Dilma Rousseff re-elected in Brazil: urgent reform and fiscal discipline needed

It was one of the remarkable features of Brazil’s road to “socialism” under the once-revolutionary Workers’ Party (PT) that it mitigated the class tensions and outright hostility from the middle class and business communities that bitterly split left-populist countries like Venezuela under Hugo Chavez. But with lower growth, creaking state services and myriad corruption scandals, Brazil’s massively expanded middle class has fallen out of love with the PT and the presidential election manifested a degree of bitterness not seen in years.

Outgoing Dilma Rousseff, following in the footsteps of the charismatic Luiz Inácio Lula da Silva, "Lula", was re-elected at the weekend after a campaign in which both sides traded accusations of Nazism and corruption. She won by the smallest margin of victory in a presidential election since democracy was re-established in the 1980s after two decades of military rule – 51.6 per cent to 48.4 for her centre-right rival Aécio Neves. The vote reflected a deep geographical and social polarisation between the poor north and wealthier south.

Acknowledging the need for urgent reform, Rousseff told supporters on Sunday night: “I want to be a better president than I’ve been until now.” Her most immediate challenges are likely to be corruption-related – a scandal at the country’s huge state oil company Petrobras which has embroiled many of her MPs, and the urgent need to get private cash out of politics by introducing state funding of parties.

The economic growth that had allowed the party to introduce generous social programmes, is giving her less room for leeway. After growing by as much as 7.5 per cent the year before she took office, it is on track to expand by less than 1 per cent this year.


The first casualty of the tight battle for re-election will be unpopular finance minister Guido Mantega, and Rousseff's replacement of him will be closely watched both within and outside the party for signs of a more fiscally disciplined approach or fidelity to the party's traditional leftist economics.