Publish in Perspectives - Wednesday, September 10, 2014
PSB presidential candidate Marina Silva's economic agenda emphasizes the need for reforms that would encourage growth and control inflation. (Photo: MarinaSilva.org.br)
BY ROGER F NORIEGA
A closer look at the programs of the three top presidential candidates in Brazil’s presidential elections, scheduled for October 5 (first round) and October 26 (second round if no candidate wins more than 50 percent of the first round).
Maria Osmarina Silva Vaz de Lima (born February 8, 1958) is a Brazilian environmentalist and politician. She was a member of the PT and served as a PT senator before becoming minister of the environment in 2003 under Lula. She resigned from her cabinet post in 2008 and joined the Green Party in 2010 to run as its presidential candidate. She finished third in the first round, winning more than 19 percent of the popular vote.
In April 2014, Eduardo Campos, governor of the state of Pernambuco, announced his presidential candidacy for the PSB, naming Silva his vice-presidential running mate. After Campos's death in a plane crash on August 13, Silva was nominated as the PSB presidential candidate.
Silva’s life story may resonate among those who sympathize with Lula’s rags-to-riches story. She is one of 11 children of rubber-tapper parents, born in the far-western state of Acre. After her parents died when she was 16, a Catholic boarding school took responsibility for her care, taught her to read and write, and introduced her to liberation theology. Later in her life, after nearly dying from heavy-metal poisoning, Silva became an evangelical Christian.
Silva first foray into political activism was as an environmentalist. She was involved in protests against deforestation with Chico Mendes, the famous trade-union leader and environmental activist who was assassinated in 1988. Although Silva is a PSB candidate with a Green Party and PT background, she holds socially conservative positions against gay marriage and abortion.
Only a few weeks after the tragic death of Campos, Silva’s campaign is still developing a political platform. Nevertheless, her campaign has described an economic agenda emphasizing the need for reforms that would encourage growth and control inflation, as achieved by Rousseff’s predecessors.
Silva’s campaign website stresses the need for “[r]eforming the Brazilian state and its management tools . . . to change [Brazil’s] development model,” adding, “The government needs to address the reform of politics, public administration, public policy management, and federalism.” Her campaign cites “the loss of competitiveness and dynamism in the economy” and says Brazil has “a strong economy, which is weakened by the bureaucratic tangle, and an abundance of natural resources, which is wrecked by the absence of policies that encourage their sustainable use.” Her platform promotes the transition to a “low carbon economy, reducing social inequalities and . . . technological innovation in production.”
As minister of the environment, Silva feuded with the powerful Brazilian agricultural industry, which accounts for one-fourth of the country’s economy. However, the private sector now appears reassured that she will adopt a much more business-friendly disposition as president. This optimism—apparent in the enthusiasm in Brazil’s stock market that greeted Silva’s surge in the polls—is based on the reputations of free-market economists and billionaire patrons who are backing the PSB standard-bearer.
These advisers are promoting a platform of orthodox macroeconomic management, fiscal discipline, consistent inflation targeting, and a free-floating exchange rate. University of Cambridge–educated economist Eduardo Giannetti da Fonseca has been careful to praise Lula’s approach while criticizing his successor. These free-market advisers also tout the designation of Beto Albuquerque, an experienced congressman with a probusiness track record, as Silva’s running mate.
Maria Alice Setubal, one of Silva’s principal advisers and confidants, is a member of Brazil’s 12th-wealthiest family, whose banking fortune is estimated at $3.3 billion. Setubal commented during an interview that the PSB candidate “would aim for the government’s 4.5 percent inflation target from the start and would support central bank autonomy to set monetary policy.” She also noted that Silva “is surrounding herself with people who understand the markets, and she is committed to gain the trust of the financial establishment.”
Aecio Neves, the presidential candidate for PSDB, wants to liberalize trade.
Aécio Neves da Cunha (born March 10, 1960) is a Brazilian economist and senator from the southeastern state of Minas Gerais. He served as governor of that state from 2003 to 2010 and as a congressman from 1987 to 2002. Neves began his political career as personal secretary to his grandfather, Tancredo Neves, whose election as president signaled the end of the military dictatorship. Aécio Neves is the presidential candidate for the PSDB.
When Neves became governor of Minas Gerais, the state was practically bankrupt, with an annual deficit of $270 million. However, implementing what he described as “management shock,” he modernized procurement, reformed the bureaucracy, and cut spending; these measures led Minas Gerais out of bankruptcy and ushered in a period of economic prosperity.
As part of his economic platform, Neves pledges to implement many of the policies that turned around his home state. He addresses the need to fight inflation and encourage job creation. He also asserts on his campaign website that “economic development must have a regional context,” with “special treatment through programs and projects” for the “most economically vulnerable regions of Brazil.”
