What Brazil’s New President Faces
by Fernando Luzio for The Harvard Business Review, December 2nd, 2010.
Dilma Rousseff, the new president of Brazil, has become the first woman to achieve the highest position of the country. She is widely known for being workaholic, very efficient, rigorous, and, above all, she is not recognized as a charismatic leader — one of the most obvious talents of her predecessor President Lula.
Three aspects of this election stand out:
First, Dilma is an impressive case of succession planning. Lula decided to start planning his succession in January 1st, 2007, the first day of his second mandate. In March 2008, Lula convened his political marketeer João Santana and Dilma to present his overall plan of making Dilma his successor.
Second, Dilma demonstrates the effectiveness of a well-formulated and rigorously executed strategy. The presidential campaign was be the first political election undertaken by Dilma; she faced an experienced opponent, José Serra. Lula and his strategists crafted and implemented a meticulous plan. For example, they had Dilma accompany Lula in his trips and inaugurations, making her an iconic “right arm.” The challenge was huge. At first, opinion polls indicated that Dilma would achieve only 3% of valid votes. Less than three years later, Dilma was elected President with 56% of valid votes. (continue reading… )
Brazil: Why Executives Should Care Who Wins
by Clinton Carter for Latin Business Chronicle, October 25th, 2010.
Why Wall Street doesn’t care who wins Brazil’s watershed elections, but executives should.
Executives building businesses in Brazil should take note of this Sunday’s presidential election runoff. This election will have a major impact on the ability of multinationals operating in the country to turn GDP growth into profit for their companies.
BRAZIL GROWS WHOEVER WINS
Brazil is about to elect a former communist guerilla, Dilma Rousseff of the Workers Party (PT), to the highest office in the land. There could be no greater demonstration of Brazil’s new status as the country-that-can-do-no-wrong in the eyes of the investment community than the corresponding indifference of capital markets and financial institutions to this political development.
That Dilma will win the presidential runoff is a near certainty, as questions over her view on abortion and new allegations of abuse of power against her are again failing to elicit much more than shrugs and channel surfing from the electorate.
Likewise, investors believe Dilma poses no threat to the growth of the Brazilian economy. The conventional wisdom driving this insouciance holds that Dilma Rousseff and her challenger, José Serra of the PSDB, will follow a similar set of orthodox macroeconomic policies, much as current president Lula da Silva of the PT continued most of the policies established by his predecessor, Fernando Henrique Cardoso of the PSDB. Serra would, of course, also follow the policy blueprint designed by Cardoso. This framework will ensure relatively low inflation, moderate to high interest rates (though low by historical standards), a stable currency, and capital inflows needed to invest in long term growth. These conditions, in turn, will guarantee macroeconomic stability and growth, and concurrent strong returns from investments in Brazilian debt and equity. (continue reading… )
Brazil’s Evolutionary Election
Interviewee: João Augusto de Castro Neves, Political Analyst, CAC Political Consultancy.
Interviewer: Roya Wolverson, Staff Writer, CFR.org
for the Council onForeign Relations, October 4th, 2010.
Brazil’s October 3 presidential election gave no decisive answer as to who will lead the world’s fourth largest democracy in 2011. A potentially complicated runoff election is scheduled for October 31. Brazilian political analyst João Augusto de Castro Neves says Workers’ Party candidate and presidential favorite Dilma Rousseff–who garnered 46.9 percent of the vote–is still likely to prevail, despite a potential deal between her two rivals to pool votes behind remaining candidate Jose Serra of the Social Democratic Party–who received 32.6 percent of the vote. Financial markets’ non-reaction to the country’s election reflects growing international confidence in Brazil’s maturing democracy and economic progress, says de Castro Neves. But the next president will still need to create better economic policies that avoid traditional emergency economic plans and instead tackle the country’s new “risks of living with abundance,” he says. On the diplomatic front, either candidate would likely ease away from close relations with authoritarian regimes like Iran and Cuba, since these initiatives were the result of President Lula da Silva’s “hyperactive presidential diplomacy,” he says.
There is speculation that front-running Workers’ Party candidate Dilma Rousseff might be challenged by a deal between her close competitor Jose Serra and the Green Party Candidate, Marina Silva. How will that play out in the runoff on October 31?
