In Brazil, Difficult Negotiations Await the Next President

8 MINS READApr 25, 2018 | 18:10 GMT
Former Brazilian President Luiz Inacio Lula da Silva, shown here after a mass held in memory of his late wife Marisa Leticia on April 7, 2018, in Sao Paulo, Brazil.

Former Brazilian President Luiz Inacio Lula da Silva surrendered to police on April 7, 2018, to begin serving a 12-year prison sentence for corruption. His imprisonment has injected a large degree of uncertainty into Brazil's presidential race.

  • The arrest of former Brazilian President Luiz Inacio Lula da Silva will force the Workers' Party to back the candidacy of another center-left candidate, such as Ciro Gomes, in the October presidential election.
  • Outsiders, including right-wing lawmaker Jair Bolsonaro, environmentalist Marina Silva and former Supreme Court President Joaquim Barbosa, will have the best chances of reaching a runoff in the presidential election.
  • Whoever wins Brazil's presidential election will have to contend with a highly fragmented Congress that will obstruct the victor in passing legislation.

The world's fifth largest country is set to head to the ballot box later this year for elections unlike any other. After more than two decades of the Brazilian Social Democracy Party and the Workers' Party largely alternating being in power, Brazil's presidential elections in October appear certain to catapult an outsider into power after a monumental corruption probe brought the country's traditional political parties to their knees. Parties that otherwise wield little power in the National Congress are racing to nominate their own candidates for the country's top job. But given the fractured nature of Brazil's Congress, winning the polls might prove to be a lot easier than actually governing the country.

The Big Picture

Brazil has embarked on a series of economic and trade liberalization reforms since 2016, but the fallout from the Petrobras corruption probe could scuttle the electoral chances of traditional political parties in October's presidential vote and, accordingly, the measures themselves. Thus this year's vote is likely to pave the way for outsiders from small parties to come to power.

Filling the Da Silva-Shaped Hole

The April 7 arrest of former center-left President Luiz Inacio Lula da Silva has injected a large degree of uncertainty into Brazil's presidential race. While president between 2003 and 2010, da Silva commanded approval ratings of 80 percent, but his popularity has slipped to 30 percent, largely due to the Petroleo Brasileiro (Petrobras) corruption scandal, which engulfed not only da Silva's party and its allies, but political parties and politicians from all sides of the spectrum. Nevertheless, da Silva's current polling figures made him the frontrunner for this year's elections and demonstrated his continuing support among a large section of Brazilian society. Because of da Silva's enduring appeal, the Workers' Party has continued to insist that the former president is its main candidate in the October election, even though Brazil's electoral law bars candidates from running if the country's top appeals court has upheld a conviction against them. Authorities could still release da Silva before the October presidential polls, but his chances of actually getting his name on the ballot are effectively nil.

The Workers' Party's insistence on da Silva stems from a lack of a strong alternative candidate. Despite its rhetoric, however, the party is already considering some form of alliance with other center-left candidates such as Ciro Gomes, a development that could give the former governor of Ceara a good chance of winning. If elected, Gomes would pursue many of the same economic policies implemented by da Silva during his time in office. Gomes has said he would reverse President Michel Temer's privatization plan for state-owned companies and overturn some of the incumbent's labor reforms. The ex-governor would likely devote special scrutiny to the oil sector, as he has expressed his staunch opposition to Temer's changes in the industry in the last two years. The current administration lifted a rule that obliged Petrobras to maintain a minimum of a 30 percent stake in every pre-salt oil field, but Gomes has suggested that the state-owned oil company should participate more in the production of Brazil's large pre-salt oil reserves. And in contrast to Temer, Gomes has also insisted on tax hikes to tackle Brazil's debt, which reached more than 70 percent of GDP in 2017, as well as an end to cuts in public spending.

The 2018 Brazilian Presidential Election: Scenarios With and Without Luiz Inacio Lula da Silva

The Candidates Who Would be President

The Petrobras graft probe not only ensnared da Silva's Workers' Party, but also its long-time rival, the Brazilian Social Democracy Party. As a result, the latter's presidential candidate, Sao Paulo Gov. Geraldo Alckmin, faces an uphill battle if he is to take office in Brasilia and continue Temer's economic and trade liberalization policies. Some polls indicate that a paltry 6 percent of the electorate will vote for Alckmin, while authorities are also investigating him over his alleged acceptance of illegal campaign donations in the last election.

