Brazil: Six months of Bolsonaro
Just over six months since Brazil’s President entered office, he has already taken the first steps toward opening up the country’s economy and fighting corruption. Still, he faces a fractured, obstinate legislature. Ultimately, the fate of his administration may be linked to the worldwide “culture war” between globalists and nationalists.
In a nutshell
- Brazil’s new president has laid out an ambitious agenda
- He is intent on fighting crime, corruption and economic struggles
- Bolsonaro will have to overcome legislative and political obstacles
The victory of Jair Bolsonaro in Brazil’s 2018 presidential election has been seen as another success of the “national populist” wave. That wave began with Brexit and was followed by the election of Donald Trump in the United States and of Matteo Salvini’s Lega in Italy. National conservatives also rule in Eastern Europe, with Viktor Orban’s Fidesz in Hungary and the Law and Justice party in Poland.
These political shifts show that the confrontation between nationalists and globalists is the new political-ideological divide. In its first six months in office, the Bolsonaro administration has already been challenged by it.
Background
Mr. Bolsonaro’s electoral success was anchored in a popular reaction to the legacy of 15 years of controversial rule under the Partido dos Trabalhadores (PT), or Workers’ Party, led by former President Lula da Silva (2003-2010) and his chosen successor Dilma Rousseff (2011-2016).
Despite being a radical left-wing party that espoused an egalitarian socialism, the PT forged one of the largest and most sophisticated networks of organized crime and kleptocracy Brazil had ever known. It involved some of the party’s leading officials and the country’s top business figures, whose scale and associated economic mismanagement wrecked Latin America’s largest economy.
Many in the public were stunned and disappointed with the PT, forming a decisive group for Mr. Bolsonaro’s election. Corruption and rising crime rates also helped turn out voters against Fernando Haddad, the PT and left-wing coalition candidate.
Most Brazilians were no longer willing to accept the status quo. Though he was a longtime member of parliament, Mr. Bolsonaro was mainly seen as an independent outsider. Voters elected him despite his radical past as a right-wing nationalist and an apologist of the military regime that ruled the country between 1964 and 1985. On top of this, Mr. Bolsonaro won the presidency against a powerful media effort, encompassing domestic left-oriented groups but also establishment international publications like the Financial Times and The Economist. Six months later, these groups have not yet lowered their weapons.
As a candidate, Mr. Bolsonaro laid out an ambitious national-conservative agenda: fighting corruption, crime and insecurity; pushing for a more liberal and pro-market-oriented economy; improving and consolidating the nation’s finances; reversing the decline of middle-class status and purchasing power; and recovering traditional social, religious, family and patriotic values. What has he delivered so far?
Keeping it together
From the start, it was clear this agenda would not be easy to accomplish. Along with the structural causes of Brazil’s current predicament, the new president would face the difficult task of striking a balance within his cabinet and with his myriad, diverse political supporters and constituencies.
The president’s new team includes some real stars in the defense, justice, economy and finance ministries, but they are not necessarily aligned on their respective agendas. Mr. Bolsonaro will have to excel as a maestro coordinating his government, assuring that military officials, market-oriented economic libertarians and Christian conservatives can all work together despite different sensibilities. The public they serve is comprised of different constituencies in a radicalized society, some who have received Mr. Bolsonaro with extreme suspicion and others with high hopes.
Bolsonaro will have to excel as a maestro in coordinating his government.
The new executive office has a strong military stance, with nine members coming from the armed forces, including President Bolsonaro himself, a former army captain, and Vice President General Hamilton Mourao. Headed by General Heleno Ribeiro (a retired and prestigious army general) and Gen. Mourao, several military leaders were Mr. Bolsonaro’s choices for important posts at the Ministries of Defense, Security, Intelligence, Energy and Mines, and Science and Technology. They tend to be highly nationalistic, favoring national sovereignty over natural resources and control of strategic companies.
