October’s presidential elections could see a fight between candidates from the two extremes.
On 2nd September, Rio’s National Museum, once the home of the imperial family and which housed Brazil’s heritage, was devastated by a fire that destroyed the most valuable natural history and ethnological collections in Latin America. Its smoldering ruins symbolize the present state of Brazilian democracy, devoured by the flames of populism. The presidential elections of 7th and 28th October are therefore being held against a tragic backcloth, and are characterized by radicalization and violence.
Spiraling scandals linked to endemic corruption – and under a judicial investigation known as Lava Jato (Operation Car Wash) – together with the marginalization of the moderate candidates, have brought about an unprecedented standoff. On the far left is Fernando Haddad, a former mayor of São Paulo, with the heavy burden of substituting for Lula, who was sentenced to twelve years imprisonment for corruption and money-laundering and declared ineligible on 1st September; his hardline ideology is similar to that of Dilma Rousseff. On the far right is Jair Bolsonaro, a former captain in the parachute regiment who is looks back with nostalgia on the years of military dictatorship and who is leading the polls with 24% of voting intentions, but is fighting for his life after being stabbed on 6th September.
Brazil’s political chaos is only to be expected, for the country brings together all the factors that breed populism. It has seen the worst economic crisis in its history, with a 7.2% fall in GDP between the end of 2014 and the beginning of 2017: average growth since 2010 has peaked at 1.4%, bringing mass unemployment that affects 12.3% of the working population – 13.6 million people. The middle class is disintegrating, with over 20 million Brazilians falling back into poverty. Violence has erupted, undermining society with over 60,000 murders every year. The people are in revolt against their leaders because of corruption, the extent of which has been seen in the Petrobas and Odebrecht scandals. Finally, the institutions are in a state of paralysis, with the destitution of Dilma Rousseff on 31st August 2016 and the inability of Michel Terner (who was also accused of corruption and obstructing justice) to bring about necessary reforms, beginning with the pension system.
The presidential elections are therefore completely out of control. They hang on the denunciation of the ruling class and demagogy that excludes any debate on the major challenges that Brazil is currently facing. Whatever the result, it seems highly unlikely that the winner will manage to lead the country out of crisis, let alone manage to preserve the democratic nature of its institutions.
Brazil has seen a fragile recovery with a 1% growth in 2017 and 1.4% in 2018, brought about by an upturn in the price of oil and raw materials. But there is an accumulation of structural problems which are on their way to becoming insoluble. First of all, Brazil shows all the symptoms that herald a financial crisis, with a budget deficit of 7.4% of GDP, a public debt of 77% of GDP and a foreign debt of 558 billion dollars, causing a fall in the real and liable at any moment to degenerate into a balance of payments crisis and a massive outflow of capital. Secondly, it has grafted a European-style welfare state onto an emerging economy with low levels of production; it is making social payments that are both costly – eating up 55% of public expenditure to the detriment of statutory functions and investment – and inefficient in terms of redistribution, since 10% of the poorest receive 31% of the benefits but 10% of the wealthiest receive 23%. All this weakens governability and delegitimizes democracy, pushing an ever-increasing percentage of the population towards opting for security rather than freedom and to being misled into giving into the temptation to choose a strong man to lead them.
None of the candidates who are in the running seems to be up to the tasks of carrying out the reforms that are necessary in order to bring the public finances back under control, to ensure the survival of the pension system, and to redirect public expenditure toward investment and social expenditure toward the poorest. There is therefore a high risk that the financial markets will have to force through the changes that Brazil’s leaders and people will not have the courage to debate or to undertake. The result: runaway extremism.
It is the moment of truth for Brazil as it hovers between democracy and authoritarian forms of government which could go as far as a return to a form of dictatorship, as was the case between 1964 and 1985. Tipping over into populism would produce a shock wave throughout Latin America, where it accounts for 60% of the economy.
(Column published in Le Point)