Brazil Election: Bolsonaro falls just short of 1st round win

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Sunday, October 7, 2018

Ultra right-wing candidate Jair Bolsonaro was close to winning Brazil's presidential election in the first round on Sunday but failed to top 50% of the votes.

Bolsonaro won with nearly 46.5% of the votes, followed by Fernando Haddad of the leftist workers party (PT) with 28.5%.

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Both will face off in an October 28 runoff vote.

Ciro Gomes also from a leftist party, PDT, finished with 12.5%, while centrist candidate Geraldo Alckmin was fourth with nearly 5%.

UNPRECEDENTED ELECTION CAMPAIGN

The presidential election in Brazil has been marked by two unprecedented events. During most of the final stretch of the campaign Bolsonaro was in a semi-intensive care unit while recovering from surgery after suffering an assassination attempt during a campaign rally in early September.

Meanwhile, Haddad was only confirmed as the PT candidate after an electoral court excluded Lula from the ballot as he serves a 12-year prison term for corruption.

WHO IS BOLSONARO?

A lawmaker since 1991, Bolsonaro is an ex-army captain known for defending Brazil's former military dictatorship. His support comes mostly from conservatives, evangelical Christians, farmers and voters who feel his no-holds-barred approach to security is the only way to deal with rising urban crime, including easing restrictions on gun onwership.

Conservative forces have supported his campaign speeches in which he has come out against gay marriage and defending traditional family values.

Bolsonaro gained important support in recent weeks when the leader of country's largest evangelical church (Igreja Universal), Edir Macedo, confirmed he would vote for the controversial candidate.

On the economic front, Bolsonaro recognized his little knowledge over the issues and announced his intention to name Paulo Guedes as his financial ministry, which was well received by investors.

Guedes, an economist who holds a PhD from University of Chicago and is considered a liberal, supports privatizing state-run companies and lowering corporate taxes. He was one of the founders of investments bank BTG Pactual and currently is a partner at of local investment house BR partners.

To handle infrastructure issues, Bolsonaro plans to name retired military officers to key posts.

In Brazil, the armed forces are often used in certain infrastructure projects, mainly in remote areas where private sector companies have little interest in carrying out works or finish projects that are already underway, such as highway BR-163, the north-south railway and the Angra III nuclear power plant.

According to Bolsonaro's plans, posted on the website of his political party PSL, the candidate seeks to cut bureaucracy and shorten the timetable needed for infrastructure projects to obtain environmental permits.

HADDAD PROFILE

The PT candidate seeks to expand social programs, such as Bolsa Famila, a monthly income program for poor families and also criticized the sky high interest rates charged by Brazilians banks, looking to increase banks competition to reduce loans rates.

Haddad has not indicated who he would appoint as his economic minister.

Although past administrations of the PT were criticized for expanding the country's debt and expenses, Haddad presided over a Sao Paulo city administration considered conservative in terms of budget. The PT is also proposing to use foreign reserves to finance infrastructure projects.

The party wants to use around 10% of Brazil's reserves to create a fund to acquire bonds linked to infrastructure projects, said Ricardo Carneiro, a member of the PT economic team during a recent seminar hosted by financial magazine Exame.

Brazil has US$381bn in foreign reserves.

In recent speeches, Haddad called for kick-starting stalled infrastructure works during the first few months of his mandate.

The PT governed Brazil from 2003 until 2014, during four consecutive terms of Lula and then Dilma Rousseff, before she was impeached. During the party's rule, development bank BNDES played a key role in financing infrastructure projects.

PENSION REFORM

Centrist candidates, with a pro-reform agenda, such as Alckmin, of social democratic party (PSDB), and Henrique Meirelles of ruling MDB failed to reach enough support to advance to the runoff.

With centrist candidates failing, fiscal reforms, considered crucial to curb government debt remain on hold, particularly a controversial pension reform.

The administration of Michel Temer, who took power in mid-2016 after the impeachment of Rousseff, abandoned the pension reform due to a lack of support.

The reform requires strong political support to secure congressional approval since it involves constitutional changes. To pass, at least 308 of the 513 lower house lawmakers must vote in favor in two voting rounds, followed by two rounds of voting in the senate.