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The Brazilian Leadership Vacuum

By BTI Blog

On Aug. 15, thousands of Brazilians once again took to the streets calling on President Dilma Rousseff to step down admist a stagnating economy and a devastating scandal centered on a recent investigation into a political kickback scheme at the state-run oil firm Petrobas. Last week, the Brazillian federal judge in charge of the investigation asked the Supreme Court to permit further inquiry into whether the president’s former chief of staff, now Brazillian Senator Gleisi Hoffman, received bribes during her time in the Rousseff administration. 

In a conversation with BTI Blog, economist Renato Flôres explains the failure of Brazil’s political leadership, the future of the ruling Partido dos Trabalhadores (PT) party, and what the country needs in order to return to a growth and development path.

BTI Blog: Mr. Flôres, what has been the greatest transformation in Brazilian society in recent decades? 

Renato Flôres: In the past two decades – here I include the eight years of Fernando Cardoso’s presidency, the eight years under President Lula Da Silva, and the first four years under President Dilma Rousseff – there have been enormous advances in the fight against poverty. This started especially during Cardoso’s second term, while Lula put particular emphasis on social programs. The results have been very good. We ended up rescuing a sizeable portion of people living below the poverty line. About 50 percent of the Brazilian population now belongs to the middle class. Of course this development process did not affect all parts of society evenly, with the result that inequality in Brazil has decreased, but not as much as could have been expected. 

BTI Blog: What effects did the expansion of the middle class in Brazil have?

Renato Flôres: The creation of a middle class is very important for the evolution of capitalism because it is in and through the middle class where transformation takes place. Of course people’s demands changed in this process. This new middle class wants better education, better public transportation, better health care – and better public governance. People demand transformation in all three branches of Brazil’s democratic system – the executive, the legislative and the judiciary. 

BTI Blog: What role did Brazil’s ruling party, the PT, play in the country’s transformation?

Renato Flôres: Since coming to power in 2003 with the election of Lula, the PT has put a strong emphasis on social programs. Part of these programs existed before but undoubtedly the number of people involved in them increased enormously during Lula’s presidency, as did the variety of programs – for instance Bolsa Familia (‘Family Allowance’), Fome Zero (‘Zero Hunger’) and Minha Casa Minha Vida (‘My House My Life’). However, it seems the PT is resting on its laurels and the success of the programs has slowed down compared to the beginning. The PT failed, for instance, to take steps that would enable people to leave the Bolsa Familia program by not giving them jobs or enabling them to have a decent life with a minimally sufficient salary outside of the program. So the transformation of each and every program was not very well designed and even less well implemented.

BTI Blog: The Bertelsmann Stiftung’s Transformation Index shows that the Brazilian government faces various challenges with regards to poverty reduction, macroeconomic stability and growth. Which social and economic priorities should the government set?

Renato Flôres: First of all, we need sound economic performance. We need job creation, labor productivity, and ultimately, growth. Unfortunately, the macroeconomic environment deteriorated at the very same time when we needed to move these people to a higher level of development. Today we need to create mechanisms to move this huge mass of people forward. 

BTI Blog: What type of mechanisms are needed?

Flôres: We need to invest in education and provide people with the necessary skills to find a job. We need more schools to provide technical education and focus on the knowledge and skills that people in Brazil’s labor market need. 

BTI Blog: How do the mass protests in 2013 fit into this picture?

Flôres: Some of the protesters belonged to the new middle class. They were frustrated about the poor state of most public services such as transportation or health care. Part of the upper middle class later joined in. An increase in bus fares triggered the first demonstrations in São Paolo in 2013. Protests spread across the country like wildfire. The same thing happened in 2014 and to some extent in 2015, though the most recent protests were also against the president. The interesting thing is that no political leadership or party has been able to seize the opportunity and use this new force to change Brazil’s political system. Nobody was able to channel this force into political transformation. 

BTI Blog: What happened then?

Flôres: The protests lost some focus, but they are still there as you can see from the most recent ones, where the political dimension became conspicuous. Today there is still dissatisfaction in Brazil with the quality of public services. I would even go so far as to say that people feel this way about the quality of what public institutions deliver at all levels. From the highest federal level, which was unable to contain corruption, down to the municipal and city level. This discontent is lurking beneath the surface, and it will play a major role sooner or later. 

BTI Blog: In what ways?

Flôres: Public dissatisfaction is now very widespread, and it has reached large segments of the lower classes. They realize that – particularly in view of rising inflation – the modest progress they have made in recent years is in danger of vanishing into thin air. The PT will need to undergo substantial changes if it wants a reasonable chance of surviving the next round of elections.

BTI Blog: Why has no one been able to channel people’s frustration into political transformation?

Flôres: It is due to a lack of new leadership and the failure of the political class. Brazil currently has very few clever and charismatic leaders with a national vision and a program for the country’s future.

BTI Blog: What do you expect for Brazil’s future?

Flôres: The economic situation has greatly deteriorated. Yet on the plus side, public awareness of the government’s failure to address the country’s challenges continues to grow. The anti-corruption charges against high-ranking public officials in recent years, and all-powerful entrepreneurs in the past months, have shown a healthy separation of powers and an improvement in the quality of the judiciary. I believe we are seeing a slow but distinctly positive trend in Brazil.

******

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Renato G. Flôres Jr. is director of the International Intelligence Unit and professor at the Graduate School of Economics at Fundação Getulio Vargas (FGV) in Rio de Janeiro. A specialist in development economics and international trade, Dr. Flôres advises several governmental and intergovernmental bodies and serves on various boards of international foundations and research centers

[Photo courtesy of Jordi Bernabeu Farrus]

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