After a wild and nasty campaign, Dilma Rousseff must reconcile a divided country and reignite growth
By J.P. | SÃO PAULO
IT WAS a wild ride. After a tight and tetchy race, marked by innumerable twists and turns, Brazil’s left-wing president, Dilma Rousseff, was re-elected on October 26th to a second four-year term with 51.6% of valid votes. Aécio Neves, of the centre-right opposition, notched up 48.4%. It is the fourth election in a row won by her Workers’ Party (PT). But her margin of victory is the slimmest in Brazilian electoral history.
Perhaps Ms Rousseff’s victory was inevitable. Only three Latin American presidents have lost re-election bids in the past three decades. Odds are stacked in favour of incumbents, with all the machinery of power and patronage at their disposal. Ms Rousseff can point to record-low unemployment, rising wages and falling inequality under the PT's watch. But Mr Neves, whom The Economist had endorsed as the better choice, put up a valiant fight, arguing, with good reason, that progress has stalled since Ms Rousseff was first elected in 2010.
The upshot is that the president will lead a riven country. She romped to victory across swathes of the poor north and north-east—helped by less fortunate Brazilians’ gratitude for the PT’s popular social programmes, but also her campaign’s baseless insistence that Mr Neves would do away with them. Most of the richer south, south-east and centre-west plumped convincingly for her market-friendly rival. In São Paulo, home to one-fifth of Brazil’s people and a third of its economy, he won by 64% to 36%; around the state capital a few fireworks and a march celebrating Ms Rousseff’s victory were mostly greeted by a resounding silence. In the south-east Mr Neves lost only in Rio de Janeiro and Minas Gerais, Brazil’s second-biggest state where he served two successful terms as governor in 2003-10—an inexplicable defeat that may have cost him the presidency.
In her victory address Ms Rousseff did speak loftily of “unity”, “consensus” and “dialogue”. But healing campaign wounds got off to a poor start when she failed even to mention Mr Neves (who had earlier called to congratulate her and wish her success) or his centre-right Party of Brazilian Social Democracy (PSDB). The scars run deep. Ms Rousseff’s earthy predecessor and patron, Luiz Inácio Lula da Silva, went so far as to liken the PSDB to the Nazis for their supposed disregard for the disadvantaged. The PSDB, for its part, has repeatedly accused the PT of being irreperably mired in sleaze, citing a rumbling probe into a kickback scheme at Petrobras, the state-controlled oil giant, that allegedly benefited Ms Rousseff’s party and some coalition allies.
Given all the acrimony, bipartisanship seems an unlikely prospect; PSDB bigwigs have already hinted that they lost in part because their opposition to the government has been too soft in recent years. They are certain to push for a congressional inquiry into the Petrobras scandal. This and other impending scraps are hardly conducive to the sort of broad consensus that will be necessary if Ms Rousseff is to carry out her first priority outlined in the victory speech: political reform to make the country more governable.
For the moment, dysfunction is only likely to increase. Starting in January Congress will host 28 parties, up from an already unwieldy 22 at present. Ms Rousseff’s weak mandate—the weakest of any government since democracy was restored in 1985—will make it hard to bang heads together to push through meaningful change. Her vow to hold a referendum on political reform deserves credit. But a previous attempt, prompted by huge nationwide protests in June 2013 that demanded it (among other things), was stymied by congressmen content with the current set-up.
More pressingly, Brazil needs to exit the funk of no growth and high inflation, running at 6.7% a year. In order to do that, Ms Rousseff should take on board Mr Neves’s economic ideas, which she roundly dismissed on the campaign trail as responsible for high unemployment, prohibitive interest rates and stagnant wages during the PSDB’s tenure in 1995-2002. These include less government meddling in business, fiscal rectitude and Central Bank independence, as well as reforms of Brazil’s impenetrable bureaucracy and tax code. In the 1990s, far from wreaking havoc as PT propaganda would have it, they helped stabilise an economy plagued by hyperinflation and lack of competitiveness, laying the groundwork for Lula’s social policies.
Markets are likely to force a degree of fiscal adjustment. (They are expected to plunge on the news of Mr Neves’s defeat.) And Lula may yet prompt his protegée to be a bit more business friendly and pragmatic, as he was while in office in 2003-10. But chances are that Ms Rousseff will merely tinker around the edges just enough to stave off a painful ratings downgrade. In the absence of fully fledged structural reform, Brazil will continue to drift, putting jobs, incomes, as well as the PT’s cherished social programmes at risk. From now on, the ride may only get rougher.
