Professional Documents
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Dilma Rousseff
Dilma Rousseff
Dilma Rousseff
dilma rousseff:
Brazil’s “automatic pilot”
Brazil’s leading presidential candidate plans to maintain the popular policies of lula’s administration
september 2010
dilma rousseff september 2010
special report
By Brian Winter and Natuza Nery TAKING THE SPOTLIGHT: Dilma Rousseff, Brazilian presidential candidate for the Workers’
JUIZ DE FORA, Brazil, September 23 Party, speaks at the Economic Forum in Sao Paulo, May 31, 2010. REUTERS/stringer
Here’s some advice for anyone who meets Dilma Rousseff (aka “Stella.”) “Is Brazil growing (that quickly) now?” she asked sharply.
First, speak quickly. And second, if you’re looking to ingratiate Well, yes, but some economists say...
yourself, it’s probably not a good idea to suggest that major reforms
are needed for Brazil to retain its title as one of the world’s fastest- “But is it growing?”
growing emerging economies.
Yes.
In an interview with Reuters, the woman who is almost certain to be
elected Brazil’s president in October flatly dismissed the need for big “Well, then, it’s possible,” she concluded.
budget cuts or changes to some of the world’s most restrictive labor
laws. Asked if it was possible for Brazil to keep growing at a 7 percent The message was clear, and it was reinforced in interviews with about
annual pace without such reforms, Rousseff shook her head, smiled, a dozen of Rousseff’s top advisers: for better or worse, the 62-year-
and interrupted the question. old former guerrilla leader, who has evolved over time into a highly
pragmatic career civil servant, does not plan major changes to Brazil’s
economic policies if she is elected.
Lula, for his part, has left little doubt that he expects his chosen
successor to hew closely to his policies when he leaves office on Jan.
1. As he told a crowd in August: “If I see something wrong, I’m going
THE CHOSEN ONE: Brazil’s President Luiz Inacio Lula da Silva rallies with his chosen successor, to call my president and say look, there’s a problem here. You can take
Rousseff, on the campaign trail in Osasco, May 20, 2010. REUTERS/PAULO WHITAKER care of it, my child, because I wasn’t able to.”
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dilma rousseff september 2010
Yet fears that Rousseff will govern significantly to the left of Lula --
expressed by some investors and opposition politicians -- seem overdone.
“We’re going to do what we can,” said Fernando Pimentel, a senatorial The daughter of a well-to-do Bulgarian immigrant who fled political
candidate and adviser to Rousseff’s campaign who has known her oppression in his own country, Rousseff joined a radical leftist
since the 1960s, when as teenagers they were both involved in the resistance group known as the Colina shortly after entering the
armed resistance to Brazil’s dictatorship. economics program at the Federal University of Minas Gerais.
“But there are certain areas where you can just turn on the automatic The leftist groups that proliferated throughout Brazil never engaged
pilot,” Pimentel added, citing the finance ministry as an example. in large-scale combat or posed a serious threat to the military
“Brazil is in a stage of tremendous growth.” government. Instead, they consisted primarily of loosely affiliated
cells in urban areas that robbed banks, set off bombs and kidnapped
FROM JAIL, AND TORTURE, TO PUBLIC OFFICE and killed political figures.
Rousseff has downplayed the importance of her activist youth, which Rousseff’s second husband, Carlos Araujo, was a fellow dissident. He said
saw her imprisoned for nearly three years and tortured by her military that her responsibilities consisted primarily of “coordinating” the actions
captors. But the truth is that, while the era did not define her, it is of various cells. As the military cracked down, both went on the run for
critical to understanding her rise in Brazilian politics. months at a time and assumed aliases -- including, in her case, “Stella.”
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dilma rousseff september 2010
her - that she would ever be a But there was no indication that she would ever rise above the
status of mid-level public servant, Dutra and others said. “Nobody
major candidate for anything.” said, nobody thought -- not even her -- that she would ever be a
major candidate for anything,” Dutra said. “She never did anything to
indicate that was her goal.”
“It pushed her to the edge,” Pimentel said.
