Opinion, by Michael Royster
RIO DE JANEIRO, BRAZIL – The 2014 Brazilian elections are done and dusted: Marina Silva will be the next President of Brazil. Four crucial things happened last week: (1) both IBOPE and DataFolha polls showed her winning a run-off election against Dilma; (2) she came across as a very decided person in the first televised debate; (3) she announced a quite reasonable economic plan, emphasizing environmental alternatives; and (4) Brazil formally entered a recession after two successive quarters showed GDP contracting.
Analysts have attributed her dramatic rise in popularity to her appeal to: (1) disaffected voters who felt disenfranchised and protested during mid-2013; (2) “evangelical” voters, an increasingly larger part of the Brazilian electorate; and (3) those who want real change. No one in these groups trusts either Dilma or Aécio.
The televised debate gave her a chance to answer some of her critics, and she did very well. In the Curmudgeon’s opinion, she seemed more sincerely desirous of changing the way things are done and Brazil is run. Dilma said “we’ve done great, stick with us” and Aécio said “you’ve done badly, we’ll do better”. Both seemed smooth and self-confident, a bit too much so, and neither talked about what they would actually do in the future.
Aécio took the surprising step of announcing his Minister of Finance would be Armínio Fraga, a head of the Central Bank under Fernando Henrique, currently a prominent investment banker. Armínio announced the next day that “when” Aécio was elected, they would restore the economic tripod on which the Plano Real was based.
On Friday, Marina announced her economic program, and, perhaps surprisingly, stated that she, too, was committed to restoring that economic tripod. The tripod both Marina and Aécio refer to comprises: (1) fiscal responsibility, meaning a primary budget surplus; (2) floating exchange rates; and (3) controlling inflation.
According to both of the opposition candidates, the FHC and Lula governments maintained the tripod, but Dilma has chopped off all three legs. In their view: (1) there is now a budget deficit, masked by creative accounting; (2) the exchange rates are manipulated; and (3) inflation is not under control, largely because price increases by government-owned businesses (petrol for cars, energy for homes) have been banned by Dilma.
The Curmudgeon suspects that the average man/woman in the street doesn’t know or care about points (1) and (2) above, but does care about the third point. No one who goes shopping believes the official government inflation rate of 6.5 percent per year. And everyone knows that in November 2014, shortly after the election, big price rises will occur in petrol and energy.
The fourth “nail in the coffin” for Dilma is the official state of an economic recession. Her economic policies have encouraged spending, controlled exchange rates, imposed artificial inflation controls, and … they have not worked. Brazil’s economy is not growing, it is shrinking.
In 2010, after the world-wide crisis two years prior, when Dilma was running, she and Lula bragged that Brazil was doing better than the developed countries. They can’t say that now. If Bill Clinton’s famous apothegm (“it’s the economy, stupid”) continues valid, the election is done and dusted for Marina, because Brazil’s economy is not going to improve before October’s elections.
Michael Royster, aka THE CURMUDGEON first saw Rio forty-plus years ago, fetched up on these shores exactly 36 years ago, still loves it, notwithstanding being a charter member of the most persecuted minority in (North) America today, the WASPs (google it!)(get over it!)