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Rousseff commences changes, but has a long way to go

Fecha:2014/11/27 Autor:Zhou Zhiwei

By Zhou Zhiwei, General Secretary of the Brazil Center of the Institute of Latin American Studies under the Chinese Academy of Social Sciences(CASS)

   Three days after Brazilian President Dilma Rousseff’s narrow re-election victory, Brazil’s central bank surprised investors with a bold interest rate hike of its benchmark Selic rate by 25 basis points to 11.25 percent. This is believed to be a signal of Rousseff’s policy adjustment amid the sharp downturn of the market, indicating a lack of confidence over her economic policies after her re-election. This is just the start of Rousseff echoing her pledges to change that she made in a speech shortly after winning her second term.

   But winning by a very slim margin, and facing a divided Brazil, Rousseff still has a long way to go. To have a better understanding of Rousseff’s focus in the next four years, particularly in terms of foreign policy, CNTV invited Zhou Zhiwei, an expert from the Chinese Academy of Social Sciences to elaborate on it.

   On Oct. 26, 2014, Brazil’s Workers Party (PT) candidate Dilma Rousseff was re-elected for a second term as the country’s president, defeating Aécio Neves of the Social Democratic party (PSDB) by garnering 51.62 percent of the vote. Rousseff’s election victory was the Workers Party’s fourth consecutive win.

   'Reform' was the key word of the 2014 Brazil election. Rousseff and Neves shared similar visions in terms of their willingness to reform and the content of the reform. But the Brazilian voters hold different views on their parties and their governing ideas.

   While the PSDB was in office (1995-2002), Brazil’s economy was transforming. Even though then President Fernando Henrique Cardoso’s 'Plano Real' (Real Plan) reduced the inflation rate from four digits to two, Brazil faced problems such as high inflation, a low growth rate, high unemployment, and the widening gap between the rich and the poor. And Brazil’s poverty rate remained at around 35 percent. Such problems are painful memories that the middle-and-working class Brazilians are struggling to escape from.

   In contrast, during the 12-year rule of the Workers Party (2003-2014), a package of poverty alleviation policies has lifted 40 million people out of poverty. Nearly 30 million Brazilians ascended to the middle class, forming the ‘spindle-shaped’ social structure in Brazil.

   Domestic consumption has become an important pillar of Brazil’s economy since the outbreak of global financial crisis. During this period, its poverty rate decreased from 35.7 percent in 2003 to 15.9 percent in 2012, while the extreme poverty rate fell to 3.5 percent. And despite the insipid economic performance since Rousseff took office, Brazil’s job market has burgeoned and the unemployment has decreased to the lowest level.

   The slim margin of the election result perhaps reflects the voters’ different understandings of the two periods. Most voters are looking forward to ‘reform’, but the majority of them remain in favor of reform with guarantees, rather than reform with unknown costs and risks.

   The slim margin perhaps also reflects that not all voters are confident that Rousseff can adequately deal with the pressure and difficulties that she will face in her second term.

   In the following four years, her biggest challenge is to achieve economic recovery. She also has to ensure that more middle-class Brazilians benefit from social policies, so as to consolidate the ruling foundation of the Workers Party.

   At present, it is impossible for Brazil to restore its rapid economic growth in a short period, because of the deep-rooted domestic constraints and uncertainties of global economy. Besides, Rousseff’s commitment to ‘investment increase’ will undoubtedly raise the risk of deteriorating its fiscal situation, thus affecting the stability of its macro-economy and the restoration of confidence in the market. If she cannot make breakthroughs in these aspects, then when the 2016 Rio Olympics take place, her government may be faced with the crisis of confidence that the government has suffered from for the past two years.

   Foreign policy was not the focus of this election, but it was the area where the two candidates differed most. In Rousseff’s second term, Brazil will follow its 'south-south diplomacy', consolidating the integration of South American region.

   Brazil will also strengthen the economic cooperation among developing countries in Asia and Africa and promote the progress of cooperation mechanism among newly-emerging economies, including BRICS nations and India-Brazil-South Africa Forum (IBSA), so as to elevate Brazil’s influence and status in the system of international decision-making.

   South American integration has been the basis of Brazil’s diplomatic strategy while Workers Party has been in power. It aims to shape South America into a pole in the world’s multi-polarization through the integration of fields such as economy, politics, infrastructure, and security in the continent.

   Even though the sub-regional bloc Mercosul faces trade disputes and the predicament of development, Rousseff will prioritize Mercosul in her future diplomatic policy through solving trade disputes among members and promoting all kinds of cooperation, apart from in the economic and trade fields.

   For the Union of South American Nations (Unasul), instead of putting free trade in the first place, Rousseff should underline the integration of infrastructure, energy, and production chain in South America, and further enhance ‘unity and self-reliance’ in South America.

   In comparison, Rousseff’s re-election is good news for South American integration. And although there are many problems and difficulties in the process, integration in South America tops every South American country’s foreign policy.

   As China has replaced the United States as Brazil’s largest trading partner, the U.S. has become less important for Brazil. And their conflicts in regional and international affairs have deprived the U.S. of high status in Brazil’s diplomacy. For example, during Rousseff’s first term, Brazil and U.S. ties once halted because of cotton subsidy disputes and surveillance issues.

   Rousseff’s estrangement from the U.S. also aroused controversies in Brazil’s political arena. So the primary target of Rousseff’s U.S. policy will be maintaining the normalization of Brazil-U.S. ties. As well as enhancing bilateral cooperation in economy and trade, she will focus on cooperation in education, science, and innovation.

   U.S. President Barack Obama also congratulated Rousseff through a White House press release and a phone conversation after her re-election as Brazil's president, trying to take this opportunity to show the U.S. willingness to reach reconciliation and ease tense bilateral ties after the surveillance scandal.

   But the two countries will keep each other at arm's length because of the differences of their international status. In terms of ties with China, Brazil, on the one hand, hopes to make the best of the economic complementarity between the two countries and to use their common aspirations in global affairs to improve its economic and social development and enhance its international status.

   On the other hand, Brazil expects to take effective measures to counter challenges brought by China in various areas, making China-Brazil ties more favorable to Brazil’s national interests. Rousseff’s re-election is beneficial for the steady growth of the bilateral ties and especially good for multilateral cooperation that includes the two countries.

   In the short and medium terms, the top priority of Brazil’s China policy is to maintain the sustained growth of bilateral trade, expand mutual investment, especially China’s investment in Brazil’s infrastructure, and increase imports of Brazil’s value-added commodities to China. Both countries will also enhance cooperation in space, education, science and technology, innovation, and collaboration in global and economic affairs.

   The Rousseff government believes that China and Brazil share the same international status and interests. So another growth point of future China-Brazil ties is multilateral cooperation in the global scale. Both countries share cooperation platforms such as BRICS, BASIC, G20 Groups, China-CELAC Forum. And their cooperation has become more practical.

   For the moment, the newly emerging countries need active political will to promote cooperation in the global governance system. And such will can be seen in Rousseff’s foreign policy during her first term in office.

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