ON THE NATIONAL STAGE, A CRISIS AWAITS
Even prior to her imprisonment, though, Rousseff had begun displaying
the pragmatic streak that would come to define her career. Pimentel When she was finally given an opportunity on the national stage,
said she “was one of the first among us to realize” that the guerrillas Rousseff seized it -- and began to reveal her true colors as a leader.
were outgunned and badly organized, and would not succeed in
toppling the military.
Indeed, upon her release from jail in 1973, Rousseff never really
looked back. She resumed her studies in economics and completely
gave up hard-line resistance, Araujo said.
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dilma rousseff september 2010
The year was 2003, and Lula had just been elected president on his fourth In the end, Tolmasquim’s more moderate proposal prevailed: a “Dutch
try. The former metalworkers’ union leader, who in previous campaigns auction” system in which private-sector companies bid for projects
had advocated defaulting on Brazil’s debt and nationalizing key industries, based on how low a rate they could provide to Brazilian consumers.
was under intense pressure to demonstrate to panicked financial markets It also provided a legal framework that guaranteed their investments
that he would not undertake radical changes as president. over the long term.
Eager to calm investors before the financial system fell apart, Lula “They called me the neoliberal of the group,” Tolmasquim recalled,
reached into a shallow pool of officials from the moderate wing of his using a term often employed in Latin America to label someone a
Workers’ Party to staff critical posts in his government. That included stooge for private, usually foreign, capital. “But,” he added with a
Rousseff, who had defected only three years prior from a different twinkle in his eye, “I was the one she promoted to executive secretary.”
leftist party based in Rio Grande do Sul.
Lula’s administration has seen Brazil’s electrical capacity expand by about
Lula put her in charge of the energy ministry, where a crisis awaited. 4.4 percent a year, up from 3.9 percent a year in the previous government,
according to official data. Blackouts are no longer a major issue, although
Brazil was still reeling from national electricity shortages, the Brazil’s electricity rates remain among the world’s highest.
consequence of a drought that left Brazil’s hydroelectric dams
depleted, but also decades of underinvestment in more diverse The flip side has been Rousseff’s relationship with Petrobras, Brazil’s
energy sources. The result was widespread rationing that shaved state-run oil company. The company has been in the spotlight since
more than a percentage point off economic growth in 2001. 2007, when it made one of the world’s biggest recent oil finds -- as many
as 50 billion barrels of oil buried beneath a thick layer of salt more than
Rousseff’s task was to lead a “complete overhaul” of the sector to four miles (7 km) under the ocean’s surface. Lula has said the so-called
prevent it from happening again, said Mauricio Tolmasquim, her subsalt reserves could generate enough revenue in coming years to
former No. 2 at the energy ministry. push Brazil into developed-world status if successfully exploited.
A working group of ministry officials gathered. Tolmasquim said that Faced with a potential bonanza, Lula’s government -- with Rousseff
some from the party’s more radical wing advocated a partial reversal as the point person -- has largely rewritten the rules for the country’s
of the free-market reforms of the energy sector in the 1990s, which oil sector. Instead of the old system of auctioning concessions to oil
would have restored the former state-run electricity monopoly fields to companies, the government has proposed a new system
Eletrobras to a more prominent role. under which it owns the oil, and pays companies with the proceeds.
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Faced with what they see as a government power play and an utter
disregard for minority shareholders, many investors have beaten
a path for the door. Petrobras shares have lost about 27 percent
since the start of 2010 -- wiping a whopping $70 billion-plus off the
company’s market value.
different way. it’s naive and Coutinho said he didn’t believe that other state-run enterprises would
an insult to our intelligence “grow massively” under Rousseff.
to think of it as an ordinary “She doesn’t have an ideological tendency to ... favor the public sector
or discriminate against the private sector. She is pragmatic and looks
commodity.” primarily for results,” he said.
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dilma rousseff september 2010
“she’s not rude at all, quite the contrary. but people in the public
sector aren’t used to being asked for results.”
