Round Two

By+Yu+Lintao

Reelected Brazilian President Dilma Rousseff pledged to boost her countrys economy and advance political reform during her second term in a victory speech soon after the final results of the election were announced on October 26. After taking the most bitterly contested presidential race in the country in over a century， Brazils Iron Lady has seemingly kept a very clear mind about what the tight race means for her and what Brazilians are demanding for the future.

Slim victory

The final result shows that the 66-year-old Rousseff garnered 51.6 percent of the vote in the late October run-off election while her rival， Aecio Neves of the Social Democratic Party （in Portuguese， the Partido Social Democrático， or PSD）， obtained 48.4 percent. Observers noted that such a narrow gap indicates that a high percentage of Brazilian voters are demanding change from the economic slump of Rousseffs first four-year term. However， the 12 years of rule under the left-wing Workers Party （in Portuguese， the Partido dos Trabalhadores， or PT）， to which both Rousseff and her presidential predecessor Luiz Inacio Lula da Silva belong， gained considerable public support for the Iron Ladys second term.

“The sluggish economy in Brazil in recent years has spurred peoples aspirations for change，” said Sun yanfeng， Assistant Director of the Institute for Latin American Studies under the China Institutes of Contemporary International Relations （CICIR）. “In addition， following the expanding of the countrys middle class， the political demands of voters are also changing， which helped PSDs Neves snatch some voters away from Rousseff.”

Brazils economic growth has witnessed a sharp decline over the past four years. In 2010， when then-President Silva turned the reins over to Rousseff， Brazils economic growth rate was at 7.5 percent. Since the latter took office， however， the countrys GDP increased by only 2.7 percent in 2011， 1 percent in 2012 and 2.3 percent in 2013. Brazils central bank forecasts this years figure at just 0.27 percent.

Meanwhile， the inflation rate has been higher than expected since 2010. A recent report from the Brazilian central bank stated that economists at respected financial institutions had elevated this years inflation expectations to 6.45 percent， approaching the governments official target of 6.5 percent.

Despite recent economic woes， the 12-year rule of PT brought tangible rewards to the countrys middle- and low-income people by lifting more than 30 million residents out of poverty， cultivating a large new middle class.

Zhou Zhiwei， a Brazilian studies researcher at the Chinese Academy of Social Sciences， told Beijing Review that PTs carefor-the-people policy most benefited the lower classes， which formed its base of core supporters.

“Many people worried that Neves would follow former President Fernando Henrique Cardosos suit in his economic policies if he came to power，” Zhou said. Though Brazil achieved a relatively rapid economic growth rate in the Cardoso era， the chaotic nature of economic and social order at that time deeply affected the lives of those in middle and lower classes， Zhou added.

Challenges and reform

The near edging out of Rousseff undoubtedly means more challenges for her in the second term. Before the vote， Brazils stock market and currency slumped when polls showed a Rousseff win as likely. Ratings agencies have also warned that a looming credit downgrade is possible unless Rousseff makes hefty spending cuts to correct deficits that have mushroomed in recent months.

“Facing Rousseff now are two major tasks. And the first one is to win back peoples market confidence and investor confidence，” Zhou said.

Zhou noted that while the influence of a global downturn is believed to be a contributing factor to the recession of Brazil， Latin Americas largest economy， more focus should be turned toward internal causes.

“Due to historical reasons and current difficulties including high production costs， severe labor protection regulations and poor infrastructure， it is hard to make a breakthrough in such a short time，” Zhou said.

The heavy fiscal pressure on the Brazilian Government also increases difficulties for the Rousseff administration amidst the current economic hardship， he added.

Sun of the CICIR echoed Zhous concerns. “Improving the economy is without a doubt the priority of Rousseffs second term， as it is closely related to peoples livelihoods and the ruling foundation of PT.”

According to Sun， the priority the new government needs to give to economic revival should be to calibrate its economic policies， win back market confidence and realize sustainable development of the national economy. “Rousseff and her ruling team clearly know that，” he added.

In her victory speech， Rousseff told supporters that the government would take special measures to boost the economy. “We will continue ensuring high levels of employment and the recovery of wages， curbing inflation and fulfilling responsibility in the fiscal field. We will give more impetus to economic activity in all sectors， and particularly in the industrial sector，” the president said.

The other major challenge to Rousseff is the transitioning of social policies through political reform. How to help the middle-class newcomers who have just been lifted out of poverty navigate the governments social programs and help them feel secure in the current economy are among the major issues the new government faces， observers said.

In a certain sense， Zhou noted， Rousseffs PT is a populist party that pursues pro-lower class policies. “However， with the success of anti-poverty programs， the social structure of Brazil is changing with a much larger middle class. Thus， PT should also make changes of its policy to meet the demands of the most people，” he noted.

Sun told Beijing Review that to appease Brazils new middle class， improving public services and investing more in education， innovation， research and development are issues the new government needs to strongly consider in the next four years.

Foreign policy

As the largest country in Latin America， Brazil has been playing a significant role in promoting regional integration， which observers believe will be sped up with the reelection of Rousseff. In the meantime， due to domestic economic problems， the president will need to take a more pragmatic stance when dealing with other emerging economies in her second term.

“Rousseff will be more pragmatic in developing ties with Western countries， especially the United States as Brazil shares more and more economic interests with the West，” Sun told Beijing Review. “She will continue to promote Foreign Trade Association negotiations with the EU， too.”

Following her reelection， in a phone conversation with U.S. President Barack Obama， Rousseff affirmed strengthening ties with the United States as a “priority” for her country.

Bilateral ties between Brazil and the United States took a dive last year following revelations， based on documents leaked by U.S. whistleblower Edward Snowden， of extensive U.S. digital surveillance on foreign leaders， including Rousseff and her advisers. In response， Rousseff canceled a planned trip to the United States in late October 2013.

In regards to China-Brazil relations， however， Sun claimed that Rousseffs reelection is good news as it guarantees the consistency of the Brazilian Governments Chinarelated policies.

Zhou is also optimistic about ChinaBrazil relations over the coming four years.“I believe the two countries will continue their cooperative relations， both bilaterally or under some multilateral cooperation mechanisms，” Zhou said.

In the meantime， Sun noted， “China is a very important economic partner of Brazil. As Brazil faces big domestic economic challenges， it is increasingly likely that the Rousseff administration will further deepen economic cooperation with China.”

China is now Brazils largest trading partner and also its largest export and import markets. Trade volume between the two countries surpassed $90 billion last year， with the figure expected to increase this year. Brazil also enjoyed a trade surplus of $8.7 billion last year.

In addition， observers believe that economic ties between China and Brazil could go far beyond simple trade to include more joint ventures and investment， with Brazil already showing interest in China-funded building projects. Chinese companies relative wealth can help compensate for the shortage of private or public funds in Brazil.

To date， Rousseff has shown increased interest in Chinese investment. During Chinese President Xi Jinpings visit to Brazil in July， Rousseff welcomed broader investment in her country by Chinese enterprises， particularly in the areas of transportation， infrastructure construction， agriculture， information technology， logistics and science and technology innovation.

“In the next four years， the Rousseff administration may request larger investment from China for helping revive the domestic economy，” Zhou told Beijing Review. “She has stressed the importance of improving Brazils investment environment and reforming the taxation system. If these promises are fulfilled in her second term， it will surely provide more room for Chinese investment.”