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talkpolitics
Dilma Rousseff, the Brazilian president, is certainly among the people who must've sent 2013 away with a sigh of relief. It was the year of the biggest protests in Brazil for the last 20 years, an event that has undermined the previously unshakable domination of Dilma on the Brazilian political scene. Then followed the fiasco with Eike Batista, the wealthiest Brazilian, who buried thousands of investors with millions of dollars when he filed for bankruptcy and caused the biggest corporate failure in Latin America. The Brazilian stocks registered the deepest dip among all top-20 world indexes. And the bad news about the sluggish economy hasn't stopped coming in all the while.
All of this can't help but reflect negatively on one of the two major Brazilian events for 2014. One is the FIFA World Cup in summer (actually Brazilian winter, kindof), the other the presidential elections in October. Until recently, the outcome of the political championship looked pre-determined, and Dilma was sure to win. But the events of the recent months have added a certain dose of dramatism, and the odds have changed. It's clear that the Brazilians want change. It's doubtful that Dilma could provide it. That spells trouble.
After South America's largest economy registered two decades of high growth, the Brazilians now live a much better life than before overall. But this may prove insufficient. The June protests, initially small in scope, started due to the high prices of the bus tickets, then escalated and revealed a much broader discontent against the deadly triangle of rising prices, bad public services and endemic corruption. The demands of the protesters were about better education and health care, more security and justice. The anger found a vent because of the astronomic amounts the government was spending for the new stadiums for the World Cup, especially at the background of the horrible infrastructure in the country. And, if a nation that's obsessed with football, eventually turns against its favourite game, that means the problem has become really serious.
What began as protests of limited scope and significance, soon grew into angry rallies against the rulers everywhere. This of course caused a considerable withdrawal of support from Rousseff and her Labour Party, and is now threatening her second presidential term. Although she has somewhat managed to recover some of her lost popularity since then, she probably won't be able to win the vote at the first round, and she'll have to face a tough and increasingly unpredictable re-run. The most recent polls give her about 47% against 30% of her two main rivals combined, but even if/when she does win, it won't be a rout, rather a penalty shoot-out (to use the football term). She's still the front-runner, but there already are serious indications that the Brazilians want change, although it's still unclear how profoundly that expectation will reflect on the results.
Even so, the challenge will be serious. The polls suggest that the people want broad reforms, and so far Dilma has proven unwilling (or incapable) of delivering. And this promises more discontent against her rule, and the air of unpredictability increasing just before October. If a serious alternative does pop up, who knows - that could be big trouble for the whole Brazilian establishment.
The probable candidate of the biggest opposition party, the social-democrats (PSDB), Aécio Neves is currently having his feet in hot water, accusations of bribery and fraud raining from all sides. Meanwhile, Eduardo Campos, the governor of the tiny north-eastern state of Pernambuco, is the choice of the socialists, who recently split away from the Dilma-lead coalition, and decided to nominate their own candidate. Campos then got the support of former minister of the environment Marina Silva, who looks set to be his VP candidate. She did really well on the previous presidential election, getting 19% and finishing 3rd; and in 2013 she sticked out as one of the very few honest figures on the Brazilian political scene.
Silva decided to join Campos' party after she missed the deadline for registering her own. Now hopes are that she'll manage to draw the youth and the disillusioned voters to him. Her decision to join forces with Campos was interpreted as a potential game-changer, a factor that would add new dynamics to the race. Silva could be able to offer a real alternative for the emerging middle class, which was largely the driving engine behind the protests last summer, being tired of the bipolar rivalry between Labour and PSDB. A good performance by Campos/Silva on the eleciton, even if they don't win, would mean that they'd cement their position nationwide, and clear their way to the 2018 election. Indeed, it's a long-term game that they've been playing, and if they don't make any big flops, they could be a real challenge to Dilma in four years.
Neves was a very popular governor of Minas Gerais, but he doesn't seem capable of sustaining such large popularity to be a big challenger to Rousseff. Campos looks like the more probable threat in four years. It's unlikely that he'd win now, so he's only paving his way for 2018. Neves would be a much weaker opponent to Dilma at this point. On the other hand, Campos is a good governor, but of a very small state. So he may have to step back and give way to Marina Silva, whose supporters have now brought the much needed reinforcement to his party. But anyone among Campos and Silva would suddenly gain a lot of weight and become a real threat to Dilma Rousseff if they reach a re-run on the elections. Because there's a growing number of factors who are feeling inreasingly discontent with her rule, and would gladly forget their differences at least temporarily, and join forces to bring her down.
