August 16, 2018
Conference Call: Brazil's Election Takes Shape
By Bryce Couch
Ricardo Sennes, co-founder of Prospectiva Consulting and nonresident senior Brazil fellow at the Adrienne Arsht Latin America Center; Roberto Teixeira da Costa, member of the Board of Trustees at CEBRI and President of the Market Arbitration Chamber at B3 Exchange; and Henrique Rzezinski, member of the Board of Trustees at CEBRI and former director for institutional relations at ENEVA. Roberta Braga, Associate Director of the Adrienne Arsht Latin America Center, moderated the conversation.
Braga kicked off the call by highlighting how the first-round vote on October 7 comes during a period of uncertainty and increased polarization in the political landscape. According to Sennes, the general mood is critical for three reasons, namely: a slow economic recovery has fueled unemployment; a sequence of corruption scandals with widespread and continuing implications has rocked the country; and high rates of violence are increasingly a central concern for Brazilians. The combination of these factors has fueled strong anti-establishment perceptions and a negative mood around the election. Sennes explained, “This environment has pushed voters toward more simplistic and populist answers for these very complex questions and problems that we have in Brazil.” Despite fragmentation across the political landscape, Braga concluded on an optimistic note, posturing that the election is an inflection point that will offer the incoming administration opportunities for future economic growth, political reform, and citizen security.
Teixeira da Costa and Rzezinski agreed that the incoming administration must address the fiscal situation through much-needed reforms. To alleviate the 13 percent unemployment rate, Rzezinski proposed increased government investment in construction, specifically housing and infrastructure projects. Both speakers emphasized the need to build public confidence and strengthen the rule of law to attract investment.
Although Brazil has historically been closed off to trade and investment, both Teixeira da Costa and Rzezinski argued that these views are changing due to a better understanding of the relationship between free trade and competitiveness. Teixeira da Costa affirmed he cannot foresee a circumstance in which a president would deny the need for further integration and trade, specifically with Mercosur and the Pacific Alliance.
Rzezinski added that “the next administration should prioritize the opening of free trade agreements negotiations, especially in our region but obviously as well in Europe, Asia, and Africa.” He also noted that fostering relations between the United States and Brazil in terms of trade, defense, and energy is essential for future growth.
Shifting to the issue of political reform, Sennes noted that some resolutions have been passed, such as raising the threshold for political parties and limiting corporate funding of campaigns. But he argued more reforms are necessary, primarily with regard to election procedures. He outlined two options under consideration: voting for representatives by district rather than state; or, a mixed electoral system that combines district voting and closed lists by political parties.
Building on this, Teixeira da Costa emphasized the importance of incorporating new political voices into Congress: “The quality of the Congress is very important to bring changes. The great difficulty for political changes is that the Congress has to change itself.”
With a record number of homicides reported in 2017 and an increase in petty crime in Brazil’s largest cities, public safety and citizen security have risen to the top priority for many voters. Teixeira da Costa explained that a simple solution to the problem does not exist but rather combatting these statistics requires an integrated, national policy. Effective measures must include actors from the private sector to ensure the changes necessary for education, civil responsibility, and employment to reduce violence. Security requires the full participation of the President, Congress, and Judiciary and cannot be left to state discretion, he added.
With polls currently showing approximately 30 percent of voters undecided or considering abstention, Rzezinski pointed to these statistics optimistically, suggesting they are indicative of voters thinking critically about their options and how to solve the very difficult problems facing the country. He noted, “the elections will obviously be an important test to see how much Brazilian society has matured and learned in electing better representatives in Congress.”
For more information on the implications of potential political and economic reform, read the latest Adrienne Arsht Latin America Center Spotlight, authored by Ricardo Sennes, breaking down the potential impact of leading nominees’ proposals for economic and political reform, foreign direct investment, and security here.