To the contrary, financial and economic posts were entrusted to more orthodox advocates of economic liberalism, including Minister of Economy Paulo Guedes. These officials are enthusiastic about privatizing public services and state-owned companies to address the country’s economic and financial difficulties.
Tensions between these factions have already surfaced, and there have been some resignations. However, the core of the ruling team – the military, Mr. Guedes and Minister of Justice Sergio Moro – remains intact, united and working together. For now, despite some hiccups, Mr. Bolsonaro has been able to overcome this first test.
Deeper challenges
Tackling crime and insecurity and imposing law and order were some of the main priorities of the Bolsonaro agenda. Brazil is among the most dangerous countries in the world: in 2017, more than 64,000 homicides were reported in the country, more than 175 every day. But making the streets and their outlying slums (favelas) safer is as difficult as it is urgent, especially when it comes to the most deadly and organized forms of crime.
The fight among criminal gangs is currently the main cause of homicides in Brazil, and the police have not yet been able to tackle this problem. In Mr. Bolsonaro’s view, that is in part due to legal constraints that hamper its capabilities, but also because of significant gaps in operational means between criminals and the police/security agents.
The numbers speak for themselves. In Brazil, there are about 650,000 legally purchased arms, half of which are registered in the name of private citizens and the rest held by security personnel. But according to official reports, the actual number of guns is much higher, mostly illegal weapons belonging to drug gangs and paramilitary groups who have no difficulty in acquiring them.
The new president is trying to pass legislation (including a controversial executive order) aimed at empowering law enforcement agents to fight street gangs more effectively. He also intends to relax arms regulations on law-abiding citizens so they can defend themselves against criminals. The president also chose Mr. Moro as the government’s “czar” on these issues and his personal strongman for the Ministry of Justice.
Mr. Moro is a fearless magistrate who conducted “Operacao Lava Jato” (or “Operation Car Wash”), which put several politicians and white-collar criminal businessmen behind bars, including former President Lula da Silva. Mr. Moro has issued a vast set of anti-crime measures: getting tougher with criminals and gang members, better arming the police, giving security agents more operational freedom, and allowing them to act more freely when engaging with gangs.
Despite the legislature’s rejection of some of the government’s initiatives, the level of violence seems to be decreasing in most parts of the country. According to studies from the University of Sao Paulo and the Brazilian Public Security Forum released last April, violent murders fell by around 25 percent in the first two months of 2019 compared to the same period in 2018. Only two states bucked this trend, and four states registered a reduction of more than 30 percent.
The credit owed to the president’s reforms is complicated, particularly since much of his program on crime has not yet been implemented. His struggle in the legislative arena continues and there are few signs it will get easier. But for the time being, the crime figures suggest that some positive effects are starting to emerge, if not entirely from tangible measures then at least from his harsh words echoing in the streets.
But risks persist: hard-line, repressive and militarized approaches to urban security could lead to a more violent reaction by criminal groups, risking civil war in Brazil’s favelas, especially in the short term.
Fighting corruption
President Bolsonaro’s election elicited a strong reaction on the left but also among the classic centrist establishment, which had been involved in high-level corruption. President Michel Temer (2016-2018) has been considered one of the most important political figures involved in the criminal network that has been devastating the country and its economy. Mr. Temer was Ms. Roussef’s vice president, who was chosen to succeed her after her impeachment and is believed to have played a large role in that decision.
Under charges of bribery linked to “Operation Radioactivity,” former President Temer was arrested last March in Sao Paulo. According to prosecutors, he led a criminal organization whose activities ranged from “cartel formation, to active and passive corruption and money laundering.” After being released and then imprisoned again, Mr. Temer is currently free under a writ of habeas corpus approved by the Supreme Court. Nevertheless, the criminal process is still unfolding and Mr. Temer stands as one of the most visible examples of the ongoing fight against corruption and impunity.
