Analyzing the Political Landscape: Historical and Current Patterns

In this extensive post, I will explain Brazil’s political structure, starting with a historical overview and then moving on to an analysis of current trends, with a focus on the upcoming 2012 and 2014 elections.

The Brazilian Empire and the Old Republic: 1808-1930

Like most Latin American countries, Brazil won its independence in the early 1800s, as the Napoleonic Wars led to a collapse of the old monarchies in Spain and Portugal and weakened those countries’ control over their overseas territories. However, Brazil’s trajectory during this period was very different from its Spanish-speaking neighbors. In 1808, Dom João VI, the Portuguese regent, was able to escape Napoleon’s advancing army, fleeing Europe with the help of the British navy and moving his court to Rio de Janeiro. This in itself was a remarkable event: Dom João became the first colonial ruler to set foot on his overseas territories. It was also a key moment in Brazilian history, as the presence of the Portuguese court helped to transform Rio into a true capital city, strengthen independent Brazilian institutions, open the region up to international trade, and keep the territory intact during a tumultuous period of secessionist insurrections. Upon Napoleon’s defeat, a liberal revolution broke out in Portugal and the country’s new rulers ordered the king to return to Europe in 1821 and sign a new constitution limiting the power of the monarchy.

King João left behind his son, Crown Prince Pedro I, to rule Brazil in his stead. When the new Portuguese leaders then requested Dom Pedro I to return as well, he responded defiantly and declared Brazil’s independence in 1822. This was an ironic historical event, as the old ruling dynasty of the colonial power declared independence from the new liberal elite that had established a more progressive constitution. It was virtually the opposite, in fact, of what had occurred in the United States fifty years earlier. Dom Pedro I declared himself Emperor of Brazil and established a highly centralized constitutional monarchy. Remarkably, he was able to keep the country from disintegrating, putting down revolutions from both Portuguese loyalists and liberal republicans across Brazil. While the remains of the Spanish empire splintered into numerous countries, the continuation of the Portuguese dynasty in Rio enabled Brazil to hold itself together, thereby consolidating its position as the giant of Latin America.

Brazil continued to operate as a constitutional monarchy until 1889, when Dom Pedro II (the son of Pedro I) was overthrown and the country declared a democratic republic. In truth, however, the country was still nowhere close to a true democracy. Like its Latin American peers, the early Brazilian republic was essentially an oligarchy controlled by the landed elite. The country’s economy was based on agriculture organized around latifundios, essentially feudal-style land plots where peasants were controlled by local “coronels”. Whereas in the U.S. Jacksonian democracy broke the rule of the landed elite in the 1830s and enhanced participation by the masses (part of the world's "First Wave" of democratization), in Brazil the coronels continued to rule with an iron fist. The presidency was determined by the “Coffee with Milk” alliance, where the office alternated between coronels from São Paulo (coffee farmers) and Minas Gerais (dairy farmers). Although slavery was abolished in 1888, the vast majority of the population continued to be illiterate peasants with no land titles or guaranteed rights.

Industrialization and State-led Development: 1930-1985

The Old Republic collapsed in 1930, when a military coup established Getulio Vargas as dictator. Vargas used populism to enhance his support base beyond the military, appealing to the lower classes through a drive toward state-led development and industrialization. He established Brazil’s large state companies, such as Vale and Petrobras, expanded the electorate, created new social welfare programs, and co-opted the nascent workers’ movement in order to limit and control its influence. This earned him the popular moniker of “Father of the Poor”. Vargas’ legacy is controversial and many compare his regime to European fascism, despite his decision to side with the Allied powers during World War II. Yet there can be no doubt that his most profound impact on Brazilian politics was to diminish the power of the landed elite, moving Brazil away from an agrarian society and creating more spaces for participation by the masses.

After World War II, Vargas allowed for more open elections, following in the pattern of the “Second Wave" of democratization that saw new regimes established in Europe, Africa and Asia. After stepping down for six years (despite wielding behind-the-scenes control), he was re-elected as president in 1951. However, Vargas soon ran into tensions with right-wing army officers and committed suicide during a confrontation with them in 1954. Following Vargas' suicide, the army was unable to establish control and thus had to cede to open elections, paving the way for the “Golden Years” of Brazilian democracy, a ten-year period that saw two presidents elected through direct, popular vote.