More importantly, whoever wins the election, will be facing the challenges of a waning Brazilian economic miracle. Since Dilma took the reins in 2011, growth has been rather anaemic. Sure, unemployment is still low enough, and at least until recently, incomes tended to grow faster than inflation. But now that job creation and salary growth is stagnating, while the prices keep climbing up, and public finances are deteriorating, there are no prospects of turning the tide any time soon.
Four years ago The Economist put a picture on its front cover, showing the satue of O Cristo Redentor in Rio designed as a rocket, with a caption, "Brazil Takes Off". And there were ample reasons for that. After two extremely successful terms that brought him 80% popularity among his people, the charismatic Lula da Silva retired from politics, and his protege and strong-lady Rousseff inherited a rapidly developing economy, a society in transition, and a regional power with aspirations to become a major player in the world.
Three years later, China's appetite for the Brazilian resources has cooled off, and the loan-fueled domestic consumer boom has slowed down - and this has revealed quite a few flaws in the Brazilian economic model. The economy has landed back to earth with a disappointing 1-2% annual growth, and the GDP deficit has swollen to the dangerous 3.7% (the budget deficit, to 3.5%). And things are not looking that bright any more.
The thing is, the Brazilian economy is suffering of a chronic problem with terrible infrastructure. Investment in the sector amounts to just 19% of the GDP, which is far below the general level among the world's emerging markets. Given the low domestic savings, the country is compelled to rely on foreign capital for financing all the roads and bridges that it needs. But the foreign investors have started bypassing Brazil because of its high tax rates, the staggering bureaucracy, the deteriorating public finances, and the reluctance for reforms. Since her election in 2010, Dilma hasn't done anything substantial to help the economy become more competitive.
The question now is when this mediocre management will start to show in real life, because at least for now, people are finding solace in the fact that they still have jobs, their income keeps growing, albeit more slowly than inflation. True, the economic growth has been quite disappointing. But still, the living standard has improved a lot in recent years. It's unclear whether this would continue for too long, though, unless the economy becomes more efficient. So the main goal of the next government should be to increase productivity and competitiveness, and invest in infrastructure.
The challenges to the next president will be monstrous, because it's a big economy in urgent need of overhaul. As of now, the private and public domestic investments are far from sufficient; inflation is high, the public sector is bloated with taxes, corruption is rampant, and the infrastructure is dismal. If the inertia from the recent boom turns out insufficient, the economy will take a sharp turn and plunge down - and this promises headaches for Dilma & Co.
Apart from the shame from the fact that the completion of the World Cup stadiums on schedule was put at risk due to the many problems with funding, workers strikes, and all the incidents, the World Cup could bring some more risks to the government. Last year the summer protests coincided with the Confederations Cup, which is a warm-up to the 2014 World Cup. And this additionally fueled the protests, because now the Brazilians had the opportunity to express their discontent for the whole world to see.
Now there's a real threat that this scenario could repeat itself. The passion for football and the national pride probably won't allow things to reach to extremities, but on the other hand, the anarchist group Black Bloc which was heavily involved in clashes with the police last June, has promised to disrupt the World Cup. The police has tried to prevent that through enhancing its intelligence capabilities, craeting a special riot force, and surveying the protest websites, but the Black Bloc's unpredictability is undermining these efforts. And, if the security forces that are so famous for their brutality do use excessive force this time, that could cause still more protests, and new headaches for Dilma.
When she won the last presidential election, everyone was well aware that Dilma was not like Lula. She has never been as charismatic, and she's certainly very different from her mentor. Nevertheless, she's known for being a capable administrator, and she has earned a lot of respect for her fight against corruption. But now, a few years later, the positive effects of the Lula factor seem to have been finally spent. The anti-corruption campaign cannot boast of amazing results at this point, and the economy has lost of its lustre quite a bit. And though Dilma keeps being the front-runner, her victory won't be easy at all... and what's more, defeat no longer looks unthinkable.
(no subject)
Date: 13/1/14 21:52 (UTC)Still, not a bad term overall, but far from the years of the boom. And people tend to get used to the effects of prosperity too easily.
As for Campos & Silva, they don't have big chances on this election. They're mostly running to gain popularity at this stage. Because few people know Campos outside of his province. They might have a better shot in 2018.
(no subject)
Date: 14/1/14 07:55 (UTC)(no subject)
Date: 14/1/14 17:28 (UTC)(no subject)
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Date: 14/1/14 18:23 (UTC)(no subject)
Date: 15/1/14 16:11 (UTC)(no subject)
Date: 14/1/14 17:44 (UTC)The video gives us a fascinating portrayal of a gringo telling Latinos how to manage their land.