Brazil Elections: A split wide open
October 30, 2014, 9:21 am

Over a grueling past three months, Brazil has seen the most divisive campaign and the toughest election since its democratization process in 1989. The campaign ended with the reelection of President Dilma Rouseff, from Partido dos Trabalhadores (Workers Party) with 51.64% of the votes and a mandate for leading the country for the next four years.

Although the margin that divided them was very slim- 54.5 million to Dilma Rousseff against 51.0 million votes to Aécio Neves – they had very different policy prescriptions, especially of reviving an ailing economy.

While both agreed on the need for social spending and economic growth to fight poverty, Neves accused Rousseff of not backing reforms needed to stimulate growth.

Aecio Neves, the opposition candidate from PSDB (Partido da Social Democracia Brasileira), flaunted his pro-business image during the campaign, he was concerned about pursuing the inflation target, allowing the Central Bank its independence in taking a hawkish stance on inflation, reducing fiscal deficit and, above all, respecting business contracts by not changing the rules during the game.

Little wonder then that Neves’ prospects restored the market’s confidence and was positioned as one that would attract investors, like his mentor, Fernando Henrique Cardoso, a former president, who led the country from 1994 to 2002 and played an important part in the recovery of economic stability in the country.

Supporters of the Brazilian President Dilma Rousseff, react while waiting for her arrival at Royal Tulip Hotel, in Brasilia, Brazil, on Oct. 26, 2014 [Xinhua]

After a summer of growing confidence, Rousseff suddenly confronted the possibility of a loss that would diminish her legacy and threaten her signature achievement, the social welfare programs.

The presidential debates sharply exposed these differences between their economic policies.

The election opinion polls reflected this divide among the voters in each state. A very good insight from this election, for example, is the chart showing where the candidates were winners.

The map below shows the states in which less than 25% of the population receive Bolsa Família – the most important social welfare program in the country – in blue, and the states in which more than 25% of the population receive Bolsa Família in red. Rousseff won handsomely in the states where this program had greater reach and implementation.

Infographic: TBP

This correlation (not causality) should not raise alarms, at least in the short-term. Brazil’s economy will not irretrievably collapse due to anti-poverty programs. Brazil is a very unequal country, and it´s important to have welfare programs like the universally hailed Bolsa Familia to reduce inequality. (Roughly translated as “Family Allowance”, Bolsa Familia is an ambitious cash-transfer scheme, which alone has helped about a quarter of the country’s more than 190 million people.)

The problem, however, arises when governments aims to solely use this kind of public policy, while creating a “culture of dependency” to perpetuate themselves in power, such as in Venezuela and Argentina.

In her victory speech on Sunday, President Dilma Rousseff vowed to unite Brazilians (divided by the extremely heated debates, especially in social networks). Tracking the heat map of voter allegiances, we can see a divided country in the blue and red states.

In some social networks, such as Facebook, stray groups are organizing campaigns for Rousseff’s impeachment and separation of some states from the rest of the country.

This is a dangerous trend that rallies against the strengths of Brazilian democracy.

The President now faces an uphill challenge of restoring market confidence, which has been lost during her earlier term.

She needs to create millions of jobs, improve Brazil’s woeful infrastructure and schools, and harness its oil wealth without deviating substantially from the set social policies.

Rousseff must return, if not to the candidate that she was in 2010, then as a pragmatic leader hungry for four more years to pursue her agenda in Brasilia, with a careful mix of social welfare plans and market-friendly policies.

“I do not believe, from the bottom of my heart, that these elections have divided the country. I believe they mobilized ideas and emotions that are at times contradictory,” Rousseff said in her victory speech.

And Brazil is hoping its true.