Political Outlook in Brazil after 2008 Municipal Elections and Global Financial Crisis

A Brazil Institute Special Report written by Professor Emeritus at Universidade de Brasilia, David Fleischer, on the impact of the 2008 municipal elections in Brazil will be published in March.

On November 10, 2008, the Woodrow Wilson Center's Brazil Institute and the Inter-American Dialogue hosted a conversation between distinguished experts of Brazilian economic, political and labor landscapes in order to assess Brazil's political outlook in light of the 2008 municipal elections and the global financial crisis. Panelists highlighted the relative strength of Brazil's position in the midst of the accelerating economic downturn because of its relative macroeconomic health and responsible policymaking and offered divergent opinions on the implications of the 2008 elections for the upcoming 2010 presidential elections.

David Fleischer, emeritus professor of the Department of Political Science and International Relations at the University of Brasilia, examined how political changes at the local level will impact the 2010 general elections and discussed reforms on the legislative agenda that may affect the structure of political parties. Citing great achievements in the extension of the electorate, voter turnout and ballot technology, Fleischer focused on mayoral reelections as a key theme of the 2008 vote.

Fleischer argued that prospects for these reforms and the outcome of the municipal elections provide telling insights about the presidential elections in 2010. First, the fate of a successful presidential candidate from the left is uncertain. Although the PNDB will be Brazil's largest party (currently dominating both the Chamber of Deputies and the Senate, as well as holding key seats in Lula's cabinet) and therefore the most coveted coalition partner, it has presently no viable candidate. Similarly, the PT has yet produce a viable candidate even though Lula has selected Dilma Rouseff (his current Chief of Staff) as his desired successor. Ultimately, the success of the party and its nominee will be largely tied to the reach of Lula's coattails, which may diminish as the global financial crisis deepens. Second, Fleischer identified José Serra, the PSDB governor of São Paulo, as a strong presidential candidate. Serra, defeated by Lula in 2002, has high name recognition among voters and may strengthen his visibility by running on a "café com leite" ticket with Aécio Neves, governor of Minas Gerais. Third, the municipal elections demonstrated that hte DEM, formerly the PFL (Partido da Frente Liberal), is in "meltdown mode," and will continue to suffer on both municipal and national levels.

Using the municipal elections to identify changes and continuities in Brazil's political economy, Christopher Garman, Latin America director for the Eurasia Group, emphasized the link between good macroeconomic behavior, presidential approval ratings, new candidates, and the investment climate in 2010. He underscored that the 2008 elections are not appropriate indicators of voter preference for the 2010 presidential race. Nevertheless, they will influence both congressional elections and intra-coalition presidential candidate nomination processes. Garman understood the expansion of the pro-government parties not as a function of Lula's political capital, but rather as the combination of several trends: voters' contentment with the status quo, positive effects from infrastructure paid for by increased tax revenue, and the results of previous gubernatorial wins by the left.

"Two years is a political eternity in Brazil," warned Stanley Gacek, Associate Director of the AFL-CIO's International Department. He cautioned his fellow panelists against using the 2008 elections to make serious predictions in 2010. Gacek asserted that PT policies and elections results have not put the governor of São Paulo, José Serrá in a "powerful and inevitable position" for 2010. It would be an error to ignore the candidacies of either Dilma Rouseff or Ciró Gomes, the latter of whom could switch parties easily.

Luiz Pereira da Silva, senior advisor to the World Bank and former international secretary of the finance and planning ministries, argued that the municipal elections were not affected by the current financial crisis. Praising Brazil's responsible macroeconomic policy, he asserted that local elections have less to do with national trends and more with individual perceptions of income and unemployment—two factors that have yet to take a serious blow. This is largely a result of several accomplishments achieved in the last six years. Brazil has seen an increase of 4 million jobs; widespread growth across all regions; a rise in average income and minimum wage, and improved efficacy and coverage of bolsa familia; and a significant drop in unemployment to 7.5% (the lowest level since Lula took office in 2003).

Additionally, Pereira maintained that Brazil's political trajectory fits closely into the general trends in Latin America of democratic elections producing left and center-left leaders. Moreover, as a result of the Lula administration's sound economic management, Brazil has strengthen its democratic foundations and governance—proving that left-leaning governments can successfully carry out responsible macroeconomic policies. As for the future, if either of the two leading political parties (PSDB and PT) are serious about enacting real structural reforms, they must be willing to compromise and establish broad bipartisan support for initiative likely to face much resistance from entrenched interests.