How to Fix Brazil’s Broken Economy

October 24, 2014

Joshua Kempf and Mark Kennedy – Foreign Policy, 10/23/2014

The last two decades made obvious a life’s-not-fair fact: Big countries can get away with bad economic policy. Size matters to investors, global corporations, and entrepreneurs because a winning payout is large and can justify the costs of bureaucracy, compliance, and corruption.

China, India, and Brazil attract big investor dollars not because they are business paradises — check out their World Bank’s “Doing Business” rankings. To understand how business leaders think, let’s imagine you built a company with 85 percent market share in more business friendly Estonia. Congrats, they’ll say, those size revenues are in a multinational’s second footnote once removed.

Which brings us to Brazil. Despite its numerical advantages, Brazil has stagnated, and is expected to have just 0.4 percent economic growth this year. What’s wrong? Many analysts have pointed out the obvious: Brazil needs to improve its education, healthcare, and infrastructure. Few economists would disagree, but these are deeply rooted problems with decades-long solutions. Brazilians go to the polls on Sunday to select a president. What reforms can be done during one term to unleash Brazil’s charmed bequest, its size? Here’s the policies we think should be on the agenda.

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What Should Brazil’s Next President Do?

October 24, 2014

The New York Times, 10/23/2014

President Dilma Rousseff is facing a runoff on Oct. 26, in one of the most tightly contested presidential elections in Brazil. A surge in support for her main opponent, Aécio Neves, reflects widespread disenchantment among many voters with her and the ruling party.

What should the next leader of Brazil do to jump-start the sluggish economy, improve social services and fix a political system seen as corrupt and dysfunctional?

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Brazil and its backyard

October 24, 2014

The Economist (print edition),  10/25/2014

Like voters in most democracies, Brazilians pay little heed to foreign policy when choosing leaders. Yet the presidential election on October 26th matters not just to Brazil but to the region. Over the past two decades Latin America’s giant has overcome its introversion and wielded growing influence in its backyard. And on foreign policy, as on economics, there is a clear gap between President Dilma Rousseff of the centre-left Workers’ Party (PT), who wants a second term, and her rival, Aécio Neves, of the centre-right Party of Brazilian Social Democracy (PSDB).

Brazil’s greater assertiveness began under Fernando Henrique Cardoso of the PSDB in the 1990s and continued under the PT’s Luiz Inácio Lula da Silva, the president in 2003-10. Both gave importance to the Mercosur trade block (founded by Brazil, Argentina, Paraguay and Uruguay), to South America and to ties with Africa and Asia. Both had reservations about a 34-country Free-Trade Area of the Americas, a plan that Lula helped to kill.

But there were differences, too, partly because of Brazil’s changing circumstances. Lula put far more stress on “south-south” ties and on the BRICs grouping (linking Brazil to Russia, India, China and later South Africa). In Latin America he emphasised “political co-operation”. Relations with the United States were cordial but distant, especially after Lula tried brokering a nuclear deal with Iran which the White House opposed.

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Brazil’s ‘most unpredictable election since return to democracy’

October 23, 2014

Joseph Bamat – France 24, 10/23/2014

An acrimonious and volatile presidential race has entered its final stretch in Brazil, with left-wing incumbent Dilma Rousseff and conservative challenger Aecio Neves running neck and neck.

Over 140 million Brazilians will be voting on Sunday, with Rousseff of the Worker’s Party (PT) fighting to win a second term, and Neves desperate to avoid a fourth consecutive defeat at the ballot box for his centre-right Party of Brazilian Social Democracy (PSDB). Rousseff appears to have regained the momentum just days ahead of the October 26 election, after opinion polls showed she had slipped behind Neves last week. Brazilian polling firm Datafolha revealed on Wednesday that Rousseff was on pace to win 52 percent of the votes that will be cast on Sunday, with Neves set to claim 48 percent support – a margin within the study’s margin of error.

“This election has been marked by unusual political vulnerability,” said Paulo Sotero, the director of the Brazil Institute of the Woodrow Wilson International Center for Scholars. “It’s been the most unpredictable election since the return of democratic elections in 1989 and will remain unpredictable until the end.”

