/ 12 October 2010

Brazil’s election is anything but over

Brazil's Election Is Anything But Over

Brazil’s presidential election, which three weeks ago looked like an easy victory march for ruling party candidate Dilma Rousseff, now looks set to go down to the wire as concerns grow over her flip-flops on social issues and corruption in her inner circle.

Rousseff still has the clear upper hand — and a healthy lead of about eight percentage points — over her challenger in the October 31 run-off vote, opposition candidate José Serra.

But the combative and surprisingly bitter tone of a televised debate on Sunday, the first since the October 3 election failed to produce an outright winner, clearly showed that Rousseff and Serra think the outcome is in genuine doubt.

Rousseff, visibly angry over the recent emergence of abortion and her faith in God as major issues, at times looked more like the underdog as she went on the attack first and accused Serra of using “lies” and “slander” to close a gap that was as big as 20 percentage points in late August.

“You have to be careful not to look like you have a thousand faces,” she said, jabbing her finger at him.

Yet Rousseff’s biggest problem is that the campaign has fundamentally shifted away from her party’s strong record of economic management during the past eight years, when about 20-million Brazilians were lifted out of poverty and the country become a darling of foreign investors.

Displaying an energy and confidence that he had previously lacked, Serra hammered away at his rival’s contradictory statements on social issues.

Rousseff has backed away from past interviews in which she favoured decriminalising abortion, which became a YouTube sensation in Brazil and alienated many evangelical Christian and Catholic voters in the final days before the first round of voting.

Serra’s strategy now is to use those statements not only to create more doubts among values voters, but more broadly paint Rousseff, a former Marxist guerrilla running in her first election, as a liar and a closet radical.

“This isn’t slander. These are things you said … and you have to be responsible for them,” Serra shot back at her during the debate on Sunday night.

After one exchange in which Rousseff’s voice cracked in anger, Serra looked at the camera, smiled, and calmly said: “I have to say, I’m surprised by her aggressiveness … She’s showing who she really is, isn’t she?”

The race first began to narrow after revelations last month of an alleged kickback scheme involving a former top aide to Rousseff, which revived memories of other corruption scandals during President Luiz Inacio Lula da Silva’s eight years in office.

Markets may tune back in
Until now, financial markets have treated the election as a non-event, since the outcome seemed clear and both candidates promise to preserve the center-left mix of social welfare programs and prudent economic management that has made Brazil one of the world’s fastest-growing emerging markets.

Investors may start paying more attention now, though.

Serra’s insistence that Brazil’s currency is overvalued could cause volatility in foreign exchange markets if he draws closer in polls. Meanwhile, Rousseff’s use on Sunday night of state-run oil company Petrobras as a political football could unsettle some investors and signal a more populist phase of the campaign.

Rousseff cast Petrobras’ recent share offering as a triumph in part because it increased the state’s control over the company — a statement which will play poorly among those who fear she could govern further to the left than Lula, the popular outgoing president and her political benefactor.

Lula’s vocal support remains Rousseff’s trump card, particularly in Brazil’s poor north-east, where his popularity is highest and Rousseff also has her biggest lead in polls.

Rousseff can take some solace in the fact that by far the roughest week of her campaign concluded with her still holding an eight-point advantage in valid votes in a poll by Datafolha, the country’s most respected polling firm.

Serra faces his own challenges, including an elitist reputation and his PSDB party’s record of economic management during the 1990s, a period that laid the foundations for Brazil’s current prosperity but also saw numerous crises.

Rousseff will now try to cast the election as a referendum on Lula’s government versus that of his predecessor, the PSDB’s Fernando Henrique Cardoso. On Sunday, she repeatedly hit Serra for orchestrating privatisations of key industries when he was Cardoso’s planning minister, and accused him of wanting to auction off Brazil’s newfound oil wealth to foreign companies.

Serra countered by painting his experience as a plus and using Rousseff’s main strength — Lula’s support — as another sign she is a dangerous unknown.

“At least the Brazilian people know I have a mind of my own,” Serra said. “I don’t linger in other people’s shadows.” – Reuters