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BRAZIL: Presidential Candidates Not Risking Economic Surprises

Fabiana Frayssinet

RIO DE JANEIRO, May 28 2010 (IPS) - Not the leftists, not the social democrats, not the greens. Ideological differences aside, the three leading candidates for the Brazilian presidency are singing the same tune on the economy: no surprises, no market shake-ups.

For now, the leaders in the voter-intent polls for the Oct. 3 elections — Dilma Rousseff of the governing Workers Party (PT), Marina Silva of the Green Party (PV) and José Serra of the Brazilian Social Democracy Party (PSDB) — seem more concerned about building alliances and figuring out who from each state will be sharing the political limelight with them.

Although the campaign doesn’t begin in earnest until Jul. 6, and the party platforms have yet to be defined, the aspirants to succeed President Luiz Inácio Lula da Silva, who has led the country since January 2003, have begun outlining proposals for the different sectors that are already making their demands.

The three defend a “basic policy” conceived in 1998-1999 by the Fernando Henrique Cardoso administration (1995-2003), of the PSDB, and maintained by Lula during his two terms in the presidency, says economist Adhemar Mineiro, of the Inter-Union Department of Statistics and Socioeconomic Research (DIEESE).

In an IPS interview, Mineiro, a trade union consultant, explained that this platform is based on principles including maintaining capital flows (“financial liberalisation”), the floating currency exchange regime, compliance with inflation goals, and Central Bank autonomy.

The differences amongst the three, says Mineiro, would be more apparent in foreign trade policy and international relations.

Serra, for example, questions the efficacy of Brazil’s main trade bloc — with neighbours Argentina, Paraguay and Uruguay, in the Southern Common Market (Mercosur) — while Rousseff, who represents the continuity of Lula’s PT government, “is focused on a more organic integration in the regional sphere,” said the economist.

There are other areas where nuances of difference emerge: the government would be a powerful force under a Rousseff presidency, as Lula’s has been, while under Serra it would be less so, he said.

The PV’s Silva comes in third place in the current polls, with 12 percent support, and Mineiro notes the obvious greener tint to her policies, than those of Rousseff or Serra, who are running neck-and-neck at 37 percent of voter intent.

Silva — environmentalist, senator and former environment minister in the Lula administration — abandoned the PT to join the PV and run for president.

One constant in her discourse “is the quality of development,” said Mineiro. Silva’s running mate, Guilherme Leal, is a business executive in the cosmetics industry, whose company, Natura, has built an image of alliances with environmental causes.

As environment minister, Silva clashed with Rousseff, who was energy minister and Cabinet chief, over issues like the construction of hydroelectric dams in the Brazilian Amazon.

The PV candidate might impose more restrictions on oil production or on major infrastructure projects, said Mineiro, but she would not likely make any major changes to the Brazilian energy matrix, which also includes nuclear and biofuels.

An economic rupture? Only if major shifts occur in the domestic economy or if the global economic crisis deepens, said Mineiro. But in that case, the modifications would come from any of the three candidates who happened to win the elections, he added.

And there is little worry among business leaders, who have applauded Lula’s successes, such as Brazil’s economic expansion despite the effects of the international financial crisis that erupted in 2008.

For 2010, various estimates forecast the country’s Gross Domestic Product growth to reach 5.5 to 6.0 percent.

“As long as the economy continues to grow and international conditions are favourable, I don’t see how anyone would want to change (the macroeconomic policy), nor do I see any ideological inclination to do so,” said Fernando Lattman-Weltman, a political analyst with the Getulio Vargas Foundation’s contemporary history research centre.

Lattman-Weltman believes it is too soon to determine “the differentiation strategies of the candidates,” who also have to attract a majority vote, “which will come from the centre.”

“At the ‘macro’ level, we are not going to have any essential changes, whoever wins,” he said.

But there could be differences at the “micro” level: in Lula’s key policies, like the distribution of income through a household subsidy system for the poor, known as “Bolsa Familia” (Family Grant), or in the areas of education or health.

The political analyst noted that Serra, when he served as Cardoso’s health minister, “confronted powerful groups,” including multinational pharmaceutical corporations.

Nor would the PT’s Rousseff “be any more prone to influence” by the left wing of her party, and would maintain the current administration’s commitment to economic stability, said Lattman-Weltman.

The PV’s Silva is also unlikely to bring any radical changes. On Tuesday, she made a commitment before the National Confederation of Industry to uphold two pillars: stability, “with a certain informal independence of the Central Bank,” and continuity of the wealth distribution plans.

The smaller differences will emerge to the extent that the candidates listen to the more powerful sectors, like industry and trade unions, in a meeting planned for next week.

The three candidates have made a commitment to the business world to overhaul the tax system, which, they agree, is an Achilles heel for the nation. They also recognise the need to improve infrastructure to drive industry, and to keep inflation and public spending in check.

Serra stepped out of the comfort zone to criticise Brazil’s high interest rates and the appreciation of the nation’s currency, the real, with respect to the dollar, which business leaders say undermine their market competitiveness.

From December 2002 to December 2009, the real appreciated 100.6 percent in relation to the dollar. Serra, however, did not propose specific policies to confront the matter.