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«Elections in Brazil: Lula on his Way to a Second Term Bruno Ayllón and Víctor García Guerrero ∗ Theme: Brazil’s incumbent President, Luis ...»

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Alckmin, former governor of the state of São Paulo, is running for this election on a platform that tries, on the one hand, to reveal the government’s supposed administrative and managerial incompetence, promising ‘managerial shock treatment’ to solve it, while harping incessantly on the corruption scandals revealed in recent years. Alckmin also says the government is responsible for the public safety crisis, which is especially serious in the big cities. Attacks by the organised crime group that controls prison life in the state of São Paulo, the Primeiro Comando da Capital (PCC), left the state’s most important city in panic at different times in May, June and July. The former governor, who promoted a hard-line policy against crime –which, his opponents say, is responsible for the equally tough response by organised crime groups– promises to follow the same path if he is elected president.

The coalition led by Alckmin, formed by the Partido da Social Democracia Brasileira (PSDB) and the Partido da Frente Liberal (PFL), was the same that governed Brazil for a large part of the 1990s and which implemented reforms and opened up the economy, privatising companies and public banks, and opening markets to foreign capital. Alckmin’s Area: Latin America (Translated from Spanish) - ARI 98/2006 Date: 26/9/2006 economic platform, which emphasises the need to reduce the state’s role and reduce public spending, also proposes to deal with foreign exchange fluctuations through greater central bank intervention in the market to prevent a loss of competitiveness in the export sector, which has been harmed somewhat in recent months as the real has traded higher against the dollar. Until the first weekend in September, a month before the elections, Alckmin had not formally presented his platform.

Direct state intervention in the economy through a central bank that is ‘autonomous and independent of financial capital and subordinate to national interests’ is the main plank in the economic platform of Heloísa Helena, the PSOL candidate. Helena proposes to use government decrees to drastically reduce interest rates and acquire millions of dollars in funds to be invested in social policies and infrastructure. Her programme also states the need to encourage accelerated growth so that the labour market can absorb surplus workers. She proposes giving land to more families than the Lula government and labels the agribusiness sector as unscrupulous capitalists who only pretend to cooperate in the country’s development. Finally, Cristovam Buarque, the former Education Minister and former PT member, is running on a platform based almost entirely on the need to undertake major educational reforms. Buarque, of the Partido Democrático Trabalhista (PDT), proposes centralising primary education, which is now in the hands of the states and municipalities.

The Challenge of Governability The Brazilian political system is commonly considered a ‘coalition presidential system’. Its distinguishing feature is the difficulty of forming majorities in the Chamber of Deputies and the federal Senate. To receive sufficient support to pass its projects and reforms, the executive needs to negotiate with a great number of parties of different stripes, representing diverse interest groups whether corporate or regional in nature. Such negotiations often take on personal overtones and involve offering jobs, transferring federal resources to the electoral bastions of local leaders and financing political campaigns with secret funds, the so-called caixa dois. This kind of political engineering comes at a high cost and puts governability at great risk. This was clear in the episode involving the constitutional amendment that allowed Cardoso to be re-elected and, more recently, during the serious political crisis affecting the country. The inability of Lula and the PT to form a programme-based governing coalition, combined with the need to form alliances with politicians of questionable reliability, was what engendered the main corruption scandals: the alleged buying of votes in Congress in exchange for money, and the illegal commissions charged by certain political allies who had been placed in government companies as part of agreements to form a government (for a more detailed report on these issues, see Bruno Ayllón, ‘La crisis política en Brasil: la esperanza se transformó en decepción’, ARI 112/2005, http://www.realinstitutoelcano.org/analisis/804.asp).

Achieving governability based on a cohesive coalition is the great challenge facing Brazilian governments and the absence of such coalitions is a permanent threat to the country’s political system. Cardoso managed to firmly bring together the PSDB, PFL and PMDB (Partido do Movimiento Democrático Brasileiro) in his first term (1995-98), but had much more difficultly in his second term (1999-02). In 2003, Lula had the support of the Communist Party of Brazil (PCdoB) and the Brazilian Socialist Party (PSB) from the start.

