2014-10-07 By Kenneth Maxwell
The first round of the most tightly contested Brazilian Presidential election in recent memory, which took place on Sunday (5th October 2014), has continued to produce surprises.
143 million Brazilians voted. Since 1996 100% of the voting has been by direct recoding electoral voting machines. So the results were available within a few hours.
President Dilma Rousseff of the Workers Party (PT) led with 42% or 43,2451,176 votes. Marina Silva of the Socialist Party (PSB) had 21% with 22,171,492 votes and came in third.
The big surprise was Aecio Neves of the Social Democratic Party (PSDB) who received 34% of the vote or 34,889,473 votes.
The second round, which will pit President Dilma (66) against Senator Aecio Nevas (54), will take place on October 26th, and will see a revival of the dispute between the PT and PSDB which has polarized Brazilian opinion since 1989.
Their first contest led to the two election victories for PSDB under Fernando Henrique Cardoso (1995-2002), followed by two election victories for the PT under Luiz Inacio Lula da Silva (2003-2010).
President Dilma Rousseff’s results in the first round this Sunday, however, were the worst result for an incumbent president in the past two decades.
Dilma’s support in the first round was concentrated in the North East of Brazil where out of every ten votes cast she received 4 votes, winning in every state except Pernambuco (home of former governor Roberto Campos, the presidential candidate killed in a plane crash early in the campaign) and Acre (home of Marina Silva).
Aecio’s support is concentrated in the south and south west of Brazil, and he did particularly well in Sao Paulo, the industrial and financial capital of Brazil.
But Aecio lost his home state of Minas Gerais. where the PT candidate for Governor, Fernando Pimental, ended the 12 year PSDB dominance of the state government.
Former President Lula, who had campaigned actively of the PT, was not able to shake the PSDB control of Sao Paulo, however, where Geraldo Alkamin was relected governor with 57.51% and Jose Serra, the defeated PSDB presidential candidate in the last presidential election, was elected senator by 58.49% of the vote defeating Eduardo Suplicy, the long term PT senator for Sao Paulo.
It is too soon to give much credibility to simulations of the voting on the second round.
Much will depend on where Marina voters go and on Marina’s reaction to her elimination. The breakdown of Marina’s voters suggest that 59% would support Aecio and 24% would support Dilma.
Most observers concur that whoever is elected to be the next president, will face major decisions next year. These involve decision over the direction of domestic policy and over the economy, which is in a technical recession.
It also involves questions about how Brazil defines and promotes its national interests, not only within the Western Hemisphere, but also about Brazil’s role in an increasingly fragmented and dangerous world.
The Financial Times and The Wall Street Journal in their editorial pages, which reflect the attitude (or more accurately reflect the conventional wisdom) of members of their respective financial markets in the City of London and on Wall Street, have been both hopeful (when Dilma Rousseff appeared to be in trouble) and depressed (when Dilma’s polling results recuperated.)
The Sao Paulo stock market (BOVESPA) reflects in inverse proportion the same phenomenon: Up when Dilma was down, and down when Dilma was up.
It has been evident for some time that the “markets” wanted “anyone but Dilma.”
This has not changed, nor is it surprising.
The international financial and investment community has long complained about the “interventionist” policies of Dilma’s government.
There was a collective sigh of relief when it appeared that the prospect of her re-election was running into serious trouble, first as a result of her catastrophic loss of public support after the widespread street demonstrations through Brazil last year.
And then again after the tragic death of former Pernambuco Governor and Presidential candidate, Roberto Campos, in a plane crash, which was followed by a dramatic surge of support in the public opinion polls for Marina Silva, his vice-presidential running mate, who had succeed him as the presidential candidate of the Brazilian Socialist Party.
Brazil under Dilma Rousseff has had problematic relationship with the world during her term in office, caused partly by her lack of engagement in international affairs, a striking contrast to the hyper-involvement of her predecessor and political mentor, former President Luiz Inacio Lula da Silva.
