Lisa McGregor ON OCTOBER 7, 115 million Brazilians cast their ballots in what has been referred to as the "world's biggest electronic election." Voting is obligatory in Brazil, and the technology is modern with advanced security features, providing count results by the following morning.
This, despite the fact that due to the massive size of the country, some electronic ballot boxes must be ferried eight hours by river into the jungle areas and powered by car batteries where there is no electricity. Even though Brazil has one of the highest murder rates in the world, the elections were peaceful and violence-free.
The front-runner in the elections, with 46 per cent of the vote, was Luiz Ignacio 'Lula' da Silva of the leftist Workers Party (PT). Mr. da Silva ran unsuccessfully for President in 1984, 1989, and 1998, but this time, victory is so close he can taste it - and he is sure to be confident, as the run-off elections will be held on his 57th birthday. Lula, as he is commonly known, has always been seen as a man of the people, campaigning in shirtsleeves and getting up close and personal with the masses, but this time around, he got a new image that put him in dapper suits and tempered his radical rhetoric. Not long ago Lula was advocating nationalising all banks, stopping international debt payments, and alignment with the New International Economic Order. During this campaign he made known his new belief that the foreign debt should indeed be paid, and although he made clear his scepticism about the North American Free Trade Area (NAFTA), he stated that he has no problem with free trade as long as it is free trade with equality.
The second place winner was Jose Serra of the incumbent Brazilian Social Democratic Party (PSDB) with 23 per cent of the vote. Mr. Serra, the former Minister of Health, was selected by the current President, Fernando Henrique Cardoso, who has already served two terms and is no longer eligible to run.
Mr. Cardoso was a successful President: He brought hyperinflation under control; stabilised the currency; privatised several inefficient government businesses; made significant investments in education which led to increased school enrolment figures; invested heavily in health, causing a significant decrease in infant mortality rates; and managed to slightly reduce unemployment. However, Mr. Serra seems to have made the same mistake that Al Gore made in the last US Presidential Elections. He could not decide whether to campaign on his party's successes or to distance himself from Mr. Cardoso and present himself as an instrument of change. Instead, he waffled between the two positions, while Lula gained support.
The Socialist Party candidate, Anthony Garotinho placed third with 18 per cent of the vote, and Ciro Gomes of the centre-left Labour Front Party placed fourth with 12 per cent. The rest of the votes were cast for minor parties. As no candidate was able to garner more than 50 per cent of the vote, there will be a run-off election of the top two candidates on October 27. This run-off election will be most interesting, and is being closely watched by international financial interests due to the financial crisis currently under way in Brazil that started in July of this year, following the financial collapse in Argentina (since July Brazil's currency has fallen in value by 37 per cent and the stock markets have also lost significant ground).
The Bush administration in the US has taken a tough stance on bailout packages for struggling nations, saying that these are a waste of taxpayers money - hence the harsh treatment of Argentina. However, with Brazil, the US supported a $30 billion IMF bailout package, stating that Brazil had taken the necessary steps to build a sound economy, but suffered due to Argentinean backlash. While it is true that Brazil was a 'star pupil' of the IMF under President Cardoso, the reason goes beyond that. With its 170 million inhabitants, Brazil is the world's 9th largest economy. If its economy were to collapse, it would not only affect South America, but the global economy as a whole. And even with this generous bailout package, there is still a significant chance that Brazil may not be able to recover and continue servicing its massive US$250 billion debt.
As a result, investors, financial markets, and the IMF would be more comfortable were Mr. Serra to win the elections, as they are confident that he would uphold Brazil's financial obligations. It is felt that Lula would have a harder time implementing the tough reforms necessary, as these would have a negative effect on those who voted for him with hopes of change. This matter is of such concern to the IMF that prior to the first round of elections, IMF representatives met with the four leading candidates and they all signed a memorandum of understanding that the disbursement of the bailout package would be conditional on the government following the bailout plan and meeting the targets set therein.
Since the first round of elections, Mr. Serra has been reiterating that the second round of the elections is not a prolongation of the first, and that the game starts all over again between the two candidates. But this is not a sure matter. Ciro Gomes, the fourth place winner, has formally placed his support behind Lula, and has been in talks with third place winner, Anthony Garotinho, to do the same. The key to Mr. Serra's success may lie in winning the official support of the conservative Liberal Front Party, that has traditionally allied itself to his PSDB party, as well as the other smaller right wing parties, but he has not yet been able to do so.
Some analysts believe that Mr. Serra is actually quite close to Lula in his political thinking. They both advocate a tougher line on trade negotiations, and believe that rich countries should drop their agricultural subsidies that can damage Brazilian exports, before any free trade agreements are signed. Again, the apparent difference is that Mr. Serra will be more willing and able to maintain Brazil's relationship with the IMF and foreign investors.
Although it is likely that Lula will get his birthday wish, and become the next Brazilian President, the matter is still not certain. There is still over a week left to rally the troops in Brazil, and either way, the financial crisis will play a major role in the outcome of the elections -- it will be a contest between those against the current economic model and those who are for it.
Lisa McGregor is a regular contributor who writes on Inter-American issues
