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Currently in the final stage of my doctoral work on the political economy of national oil companies. Here you'll find some of my findings--as well as other musings on oil-related topics. All comments -- civil, civilized or barbarian -- are welcome

Brazil’s presidential election: more anger and division to come

Brazil’s presidential election: more anger and division to come

Brazilians are deeply divided as they go to the polls in October to elect a new president. Whoever wins, he won’t be able to bring about the reforms that the country desperately needs

September 2018

Brazil started the twentieth century riding a wave of optimism: inflation was finally under control, investment was flooding in, the world was hungry for Brazil’s exports, the country had found an abundance of oil beneath its continental shelf and had the capacity to extract it, and a middle-class of Brazilians was growing bigger, wealthier and more confident. That decade-long ride hit a snag in 2014: bit by bit, the Brazilian public came to find out what it had long suspected of its ruling class—that its members were colluding across party lines to pillage public coffers. But that systematic plunder took place on a scale that even the most cynical observers couldn’t have imagined.

Over the past four years, those investigations (under the broad umbrella of ‘Operation Car Wash’ or Lava Jato) implicated high-ranking politicians, managers from the state-owned oil giant Petrobras, construction firm executives—reaching to the highest echelons of Brazil’s politics and leaving no political party unscathed. Things got worse. Through 2015-16, Brazil was suffering through one of the worst economic recessions of its history, its president (Dilma Rousseff) was impeached for having fudged economic statistics, and her predecessor of rock-star popularity (Lula Inácio da Silva) was tried—and eventually jailed—for his participation in this corruption scandal.

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Brazil is still living through this nightmare. But the presidential elections of October 2018, generally a chance for cleaning or renewal, should have no one thinking things will get any better any time soon. The country is dangerously polarized: the multi-layered corruption scandal that the Car Wash investigations revealed has effectively hollowed out Brazil’s political centre, destroyed any lingering credibility of its political establishment, and made radical candidates appear like necessary alternatives.

From this morass has emerged Jair Bolsonaro. Till a few years ago, he was living an obscure existence in Congress, saying insulting and socially retrograde things about gays, guns and ugly women. Now in the latest Datafolha poll, Bolsonaro leads with 26% support, nearly twice as much as the two nearest candidates, Fernando Haddad and Ciro Gomes. The latter two are both on the left, and are likely to cannibalize each other’s votes in the first round (set for 7 October). Although Gomes has been a fixture of the Brazilian left for decades, Haddad appears to be the only viable challenger to Bolsonaro.

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But Haddad has a few big problems. First, he was recently named candidate of the Workers’ Party (PT for its Portuguese acronym), replacing two-term president Lula Inácio da Silva, who despite being in jail for corruption, is still the most popular choice among the masses. Haddad, although a moderate leftist who did a good job as mayor of São Paulo (2012-16), is tarnished by the party’s central role in several, undeniably dark episodes of the past fifteen years: mismanagement of the economy under Dilma Rousseff (president, 2011-16), the mensalão ( ‘monthly big payment’) scandal in which the PT simply paid off opposition congresspeople to support the PT’s agenda, and most importantly its central role in the Car Wash scandal. Third, it’s not even clear if Haddad would follow through with the PT’s statist economic plan, basically a throw-back to the heavy-spending years of Lula’s first term that the commodity boom of the time facilitated. More than that, Haddad has talked about breaking the country’s pension quagmire (known as previdência), which unfairly privileges public sector workers at the expense of the rest of the country. He’s also said that the state should relinquish controls over oil prices, meaning the state-owned oil giant Petrobras should decide—a shift of power that would instantly result in a jump in pump prices.

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Bolsonaro will likely continue to lead the polls even after the first-round (the top two candidates advance to the run-off, scheduled 28 October). Bolsonaro has stayed in the spotlight through his skillful use of social media—Twitter, Facebook and Whatsapp—from which he communicates directly to millions of supporters and critics alike. But he may have hit a ceiling in his popularity; most Brazilians, especially in the country’s vast interior still get their political news through television. That means having to work through and find the support of century-old media hegemony of O Globo, a status quo force more than a purely conservative one—a fact that Bolsonaro’s radicalism will no doubt make difficult. Although Bolsonaro has positioned himself as a rightist—he’s appointed well-known pro-market Paulo Guedes as his economic czar—it’s not really clear what Bolsonaro wants to do with Brazil’s economy anyway. Or what he wants to do on many policy issues, for that matter. He speaks in sound-bytes, many sensationalist but virtually all devoid of policy substance.

The big reforms that Brazil desperately needs—on pensions, the oil sector, rationalizing the political system (there are over 30 parties in Congress)—don’t appear possible under Bolsonaro, Haddad or Gomes. For one, Bolsonaro is from a tiny party that has virtually no sway in Congress; Haddad is from one that has national reach but is deeply hated by wide swathes of the opposition. Second, the country is deeply polarized: a leftist minority sees Lula’s imprisonment and Dilma’s impeachment as a part of a right-orchestrated ‘coup’; meanwhile the right blames the widespread corruption and economic crisis on the PT’s last go in power, and so is determined to prevent another one from being elected. Third, none of the candidates is, on his own, sufficiently popular, moderate or experienced to give any hope that he could act as a healer, unifier and negotiator—three qualities that the country desperately needs. It’s not clear what will come out of Brazil’s presidential election in October, but it won’t be big reform; it’ll likely be more division and acrimony.

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