The first of these leaders, Juscelino Kubitschek, continued Vargas’ drive for state-led development, promoting urbanization, large public works projects, and the construction of Brasilia as the new capital to “penetrate the interior” of the nation. His successors moved to continue in this direction, but like Vargas before them, they ran afoul of the military establishment, which was concerned about Brazil’s growing relations with communist regimes in Cuba, China and the USSR. Citing the danger of communist influence on the national government, the Brazilian armed forces overthrew President João Goulart in 1964, establishing a new military junta that would rule the country for twenty years. While the military dictatorship represented a very new political order, it continued the country along the state-led development path begun by Vargas and continued by Kubitschek and Goulart, albeit with much greater suppression of workers' movements.

The New Republic: Rise of the PMDB, PSDB and PT

The military regime finally collapsed in 1985, weakened by popular pressure and economic devastation resulting from the Latin American debt crisis. (For more on Brazil's economic history during this period, see my previous post.) The transition to democracy was completed with a new constitution in 1988 and the presidential election of 1989. While many political parties have come and gone during the country’s twenty-seven years as a democracy, three stand out as the most influential.

The Brazilian Democratic Movement Party (PMDB) led the challenge to the dictatorship during the 1980s, forming an umbrella opposition group to coordinate the "Direitos Já" street protests that led to the collapse of the old regime. The party contested the 1985 presidential election (via electoral college) against the ruling junta and its victory marked Brazil’s transition period away from military rule. The PMDB thus shepherded the nation into a new democratic era during the world`s "Third Wave" of democratization.

The Brazilian Social Democratic Party (PSDB) stabilized the country during the 1990s under the leadership of Fernando Henrique Cardoso, who served as finance minister and then president from 1993 to 2003. A former sociologist and political exile, Mr. Cardoso introduced a series of sweeping macroeconomic reforms to bring hyperinflation under control, privatize large, inefficient state-owned enterprises, and open the Brazilian economy up to international trade and finance. Mr. Cardoso thus helped the PSDB to become known as the liberal reform party, reversing sixty years of protectionist, state-led development begun under Vargas and continued under Kubitschek and the military junta. While many criticized these initiatives, especially following the 1998-1999 currency crisis that highlighted the dangers of global capital flows, Mr. Cardoso’s reforms essentially set the stage for the impressive growth Brazil enjoyed over the last decade.

The Workers’ Party (PT) had been a fixture on the Brazilian political scene since the return of democracy, as its leader Luiz Inácio Lula da Silva (Lula) was the presidential runner-up in the 1989, 1994 and 1998 elections. Mr. da Silva finally broke through in 2002, beating the PSDB candidate José Serra by a wide margin due to popular dissatisfaction with Mr. Cardoso following the financial meltdown in his second term. While international investors were at first wary of the PT’s rise due to its traditional left-wing politics, they were pleasantly surprised when Mr. da Silva chose to keep in place many of the PSDB’s economic policies, thus establishing himself as a moderate leftist whose principal contribution to Brazil was to expand the social safety net and combat historic inequality. Mr. da Silva’s time in office also coincided with a huge commodity boom caused by China’s industrialization, allowing him to reap the benefits of strong growth and reach approval ratings of 77% by the end of his second term. The PT remained so popular during Mr. da Silva’s presidency that his hand-picked successor, Dilma Rousseff, was able to crush the PSDB candidate (once again Mr. Serra) in the 2010 election despite being a political novice who had never before held elected office.

Brazil’s democracy over the last quarter-century has thus been remarkably successful at generating political stability. The PMDB, PSDB, and the PT all made important contributions to the country, guiding the transition to democracy, introducing prudent macroeconomic reforms, and reducing inequality, respectively. They still compose the three major political parties in Brazil, with the PSDB and PT in principal opposition to each other and the PMDB the king-making coalition party (it is currently allied with the PT and holds the vice-presidency). Brazil’s political landscape looks especially impressive when compared to its BRICS peers. China is still a dictatorship and Russia an illiberal democracy, while India and South Africa remain dominated by the same political clans that have led them since independence (the Gandhi-Nehru dynasty in India and the African National Congress in post-apartheid South Africa). Politically speaking, it can be said that, for now, Brazil is the most developed of these emerging market powers.

The 2012 Elections: The São Paulo Race and Lula’s Legacy

This October, Brazilians will go to the polls to vote in municipal elections across the country. Campaigning begins in July, and all eyes will be on focused on the mayoral elections and their significance for the 2014 national and statewide contests. The PSDB, currently in opposition, hopes that solid local performances will lay the groundwork for a successful national campaign in 2014. The ruling PT, however, hopes to make inroads in opposition strongholds, most notably São Paulo. As in the US, where midterm elections serve as important gauges of the president’s popularity, many Brazilian political commentators will be reading into the results to determine their impact on Ms. Rousseff’s prospects for reelection.

