Does Dilma’s reelection mean more of the same for Brazil?
October 27, 2014
On Sunday, Brazilians reelected current president Dilma Rousseff to a second term, in elections marked by poll twists and unprecedentedly heated debates.
Her election marks a continuation of the rule of her Workers’ Party, in power since Luiz Inácio "Lula" da Silva’s election to the presidency in 2003. But in practice, Dilma’s second administration will be forced to face the abundant demands for change of a polarized country —demands evident in last year’s widespread protests and in the closely-contested elections alike. Her greatest challenge will be in unifying a divided country—and Lula will be her biggest ally in that task.
This unusually tight electoral runoff was characterized by public sparring in televised debates and allegations of corruption between Dilma and her contender, Aécio Neves.
More contentious and heated than any election in recent memory, this contest showed a clear desire among Brazilians for change—a demand many were unconvinced either candidate could meet. Ultimately, Dilma garnered a small majority—51.6 percent of the vote—while Aécio received 48.4 percent.
As Brazil continues its march towards becoming a more visible player on the global stage, what does Dilma’s victory mean—for Brazil, South America, and the United States?
Q1: What does Dilma's win mean for the Brazilian economy?
A1: The past four years under Dilma Rousseff have been characterized by elevated public expenditures, both to expand consumption and to ease the burden on Brazil’s poorest citizens, and by a resistance to structural economic reforms.
Under those policies, Brazil’s annual economic growth rate has decreased from 7.5 percent to just 0.27 percent—and inflation could rise to nearly 7 percent this year, according to recent estimates. In technical terms, Brazil’s economy has already entered recession. And, based on Brazil's (BOVESPA) stock market’s 5 percent dip in response to Dilma’s victory, that recession is likely to deepen.
That isn’t to say, though, that a second Dilma administration will necessarily bring more of the same.
During the campaign, Dilma announced that if reelected she would allow for some degree of reform, and hinted at replacing the leadership at the Ministry of Finance and Central Bank.
Still, the likelihood that those changes will be enough to generate a significant impact in Brazil's economy is low.
The Workers’ Party’s tendency toward high public spending would have to be curbed should Brazil hope to avoid recession in the coming months and years.
The stock market reacted well to the possibility of business- and austerity-friendly Aécio’s victory during the campaign—and the government certainly noticed, which could motivate Dilma to adopt a tighter fiscal policy in hopes of improving her administration’s dialogue with the private sector. Still, social assistance programs will likely remain a top priority for Dilma, even if economic reform measures are pursued.
Q2: What are the likely implications of Dilma’s victory for South America?
A2: In recent years, Brazil’s foreign policy has focused on asserting the country’s role within the international system—and, in particular, on doing so by exercising leadership in South America. Overall, Dilma's approach to the region will continue.
Under the Workers’ Party, Brazil has sought to tighten its relations with its South American neighbors, often prioritizing its immediate "neighborhood" over other parts of the world.
Part of that focus has involved becoming increasingly independent from the United States, opting instead to deepen its ties with the BRICS bloc. In all likelihood, we will see a continuation of this trend in Dilma’s second term, as well.
Mercosur will likely be the primary focus of the next administration. From the Workers’ Party perspective, Mercosur does not present an obstacle to trade agreements, as the bloc represents an important share of Brazil’s export market. Under Dilma, Brazil will likely be active in its presidency of Mercosur—and we may well see Brazil pursue increasing Mercosur’s relations with the Pacific Alliance.
Still, Dilma is less likely to pursue an active foreign policy writ large—given her alleged disinterest in foreign policy concerns. Brazilian diplomacy will, like in her first term, likely remain a less prominent aspect of her overall agenda.
Q3: What are the likely implications of Dilma’s victory for U.S.-Brazil relations?
A3: Under Dilma’s second term, we will likely see some easing of tensions with the United States.
Rebuilding trust and cooperation between the two countries could take several forms—perhaps, for example, the postponed state visit could be realized as the controversy around the NSA revelations ebbs. And this may be more likely in the context of Brazil’s sluggish economy, as the United States could prove a key actor in its recovery. Trade and investment cooperation could, then, provide a foundation for a redefined bilateral relationship.
But putting those tensions aside is unlikely to be an easy task. The Workers’ Party will likely expect a proactive effort on the part of Washington—an explicit effort with tangible gestures, aimed at improving bilateral ties, that recognizes Brazil as a key global actor and a high priority for the United States.
Supporting Brazil’s push for UN Security Council reform could be one potential avenue for demonstrating Washington’s appreciation of Brazil’s growing global importance.
Prospects for any change in the bilateral relationship are complicated by the broader context which includes the environment that will be left by the results of the U.S. midterm elections, the upcoming presidential election cycle, and the ongoing fight against ISIL.
Conclusion: Dilma’s second term is likely to bring more of the same in Brazil. The government’s traditional resistance to decreasing public spending will continue to take a toll on the country’s economy—though that might be mitigated by reforming fiscal policy, which we may well see in the coming months and years.
Brazil’s foreign policy agenda will, in kind, likely remain intact, focusing on regional integration efforts and the BRICS framework. Much of this will have a decisively economic lilt, as the administration tries to ignite the spark of Brazil’s economic growth.
With that in mind, we could see Dilma show an increased interest in foreign commercial policy —particularly toward China, India, Russia, Germany, and the United States.
The greatest potential for significant change for Brazil is improving commercial ties with the United States.
A recognition from Washington of Brazil’s global importance could make the difference in creating the conditions for a substantive reconciliation between the two countries —and in reducing Brazil’s tendency to wander toward its often controversial BRICs partners.
Carl Meacham is director of the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Vitoria Moreira, intern scholar, and Jillian Rafferty, program coordinator and research assistant, both with the Americas Program, provided research assistance.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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