It’s official: Dilma Rousseff is no Lula. The left-wing Brazilian president may have been reelected late last month, but she enjoys nowhere near the popularity that Luiz Inacio Lula de Silva – better known simply as “Lula” – once did. Rousseff managed to squeak by with only 51.6 percent of the vote in a runoff – a far cry from the 61 percent that Lula garnered when he stood for reelection in 2006. And Rousseff’s close shave came despite the fact that Lula came out and campaigned hard for her.
Part of Rousseff’s problem is that she possesses none of the natural charisma and charm of the former president. But Rousseff is different from Lula in other ways as well. While they are both members of the leftist Workers’ Party, Lula avoided following in the far-left steps of Hugo Chavez or Fidel Castro when he was Brazilian president from 2003 to 2011. Lula kept inflation stable, invested in infrastructure, and simplified and reduced taxes – an impressive record for an avowed Socialist. He even balanced the budget for several years. Consequently, Brazil boomed under his leadership, enjoying rapid economic growth and lifting some 20 million people out of extreme poverty. Brazil is now the eight largest economy in the world, a significant achievement.
It’s been a rather different story for the four years that Dilma Rousseff, Lula’s former chief of staff, has been president. Rousseff has been very hostile to the free market, preferring an interventionist model. For example, the former leftist guerilla has set price caps on electricity and subsidized gasoline. She’s also prioritized increasing social welfare spending, rather than on lowering taxes and reducing government interference in order to foster growth. As a result of her flooding the economy with government lucre, inflation in Brazil now stands at an unmanageable 6.75 percent per year.
Despite her penchant for spending, growth has suffered mightily under Rousseff’s leadership. Part of this is due to the slowing Chinese economy, and therefore falling commodity prices. But that doesn’t tell the whole story: a couple of years ago, while neighboring countries like Colombia, Peru, and Chile were growing at more than 5 percent per year, despite suffering from the same macroeconomic conditions, Brazil was chugging along with only 3.5 percent growth. And things are even worse now; Brazil slipped into a recession earlier this year. The stock market, meanwhile, has lost 25 percent of its value since she took office, and the Brazilian currency, the real, has lost about a third of its value against the dollar. It’s little wonder that Brazil’s major cities were riven by major protests this year and last at the country’s deteriorating conditions, or that Rousseff suffered the humiliation of being booed at this summer’s World Cup.
Debt is also becoming a significant problem for Brazil. The topline numbers look reasonable, with the country’s debt to GDP ratio still a fairly healthy looking 60 percent. But this masks real troubles; as the Financial Times recently noted, “Brazil’s high interest rates mean that if debt continues increasing at its current pace, the cost of servicing it would reach over 7 per cent of GDP by 2017 – the peak level for Greece during the eurozone crisis.”
That’s not all; Rousseff’s leadership problems extend beyond her mismanagement of the economy. Her Workers’ Party is also embroiled in a major corruption scandal involving Petrobras, Brazil’s state-run oil company – the largest company in the country. The company’s former chief executive has reportedly alleged that he accepted bribes on inflated contracts,–and passed a portion of the ill-gotten gains to the Workers’ Party. Moreover, “dozens of senior politicians received kickbacks from oil contracts as part of a scheme to buy votes,” reports the Guardian. While Rousseff was not personally implicated in the scandal, it rightly raised troubling questions about the integrity of the political party that she leads. It also called to mind a scandal that nearly brought down Lula’s presidency, when it was discovered in 2005 that a number of Congressional deputies had been bribed to vote a certain way on certain issues. That scandal led to dozens of convictions and resignations.
So given her appalling record, how did Rousseff manage to be reelected? By vilifying her opponents, primarily. In the first round, she dispatched with a strong challenge from Green Party candidate Marina Silva by suggesting (disingenuously) that Silva would eliminate welfare payments to poor families. That was enough to push Silva to third place, and eliminate her from contention after the first round. In the runoff, meanwhile, Rousseff caricatured her pro-free market opponent, Aecio Neves, as a snob and an enemy of the poor. Lula himself got in the act as well, likening Neves’ party to the Nazis while campaigning for Rousseff during the final week of the campaign.
Ultimately, Rousseff’s relentlessly negative campaign was just successful enough for her to squeak by and be reelected by a three point margin. But in the end, Brazil – and Rousseff – will probably suffer for the way she conducted herself during the campaign. She has succeeded in making a country that’s already extremely divided along class and economic lines even more divided. That will prove troublesome in the years ahead, as Rousseff will need a wide coalition to jump-start Brazil’s moribund economy. Lacking the mandate that Lula had, Rousseff will have a much harder time during her second term than her old boss did.