Dilma Rousseff’s international involvement was also poisoned by the revelation by Edward Snowdon, the former National Security Agency contractor, that United States spy agencies were tapping her cell phone and communications and those of her associates as well as those of Petrobras, the Brazilian State Oil and Gas Company.
Edward Snowdon revealed that the US was also tapping the phone of German Chancellor, Angela Merkel, as well.
But Brazilians do not need lessons from the Americans about phone tapping, which has been common practice in Brazil since the military dictatorship (1964-1985), and long before for that matter. Getulio Vargas (and his agents) during the period of his dictatorship (1930-1945) was a master at such techniques (as well as in avoiding them).
But the revelation of the episode profoundly damaged US-Brazil relations, leading Dilma to cancel her scheduled “State Visit” to President Barack Obama in Washington DC.
Dilma’s foreign policy has been left largely in the hands of her “eminence grise” for foreign policy in the Planalto, Professor Marco Aurelio Garcia, who held the same post of special adviser for foreign affairs in the Planalto under President Lula, and was retained by President Dilma.
Professor Marco Aurelio Garcia has been the great promoter of good relations with Argentina and Venezuela, and has pre-empted in many respects the traditional pre-eminence of Itamaraty and its sophisticated professional corps of diplomats in questions of foreign policy.
But Venezuela and Argentina are both engulfed by self inflicted crises, and Brazil has been damaged and inhibited by the continuing problems both countries, which have had a negative impact most importantly on Brazil’s desire to develop broader trade relationships with Europe.
And it has not helped Brazil’s relationship with the US either.
In many respects Dilma’s foreign policy, under the backroom influence of Professor Garcia, has been the most ideological part of her activity, and while this may please the base of the Worker’s Party (PT), it does not do much for Brazil’s position in the world at large.
The brutally frank comment by the Israeli Foreign Office official, Yigal Palmor, that Brazil was a “diplomatic dwarf” and “an irrelevant diplomatic partner” was unfortunately very close to the mark.
Brazil had criticized Israel’s incursion into Gaza as “disproportionate.” But Brazil has a very large an influential Jewish population as well as a population of Arab origin (especially in Sao Paulo), and the result was disquiet at home from both communities. Brazil has also been absent for any international comment (much less criticism) of the Russian incursion into the Ukraine and its seizure of the Crimea (and there are of course many Brazilians of Ukrainian origin in Southern Brazil).
The pursuit of deals with the BRICS (including the establishment of a BRICS development Bank at the meeting of the leaders of Brazil, Russia, India, China and South Africa at Fortaleza in Brazil after the ending of the World Cup), has also come at the cost of silence on critical foreign policy questions, none of which of course helps Brazil’s long lasting desire for a place at the top table as a permanent member of the security council of the UN.
Despite the conviction and imprisonment of former leading PT members in a Congressional vote buying scandal, the rumbling scandal is ongoing.
It involves the massive over-costs at the oil refinery of Abreu e Lima in Pernambuco, and the inflated purchase price paid by Petrobras for a refinery in Pasadena, Texas. It involves as well the massive corruption operation at Petrobras, managed by former Petrobras director, Paulo Roberto Costa (who has turned state’s evidence), and which apparently involves kickbacks paid to over thirty leading congressmen, ministers, governors, and money launderers.
Dilma was previously minister of mines and energy and headed the Petrobras board. Dilma Rousseff, nevertheless, continues to enjoy the support of those who have benefited from her government’s social and income support programs, and who are worried about losing them.
In fact the distrust and hostility of the “markets” only serve to fortify her position. In many respects she is the candidate of continuity.
But if “the markets” reflect the view of London and Wall Street about Dilma this is not an accurate reflection of foreign opinion in all sectors about the Brazilian presidential candidates.
Marina Silva enjoys a very considerable reputation among environmental activists in the United States and in Europe. She is the heir apparent to the legacy of Chico Mendes, the legendry leader of the Amazonian rubber tappers, who was assassinated in 1988.
Chico Mendes was a major player on the international scene, and enjoyed strong support in political and intellectual circles. And Marina’s own biography is unparalleled, even in comparison with Dilma, who has a history of stalwart opposition to the military dictatorship (for which she as imprisoned and tortured).