Other reformist presidential candidates, such as former Finance Minister Henrique Meirelles and Rodrigo Maia, speaker of the lower house of Congress, also are struggling in the polls. Meirelles masterminded Temer's economic and trade reforms, earning some of the credit for putting Brazil on the road to recovery after one of its worst recessions ever. A candidate from outside the country's traditional political establishment, Meirelles himself is not the subject of any probe, but the conviction or prosecution of his party colleagues — to say nothing of the ex-minister's own lack of charisma — will stack the odds against him. Maia, meanwhile, has also failed to gain traction amid an investigation against him for receiving illegal campaign donations in the last general elections.

Since no candidate has built up a lead over the chasing pack, the path is open for a political outsider to capture Brazil's highest office. The frontrunners include former Supreme Court President Joaquim Barbosa, the first Afro-Brazilian to lead the top court; far-right lawmaker Jair Bolsonaro; and environmentalist Marina Silva. The latest poll conducted by Datafolha shows Bolsonaro in first place with 17 percent, Silva in second with 15 percent and Barbosa tied with Gomes for third with 9 percent. But even if Bolsonaro enjoys a slim lead at present, Datafolha's survey suggests that Silva would win in a second round. Silva is not an entirely unknown quantity; she ran for president in the last two elections. But her political party, Sustainability Network, possesses just two of 513 seats in the Chamber of Deputies and one of 81 seats in the Senate. Barbosa, by contrast, has yet to officially announce his candidacy, but the Brazilian Socialist Party is expected to nominate him by July.

Since no candidate has built up a lead over the chasing pack, the path is open for a political outsider to capture Brazil's highest office.

Silva, Bolsonaro and Barbosa differ widely from one another, yet their status as outsiders with no connection to Brazil's traditional political parties unites them all. All three also lack clear economic and political agendas. Bolsonaro, for example, has said he is in favor of the privatization of state-owned companies — even as he supports restrictions on Chinese investments in Brazil. The conservative candidate's main policy issue is security, which has deteriorated considerably in the past couple of years in some states such as Rio de Janeiro. Unsurprisingly, Silva's main focus is the environment, which could result in her limiting the expansion of Brazil's agricultural frontier and mining activities in the north, although she would likely continue with Temer's economic and trade policies if elected.

But if Bolsonaro is locked on security and Silva is big on environmental issues, Barbosa's focus is far from certain. Barbosa has never run for office, although he became famous for presiding over the 2005 Mensalao corruption probe, which centered on vote buying in Congress. Barbosa has described himself as a social democrat, a proponent of the market economy (he advocates the lifting of Petrobras' monopoly over oil production and believes the Central Bank deserves more autonomy from political interference) and a champion of social issues. However, beyond his depth on judicial and anti-corruption matters, Barbosa has outlined few policy ideas regarding Brazil's economic future.

The Tall Order of Taming Congress

Along with any number of candidates, Brazil's Congress is also home to a similarly wide array of parties. At present, more than 30 political parties have seats in Congress, the largest of which controls less than 12 percent of the seats in both houses. Such fragmentation is likely to continue. When they go to the polls in October, Brazilians will also cast ballots for legislative representatives, but surveys indicate that no party is likely to grab a larger slice of the congressional pie. And because popular approval ratings matter little in terms of the nuts and bolts of governance, the winner of Brazil's presidential election will have no choice but to cobble together a broader political coalition among lawmakers if he or she wishes to pass legislation. After all, the decidedly unpopular Temer has proven that legislative support, rather than street support, is key to governing. Despite posting the lowest approval rating ever for a Brazilian president, he has managed to impose controversial economic reforms and stave off two impeachment attempts thanks to his success in cultivating a strong base of support in Congress.

Come the new year, a political outsider is likely to be heading Brazil. The prospect of a weak presidency is always likely to moderate the victor's policies so as to attract congressional support, but the larger upshot is one of political instability, as impeachment inevitably will loom above the incumbent's head in times of crisis. The winner's ability to manage a highly fragmented Congress will determine the fate not only of Brazil's economic reforms, but also of its future political stability.

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