Courcy’s Intelligence Brief
Brazil isn't Egypt
A well-placed Courcy’s Intelligence source in Sao Paolo writes that while comparing Brazil with Egypt and Turkey is inevitable it is misplaced. Brazilians have not taken to the streets to overthrow the government. The key points are:
* President Dilma Rousseff is struggling to stay one step ahead of the public mood. Her approval rating has fallen from 65% in March to around 30%. What looked like being a comfortable first-round victory in the 2014 presidential election could now go to a close fight in the second round. Although the protesters did not set out to topple the government, they may have created the conditions for an end to the PT’s spell of power.
* Rousseff presented five proposals for political reform to Congress on 2 July. A commission is to take 90 days to consider these and to decide upon questions to be put to a plebiscite. The supreme electoral court (TSE) says that it needs 70 days to organize and hold a plebiscite. They would then have to be enacted, so it might be difficult to get the reforms in place for the 2014 election.
* Congress is unlikely to be bounced into a quick fix to suit Rousseff’s electoral timetable. However, an intransigent (and unpopular) congress blocking popular executive initiatives could conceivably boost Rousseff ahead of the elections.
* The good news for Rousseff is that as yet few of her rivals have profited to any great extent from her fall in popularity. Voting intentions for the former environment minister Marina Silva are up to 23% from 16%, but she has yet to gather the 500,000 votes necessary to register her new party. Support for the main opposition candidate, Aecio Neves of the PSDB, has risen only three percentage points to 17%.
* One intriguing thought is that the unrest could benefit former president Lula da Silva who remains popular despite his proximity to a corruption scandal.
* The 2013 budget was formulated on the expectation of 4.5% growth for the year. The central bank is now forecasting 2.7%.
* All this suggests that the ratings agency Standard & Poor’s is right to be concerned about popular pressure on fiscal policy ahead of the 2014 elections. S&P has said there could be a further downgrade “if there is a greater sense of intervention in the public sector, which will increase debt levels”.