Why Brazil's Rousseff Is in Tears
Days away from the start of the new presidential term, Brazilian media are reporting that President Dilma Rousseff is feeling low and has taken to weeping. Imagine if she had won the October election.
Don't get me wrong. Rousseff eventually came out on top of the balloting for the Oct. 26 runoff vote, just besting Social Democrat Aecio Neves. But winning is not the same as governing.
As a row over Rousseff's slow-motion cabinet reshuffle indicates, she looks poised to preside over an administration that was largely chosen for her, by coalition partners she must indulge but can't stand, and whose appetites and political agendas she doesn't control.
It's not just that Rousseff will have to super-glue a working majority from the 28 political parties in Congress -- 10 alone in her ruling bloc -- week by week. She must also stomach policies she once trashed and defend them to supporters who now feel betrayed.
Start with her pick for finance minister, Joaquim Levy. An orthodox, University of Chicago-trained economist, Levy spent much of his career in government performing fiscal liposuction, first at the National Treasury and then as finance secretary for Rio de Janeiro state.
He returns to Brasilia by way of Banco Bradesco, the country's largest commercial lender, where he tended high-asset clients, much to the horror of the Workers' Party rank and file. Rousseff's "militantes" delighted in her aggressive campaign ads last year showing food disappearing from Brazilian dinner plates, a warning of what would surely transpire if market-friendly types like Levy won the day.
"Brazilians were sold on the idea that bankers were the enemy. Now apparently they're the solution," former finance minister Mailson da Nobrega told me.
Levy's rise heralds a change from the dirigisme of the last four years, when bureaucrats tweaked the economy with fuel price caps, tax breaks and easy money for favored industries, such as carmakers and meatpackers. The dirigiste-in-chief was Guido Mantega, Rousseff's finance minister, whose "creative accounting" Levy has pledged to undo.
"It's important to understand that trying to avert the slowdown in job creation and GDP growth with more fiscal expansion, which has been the practice for some time, no longer has any real traction and would be dangerous," he said Jan. 29, in an interview with Valor Economico.
Levy, tellingly, was not Rousseff's first choice but that of her political mentor, former president Luiz Inacio Lula da Silva, who is credited with rescuing her re-election. Now, with an eye on his own political comeback in 2018, he is said to be nudging her to the right to salvage the tanking economy. "This is Lula's pragmatism," says Nobrega. "He's interested in power, not ideology."
But creator and creature have not always agreed. While Lula took care to compensate his initial Scrooge-like economics with an activist foreign policy and aggressive social spending, Rousseff has been less indulgent to the companheiros. In spite of preserving poverty-busting programs, she has frustrated militant civic groups and now risks alienating unions and public sector employees with cuts to the loss-making social security and pension system.
Levy is not the only conservative in Rousseff's new kitchen. Katia Abreu, a big farm and rancher advocate, and the bane of Brazilian environmentalists, is in line for agriculture minister. Armando Monteiro, Rousseff's pick for the coveted Development Ministry, was head of the National Industry Confederation. Neither hails from the ruling Workers' Party, which has seen its hold on cabinet real estate shrink by the day.
To the uninitiated, this may seem as convoluted as a Brazilian baroque church. Brazil's elections are won on the stump, but its governments are made on marble floors, which tend to expand. Rousseff presides over 39 ministries, up from 34 in the 1990s, and 16 in the early 1980s.
The Lula government kept the plum jobs for the Workers' Party and bought congressional support with monthly payoffs to friends of convenience, inventing the mensalao payola scandal.
And during Rousseff's administration, apparatchiks greased the wheels with campaign funds skimmed from supply contracts for the state oil company, giving way to the Petrolao, a far bigger scam.
Staggered by corruption probes and a feeble economy, Rousseff now faces a second term, having made aides of enemies and enemies of allies. It's enough to bring a leader to tears.
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