Dilma Roussef, in turn, was also charged for illegal funding from state banks to political and cultural institutions. And former president Lula da Silva has also been sentenced to a long prison term for several crimes.
High-profile scandals have allowed Bolsonaro to present himself as an outsider.
This succession of events involving the country’s highest leading political figures, which included presidents and vice presidents being impeached, charged and arrested, shows that the climate of suspicion and wrongdoing that surrounds the Brazilian political elites touches virtually the entire political spectrum. Mr. Lula and Ms. Dilma were the faces of the left-wing PT, while Mr. Temer comes from the center-right Brazilian Democratic Movement (MDB). These events deeply damaged the country’s international image and credibility, but they have allowed Mr. Bolsonaro to take advantage of being perceived as a political outsider.
The big reform
An important and critical reform is the one concerning Brazil’s social security system, the so-called “Previdencia reform.” It is a tremendous task that no government had formerly been able (or willing) to address, but a crucial first step toward improving the country’s public finances.
The costs of the system have been rising continuously since 2003, while revenues coming from workers’ and companies’ contributions tend to decrease, leading to a huge deficit and a ticking time bomb for the federal finances. The annual gap is now close to $53 billion. In 2018, the costs of the Previdencia amounted to near $160 billion, and for 2019 the budget expects a cost of $204 billion. This equals 53.4 percent of the state’s overall budget and three times the total spending on health, education and public security.
Critics of the system also denounce its unfairness. High-ranking officials are entitled to retire earlier and with much better benefits than lower-class workers. The top cadres of the legislative and judiciary branches are some of the highest-paid in the system. A retired member of parliament currently receives 33,600 reais, around $8,500. Veterans and reservists earn an average of 13,700 reais per month or more, compared to 9,000 reais per month for public union employees and less for other workers.
If the Previdencia reform is approved, many of the current benefits will be reduced and some of the implicit values will decrease substantially. Targeted groups are expected to resist these reforms and tension could emerge, especially since the proposed measures will not affect all equally. The government intends to maintain a special regime for public servants, mainly those linked to the armed forces and the security apparatus, a key constituency for Mr. Bolsonaro and the country.
But in the face of a system on the verge of bankruptcy and the country’s tremendous economic and social disparities, a policy of selective double standards risks its own potential success and threatens to exacerbate social discontent in an already fragmented society. There are also structural problems with the ratio of active and retired workers, and a proposed fix by Mr. Guedes has been rejected by the legislature.
Apart from all the issues surrounding the proposed reforms, there are bureaucratic and procedural obstacles to overcome with the Previdencia reform and the government’s general program. Mr. Bolsonaro must find legislative support for his reforms if his campaign promises are to bring tangible results.
Backstage bargaining
Six months in, as expected, Brazil’s fragmented legislature is hardly making Mr. Bolsonaro’s job easy. The Senate, composed of 81 senators, and the Chamber of Deputies, with 513 representatives, make up the National Congress. Both chambers are extremely divided between around 30 contending political parties in the Chamber of Deputies, where Mr. Bolsonaro’s Social Liberal Party (SLP) can only muster 52 seats and where the PT still has 56 seats and remains the biggest party.
In the case of the Previdencia reform, President Bolsonaro needs a two-thirds majority in both houses. It has been a tightrope walk, but an initial victory was won on July 11, when the Chamber of Deputies approved the reform’s general text-base with 379 votes in favor and 131 against. The proposal will now be discussed during negotiations in August, with some major amendments possible, then sent to the Senate only if it is approved. It won’t pass easily, at least without substantial changes or trade-offs in other areas of the government’s agenda.
Forging majorities to pass the government’s projects will be difficult.
The president’s executive order on the liberalization of weapons was also rejected, this time in the Senate (47 votes against 28). Chances were high that the same would happen in the lower house, leading the president to withdraw his initial decree. But the process drags on, as do many others.
Forging working majorities to approve the government’s projects will be a hard challenge that consumes time and, more importantly, forces all players to permanent make concessions and trade amendments that ultimately delay or preclude change from happening.