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5 Reasons Why Aecio Neves Should Be Elected The Next President Of Brazil

October 23, 2014

Anderson Antunes – Forbes, 10/22/2014

Twelve years ago Brazilians chose Luiz Inacio Lula da Silva, the first member of the working class to be elected president of Brazil, as the person whom they believed could promote the changes that the country needed in order to become a fairer and better place to live. Lula, who is known by his first name, didn’t disappoint. During his government (2003-2010), Brazil’s economy expanded considerably, although not as much as the world economic growth during the same period, and  it was mostly thanks to China’s appetite for Brazil’s commodities.

Millions of Brazilians were lifted out of poverty, and a new middle class emerged, eager to spend money. During Lula’s eight year term, the number of Brazilians with banking accounts went from 70 million to 115 million, increasing from 40% to 59% the percent of the Brazilian population who maintained a relationship with the country’s financial system. The total number of mortgages went from 37,000 in 2003 to 530,000 last year, while today the equivalent of 60% of the country’s GDP is circulating in the economy in the form of loans. Even the number of Brazilian billionaires increased, from only five in 2003 to 65 this year.

However, during Lula’s last years, inflation became a dangerous distraction and industrial production didn’t grow as much as it should have. Add to that the fact that Lula’s successor, Dilma Rousseff, failed dramatically to keep up his good work, blaming a nonexistent world crisis for her poor performance as the commander-in-chief. Investors who once lined up to put money into Brazil’s economy are now looking to other markets. That should change if Rousseff loses her bid for re-election.

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Brazilians Are Shocked, Shocked at Corruption!

October 21, 2014

Antonio Prata – The New York Times, 10/21/2014

We Brazilians suffer from a curious cognitive dysfunction, which occurs with the same frequency in our population as lactose intolerance does among the Japanese, or the inclination for punning among the English. We have the ability to be outraged by corruption, while engaging in our own petty versions of it.

As the second round of presidential voting approaches on Sunday, this evil is spreading like an epidemic. In bars, on the streets and on social networks, advocates of Dilma Rousseff, the Workers Party candidate for re-election, and Senator Aécio Neves, of the Brazilian Social Democracy Party, never tire of reminding us of the “robberies” that their rivals commit.

Workers Party supporters cite the re-election scandal in which Social Democrats were accused of bribing congressmen to approve a constitutional amendment allowing Fernando Henrique Cardoso to compete again for the presidency in 1998. Social Democrats’ supporters mention the “Mensalão,” a case in which congressmen allied with the Workers Party regularly received money diverted from Luiz Inácio Lula da Silva’s illegal campaign contributions. Those not involved in the party squabbles tend to blame all the politicians, as if the politicians were a separate species, able to corrupt our reputable citizens.

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Neck & neck Brazil presidential race casts doubts on Mercosur, BRICS

October 21, 2014

Mauricio Saverese – RT, 10/21/2014

About a year ago everyone expected an easy ride for President Dilma Rousseff in her reelection campaign. Now, in the final week of Brazil’s election season, she is technically tied with opposition’s Aécio Neves.

About 20 percent of voters, who reject both candidates or seem too tired of politics to show up on October 26, are hearing desperate claims from the incumbent and her antagonist. It is likely Brazilians only know what will happen after the last vote is counted. That uncertainty makes the country’s future a big mystery. And that includes a big chunk of South America’s powerhouse foreign policy.

Neither Rousseff nor Neves want to give away much of what they intend to do if victorious. But the president’s closest allies have given hints. Rousseff’s foreign advisor Marco Aurélio Garcia says “South America is a big asset” and insists Mercosur – the region’s free trade zone – must be strong to keep Brazil’s position as a Latin American spokesman. Neves’ aide Rubens Barbosa, a former ambassador to Washington, says Brazil does better by imploding Mercosur (which includes Venezuela, Brazil, Argentina, Paraguay and Uruguay), so there is a deal with the European Union and diplomacy that is friendlier to the US.

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