Nearly everyone else in Rousseff’s inner circle echoed that sentiment To this day, Lula has never formally asked her to run, Rousseff says.
in conversations both on and off the record. And during her “It was spontaneous, natural,” she said. “And over time, I just kind of
presidential campaign, Rousseff has again surrounded herself with became a candidate.”
her party’s most market-friendly voices, including Coutinho and Lula’s
first finance minister, Antonio Palocci. There’s another version to the story. It’s unlikely that Rousseff would
have been Lula’s chosen successor if not for multiple corruption
Tolmasquim described Rousseff as a “developmentalist”– concerned scandals during his administration that forced more obvious
primarily with homegrown, job-creating industries and infrastructure candidates, namely former cabinet chief Jose Dirceu and Palocci, to
projects. The main debate, in her mind, is “not state versus private,” resign in 2005 and 2006, respectively.
Tolmasquim said. “It’s ‘Made in Brazil’ versus not.”
“It was like she won the lottery,” said Collares, the former state governor.
The ultimate proof of Rousseff’s attitude toward the state? Araujo, her
ex-husband, points to the reputation she earned in the public sector Rousseff began the campaign as an enigma even within some political
as brusque, even rude, with her subordinates. “Oh, she’s extremely circles in Brasilia. Her name recognition among voters registered in the
demanding,” he said, laughing. “She’s not rude at all, quite the contrary. single digits, and the nomination did not go over well among some in the
But people in the public sector aren’t used to being asked for results.” Workers’ Party who wanted a better-known, more experienced candidate.
“She’s obsessed with efficiency.” That helps explain why, from day one, she has staked her candidacy
on a message of total continuity of Lula’s policies, appearing by his
PROSPERITY NOW, BUT THERE MAY BE TROUBLE AHEAD side at rallies and on TV as often as possible.
As for just how she made her unlikely leap to frontrunning presidential It has been an effective strategy. Under Lula’s mix of responsible fiscal
candidate... well, even Rousseff admits to being a little hazy on that one. management and cash transfer programs to Brazil’s poorest, more
than 20 million Brazilians have escaped poverty since he took office.
She says that Lula began by “joking around” about a possible In a country that was long defined by its massive gap between rich
presidential run -- “the only way that someone who is not thinking and poor, inequality has fallen and a newly empowered lower-middle
about becoming a candidate will get used to the idea,” she says. class has been snapping up cars, homes and TVs in record numbers.
Brazil GDP
1994, the year Brazil introduced the real, proved to be a turning point in Brazil’s economic history.
GDP – percent change from previous year
8
Est.
7 7.4
1
0.0
21/09/10
-1
‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10
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dilma rousseff september 2010
Lula has been, and will remain, a hard act to follow. At a joint rally last
month in Osasco, an industrial suburb of Sao Paulo, Rousseff gave an
awkward, at times rambling catalogue of Lula’s accomplishments. She
then promised to be “the mother of all Brazilians” and concluded her
speech by pledging, at full-throated roar, that “this will be the election
that dignifies the women of our country!”
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dilma rousseff september 2010
Brazil unemployment
Brazil’s unemployment rate has steadily fallen as Latin America’s largest economy booms. This has
resulted in a tight labor market, putting pressure on employers causing workers to demand higher
salaries and more benefits.
Unemployment rate – percent
14
13
12
11
10
21/09/10
7
6.9%
6
2003 2004 2005 2006 2007 2008 2009 2010
“you do major fiscal reform when you have economic crises, not when
you have the country’s international reserves (at record levels).”
The head of Brazil’s main industrial lobby, the National Confederation Meanwhile, Rousseff has ruled out major labor reforms, saying in
of Industry, is among those who warn that such restrictions will speeches she will not touch the rights of Brazilian workers -- who
prevent Brazil from realizing its grand ambitions unless changes are form her party’s constituency.
made. “If there is no change in the country’s business climate, we
won’t transform Brazil into the power and the (world’s) fifth-largest As for the other dream held by some investors -- a major overhaul of Brazil’s
economy as some foresee,” Robson Andrade said. budget that could open up more cash for infrastructure spending by
cutting pension outlays, for example -- Rousseff is even more emphatic.
TAX REFORM? MAYBE. LABOR, FISCAL CHANGES? FORGET IT.