Stirring up the economy
Despite being the ninth-largest economy in the world, Brazil had only the 161st-fastest growth in gross domestic product (GDP) in 2018. This has been the story since 2010, illustrating the gap between the country’s potential and what has actually been achieved – especially when it comes to a developing country with many of its resources still untapped.
Recent years have been even more sluggish, with an average growth rate of -0.8 percent from 2014 to 2018. The task of rescuing Brazil’s economy from the brink of an even deeper recession, such as the case in 2015 (-3.5 percent growth) and 2016 (-3.3 percent), is urgent, and was at the top of the president’s list of priorities.
Mr. Bolsonaro’s economic agenda has attracted the attention of private investment and international agencies. After he announced his economic team of pro-business and market reformists, Brazil’s stock exchange hit record highs and the country’s currency strengthened against the U.S. dollar. Expectations were running high and markets were excited at the prospects of the liberal-oriented reforms to come. More recently, Brazil’s level of risk was reduced in the Credit Default Swap Index to the lowest level since 2014. But caution remains the keyword, and not without reason.
Brazil’s economy remains weaker than at the beginning of the decade.
Acknowledging the real and sometimes unwritten rules of Brazil’s decision-making process and the obstacles raised by the Congress to the government’s reforms – particularly the social security reform given its potential impact on the country’s finances – soon brought skepticism to the initial positive expectations. This feeling was exacerbated after a series of government blunders, from tension within the administration to a clumsy attempt at state intervention in Brazil’s fuel policy.
The economy remains weaker than at the beginning of the decade and most analysts have trimmed their forecasts, predicting that significant growth may come only after 2020, with GDP getting closer to pre-2014 values only in a five-year period.
One crucial development could help generate optimism. On June 28, with President Bolsonaro arriving in Osaka for the G20 meeting, the free trade agreement between Mercosur and the European Union (EU) was announced. In the words of Mr. Bolsonaro, this “historic” agreement was owed, to a large extent, to the extraordinary work of his diplomatic and economic team. The deal is an important economic and commercial compromise that is expected to benefit Brazilian exporters who will have free access to the European market. The agriculture and agro-industrial domains will be areas to watch, but a general increase in the country’s total exports is likely, contributing to a much needed economic boost.
What more can be expected?
It was believed the first quarter of 2019 would provide the initial insights on whether or not President Bolsonaro would be able to translate popular legitimacy into effective policies.
One of the first conditions for this to happen would be to create the necessary working majorities in the legislative; little would be accomplished without the backing of the National Congress. Over the past six months this has proven to be extremely difficult to achieve. The lack of leadership in Congress has hampered many of the president’s and his team’s initiatives. But Mr. Bolsonaro’s 27 years of legislative experience could ultimately help him turn the game around.
At the end of the day, the belief among experts on Brazilian politics is that the main issue is less about legislative technicalities as it is a broader “cultural war” and partisan divide between nationalists and globalists, one that has parallels in some European countries and the United States.
Brazil’s new president hasn’t escaped this chasm, nor has Sergio Moro, his justice minister. Considered by the left “public enemy number two,” Mr. Moro is one of the cabinet’s most hated members by some in the political and economic establishment. He has been harassed in social media and a campaign of psychological stress has targeted his family. Conspiracy theories against him multiply each day. The last offensive against him was particularly harsh, with Mr. Moro’s adversaries accusing him of unethical behavior following a cyberattack on his personal computer obtaining sensitive information on his anti-corruption activities involving former president Lula da Silva.
No matter what these new political leaders try to achieve, the left and liberal opposition in the media and academia likely reject their proposals. The collapse of the center is undeniable, and both sides of the political spectrum have radicalized. Even for traditionally moderate and intellectually open societies like Brazil, this has created a climate of tension and confrontation that will not soon disappear.
Special research by Carlota Ahrens Teixeira