In terms of foreign trade, Neves cites the need to promote a much more vigorous integration of Brazil with the world through “the reduction of technological gaps and with a modernization strategy.” He pledges to reduce the tax burden on exports, simplify and reduce national and ancillary costs, and streamline the laws and bureaucracy regulating foreign trade. It is particularly noteworthy that Neves intends to lay the groundwork for a preferential trade agreement with the United States.
His economic platform includes a detailed plan for modernizing Brazil’s infrastructure: “Planning rationally; assessing costs and benefits; listening to the public, investors and users; executing projects in a competent manner; adopting well-designed projects that embrace best practices; applying regulations with independence and transparency; balancing the interests of distributors and users; and reducing the risks of frequent rule changes.”
In his macroeconomic strategy, Neves outlines the necessity of having a truly autonomous central bank, which he asserts “will be able to maintain an inflation rate of 4.5 percent; reduce public spending; create an environment that protects legal security; and establish an administration that is transparent.”
Neves also proposes simplifying the national tax system by “unifying taxes and contributions levied on the same basis, with respect to federal principles; streamlining the use of credit balances accrued by the tax authorities; and the creation of a single registry for individuals and corporations.”
Dilma Vana Rousseff (born December 14, 1947) is the first woman to serve as president of the Federative Republic of Brazil. She is the nation’s 36th head of state, sworn in to a four-year term on January 1, 2011. In 2010, she won 56 percent of the vote in a runoff versus José Serra of the Brazilian Social Democracy Party (PSDB). Rousseff previously served as minister of mines and energy from 2003 to 2005 and as chief of staff to Luiz Inácio “Lula” da Silva. She is a candidate for reelection, representing the Workers’ Party (PT).
Rousseff was raised in a middle-class family in the southeastern city of Belo Horizonte. She became a socialist in her youth and, in the wake of a 1964 coup, joined various leftist guerrilla organizations. She was imprisoned from 1970 to 1972, during the military dictatorship, and was reportedly tortured.
As president, Rousseff has remained faithful to the economic and social policies of her predecessor. In her reelection campaign, she has doubled down on a statist approach, notwithstanding growing skepticism among Brazilians. Rather than address the economic downturn and public dissatisfaction that has marked her tenure, her party’s platform seeks to remind Brazilians of the past achievements of Lula’s PT government.
In just 12 years the PT and allied parties staged a peaceful social revolution, the widest and most vigorous process of changing the country's history. . . . After these major changes, it is necessary to usher in a new cycle of change, to overcome structural and secular issues that still prevent the full development of a fairer country and to ensure that there will be no setbacks in the important achievements of the last 12 years.
Rather than offer a specific blueprint or any supporting arguments for a new term in office, Rousseff’s platform offers mostly aspirational statements: “Economic strength, the breadth of social policies and productive competitiveness will ensure the sustainability of what has been accomplished.” Rousseff pledges to launch “a new historical cycle of prosperity, opportunity and change.” Her platform mentions reducing inflation and promoting growth, and she has said that economic growth “will be stimulated with the increase in investment rates in the economy and the expansion of a solid and dynamic domestic market, and the expansion of infrastructure investments.”
Rousseff’s economic platform furthermore asserts that “productive competitiveness will be achieved through investment in production and mass consumption; investment in social and economic infrastructure; the reduction of bureaucratic constraints; and investing in education, science, technology and innovation” to build what Rousseff calls a “society of knowledge.”
Her campaign notes that “The expansion and qualification of the internal market and an expansion in exports will lie in the center of the productivity strategy.” The PT’s economic platform also says, without further explanation, that “increasing exports will take place by modernizing Brazil’s industrial capacity, improving the business environment and empowering a more qualified workforce.” The campaign likewise proposes simplifying the tax code and reducing logistics costs and bureaucracy to improve the country’s business environment.
On the campaign trail, Rousseff has been clearer about her social and economic proposals. She has pledged massive new spending on government antipoverty programs, health, education, and housing. In May, Rousseff announced a 10 percent increase in social-welfare transfer payments to the poor, well above the rate of inflation. Furthermore, although public-education outcomes have proven unsatisfactory, she has proposed increasing education spending to 10 percent of GDP, the highest rate of any nation in history.
Roger F. Noriega (firstname.lastname@example.org), a former US ambassador to the Organization of American States and assistant secretary of state for Western Hemisphere affairs (2001–05), is a visiting fellow at the American Enterprise Institute and managing director of Vision Americas LLC, a Washington, DC–based firm with US and foreign clients. He is a member of the board of directors of Brazil Minerals, which operates in Brazil. This column is based on an excerpt from a recent AEI Latin America Outlook report.