Marina Silva was born on a Seringel Bagaco in Acre in the far west of the Amazon basin, where her rubber tapping father and sisters collected latex. Marina was illiterate until she moved Rio Branco at the age of 16. She suffered from malaria, hepatitis, and metal poisoning. She worked as a maid and leaded to read and write, and went on the university of Acre. She was elected a Workers Party Senator, and was appointed to be Brazil’s environmental minister by president Lula. She does not need to pretend to understand the plight and struggles of Brazil’s poor and marginalized population. She has lived them and overcome both.
Marina was chosen as one of the standard bearers of the Olympic flag at the opening the London Olympic Games, something which surprised and angered the Brazilian government, and led Aldo Rebello, the sport minister, to complain sourly at the time that Marina “has always had good relations with the European aristocracy.”
A prelude in fact to Dilma’s bitter (and inaccurate) televised attacks on Marina as being a creature of the bankers because of the support Marina receives from Maria Alice “Nuca” Setubal, the billionaire heiress to the Itau-Unibanco fortune. Marina was a distinguished speaker in the Earth Day Challenges Action Project at MIT, and she was chosen by “Foreign Policy Magazine” in 2010 as being among the world’s “top global thinkers.”
Marina promised independence to the Central Bank during her campaign. This economic “orthodoxy” generated much criticism of Marina from Dilma and her cohorts, but it has pleased the domestic and international “markets.” Marina is also a Pentacostal Christian, part of the fastest growing movement in Brazil, and a movement with broad international connections both within the United States and throughout Latin America.
This evangelical connection led her to drop her support for gay marriage. But she remains popular among those young people who joined the mass demonstrations on the streets thorough out Brazil last year and for many she was the candidate of hope.
Former governor of Minas Gerais, and a senator from Minas, Aecio Neves, who came in second in the first round and who is running for the Brazilian Social Democratic Party (PBSD), is also viewed as being “market friendly” by the international financial markets, though he is less known internationally than either Dilma or Marina.
Like the late Robert Campos, Neves is heir to a formidable Brazilian political dynasty, a maternal grandson of Tancredo Neves, the wily and experienced Mineiro politician, who was the first civilian elected (by indirectly by the electoral college) to the presidency after the end of the military regime, but who died in 1985 before he took office.
This link to the old political establishment is both an asset (he has experience and a record in government), but it is also at the same time problematic when many Brazilians are looking for change.
Aecio Neves was, however, a popular governor of Minas Gerais, Brazil’s second most populous state (he left office with 77% approval ratings for running a government deemed “excellent or good”). He introduced a “management shock” whereby he sought to improve heath and public security and cut government expenditures (as well as his own salary). His actions were rewarded by a US$ 200 billion loan to his state from the World Bank.
Aecio Neves has as his principal economic adviser, Arminio Fraga, who is expected to become economy minister if Aecio is elected.
Armino Fraga has a PhD in economics from Princeton, and he worked as a fund manager with George Soros in New York City. He is a former and very successful president of the Brazilian Central Bank between 1999 and 2002 during the Presidency of Fernando Henrique Cardoso, where he is credited re-establishing stability after a floating exchange rate regime was adopted and inflation targeting instituted. Arminio Fraga is, needless to say, very popular among international investors. After leaving the Central Bank, he founded the Rio de Janeiro based asset management company Gavea Investments, which was acquired in 2010 by Highbridge Capital Management, a subsidiary of J P Morgan Asset Management.
Armino Franga made his policy prescriptions for Brazil very clear in an interview with Luciana Magalhaes in The Wall Street Journal in August 2013. Unlike Dilma, who tends to blame Brazil’s economic wows on international economy, Armino Fraga says “our problems are internal as always.”
He placed on a scale of 4 or 5 to 1 the role of domestic as opposed to international problems as they affected the Brazilian economy. He criticizes the manipulation of fuel and energy prices by Dilma’s government, and advocates a return to economic orthodoxy.
