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Who's next? Brazil's modern presidencial palace, Planalto, in Brasilia. (Photo: Brazil Government)
Waiting for the new president Two guards in front of Colombia's presidential palace, Palacio de Nariño, in Bogota. (Photo: Colombia Government)
Michael Shifter, Inter-American Dialogue; Cynthia Arnson, Wilson Institute and Riordan Roett, SAIS-Johns Hopkins University.
Wednesday, January 17, 2018
Latin America Outlook

Political Outlook: Brazil, Colombia Uncertainty


The outlook of presidential elections in Brazil and Colombia still uncertain.

BY JOACHIM BAMRUD

Multinational companies and institutional investors are closely following the outlook for presidential elections scheduled to be held in Brazil in October and in Colombia in May.

As of today, both appear wide open. While polls show some early favorites, none can claim dominant support, making it harder to predict the outcome.

“Brazil’s October 2018 elections are a long way off, and much could change to shape the electoral scenario,” says Cynthia Arnson, Director of the Latin American Program at the Woodrow Wilson International Center for Scholars.

Michael Shifter, President of the Inter-American Dialogue, agrees.

“Although Brazil is experiencing an incipient economic recovery, its politics are particularly tumultuous, and its outlook is very hard to predict,” he says.  “The October elections will be critical in shaping the country's political direction.”

At stake is the economic recovery and whether the next president will continue the reform agenda of outgoing president Michel Temer.

While Temer has received widespread praise among investors (in contrast to record-low approval ratings among Brazilians in general), his reform agenda appears to have slowed down due to corruption charges against him.

Those charges forced him to water down a widely-anticipated pension reform in order to get congressional backing. Even worse, the reform vote in congress has been repeatedly delayed and last week Standard & Poor's cut Brazil's credit rating further below investment grade in part due to doubts over the reform as well as the October elections, Reuters reports.

The outlook for the pension reform is now further clouded by an apparent rivalry between Finance Minister Henrique Meirelles – the man spearheading Temer’s reforms – and Congress Speaker Rodrigo Maia.

Until recently most polls showed former president Luiz Inácio Lula da Silva as the favorite, followed by rightwing populist Jair Bolsonaro.

However, a new poll among readers of Folha de S. Paulo, Brazil’s largest newspaper, shows São Paulo Governor Geraldo Alckmin, who has the backing of Temer, as the leader, with 23 percent support, followed by Lula with 16 percent.


Among 211 investors surveyed by XP Investimentos, a Sao Paulo-based investment bank, nearly half thought Alckmin would win the election, followed by TV host Luciano Huck and Bolsonaro, Bloomberg reports.

 

Lula would be most disruptive to financial markets, prompting the Sao Paulo stock exchange to drop 23 percent and the real to plummet at least 20 percent, according to a majority in the survey.

 

Yet, for many Brazilians, Lula is remembered as an enormously popular president who rode an economic boom and focused on the social agenda, Shifter points out.

 

In fact, the economy saw its best performance in 25 years under Lula and despite his leftist origins he often followed pragmatic economic policies, including giving then-Central Bank Governor Meirelles a free reign.

 

One major problem for Lula is whether or not he can actually run due to several charges against him. In July 2016, he was sentenced to more than nine years in jail for corruption and money laundering. He appealed, and his trial is now set for next week.

“His eligibility to run again is uncertain, although a judicial appeals process could stretch out for many months,” Arnson says.

And even if he can run, it is not clear that his Workers Party (PT) will be as strong as when he was president for eight years, argues Riordan Roett, Professor and Director, Latin American Studies Program, Western Hemisphere Studies, SAIS-Johns Hopkins University.

The PT has been hit by several corruption scandals as well as the dismal performance of Lula’s handpicked successor Dilma Rousseff as president. Under Rousseff, the economy saw its worst crisis in 25 years, with GDP declining and inflation jumping.

Bolsonaro, a federal deputy who is nostalgic for Brazil's military rule, is capitalizing on widespread public concern with crime and insecurity, Shifter points out. But he is totally unpredictable and would be a wild card in the campaign and as president, Roett warns.