A look at Brazil’s recent history shows that even when there’s a runoff, usually the one that was first place is still the favorite.It was a surprise that Rousseff didn’t win in the first round, but she’s still the favorite, [considering President] Lula de Silva’s popularity plays in her favor. The “transfer of votes” idea is very uncertain in Brazil. Even if the Green Party’s Silva declares that she’ll support Serra, that doesn’t meant that all 19 percent of voters will go and vote for Serra.
Why did Silva make a bigger-than-expected gain in the election?
First, opinion polls in Brazil tend to inflate the numbers of the official candidate, so some say they didn’t pick up on Marina Silva’s numbers.(continue reading… )
Fund managers relaxed about Brazilian elections
by Anthony Harrington for QFinance, October 5th, 2010.
Despite the head start given by Brazil’s thriving economy, the country’s ruling party candidate Dilma Rousseff, was unable to win Brazil’s presidential elections on October 3 by a sufficient majority to avoid a runoff scheduled for October 31. Rousseff won 47% of the ballots, falling short of the required 50% plus one required to put her past the post ahead of her main challenger, the former governor of Sao Paulo, Jose Serra.
Rousseff, who has something of a worrying reputation as an interventionist in economic matters, remains the odds on favourite to become the country’s new President.
Rousseff had been expected by many to win outright. A Reuters report just before the election pointed out that Serra had managed to turn a 10 percentage point lead in the polls, dating from February, into a 20 point lead for Rousseff in the run up to the election. The general view throughout the campaign has been that Serra was going to struggle against the impetus given to Rousseff’s campaign by the huge personal popularity enjoyed by Brazil’s outgoing President, Luiz Inacio Lula da Silva.
All in all, the global investment community seems fairly relaxed over the probable outcome. The Association of Investment Companies (AIC) recently sampled the views of a handful of fund managers in the region. The AIC points out that the Brazilian economy has been performing pretty well and has rewarded fund managers with a deep understanding the Brazilian markets. The sector veteran fund, BlackRock Latin America, outperformed the investment company average over both the short and the long term, demonstrating the attractiveness of the region.(continue reading… )
The Impact of Brazil’s Presidential Elections: Different Roads, Similar Direction
by Carlos Pereira for Brookings, September 28th, 2010.
Whatever the outcome of Brazil’s presidential election on October 3, the government is unlikely to make any fundamental changes to its policy imperatives of macroeconomic stability and social policy, which have put the country on the road to good governance. The two main presidential candidates, Dilma Rousseff of the Workers’ Party (PT) and Jose Serra of Brazil’s Social Democracy Party (PSDB), represent different political positions with distinct styles, personalities, leadership and approaches. However, it is very likely that as president, both front-runners would maintain the core macroeconomic stability and social policies currently in place.
Since 1994, Brazil’s government has been highly constrained both institutionally and electorally to keep macroeconomic stability and inflation under control. Recently, it has also lost the freedom to eliminate poverty alleviation policies like the bolsa família cash transfers program. Therefore, social policies in Brazil are no longer residual policies. Just as macroeconomic stability became a policy imperative in Brazilian politics, so too has social policy.
In Brazil, strong presidential powers have generally allowed the president to initiate, pursue and approve much of his/her policy agenda. While this may seem perilous given Latin America’s history with strong presidents, Brazilian political institutions provide two sets of safeguards against abuse of those powers. (continue reading… )
Brazil’s Serra Likely to Go Out With A Whimper
by Reuters, Editing by Brian Winter and Kieran Murray for The New York Times, September 28th, 2010.
In the final stretch of a weak presidential campaign that has seemed doomed for at least the last six weeks, Brazil’s main opposition candidate Jose Serra has resorted to China-bashing and conspiracy theories.
It has been a rapid fall from grace for the former governor of Sao Paulo state, who is among Brazil’s most accomplished politicians. Polls showed Serra with a lead of over 10 percentage points in February but that evaporated quickly as soon as campaigning began in earnest, and he now trails ruling party candidate Dilma Rousseff by nearly 20 points.
While he has made some strategic errors on the campaign, Serra also simply seems to have been on the wrong side of history, overwhelmed by a ruling party that is enjoying Brazil’s strongest economic expansion in decades.
Serra has landed few lasting blows against Rousseff or her political benefactor, President Luiz Inacio Lula da Silva. Deterred by Lula’s 75-percent approval rating, Serra tried to focus on his own past as health minister in the 1990s, when his policies helped prevent an AIDS epidemic, but his main message — “Brazil can do better” — didn’t take hold.