Once elected president, he broadened his coalition to include small parties such as the Partido Trabalhista Brasileiro (PTB), the Partido Liberal (PL) and the Partido Progressista (PP).

The executive’s parliamentary base remained relatively cohesive until 2005, when the news broke that corruption charges had been laid against PTB deputy Roberto Jefferson.

Deputies of practically all the parties in the alliance were involved in various corruption Area: Latin America (Translated from Spanish) - ARI 98/2006 Date: 26/9/2006 scandals investigated by parliamentary commissions, affairs that monopolised the attention of Congress. Unable to govern, Lula made a strategic move with a double objective: to attract the sectors of the PMDB (the party with the largest representation in Congress) that most favoured an alliance with the government, offering a few ministries in exchange –thereby also focusing attention on that party’s internal divisions and the implosion of its candidacy for the presidency– and to reconstruct his political backing in order to contain the opposition’s thrusts in the investigation of the charges. Lula’s tactics were successful. In late 2005, the executive managed to choose allies to preside the Chamber of Deputies and the Senate, and reorganised its political support base. It was able to start 2006 with a Congress that, while still somewhat unpredictable, is no longer entirely hostile.





The bad experience of depending exclusively on small parties and the whims of their leaders could incline Lula to negotiate with a big party if he wins a second term. That party would be the PMDB, in particular its pro-government sector, led by the current President of the Senate, Renan Calheiros, and former President of the Republic, José Sarney.

Calheiros, a skilled and rising politician, was a key figure in minimising the negative effects of Lula’s political crisis. He also helped neutralise a move for the PMDB to run its own candidate. In any case, everything will depend on the results of the parliamentary elections. This time around there is a ‘barrier clause’ that will disallow parliamentary representation to parties that do not win at least 5% of votes (of which 2% must be obtained in at least nine states) in the Chamber of Deputies.

This new regulations mean it is reasonable to imagine that the 17 parties now represented will be reduced to half that number. On the left, some parties run the risk of being absorbed by the PSB and by the PT. The Socialist People’s Party (PPS), a break-away from the old Communist Party, is already on its way to integrating with the PSDB. On the right, there could be a flight of PL, PP and PTB members to the PMDB, which would tend to make it even more of a political ‘hodgepodge’, as well as an indicator of the direction of Brazilian politics.

Although there are no polls on voter intention for the Congress and Senate, some estimates suggest that the PT will lose 20% of its seats, dropping from 91 members in 2002 to about 70 in 2006. The PSDB and PFL opposition parties could see between 120 and 130 deputies elected, while the PMDB could win between 90 and 100 seats. The PDT and the PSB will likely win about 30 seats each. This would result in a split Congress in which no one party would have the majority. As for the Senate, everything suggests that the opposition will gain ground, although the PT –allied with the PMDB– may be able to take control of it.

The question is what price Lula is willing to pay in exchange for the support of the PMDB.

There is speculation on an agreement that would give the PMDB the presidencies of the Chamber of Deputies and the Senate, a significant number of ministries –between four and six– and a large percentage of posts in administrative bodies and public companies.

The possible fragmentation of the PT, the risk of failed political coordination and the fear of over-dependence on the PMDB –a party whose internal disputes make it unpredictable, not to mention its voracious appetite for government posts and ministries– could be behind certain recent proposals, such as the grand national political coalition suggested by Lula at a recent meeting of the Economic and Social Development Council. This coalition agreement, not actually formalised, suggests some kind of understanding with the most development-oriented and least radical sectors of the opposition, especially José Serra and Aecio Neves, who will also run in the 2010 presidential elections. The terms of this agreement would focus on achieving ‘mature governability’, which would include attempting to re-elect the president, governors and mayors to five-year terms, and taking steps to ensure party loyalty and the public financing of campaigns. Reform of the social Area: Latin America (Translated from Spanish) - ARI 98/2006 Date: 26/9/2006 security system, the public administration and labour and trade union legislation, as well as extensive tax reform to unify the dozens of taxes levied in the country, are also among the priorities of this agreement, which has been promoted by Tarso Genro, the current Minister of Institutional Relations.