He supports as well a liberalization of investment in infrastructure, reform of public lending, a reform of the role of Petrobras, the government controlled oil and gas company which has become “too big,” and to scale back the role of government banks which now control half of banking assets in Brazil. In this sense at least Aecio is the candidate of change.
The coordinator of Aecio Neves’s national defense, foreign policy, and international commercial policy team, is Rubens Barbosa, former Brazilian Ambassador in Washington (1999-2004). He previously was Ambassador in London (1994-1999)
He has criticized Dilma’s foreign policy, most recently her speech at the opening the UN General Assembly in New York, and his view reflects that of many within the Brazilian Foreign Ministry (Itamaraty) which are worried about Brazil’s approximation with Venezuela and Cuba, or what they call “Chavismo light,” after the late populist ruler of Venezuela, Hugo Chavez, and are critical of Brazil’s “Bolivarian” foreign policy with its near neighbors in South America.
Members of the Brazilian military (both active service and retired) have also been in touch with the PSDB. They are concerned not only about the direction of Brazilian foreign policy under Dilma, but also about their salaries, the “socialization” of the country, control of the inland and Amazon borders against illegal immigration, and Dilma’s position on the “truth commission”
Dilma supports in theory the idea of revising the amnesty law which prohibits prosecution of military for acts under the military dictatorship, but her government has not taken any action on the matter.
Barbosa is a senior director of ASG (Albright Stonebridge Group) as well as director of the council of foreign commerce (COSCEX) of the Sao Paulo Confederation of Industries (FIESP).
Not surprisingly the two great protagonists of recent Brazilian political history stand behind their respective presidential hopefuls: Former PT two term president Lula behind Dilma, his protégée, and former PSDB president, Fernando Henrique Cardoso (FHC), behind Aecio.
And both of these “godfathers” have significant international connections.
FHC was exiled in Chile, France, and the United States; the man who introduced of the “Real” plan which killed inflation; holder of many honorary degrees for foreign universities; cosmopolitan and multi-lingual; winner of 2012 John W Kluge Prize for million dollars for achievements in the study of humanity from the US Library of Congress.
Lula, also with strong and long standing international relationships, beginning with the anti-communist American trade union movement; the one of the most popular presidents in Brazilian history. Neither man has put aside their rivalry, which continues, as intensely as ever in this presidential campaign.
The presidential election in Brazil evidently still has surprises in store over the next three weeks.
The race will be increasingly bitter and contested.
Dilma has already said the Brazilian people do not a return “to those who called retirees vagabonds” referring to Fernando Henrique Cardoso. Much mud (on both sides) yet remains to be hurled.
Both the PT and the PSDB have deep roots and much financial support. Marina, even if out of the race, will continue to play an important role, and one thing is certain: She is no friend of Dilma, not only because of past clashes over environmental policy and development projects during the Lula government (disputes which in the end Marina lost), but also because of Dilma’s recourse to underhand attacks on Marina during the first electoral round.
Who will prevail on October 26, therefore, still remains a very open question but decisive for determining the future course of Brazil.
Editor’s Note: A reflection of the global interest in the outcome of the election is reflected in this recent editorial in the Dubai-based Gulf News:
Brazil’s economy is the world’s seventh largest and the country is an important part of the emerging global economic power of the group roughly categorized as the Brics (Brazil, Russia, India, China and South Africa). This means that Brazil’s economic success is a matter of global interest and its current languishing in slow growth is a global problem.
The incumbent government of President Dilma Rousseff has failed to address many of these issues, even if Rousseff‘s Workers Party’s paternal interventionism and its new income redistribution program won unexpected favor with the voters late in the first round of the presidential vote and got her an impressive 41.4 per cent.
She will now face the pro-business Aecio Neves of the Social Democratic party in the second round, who achieved a late surge that boosted his vote to 33.7 per cent, leaving former environment minister Marina Silva, who had led the polls at one stage, well behind with 21.3 per cent.
The next round could be tight and will depend on whether Rousseff succeeds in defending her economic record and continuing to persuade the voters that they will be better off with her, or if Neves succeeds in showing her up for lack of vigor on opening up the economy and developing a more competitive industrial base.