 

“Bolsonaro, a former military officer, [has] as an “outsider” has benefited—perversely—from the lack of credibility of politicians and the political system,” Arnson says.

 

Meanwhile, despite the recent Folha de S. Paulo poll, Alckmin may not be able to garner enough support at a time when many Brazilians favor change.  For one thing, his disapproval ratings are high among general voters, Arnson argues. For another, he will have to contend with a decidedly anti-establishment mood, Shifter points out.  Roett questions whether Alckmin is dynamic enough to respond to the popular demand for an end to corruption and nepotism on the part of the traditional elite.

 

“There is widespread disgust with the political class in Brazil and few politicians remain unscathed by serious corruption allegations, including president Temer,” Shifter says.     

 

COLOMBIA OUTLOOK

 

In Colombia, the election outlook is also seen as highly uncertain.

 

“In 2018, Colombia holds one of its most critical elections in recent history,” Shifter says.   “The context is unique, and the stakes are huge. There is widespread disdain for traditional political parties, and polls show that corruption is the dominant concern.  The political consensus that once distinguished Colombia has broken down, chiefly over the terms of the controversial peace accord between the government and the FARC.”

 

The Colombian political system is witnessing unprecedented fragmentation, with dozens of candidates entering the presidential race, including some whose names are completely unknown,” Arnson points out. 

 

For several years, the defining cleavage of Colombian politics has been the split between outgoing president Juan Manuel Santos and former president Álvaro Uribe over peace negotiations with the FARC guerrillas and the terms of the peace settlement, she says. 

 

“Polarization around the peace accord—which was narrowly defeated in a 2016 plebiscite—dominate political debate and so far, have eclipsed meaningful discussion of the central concerns of the Colombian public:  corruption, unemployment, and the quality of services, especially health care,” Arnson says.  “To the extent that this disconnect is not addressed, the legitimacy of politicians and the political system risk further erosion.  The deteriorating security situation, reflected not only in an astronomic increase in coca cultivation but also in the failure of the government to fill spaces vacated by the FARC with legitimate state authority, is a time bomb.  Failure to reintegrate former guerrilla combatants will reinforce Colombia’s tendency to recycle forms of violence.”
 

Uribe will, through the candidate he ultimately supports, seek to take advantage of the high level of polarization on the FARC peace agreement, Shifter says.  

Although there is a field of over 50 candidates, only four or five of them, leading different coalitions, are viable. 

Sergio Fajardo, a former mayor of Medellin and governor of Antioquia state, has been leading several polls.  

“He enjoys enormous credibility and is seen as honest in a system in which corruption is rampant,” Shifter says. 

Fajardo won widespread local and international praise for turning Medellin from a crime-ridden city to a model city through innovative social programs and improving infrastructure and transparency.

A former mathematician rather than career politician, Fajardo hired a team of technocrats to help him run Medellin, garnering him support across the political spectrum.

Although he is seen as left-of-center he had a good working relationship with then-President Uribe, who is right of-center.

Meanwhile, former vice president German Vargas Lleras should not be underestimated, Shifter says. 

“Even though his support has recently been declining, he retains control of a powerful political machinery,” he says. 

In fact, Vargas Lleras’ party, Cambio Radical, consists of many supporters of Uribe and he could end up winning the former president’s endorsement if his own party’s candidate fails to attract enough support.

Meanwhile, another strong contender is Gustavo Petro, a former leftist mayor of capital Bogota. He has also led several polls, but like Fajardo has failed to dominate any.

And FARC leader Timochenko will be the new party's presidential candidate, though he is polling at just one percent. 

According to a new poll for Caracol Radio y RED+ Noticias, Fajardo is the only leading candidate that has a net favorability rating, whereas both Vargas Lleras and Petro have negative favorability ratings higher than 50 percent of those polled. Fajardo, in contrast, has a 43 percent favorable rating versus a 31 percent negative rating.  

“Whoever wins, governing will be a formidable challenge, Shifter warns.  “2018 will be the first time a Colombian president will not have a majority in congress.  Colombians will have to get used to divided government.”


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