“I won’t do a fiscal reform,” she told Reuters. “You do major fiscal
Among the major reforms, tax policy might have the best chance of reform when you have economic crises, not when you have the
being addressed under Rousseff -- but even there, it may well fall short of country’s international reserves (at record levels), inflation within its
the major overhaul that many businesses are hoping for, her advisers say. target range and decreasing public debt.”
Pimentel, the senatorial candidate, said that Rousseff has told advisers “We will control spending in good and bad times,” she vowed. “And
she will probably send an omnibus tax bill to Congress. But he called we will transform the Brazilian state into a more professional state
this approach the “Holy Grail,” and said Rousseff could also be willing based on meritocracy.”
to make incremental changes to the tax code if that approach proves
more expedient. The risk is that, without finding substantial fiscal savings, Brazil will be
unable to increase the relatively small amount of money it invests in
He compared that strategy -- which he called a “bypass” -- to the infrastructure -- about 2 percent of GDP. By contrast, China spends about
piecemeal approach Rousseff employed to execute infrastructure 16 percent. As is, Brazil’s ports and roads are completely overwhelmed,
projects as Lula’s chief of staff. “You do a bunch of little things, and it and crops often rot before export because of bottlenecks.
has a large effect,” he said.
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dilma rousseff september 2010
Yet, even if Rousseff did want major changes, it’s unclear she could
push them through Congress. Her main coalition partner, the PMDB
BRAZIL
party, is an ideologically disparate group that has shown little ELECTION
enthusiasm for major legislative initiatives under Lula, focusing POLLS
primarily on pork-barrel projects instead. Leading presidential
candidates for the Dilma Rousseff, Jose Serra,
Franklin Martins, Lula’s communications strategist and a close adviser October 3 elections Workers' Party (PT) Brazilian Social
to Rousseff, indicated that she is betting on responsible macroeconomic Former Chief of Staff Democracy Party
President Luiz (PSDB)
management policies that will bring down Brazil’s debt-to-gross Inacio Lula da Silva Former Governor
OPINION POLLS
domestic product ratio from its already low level of 41.7 percent. EVOLUTION (percentage)* state of Sao Paulo
50 50 51 49
47 49
That, in turn, should bring interest rates down from their current level 50
40 41
of 10.75 percent, among the world’s highest. Martins pointed out that 39
36
39
37
40
each full percentage point drop in interest rates generates about $9
36 37 36
billion in fiscal savings on Brazil’s debt payments. “That’s an entire 30 41
Bolsa Familia,” he said, naming Lula’s social program that sends 29 29 30 29
28 27 27 28
cash transfers to poor families. 20
Mar Apr May Jun Jul Aug Aug Aug Sep Sep Sep Sep
26 16 21 30 23 12 20 24 3 9 15 15
Martins says he’s sure that Rousseff will forge her own identity as
Source: Datafolha Estudio R. Carrera para
president. “Anybody who says she’ll be an automatic pilot doesn’t
know Dilma,” he said, laughing.
“Was there chaos?” she asked the crowd.
His other prediction -- that Rousseff would quickly grow into the role
of president, just as she has others throughout her career -- is also “Nooooooo!” they yelled back.
showing signs of coming true.
“Did Brazil grow?”
At the rally in Juiz de Fora, Rousseff looked much more comfortable
than she had at the Osasco speech, working the crowd into a frenzy “Yessssss!”
by singing Lula’s praises.
“Did (Lula) create 10 million jobs?” she asked. But before the audience
She said a new spate of corruption accusations that have shaken her could shout a reply, she yelled one of her own into the microphone:
party were just cynical scare tactics whipped up by the opposition -- “Nooooo! He created 14 million jobs!”
much like predictions that the economy would collapse if Lula was
elected in 2002, she said. Many in the crowd laughed.
Lula lingered backstage for part of the night, watching Rousseff work
the crowd.
Asked why he never actually asked Rousseff to run, Lula thought for
a moment. “Because it worked out,” he said with a smile and a shrug.
And then he bounded on stage, ready to push his chosen successor
one step closer to power.