«Be careful what you wish for»: Brazil's optimism and fears post-election

«Cuidado com o que você deseja: você pode acabar conseguindo» («Be careful what you wish for, because you might get it»): this simple Brazilian proverb have been heard insistently after the elections of October 5th.

Aerial view of Sao Paulo, the economic heart of Brazil and Latin America and the fortress of the PSDB of Aécio Neves.

Yes, Dilma Rousseff - President and candidate of the PT - after have intensely desired to challenge the liberal Aécio Neves rather than the environmentalist Marina Silva in the second round, was surprisingly satisfied. In the second round there will be once again a matter between the «Workers' Party» and the «Brazilian Social-Democratic Party». The sixth consecutive challenge since 1994. The first two elections were won by Fernando Henrique Cardoso, now Neves’mentor, while those of 2002 and 2006 were dominated by Lula, and in the last one Rousseff was elected in 2010 in the second round.

Brazil, therefore, quite unexpectedly moves towards the classical polarization, excluding the candidate Marina Silva of the PSB (21% of voting preference) from the presidential dispute.

The leading environmentalist, favorite in the race to Brasilia in early September, has been largely superseded by the former governor of Minas Gerais, Aécio Neves. Politically, it is a miracle, well run by the organizers of Aécio’s campaign. Only a month before the election, Neves could count on 14% of voting intentions. Now, however, comes out of the first round with 33.5% of the votes. A turnaround that started to frighten PT’s leaders, including Rousseff, who took 41.59% of the votes.

The polls have confirmed the advantage of the actual government, although at the moment the most interesting aspect will be to observe the direction in which Marina Silva is going to divert her 22 million votes. The position of the former senator of Acre is more complex than expected, given that, after Eduardo Campos’ death, she found herself a candidate of a party (Brazilian Socialist Party) which was not hers. Her alliance with Campos was built on mutual respect and the impossibility of Silva to sign up with Rede Sustentabilidade, her movement, for the presidential election.

After Sunday's defeat, it became clear that Silva and the PSB will return to being independent. The feeling is that both are going into Neves’ direction. Marina Silva has already given a mild signal, speaking of the need for «a qualified change», while the liberal in his post-election speech, has cited Eduardo Campos and invited the opposition to «join forces». In 2010, when Silva possessed 20 million votes, she declared herself as neutral; Now the attacks of PT seem to have touched her personally, and as confirmed by Beto Albuquerque, it will be «a very difficult step in the direction of PT», even though Silva had been a leading figure in PT for a long time.

The last problem to solve is the position of Campos’ family, very close to Lula, but seems willing to support Neves. The first survey (source: Datafolha) indicates that 24% of Marina Silva voters would be willing to veer toward Rousseff, while as much as 59% would vote for Neves. These numbers clearly indicate that the rejection for the government can overpower the ideals of the party.

The amazing comeback of the liberals has satisfied the markets: Ibovespa index, Sao Paulo Stock Exchange index, has opened with a rise of 7%, then came down to 5% during the day (57 396 points). Positive aspect especially for state companies such as Petrobrás, Eletrobrás and Banco do Brasil. «The market - said Eduardo Velho, economist of Global INVX at portal Folha.com - works with the possibility of minor changes in state companies. Because of this fact, banks and state companies are rising. The idea is that Aécio could implement reforms to contain inflation. There is more confidence that the economy can be adjusted».

On the other hand, Dilma Rousseff received the most number of votes in the North East and the North of the country, less developed and largely benefited areas from the social policies of the PT. The voters of South East and Central West areas, more sensitive to the effects of the recession and fed up with the closure with EU and USA markets, have joined PSDB. The possible change of perspective has ignited the enthusiasm on the other side of the Atlantic: «The decline in investments – said Société Générale in its report post-election - is the determining factor in the recession and also low growth in the last three years. The key to boosting investment in the short term remains to be investor’s confidence, while political stability and reforms are the basis for growth in the medium to long term: and Mr. Neves is certainly able to act on these fronts».

The PT’s Committee expects an advantage of Neves in the polls at the beginning, but expects to reduce his forces as they did with Marina Silva.


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