One of the key questions to be answered in the 2012 elections is the extent of Mr. da Silva’s popularity. After years of sky-high approval ratings and the PT’s crushing win in 2010, Lula still appears to be Brazil’s political kingmaker. Although he lay low in 2011 during a fight with throat cancer, he has since recovered and has been hot on the campaign trail, building up support for several PT mayoral candidates.

The most important race is certain to be São Paulo, Brazil’s biggest city and a longtime PSDB stronghold. Mr. da Silva successfully sidelined other potential candidates from his party to make room for his preferred choice, Fernando Haddad, a former education minister. The PSDB has nominated none other than Mr. Serra, a former mayor and state governor who was twice the party’s presidential candidate in 2002 and 2010. The expectation is thus for a major showdown between the PT and PSDB, although the PMDB has refused to join a coalition and has instead nominated its own candidate, Gabriel Chalita. Mr. Serra has been leading in the polls for now, but Mr. da Silva insists he is still “introducing” Mr. Haddad to the voters.

The most controversial moment of the campaign so far came last week, when Mr. da Silva formed an alliance with an old adversary, Paulo Maluf. A former member of the military-led ARENA party, Mr. Maluf ran against the PMDB candidate in the 1985 election in an attempt to maintain rule by the armed forces. (For those following current events, he is a very similar figure to Ahmed Shafik in Egypt). He was also accused of numerous corruption charges and is currently wanted by Interpol for involvement in international money laundering. A staunch conservative, Mr. Maluf had a strong political rivalry with Mr. da Silva in the 1980s, once accusing him of being a “bird of prey”. The Lula-Maluf alliance has caused a firestorm in the national media, as even strong PT supporters have been dismayed by the ex-president’s political opportunism. It remains to be seen whether the alliance will ultimately help the PT at the polls, but it has clearly hurt Mr. da Silva’s image among many voters. Luiza Erundina, Haddad’s vice-mayoral candidate, dropped off the ticket in protest.

Enter the Challenger: Aécio Neves and the Future of the PSDB

Aside from Mr. da Silva, the other figure to watch in this election cycle is Aécio Neves, a PSDB senator from Minas Gerais. The grandson and personal secretary of Tancredo Neves, the PMDB opposition candidate whose 1985 election signaled the end of the military dictatorship, Mr. Neves is a former speaker of the Chamber of Deputies and two-term governor of Minas. Upon leaving the governorship in 2010, he enjoyed a nearly 80% approval rating, making him one of the few opposition leaders who can claim to rival Lula in popularity. Like Lula, his handpicked successor romped to victory in the 2010 gubernatorial election. Mr. Neves sought the PSDB nomination for the presidency in 2010, but was pushed aside in favor of Mr. Serra. With Mr. Serra now running for mayor and the national leadership of the PSDB eager to expand beyond its support base in São Paulo (Geraldo Alckmin, the current governor, challenged Mr. da Silva in 2006 and Mr. Cardoso also hails from the state), Mr. Neves appears to be the inevitable PSDB nominee to challenge Ms. Rousseff in 2014.

Mr. Neves has been busy barnstorming the country in 2012, supporting PSDB candidates and building alliances wherever possible. A recent report pointed out that he had already traveled to 13 of Brazil’s 26 states during this election cycle and had been discreetly courting support not only from local PSDB leaders but also from PMDB figures such as Sergio Cabral, governor of Rio state, Eduardo Paes, mayor of Rio city, and Michel Temer, vice-president of the Republic. Most importantly, Mr. Neves has been trying to shore up his base of support in Minas, Brazil’s quintessential swing state. In recent elections, the PSDB has had strong showings in the South and Midwest, whereas the PT has relied on support from the North and Northeast. The Southeast has been split and Minas, Brazil’s second-most populous state that happens to be sandwiched between North and South, has been a key factor in propelling the PT to victory:

2006 Presidential Election

2010 Presidential Election

 

To defeat Ms. Rousseff, Mr. Neves will thus have to have a very strong showing in his home state, beginning with a solid performance in the municipal elections this year. The initial signs are promising, as the PSDB has formed a large coalition that hopes to win up to 80% of the state's prefectures. Mr. Neves has also launched a giant public campaign to push for raising the royalties Minas Gerais receives from mining exports, thus throwing down a very clear challenge to the PT to support greater decentralization and state autonomy, an approach expected to go down well not only in Minas but also in Rio, where locals are eager to secure a greater share of offshore oil royalties.

