After Brazil’s election Diehard Dilma

Nov 1st 2014 Economist

Screen Shot 2014-10-31 at 11.02.10 PMAfter her narrow victory in a divided country, the president must heed opponents as well as supporters

IT WAS hardly a ringing endorsement. After a dirty and divisive campaign, Dilma Rousseff won a second term in Brazil’s presidential election on October 26th by just three percentage points against her centre-right opponent, Aécio Neves (see article). That is by far the narrowest margin in Brazil’s modern electoral history.

If her second term is not to be an even bigger disappointment than her first, Ms Rousseff needs to take heed not just of her supporters but also of those who did not vote for her. They include much of the middle-class, who in 2013 took to the streets in mass protests to demand better public services and less corruption. Mr Neves won easily in much of Brazil’s south-east and south, the country’s economic powerhouse.

Ms Rousseff’s victory is not what this newspaper hoped for—we backed Mr Neves—yet it is no great surprise. Brazil remains a country of searing inequality, and poorer voters are grateful to the ruling Workers’ Party (PT) for the improvement in living standards and opportunities they have enjoyed in its 12 years in office (eight under Luiz Inácio Lula da Silva). The advantages of incumbency, the PT’s formidable machine and its money (some, it seems, stolen from Petrobras, the state-run oil company), and Lula’s rapport with o povo (the people) combined to tip the campaign in Ms Rousseff’s favour.

Nobody but herself to blame  Her performance during her first term, however, did not justify her victory. The legacy she has left herself is a troubled one, which includes recession, inflation above the Central Bank’s target, opaque public accounts, rising public debt and a looming downgrade in Brazil’s credit rating, as well as a current-account deficit that, at 3.7% of GDP, is the widest since 2002 and is financed partly by “hot money” (whose ardour is likely to be cooled by her victory).

Her main job is to sort the economy out. She needs to appoint a competent finance minister, who must be allowed to do the job without interference from the presidential palace, to redouble her timid efforts to attract private investment into infrastructure, and to attempt a tax reform. That she has promised to reform Brazil’s political system is encouraging, but she is not proposing the changes that are really needed: smaller constituencies to make politicians more accountable, and a higher threshold for entry to Congress so as to prevent the endless proliferation of parties (the new Congress will have 28). Without these, her preferred solution of public funding for parties risks bringing democracy into further disrepute.

Damaging though the Petrobras scandal is for the PT, it should be properly investigated. Ms Rousseff might benefit from such a move. When, at the start of her first term, she sacked several ministers accused of corruption she was rewarded with widespread popular approval.

There is a risk that Ms Rousseff chooses a darker road. Some in the PT favour partisan policies, such as curbs on the mass media. Previously a stout defender of freedom of expression, Ms Rousseff wavered on this during the campaign, and her grip on the Brazilian state is tightening. By next year she will have named a majority of supreme-court judges. The danger is that Brazil turns into a micromanaged society in which the state dishes out favours to its clients and allies.

A glance at Venezuela ought to dissuade Ms Rousseff from pursuing such a course. It would not just be a disaster for Brazil; it would also, very likely, weaken her own position. Her allies have only a narrow majority in Congress. A partisan approach would make it harder for her to control it.

That such a bitter election took place peacefully is credit to Brazil. But 16 years of rule by one party is bad for the health of any democracy. Though widely regarded as obstinate, Ms Rousseff insists that she has learned to listen and to change. Let’s hope she means it.