There is another key factor adding to the complications inherent in negotiating, managing and maintaining a support base for four years: the weight that individual states and their governors carry in national politics. If the 2002 elections were not good for the PT at the regional level –since they were able to form a government in only three states with little political or economic importance– neither is the outlook for 2006 great for Lula’s party.

Once again, the key will be the PMDB, which the polls say will have excellent results in the southern states, an easy win in Rio Janeiro and victories in other less important states. São Paulo and Minas Gerais will most likely go to the opposition social democrats.

The PFL, the opposition party most clearly to the right, will be the biggest force in some north-eastern states, especially Bahía, and the northern Amazon states. Given this situation, the challenge facing the next president will be to implement a policy that can reduce the tensions caused by the tax war among the states and between the states and the federal government. This will determine not only the possibility of peaceful coexistence among institutions, but also of a tax reform project that will have to include the unification of several taxes and tax collection mechanisms, as well as ways of redistributing the funds later on.

Conclusions: Less than 30 days from the elections, all polls carried out in Brazil suggest that about 50% of voters intend to cast their ballot for the incumbent President, while his closest rival, Geraldo Alckmin, will receive at most 28% of the vote. Leftist candidate Heloísa Helena will likely receive about 10%. This would make Lula the winner in on 1 October, with no need for a second round. For the moment, the campaign has been characterised by the lack of passion shown by the candidates and a certain apathy among voters. The crisis that began in 2005 brought with it an avalanche of political information quite unusual in Brazil. Analysts say this may have saturated the great majority of voters who, far from being scandalised by the reports of corruption, have accepted it as something inherent to the system. Neither could the opposition prove that Lula was directly involved in any of the reported wrongdoing. The President enjoys great popularity, similar to levels at the start of his term.

The reasons for Lula’s probable victory, apart from his apparent invulnerability to scandal, have to do with his charisma and his ability to communicate with the people, especially with the poorest classes. It is also a result of the daily benefits that this segment of the population are receiving: the basic shopping basket is cheaper today than four years ago, prices are under control, the minimum wage has risen considerably, lending is expanding and social programmes now cover more than 40 million Brazilians. The middle class – initially the most resistant to what Lula and, above all, the red star of the PT represent to them– have also seen the benefits of controlled inflation, expanded credit and a stronger real, which has increased middle class purchasing power. Major banks and big companies in the export sector have obtained extraordinary returns in these four years.

Although the shareholders of these companies and financial institutions do not and never will vote for Lula, neither do they have any reason to complain.

Meanwhile, Geraldo Alckmin is approaching the Brazilian electorate from his platform as governor of São Paulo. His first challenge was to make himself known nationally, especially in the north-east, where his São Paulo origins could be a handicap, and where seven out of 10 citizens are ready to vote for Lula (who lives in São Paulo but was born in Pernambuco). However, after weeks of media attention, Alckmin’s popularity rating continues flat; and worse still for his aspirations, the number of people who would not vote for him under any circumstances has grown. His proposals remain unknown and he is Area: Latin America (Translated from Spanish) - ARI 98/2006 Date: 26/9/2006 considered significantly lacking in charisma. The choice of Alckmin as PSDB candidate instead of José Serra –who at the time (early 2006) was actually ahead of Lula in the polls– was a process carried out by top party leaders without grassroots support, as a nod to the party’s most conservative sectors and its main ally, the PFL. The resulting shift of the PSDB to the right has alienated the middle class.



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