Tragedy may reshape Brazil economy, not just vote

August 27, 2014

By Martin Hutchinson and Richard Beales

The authors are Breakingviews columnists. All opinions expressed are their own. 

Add Marina Silva to the challenges facing Dilma Rousseff. Brazil’s president faces a new opposition candidate in October’s election after Eduardo Campos’ death in a plane crash, and Silva looks a far bigger threat. If she ousts Rousseff, which polls show is possible, Brazil could gain economically from less state meddling.

Silva was environment minister under President Luiz Inacio Lula da Silva (no relation) and ran for president on the Green Party ticket in 2010. She looked set to become the Socialist Party’s official candidate for this year’s race on Wednesday. Even before that, a poll on Monday pegged her support at 21 percent, far more than Campos had been achieving.

The poll showed Silva edging out centrist Social Democracy Party candidate Aecio Neves with 20 percent, and that result would force a second-round runoff with Rousseff at 36 percent – which the survey suggested Silva could win. It is early days and Neves has grabbed attention as the financial market favorite, but the scenario makes Silva’s economic ideas suddenly relevant.

She supports the most successful of Lula’s reforms, the Bolsa Familia social welfare program that has helped alleviate Brazil’s notorious poverty. Other left-leaning credentials, including her environmentalist background, will surely meet with more concern at least in the business world, especially among Brazilian resources and agribusiness players.

On the other hand, Silva has long fought special interests and corruption in the nation’s power structure and she isn’t entwined with the influential government-worker unions. That means she could be well placed to tackle two big needed macroeconomic reforms: reining in Brazil’s bloated government, including agencies like state development bank BNDES, and ending the unproductive interference in energy and other sectors in which Rousseff has indulged.

Brazil’s membership of the BRIC group of large, fast-growing economies a decade or so ago and pride in hosting the soccer World Cup this year and the Olympic Games in 2016 have lately been overshadowed by slumping growth, with the government’s forecast of GDP expansion now only 1.8 percent for this year. Brazil’s voters seem to be looking for a fresh approach. The tragedy that killed Campos and brought Silva to the fore may just provide it.

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