By Beatriz Gorostiaga.
On Sunday the incumbent left-wing president of Brazil and candidate of the Worker’s Party (PT), Dilma Rousseff, was re-elected in one of the most volatile and tightly contested presidential elections in the last few decades. Rousseff took 51.4% of the vote in the second and final round of elections against 48.5% for the center-right Party of Brazilian Social Democracy (PSDB) candidate, Aécio Neves. The elections were characterized by intense debates and constant corruption accusations, revealing the increased polarization in Brazil’s society.
Only two months ago, the candidate from PSB, Eduardo Campos, died in a plane crash. His running mate, environmentalist Marina Silva, took his position as party leader and began a campaign of “change” that momentarily gave hope to many Brazilians. In September, Marina soared in opinion polls and it appeared almost certain that Rousseff would have to face her in a final runoff, leaving Neves trailing a distant third. However, on October 5, Rousseff topped the poll with 41.5% of the vote, followed by 33.7% for Aécio Neves and 22% for Marina Silva. Since no single candidate won a majority of the vote, the election was forced into a runoff between incumbent Rousseff and challenger Neves that took place on Sunday.
The election was essentially a squaring off between Brazil’s left and right that has defined all Brazil’s presidential elections since 1994. The opposing ideologies represented two distinct visions for the future of Brazil – the incumbent hewing to interventionism and the opponent contending that the state’s role in the economy should be reduced. While Rousseff described Neves as a businessman who would cut the previously established poverty eradication initiatives, Neves portrayed Rousseff as a socialist who has burdened the country with careless government spending and has driven the economy into recession with her state-controlled approach to growth. Just a few days prior to the runoff, it was still difficult to predict the outcome.
The candidates differed mostly on foreign policy and economics. Aécio Neves – twice governor of Minas Gerais- was perceived as a business-friendly candidate who would not cut the already established social policies, but would indeed attempt to tackle Brazil’s economic woes. His campaign platform, built on pro-economic growth policies such as trade openness and decreased state intervention, became increasingly attractive given the worrying state of the country’s economy. Also, his claim to put Brazil back on the path of economic growth seemed credible due to his party’s record. Under the PSDB rule of Fernando Henrique Cardoso from 1995-2002, the government stabilized the economy and introduced much-needed economic reforms. In addition, Neves boasted an excellent team of advisors led by Arminio Fraga, a former Central Bank chief between 1999 and 2002.
On the other hand, Rousseff, who has been in power since 2010, remained popular with poor Brazilians thanks to her government’s social welfare programs. Her campaign’s strengths were popular satisfaction with higher wages, employment, and the effectiveness of her program “Bolsa Família” that has lifted 36 million people out of poverty. While Rousseff’s campaign emphasized her government’s support for the poor, she faced severe criticism from her opponents over her economic policies, with Brazil struggling with a recession this year coupled with rising inflation. Under Rousseff, the economy has stagnated. Her constant attempts to control the private sector and her interference with macroeconomic policies have failed to reduce inflation and have caused investment to decline, thus forcing the Central Bank to raise interest rates and cutting into growth. The Brazilian stock market fluctuated with every new twist in the polls – surging when Neves was ahead and plunging when not, reflecting skepticism from the business community over Rousseff’s ability to manage the economy. Moreover, Rousseff was heavily criticized for a corruption scandal at Petrobras, the national oil company.
The race inflamed divisions along the lines of social class and geography. Whereas Dilma won in the poorer northern states that benefited mostly from her welfare programs, Neves won in São Paulo – Brazil’s richest and most populous state- and many of the wealthier and more developed southern parts of Brazil. Supporters of Neves blamed Rousseff’s interventionist policies for undermining the confidence of foreign investors and for allowing inflation to climb. On the other hand, supporters of Rousseff were worried that a change in power would lead to the erosion of the current social programs.
As Neves pointed out during one of the debates, the low growth in Brazil puts the advance of social programs at risk. Brazil needs to shift toward economic policies that will attract investment and increase exports to developed nations. Openness would not only put Brazil back on the path of economic growth, but also the entire region, considering the fact that Brazil has the biggest economy in South America. While Rousseff prefers maintaining and improving regional ties, especially with Mercosur, the “Common Market of the South,” Neves stressed the importance of establishing close ties with the United States, Europe, and Asia. During Dilma’s rule, she unconditionally backed other radical populist leftist regimes in the region, as evidenced by her decision to welcome Hugo Chávez’s Venezuela into Mercosur – which seemed to have been more about support between leftist leaders than about economic gains.
While the current government deserves credit for helping to bring millions out of poverty, Rousseff’s political reform and growth restoration promises have doubled the economic recovery expectations. The pressure to pull the seventh largest economy in the world out of recession rests heavily on her shoulders. Among the challenges that she will face are unifying a polarized country and adopting policies that will improve the business climate. Will Rousseff continue with interventionist and corrupt policies that restrict trade and hinder development? Or will she stay true to her promises of political reforms to regain the confidence of the business community and investors to help Brazil grow?