Thursday, November 13, 2014

Rouseff re-election: lower expectations

The reelection of President Dilma Rouseff means continuation of the slow growth of the Brazilian economy and a lower likelihood of much-needed, major political and economic reforms. India should lower its expectations on a global partnership with Brazil in the short term
President Dilma Rouseff won the second round of Brazil’s elections held on 26 October with 51.64 % votes, beating rival Aecio Neves who received 48.36%. Her win was the outcome of the increased vote share from the 15 poor states of North and North East Brazil, as against the affluent 11 states in the South and the Federal District of Brasila which voted for the centre-right Neves. The masses who have benefitted from the pro-poor policies of the Rouseff government, the historic low unemployment rate ( 4.9% in September 2014) and the increase in wages in recent years, were convinced by Rouseff’s  message, “You are better off today than you were a dozen years ago because of what we have done. Count on us to continue working for you. Don’t trust your future to anyone else or you risk losing everything.”
Those who thought wishfully that the Left is fading in Latin America, should think again. In this election, for the first time in the history of Brazil, a Communist (Brazilian Communist Party PCdoB) candidate, Flavio Dino, was elected as state governor in Maranhao, the poor northern state with a population of 6 million. The state was the pocket borough of the oligarchical family of Sarney which ruled the state for the last five decades. Dino won in the first round itself, with an impressive 63.5% as against his rightist rival who got just 33.6 %.
Responding to the polarisation of the voters and to the criticism of the opposition, Rouseff declared in her victory speech that she would be a much better president than she had been up until then. She pledged to open more space for dialogue with all sections of society to deal with the country’s problems – which are enormous.  Brazil’s stagnant economy has been in a technical recession since August this year; plus there is high inflation, low investment, high cost of production, poor infrastructure and inadequate public services.
Despite her promises, Rouseff’s ability to bring about major reforms is severely constrained by her narrow victory. Her party has just 70 Deputies of 513 in the lower house of the Congress, and 12 of the total of 81 senators in the Senate. Coalition-building will be a problem because the major parties including the Workers Party have lost seats, even as the actual number of parties in the lower house has increased from 22 to twenty-eight. Rouseff needs to work harder and offer greater incentives to partners and other parties, to pass the difficult bills and reforms that have already been difficult to legislate, triggering mass protests last year. She must also now face the unfolding corruption scandal in Petrobras, which might decimate some of her own, and other party leaders.
But unlike the Indians who have now elected a majority government led by Indian Prime Minister Narendra Modi, and expect him to deliver on reforms, the Brazilians are not optimistic. The country’s low growth is expected to continue over the next few years, much to the dismay of the Brazilian industry which supported the pro-business Aeceio Neves. The poor, however, do expect an improvement in their lives, as the social policies of the government of Rouseff’s Workers Party, continue.
Rouseff’s low key approach to foreign policy will also continue. Mercosur and  South America will be her priority,  along with South-South cooperation. Neves would have prioritised the U.S. and Europe, although Brazil’s combined trade with China and within Latin America is more than its total trade with the U.S. and the EU.
For India, Neves might not have been an enthusiastic partner, and in that sense, Rouseff’s reelection is better for India. Brazil is a strategic partner for India in the pursuit of global aspirations, in multilateral fora as well as in groups such as IBSA, BRICS and G-20. But given the lack of interest of Rouseff in foreign affairs, don’t expect a significant strengthening of the partnership or any new, major joint initiatives in the next four years.
India then, should lower its expectations from Brazil. The country’s economy is already in a slow growth mode, and is relatively closed. This is reflective in the bilateral trade, which has already declined in 2013 to $9.48 billion from $10.62 billion in 2012. According to a ECLAC (Economic Commission for Latin America and Caribbean) report issued in October, Brazil’s global imports will likely drop by 3.2% in 2014. But India should look at the long term picture; Brazil with its large market, rich resources, vibrant democracy and regional leadership will inevitably emerge as a global player. It is just a matter of some more time.