SE PRECISAR DE AJUDA PARA TRADUZIR, ME LIGA FORBES MAGAZINE 5 Reasons Why Brazils President Dilma Rousseff Should Not Be Re-Elected Twelve years ago Brazilians chose Luiz Inacio Lula da Silva, the first member of the working class to be elected president of Brazil, as the person whom they believed could promote the changes that the country needed in order to become a fairer and better place to live. Lula, who is known by his first name, didn’t disappoint. During his government (2003-2010), Brazil’s economy expanded considerably, although not as much as the world economic growth during the same period, and it was mostly thanks to China’s appetite for Brazil’s commodities. Millions of Brazilians were lifted out of poverty, and a new middle class emerged, eager to spend money. During Lula’s eight year term, the number of Brazilians with banking accounts went from 70 million to 115 million, increasing from 40% to 59% the percent of the Brazilian population who maintained a relationship with the country’s financial system. The total number of mortgages went from 37,000 in 2003 to 530,000 last year, while today the equivalent of 60% of the country’s GDP is circulating in the economy in the form of loans. Even the number of Brazilian billionaires increased, from only five in 2003 to 65 this year. However, during Lula’s last years, inflation became a dangerous distraction and industrial production didn’t grow as much as it should have. Add to that the fact that Lula’s successor, Dilma Rousseff, failed dramatically to keep up his good work, blaming a nonexistent world crisis for her poor performance as the commander-in-chief. Investors who once lined up to put money into Brazil’s economy are now looking to other markets. That should change if Rousseff loses her bid for re-election. And so she should, as I already explained. Her opponent, Aecio Neves, is now the best option for those Brazilians who still want change, many of whom voted for Lula in 2002, and last year hit the streets of the largest Brazilian cities to protest against the country’s numerous unsolved issues. The time to give those protests a meaning has come. Neves, a senator and former governor of the state of Minas Gerais, may not be the best politician in Brazil. He is certainly not as popular as Lula, who recently called him a “daddy’s boy.” And he has a few skeletons in his closet that still need clarification. Right now, Rousseff represents the worst of Brazilian politics. Neves is the natural choice over her. Here are five reasons why he should win this Sunday’s presidential election: 1. Alternation Of Power As in 2002, when Brazilians elected Lula da Silva to end the eight years of neoliberal government of former president Fernando Henrique Cardoso, who promoted the institutional changes that inevitably benefited his successor, Neves is now the best antidote to Rousseff’s many mistakes, which have put Brazil’s economy in jeopardy. The structural changes promised by Rousseff during her first campaign for the presidency in 2010 didn’t occur. Brazil is still one of the most bureaucratic nations worldwide, with a complex tax system and in desperate need of political reform. Rousseff had four years to address those issues, but she didn’t. Neves, together with a new breed of political leadership, has a better chance of succeeding in that task. The most direct way to break the grip on state power of private interests is through the alternation of officeholders with new political players, and countries with frequent alternations of pwoer are generally better governed than countries with few alternations. Brazil is no exception, as the governments of Cardoso and Lula da Silva prove. Without the changes promoted by Cardoso, it is unlikely that Lula would have succeeded as he did. 2. Investors Want Him Although the current mood of the presidential campaign makes Neves look like the candidate of the rich, while Rousseff presents herself as the candidate of the poor, in reality that is a lie. It’s undeniable that her party, the Workers’ Party, was in power when the most significant social and economic achievements in Brazil’s recent history took place, but her fragile lead of the country has put these achievements at risk. Investors have taken note. Her constant interference in macroeconomic policies and her attempts to control the private sector are among the issues cited by international investors for the decline in investment. Last year alone, the total amount invested by foreigners in Brazil was $63 billion, according to Unctad. That’s a 3.9% drop when compared to the previous year. Among the BRIC countries, Brazil was the only one last year whose foreign direct investments decreased. That scenario should change if Neves wins the election: banks expect the Ibovespa index to hit 65,000 points next year in an eventual Neves government. Today the Ibovespa index is at about 50,000. If Rousseff wins, the index is expected to drop to 45,000. A Neves government would attract foreign investors again, whose money can be inserted into the economy. More