Rousseff’s lead in polls has narrowed in recent days because of a corruption scandal in her party. But even that stumble has failed to lift Serra’s support, with the votes going to a third-party candidate instead. Polls show Serra losing by a wide margin in a runoff with Rousseff if she fails to win a majority of valid votes in Sunday’s election. Serra’s PSDB party has been tagged during the campaign as ‘elitist’, a dreaded label in a country where the ascendant lower middle-class is dominating politics. (continue reading… )
Brazil: Storm clouds ahead
by H.J. for The Economist – Americas View Blog, September 16th, 2010.
At this stage in Brazil ‘s presidential race it would probably take a full-blown hurricane to blow Dilma Rousseff, the front-runner, off course. With the voluble support of the current president, Luiz Inácio Lula da Silva, she has pulled far ahead of her nearest rival, José Serra, and the occasional scandalous cloud on her campaign’s horizon has so far come to nothing. But with just over two weeks to go before the elections, Ms Rousseff may be entering squally weather.
Earlier this week Veja, a Brazilian news magazine, published an article alleging that Israel Guerra, whose mother, Erenice Guerra, is the presidential chief-of-staff, had helped private businesses win no-bid government contracts. In exchange, it said, he received “success fees” and monthly cash payments for “political commitments”. The magazine contended that Mr Guerra’s help amounted to influence-peddling by his mother, and that the payments were in reality bribes. Ms Guerra denies all wrongdoing and has called for an investigation, which she says will exonerate her.
Unlike the most prominent political scandal of the previous few weeks, in which junior members of Ms Rousseff’s Workers’ Party (PT) had illegally accessed private tax records of people close to Mr Serra, this one passes much closer to the front-runner. Until last year she herself was Lula’s chief of staff, and Ms Guerra was what she called her “right-hand woman”. Mr Serra has played the affair for all it is worth in his election advertising, showing footage of the two women together and emphasising their close and long-standing working relationship. Lula’s predecessor as president, Fernando Henrique Cardoso, in whose government Mr Serra served, has also joined the fray, after keeping a low profile in recent years. “It’s the mensalão scandal all over again,” he said, recalling a scheme of monthly bribes paid by the PT to its congressional allies in exchange for their votes. “Plotting in the presidential palace, next door to the president”. Although the mensalão did not stop Lula from being re-elected in 2006, it is widely credited with having denied him a first-round victory. (continue reading… )
Brazil’s Economic Policies Under President Rousseff
by Thomas Trebat for Roubini Global Economics, August 31st, 2010.
I would be the first to admit that I am not very good at reading the political tea leaves in Brazil. I once anticipated that Jose Serra would win the presidency – in 2002! I even thought this pragmatic centrist had a good chance to win in 2010. Of course, I never envisioned the emergence of . Wrong again! It now looks like Dilma in an absolute landslide and in the first round, no less.
All of this should disqualify me from speculating about the economic policies to be adopted by President-to-be Rouseff when she assumes office in January 2011. But I am going to hazard some guesses anyway on the (dubious) theory that if you cannot forecast well, forecast often.
I will start with a fairly safe call. The new administration will go to some lengths to convey continuity with Lula in terms of policies and players. After all, why rock the boat when the foreign investors are so happily on board? (continue reading… )
Serra in disarray “campaigns” for Lula da Silva’s protégé Dilma
by MercoPress, August 30th, 2010.
While the Brazilian ruling coalition presidential candidate Dilma Rousseff consolidates her lead in opinion polls and is almost certain to win in the first round October 3, her main rival Jose Serra’s campaign seems to have fallen in disarray.
In effect in his latest criticisms Mr. Serra claims that a government can’t be managed by remote control or “under instructions”, much less “out-sourced”, trying to convince the electorate that who really is going to run the show if Ms Rousseff is elected is her mentor and protector President Lula da Silva.
However this has been precisely the real message of Lula da Silva, the most popular Brazilian president in the last six decades, who has gone out of his way to tell the people that Ms Rousseff is the continuation and guarantee of his administration.
“She’s me, dressed as a woman” and “we must give women a chance” has on occasions said the Brazilian president in a permanent effort to convince the electorate that they can trust the lady bureaucrat, former minister and cabinet chief but with no electoral experience.
“A candidate can’t have two faces. Commands are not outsourced. It’s imaginative, creative to think Brazil can be ruled by Lula out of the government. That’s not possible”, said Serra, former governor of the state of Sao Paulo addressing representatives from manufacturing industries. (continue reading… )
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