The most important municipal race in Minas this year will be in the capital city of Belo Horizonte, where mayor Marcio Lacerda of the Brazilian Socialist Party (PSB) is running for reelection. Elected in 2008 with the rare support of both the PSDB and the PT, Mr. Lacerda has become an influential figure in the state and a potential gubernatorial candidate. While the PSB is part of the national PT coalition, he has worked in close partnership with the state PSDB government. Last week, the PT/PSDB alliance in the city came apart as Mr. Lacerda, under pressure from Mr. Neves, changed the terms of the coalition, giving less weight to the PT in the city council. The PT, under direct orders from Ms. Rousseff, responded by breaking the alliance with Mr. Lacerda and launching its own candidate for mayor, Patrus Ananias. This has set the stage for a high stakes PT-PSDB showdown in October, with the winning party having the inside track to carry the state in 2014. Early polling shows a tight race between the two contenders.

In addition to forging political alliances and solidifying his position in Minas Gerais, Mr. Neves’ other principal task is to restore the PSDB’s image as the party of economic reform and prudent management. He will do this primarily by drawing on his own history. During his governorship, Mr. Neves instituted a “Management Shock” program that drastically revamped the state bureaucracy, allowing the government to reduce expenditures, seek international investment, and fund new public projects. The Minas government was so successful in this reform that the World Bank began to promote the “Management Shock” policy as a model for improving public administration across the country, and even overseas. Mr. Neves has talked about implementing this program on the federal level, shrinking Brazil’s famous bureaucracy and reducing the size and scope of the national ministries, thus improving the business climate while simultaneously using the savings to increase investment and social projects.

Aside from promoting his own record as governor, Mr. Neves is working to rebrand the PSDB, linking its past success to its vision for the future. He recently announced that the PSDB would soon propose a platform of major changes to be implemented in Brazil over the next twenty years, focused on improving the quality of public administration and provision of services. He has also embarked on a campaign to “rescue the PSDB legacy” and remind voters of the important contributions that Mr. Cardoso made in stabilizing the Brazilian economy and laying the foundation for its current success, initiatives that are often forgotten after the last decade of PT hegemony.

Looking Toward 2014: A Battle of Reformers?

So far, the stage looks set for Mr. Neves and Ms. Rousseff to face off in 2014. There are, however, lingering questions regarding the nomination process for both parties. Although Sergio Guerra, the PSDB president, recently said that Mr. Neves will almost certainly be the party’s candidate, there is still the chance that either Mr. Serra or Mr. Alckmin will make one last attempt at the presidency, thus setting up an important primary contest. On the PT side, Mr. da Silva recently refused to rule out the possibility that he will run again if Ms. Rousseff chooses not to stand for reelection. (Brazil does not have term limits but the same person cannot hold the office for more than two terms in a row.) This has fueled much speculation about the possibility that Ms. Rousseff will stand down and allow Mr. da Silva to contest the election, although most would agree that this possibility is still unlikely.

Should he secure the nomination, Mr. Neves will certainly be in for a tough fight. Ms. Rousseff has been on an impressive run lately, standing up to corrupt politicians in Congress, forcing banks to push down their spreads and offer cheaper credit, pushing back against the military establishment, and solidifying her reputation as a no-nonsense technocrat who has been an adept economic manager during a period of global economic turmoil. She continues to enjoy sky-high approval ratings, breaking even Mr. da Silva’s record after his first year in office. But Mr. Neves has some key factors working in his favor as well. Growing frustration among the middle class with Brazil’s labyrinth of taxes and bureaucracy means that voters should be receptive to an ambitious reformer willing to put forward the sort of comprehensive changes that Ms. Rousseff has so far failed to embrace. His proven track record in a critical bellwether state will no doubt prove an asset. Regardless of the outcome, I am cautiously optimistic that the 2014 presidential contest will at least force a debate on the major reforms Brazil needs to keep moving forward in its development.

The critical factor, as always, may end up being the state of Brazil’s economy. The country has been stagnating for nearly a year already, and all signs point to a prolonged period of subpar growth that could reflect poorly on the incumbent PT. Yet ordinary citizens seem to be surprisingly unaware that this slowdown has even been occurring. Unemployment, perhaps an even more important indicator than GDP growth, continues to hit record lows, falling to 5.8% this month. And Ms. Rousseff seems willing to stake her legacy on an ambitious attempt to cut interest rates, apparently confident that this could be her single greatest contribution to the country’s long-term economic success. If, however, the economy continues to stall and unemployment and inflation begin to creep back up, Ms. Rousseff will almost certainly be looking at a much tougher contest in 2014. In this case, the end of PT dominance may end up coming sooner than most political commentators seem to think.