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.

The Curmudgeon, Brazil, Opinion
The Curmudgeon, also known as Michael Royster.

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!)


  1. Outstanding article. Listing of facts instead of mere opinions. And a very convincing listing of facts at that.
    Marina still needs to surround herself with “name” economic experts to offset her perceived lack of business/economic know-how. Look forward to reading more on this topic as October 5th approaches.
    It is a shame that Petrobras has been forced to import petroleum products and resell them at a loss due to Dilma. A new government should reverse this and allow Petrobras to return to market-based sales pricing. I would like to read the Curmudgeon’s opinion on this issue.


    Paul R.

  2. I couldn’t agree more. This article is a real portrait of Brazilian election and I don’t think the situation may be altered in the next days, even with the help of the former President Lula in favor of the incumbent Dilma Roussef.

  3. Paul R, you are almost surely right about Petrobras. In fact, around 6 months ago, Graça Foster and the Executive Board submitted a plan to the Finance Ministry whereby there would be some automatic triggers for increases in prices at the pump. Dilma killed that off instantly at the Supervisory Board level, because she knew for sure that if prices had increased, the official inflation target would have been blown out of the water. As it is, it’s right at the upper edge of the band at 6.5% (which of course is about half the real rate).
    OTOH, if Marina is elected, you have to wonder whether she’ll be as protective of all the crooks inside Petrobras as PT and Lula and Dilma have been. Pasadena is chicken feed at US$ 1 billion, the Abreu e Lima refinery is now US$20 billion after an initial budget of $2.5 billion. Everybody in Brazil knows where the money went, but everybody’s afraid to say so.

  4. I’d like to voice my agreement with the op/ed and the 2 readers. I was glued to the last debate and was very impressed by Marina. My support had initially been with Aécio and my pick up sports his bumper sticker but I now think Marina has moderated her views to the point where I could support her.
    Thanks to Curmudgeon for laying it all out so clearly.

  5. Reinforcing the arguments of Michael I would say that the “fifth nail in the coffin” are the declarations that were leaked on the propinoduto which is and always has been Petrobras.

  6. God help Brazil if Marina is elected. Fitting that you would invoke the name of Bill Clinton, who in 1999 finally cut the reigns on financial regulations put in place following the great depression of the 30’s which led directly to the most recent worldwide banking meltdown. Sure, many will sneak away with truckloads of money, but that’s the real reason for the business class to support deregulation. And you’re right, many of those who would vote for Marina may not be aware of the impending apocalypse of her policies (or perhaps they are voting for the glorious endtime?) They are enraptured by the fuzzy warm vagueness of “change” which at least for the upper middle class here seems to be a codeword for “The social programs are working! Too many of THOSE people are showing up in OUR fancy shopping malls! I don’t want to have to compete with THEM to get MY government entitlement at public university!” The last thing Brazil needs is a fundamentalist ideologue who believes it is divine will for her to become president. That should be a real red flag. Her social agenda, including anti-reproductive rights for women and support for teaching creationism in school represents a giant leap back to the bronze age.

  7. “Brazil is the country of the future — and always will be…”

    I was pretty excited about her debate performance. Then watched a William Bonner Jornal Nacional interview which left me very distrurbed.

    But what are the choices? Aécio Neves can’t get any traction. This post-Campos period seems to have finished his campaign.

    And that leaves us with Dilma. Really? God Save Us.
    (I don’t have enough words, vulgar or otherwise, to express fully my opinion of that person).

    If the readers think that Petrobras is full of scandals, mark my words, that’ll be seen as the tip of iceberg compared with BNDES. That’s where the real Money is. Billions and Billions to be “loaned” to political cronies, phantom companies, etc.

    When first visited, and then moved to, Brazil I had high hopes. Not so much anymore.

  8. To American in Rio, that’s an interesting take on BNDES and very different from what is usually heard. For years, BNDES has been thought to be honest, it does have financial experts who know their job–I’ve had clients that had to go through the financial analysis and it was not easy. The head of BNDES does not report to the Finance Minister, but to the Minister of Commerce and Industry, so it has commercial objectives. During the LuDilma administrations, BNDES has seemed to focus on big loans to big contractors, rather than on small or medium sized businesses, and (duh) it’s these contractors who have lined the pockets of the politicians.
    Maybe it has been lending to political cronies and phantom companies, but I’ve not heard that before.

  9. I have no hard evidence, just speculation. In my 11 years living here (doesn’t compare with your 40!) I haven’t yet seen any evidence of clean government in Brazil. Why would BNDES be different? Their lending levels have been extraordinary and I’m sure there’s at the very least a 3% kickback going on. Why would Petrobras be the only game in town?
    And like you say the contractors are getting very rich. A small example is the Maracana management deal – Odebrecht Construction rents this (these numbers are all from a failing memory) USD $500M++ stadium for a R$1M a month? And pockets all the profits So you get your money when you line your pockets remodeling it and then for a lifetime on a sweet heart deal like their management deal.

  10. I applaud an article written with such conviction, but … the result of the election is unknown, and the campaign still in full swing. The opinion polls now seem to be indicating a surge towards President Dilma who is clearly leading the race again – and a very close result is predicted for the second round. Unlike the conributors above I would not be unhappy to see a Dilma/PT victory … the alternatives are, in my opinion, very bleak!


Please enter your comment!
Please enter your name here

3 × 1 =