money from investors is fundamental for Brazil to keep its social and infrastructure programs in place. Rousseff pressured Brazil’s Central Bank to cut interest rates and allowed accounting tricks to meet the fiscal targets. Investors and entrepreneurs didn’t like it, and they quickly withdrew their money from the Brazilian economy. During Rousseff’s government, Brazil grew at a mediocre rate of 1.6% annually, with the country hitting a recession this year, the first time the economy slipped in five years. Investments in Brazil are still low, and they represent 17% of the GDP, while in Latin America the average number is 22%. It’s a terrible combination. The markets and its players may be an obvious set of villains during a presidential election in Brazil, but the truth is capital (stock) markets represent the economic strength and development of a country. There is no strong economy without a strong stock market. And there are no effective and sustainable social policies without a strong economy.Having ex-Central Banker and Brazilian private equity pioneer Arminio Fraga as his proposed Finance Minister is also a plus. 3. Shrinking Of The State Rousseff’s government followed in the footsteps of her predecessor when it came to the presence of the state in the economy. Brazil now acts both as a regulator and as a player in sectors like oil and gas, thus creating an uncomfortable and unfair situation for private investors. Traditionally, Neves’ Social Democratic Party (PSDB) has been known for promoting economic liberalization, which does not necessarily mean privatization. In truth, these terms are misleading, as they are unable to capture the most critical political dimension associated with marketization: the reassertion of state power. In countries where the state has withdrawn from key markets, leaving a number of allocative functions to the private sector, domestic or foreign, the result was more about state building than about state shrinking or retreating. Besides, a deliberate shrinking of the state through tax reform has been associated with the strengthening of a country’s economy and with improvements in corruption control. The smaller the state, the more productive it is. Exactly what Brazil needs to be now. 4. End To Re-Election Historically in Latin America, re-election reinforces the trend towards personal and hegemonic leadership. The Workers’ Party has made it clear it wants to stay in power as long as it can (Rousseff’s victory would represent 16 years of ruling for the party), but that could end up creating an authoritarian system. Re-election is their way to keep up with that, not to mention it provides incumbents with an unfair advantage over other candidates. In Brazil re-election has become a problem, considering that those who are elected almost immediately make plans for another term, in an incessant search for power. Neves has personally committed to lobby for an end to re-election, should he be elected, in exchange for former presidential candidate Marina Silva’s support. Silva, who place third in the first round the election earlier this month, originally defended the idea in her government program. It will be a hard task for Neves, as re-election is guaranteed by the Brazilian Constitution. But his sympathy for the idea seems promising. 5. Petrogate The latest political scandal in Brazil takes place around the country’s largest company, the state-controlled oil behemoth Petrobras , and involves several members of the Workers’ Party and its allies. It consists of a $4 billion (R$ 10 billion) bribery scheme within the boundaries of the company in order to transfer funds for the party and its coalition that has enriched many at the expense of taxpayers’ money. One of the company’s former top executives, Paulo Roberto Costa, is behind bars. Costa recently accepted a plea deal from prosecutors, and he is collaborating with them to unveil the scheme. Petrobras was seriously damaged during Rousseff’s government. The company’s market capitalization went from $190 billion four years ago to the current $92.8 billion. Its net income has declined and its total debt is expected to rise to $117.2 billion by the year end, a considerable increase when compared to the $94.7 billion reported last year. As result, Petrobras maintaining an investment-grade rating on its debt is now under question. Citing the increasing debt load, Moody’s downgraded the Petrobras’ debt last October to Baa1, the third-lowest investment grade rating offered by the credit agency. The company is also being used by the government as a way to control inflation, by holding up increases in the pricing of oil and aggregates, which generated a loss of $20 billion last year. Any CEO in charge of a major company like Petrobras, who presented these disappointing results, would probably be fired. It’s up to Brazilians now to do that, as Rousseff is the person in charge of Petrobras. For Brazil, it’s either Neves or disaster.
Posted on: Sat, 25 Oct 2014 17:25:19 +0000
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