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Rubens Barbosa is a senior business adviser based in Sao Paulo, and a popular speaker and writer on global business and trade issues. He served as Brazil’s Ambassador in Washington and London. He has extensive international economic, trade and commercial experience.
The result of last week’s Presidential election in Brazil confirmed the trend indicated by the polls. The candidate with the least rejection won, after a campaign that was characterized by personal attacks and accusations, many fake news and religious disputes, and not by the debate of ideas, programs and proposals to face the great challenges that impede the country's growth. The election was not a contest between the right and the left, but between democracy and authoritarianism. Lula's populism and the ideological radicalism of his party, the PT (Workers’ Party), will have to adapt to this new national political reality. To govern, Lula will have to move pragmatically to the center and not make a PT government.
The new Government will begin under the cloak of political, economic and international uncertainty. Lula must face challenges never seen before in the history of this country: divisions within his party, among allies and with an ideological opposition.
As of 1 January, in order to govern within democratic rules, Lula will have to negotiate with Congress - strengthened by the conservative and Bolsonarist vote – to obtain approval of legislation to face the challenges of the economy, achieve reforms and, above all, to resolve the secret budget issue. The country will continue to be divided, with divergent customs and liberal agendas, and the PT will, for the first time, face fierce and angry opposition.
The stoppage of truck drivers (the Brazilian version of the attack on the Capitol) failed, showing the strength of institutions and the determination of society to respect the result of the polls. Demonstrations were limited and controlled. Institutions will remain strong and avoid more serious crises. Bolsonaro lost the election but Bolsonarism is here to stay, like Trumpism in the US.
Corruption and violence will be high on the agenda and scrutiny and control over both will be very strong, given the importance they had in the election campaign. Poverty, inequality, hunger, health, education will continue as the main structural social priorities, but immediate problems will be present on the first day of the mandate: the disorganization of the State, due to the dismantling of the public service in several areas (education, environment, health, for instance) in the last four years, and the place of Brazil in the world, given the deterioration of the global scene in view of the war crisis in Ukraine as well as the confrontation of the USA against China.
From an economic point of view, the fiscal problem will be one of the main challenges, but it is still a question mark for the future government. The external economic and commercial scenario, with the rise in fuel and food prices, will not help to reduce inflation and a return to sustainable growth. The approval of structural reforms, such as tax and administrative reforms, will show the degree of commitment to progress towards a more dynamic economy. Agribusiness, Bolsonaro's main supporter, will have to be assured that violence in the countryside, with possible occupations of land, should not occur. Policies for reindustrialization will be demanded by the private sector. The discussion of the past on the role of the State to promote development and economic growth will be resumed. Lula will have to find a modus vivendi with the politicians’ initiative to take to the Supreme Court political matters not settled by the National Congress, and to define the role of the military, hopefully, commanded by a civilian in the Ministry of Defense.
Political radicalization can be contained if there is a moderate movement of society and the political class towards a democratic centre. Lula is saying that his Government will go beyond the Workers’ Party and will be ruled by a coalition of centrist parties.
Lula's election will have an immediate positive effect on external perceptions, which could lead to the recovery of credibility, if there are immediate changes in environmental policy. The confirmation of this trend will depend on concrete results in the fight against illegal activities in the Amazon, with the reduction of deforestation, fires and illegal mining. The hesitation towards the Brazilian Government will be significantly reduced in Europe and the USA as long as foreign policy stays away from ideological or partisan radicalism and is pragmatic in the defense of national interests.
In the first public address of the President-elect, after the announcement of the election results, he mentioned the main priorities of his future Government in the foreign area. Lula stressed that Brazil will be back on the international scene with the leading role it enjoyed in the past, with the aim of regaining credibility, predictability and stability to bring back foreign investments. He emphasized that Brazil will seek fairer international trade and resume partnerships with the US and the European Union on new bases. In this context, he mentioned that Brazil is not interested in trade agreements that condemn our country to the eternal role of exporter of commodities and raw materials. His Government will support a new global and United Nations governance, the reform of the United Nations Security Council, with an increase in the number of countries with permanent seats and an end to the right of veto. It will fight hunger and inequality in the world and promote peace. He highlighted the importance of the environment and the protection of the Amazon, in the context of foreign policy. It committed itself to implement policies for monitoring and surveillance in the Amazon, to combat illegal activities in the region and to define policies for the sustainable development of Amazonian communities, and to resume international cooperation for the preservation of forests and indigenous peoples. He stated that he does not want a war for the environment and that Brazil's sovereignty over the Amazon is not in question.
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