela, the last two of which are adamantly opposed to trade liberalization.

Overall, because even the Venezuela crisis is unlikely to degenerate into a regional conflagration, and also because Brazil remains a relatively marginal player globally, the results of the election are unlikely to radically affect global dynamics.

The domestic game is another matter. The election of Lula in 2002 was the culmination of the country's slow transition from the military regime that had governed it between 1964 and 1985. In this most unequal country long dominated by narrow elite coalitions, the election of a working class President born in the impoverished Northeast came as breadth of fresh air and then his reelection, with the massive support of the poorest sectors of the electorate, undoubtedly boosted the democratic legitimacy of the political system. Innovative social programs, quite aggressive adjustments of the minimum wage, extensive infrastructure and education investments (almost all of it, admittedly, a continuation of efforts begun under Cardoso) have given substance to the claim that, at last, the state was to serve all Brazilians.

In spite of this very concrete progress, and beyond the important symbolic effect of Lula's decade in power, there are few signs of further progress towards freer, more open and less corrupt political governance since he was elected. The congressional coalition led by the Workers' Party ("PT," for Partido dos Trabalhadores) has included some of the worst sectors of the good old clientelistic cliques, and often provided cover for their corrupt schemes. The party leadership itself, including Lula's closest lieutenants (but not Lula himself, apparently), was involved and then condemned for their use of a large-scale vote-buying scheme. Court nominations, including at the Supreme Court, have become ever more politicized--epitomized by the progressive weakening of the vote-buyers' sanctions. The country's huge national development bank, the BNDES, as well as its mega-oil company, Petrobras, have been increasingly used as political instruments, both for populist purposes--e.g. to keep gasoline prices artificially low--and to place and help party members and allies.

From those standpoints and except perhaps for Petrobras, which had slowly become more autonomous from the political powers that be, the PT in power has not been very different from its predecessors. But that is precisely the problem: Brazil's democratic consolidation seems to have stopped in its tracks, and there are worrying signs that it may be starting to move backward. It appears, in particular, that Dilma Rousseff and the PT do not stand for a particular political, social or economic program, but that they are instead strictly driven by their will to stay in power. If Dilma is elected this Fall and, as is most likely, if she completes her mandate, the PT will have been in power for 16 consecutive years. Worryingly, party president Rui Falcão recently said bluntly that the main reason the party wanted to reelect Dilma was to pave the road for the return of Lula in 2020 (unlike their American counterparts, Brazilian presidents are only barred from more than two consecutive mandates). Four years is obviously very long in politics, but the comment nonetheless testifies to a political project that, beyond the consolidation of the party's grip on the state, is a bit thin. In the context of the growing politicization of public institutions and public policy, moreover, such an outlook is not promising for Brazilian democracy.

This political stasis happens in the context of growing economic difficulties, with some of the slowest growth rates in Latin America (only "beaten" in that race by the likes of chaotic Argentina and Venezuela). The resource boom that sustained Brazil's relatively high growth rates of the first decade of this century appears to be over, while the country's quickly shrinking industry is less competitive than ever. Inflation is creeping up, in spite of the government's efforts to artificially control it--for instance by forcing Petrobras to sell well below profitable levels, crippling the company's ability to invest and sustain the country's now very slow march towards energy self-sufficiency. The huge investments tied to the World Cup and, in two years, to the Rio Olympics, are set to have little long-term economic impact and heavily constrain the government's investment plans. These difficulties, unfortunately, push the government towards short-term populist measures likely to deepen the country's predicament.

While Brazil's political development and its economic and public policies now moves like an oil tanker--not a bad thing when the recent past includes a military regime and the wild economic swings of the Collor de Melo era--the stakes of this election may well lie in the fate of the increasing closure of the political system and the consolidation of a short-term, populist and ultimately counter-productive economic policy.

In the next instalment of this monitor, I will briefly examine how the two other candidates would likely affect the tanker's direction.

Latest polls

According to Datafolha, one of Brazil's top pollsters, Dilma Rousseff remains in first place, with 36% of voting intentions, while Marina Silva and Aecio Neves, the still unofficial replacement for Eduardo Campos, were tied at 21% and 20% (a huge progress for Silva, whose ticket, with the late Eduardo Campos as Presidential candidate, was still stuck below 10%). This implies that a second round would take place and, in that eventuality, Datafolha's numbers suggested that Marina Silva would defeat Rousseff, a stunning reversal of all the polls done since the latter was elected in 2010...

Silva appears to be surfing on the publicity and universal wave of official and public sympathy for Eduardo Campos, a bright, popular, likable and pragmatic centrist politician that, remarkably, had a plethora of personal friends of all stripes. However, she is also a force unto herself. She enjoys broad and positive public recognition and commands respect, even from her political enemies and she received 20 million votes in the 2010 election. As columnist Dora Kramer recently pointed out, moreover, in the early stages of this campaign, when Silva was trying to legalize her own party, 27% of poll respondents supported her, more than anything Eduardo Campos ever registered.

By next week, the dust should have settled to some extent when we will look in more details at the main candidates and assess their prospects.