Date
November 01, 2018

Executive Summary

The historic victory of Jair Bolsonaro in the 2018 presidential election is likely to result in an increase in civil unrest and violence during the president-elect's term in office. Bolsonaro has proposed and will likely implement a heavy-handed security strategy, particularly in low-income neighborhoods. As a result, extrajudicial killings and disproportionate use of force by security forces may increase, particularly in Brazil's favelas (shanty towns). Organized crime groups will likely respond to heightened security efforts with increased violence, and homicide rates are expected to rise consequently. Civil unrest, fueled by anti- and pro-Bolsonaro sentiment, will likely escalate in reaction to Bolsonaro's security policies. Nonetheless, markets have reacted positively to a Bolsonaro presidency, but the president-elect will need to sustain Brazil's economic recovery beyond the near-term to curb escalating public dissatisfaction.

 

Key Judgments

  • Bolsonaro's election victory will likely lead to heightened security in major cities, particularly in low-income neighborhoods.
  • The threat of civil unrest may rise as anti- and pro-Bolsonaro groups increase their activity in response to the president-elect's heavy-handed security policies.
  • Markets will likely continue to react positively in the short-term, but the country's ongoing economic recovery may falter if Bolsonaro fails to fix a ballooning public debt burden.
  • Operation Lava Jato (Car Wash), a far-reaching corruption probe, will remain a fixture in Brazilian politics and will likely incite further civil disobedience.

 

Background

Thumbnail
Jair Bolsonaro at a rally in Juiz de Fora in September.

The election results are the culmination of a multi-round fight for the presidency that ultimately came down to a contest between Jair Bolsonaro of the Social Liberal Party (Partido Social Liberal, PSL) and Fernando Haddad of the Workers' Party (Partido dos Trabalhadores, PT). Bolsonaro campaigned on a far-right platform that criticized many progressive sectors of society: women's rights groups and the Lesbian, Gay, Bisexual, Transgender, and Queer (LGBTQ) community were common Bolsonaro targets. While Bolsonaro's initial support base was largely white, educated, and of a higher socio-economic class, he was successful at attracting younger and less-affluent voters in the final months of the election. Haddad, meanwhile, campaigned on the standard left-wing platform of the PT. Haddad's candidacy emerged from the PT's unsuccessful efforts to allow the hugely popular former President Luiz Inácio Lula da Silva to run for office but never managed to achieve Lula's level of popular support.

Lula's inability to run for president was a major factor in Bolsonaro's success, but the history and presence of endemic political corruption also played a major role in the victory. Bolsonaro campaigned on anti-establishment and anti-corruption promises. His opponent, Haddad, failed to dispel the taint that many voters associated with the PT in the wake of corruption allegations targeting party officials. Bolsonaro, in contrast, pledged to purge the country of corrupt politicians; while speaking to a crowd of supporters in the city of São Paulo, Oct. 21, he threatened to imprison Haddad, seizing on the corrupt image of the opposition PT.

Bolsonaro successfully made the purported pro-Venezuelan and anti-democratic views of the PT a core issue of the election, while also emphasizing the PSL's popular proposals to tackle violent crime and improve the economy. In the build-up to the Oct. 28 runoff election, Bolsonaro repudiated some of his more controversial claims and policy pledges. For example, he revoked his promise to withdraw Brazil from the Paris Agreement on climate change. Ultimately, diminishing violent crime was the campaign pledge that most resonated with voters. 

 

Crime and Violence

Bolsonaro's anti-crime rhetoric was central to his campaign for president. After Bolsonaro assumes the presidential mantle in January 2019, it remains very likely that the president-elect will hold firm to his pledge to wage a war on violent crime. This will likely entail more troops on the streets, as well as greater impunity for security forces that shoot and kill suspected criminals. Congress is likely to approve any major anti-crime bill the PSL coalition proposes; according to the Brazilian Forum of Public Safety, the murder rate in 2017 in Brazil was the highest in the country's history at approximately 30 per 100,000 people. Military operations will likely become more common in low-income neighborhoods in major cities such as São Paulo and Rio de Janeiro.

Bolsonaro's security strategy, which may increase violence in the long-term, even if Brazil registers a brief reduction in violence initially, mirrors a security policy already in place in Rio de Janeiro. In February 2018, Congress approved President Michel Temer's decree for military intervention in Rio de Janeiro to quash violent crime. Temer's order has still not been retracted, and thousands of soldiers currently patrol Rio de Janeiro's streets. The military was also granted control of the city's police force for the first time since 1988. The heightened presence of federal troops in major cities will likely be a permanent feature of Bolsonaro's presidency. The collaborative digital platform Fogo Cruzado, which documents armed violence in Brazilian cities, indicated a large increase in firefights in Rio de Janeiro between April and September compared to the same period in 2017.

A public schism surrounding the success of Bolsonaro's war on crime will likely develop in response to security efforts in favelas. The backlash by favela dwellers to previous military-like operations in their neighborhoods is emblematic of the type of resistance that many people in low-income communities will continue to display under Bolsonaro's presidency, even as a significant number of people in those same communities champion Bolsonaro's new security strategies. As the military effort increases in scope in large cities, a greater number of bystanders may be caught in the crossfire between security forces and organized crime groups. If notable activists, such as the recently murdered politician Marielle Franco, whose death sparked widescale protests, continue to be killed, civil unrest will likely reach new heights. Similar to Brazil's experience following former President Dilma Rousseff's impeachment, anti- and pro-Bolsonaro protests will likely become a common feature even before Bolsonaro takes office.

 

Turbulent Economic and Legislative Waters

A fundamental question is whether investor excitement in Bolsonaro's victory will result in long-term economic stability. Markets have reacted positively in anticipation of the liberal economic agenda championed by Bolsonaro's chief economic advisor, Paulo Guedes. Brazilian stocks enjoyed very robust growth in the build-up to the elections, as Bolsonaro began to gain momentum in the polls, and experienced a surge after both the first and second rounds of elections on Oct. 17 and Oct. 28. The major question is whether the current enthusiasm, reflected in the markets, will last.

Bolsonaro's economic agenda, while focused mainly on job creation on the campaign trail, will likely include austerity measures that could drain the economic lifeblood of his base and may increase public dissatisfaction with his presidency. Bolsonaro's economic policy initiatives include comprehensive tax reform and major privatization schemes aimed at reducing the country's public debt by 20 percent. Noting this, Bolsonaro has backtracked on some of his privatization pledges, particularly for state-owned energy companies. While failure to follow through with some of his privatization promises may anger some of Bolsonaro's base, many of his supporters come from a disillusioned populist wave, more preoccupied with violent crime and lack of economic opportunity than broad economic principles.

Dozens of political parties with wildly polarizing agendas have won seats in Congress in elections held alongside the presidential poll and are poised to thwart and dilute Bolsonaro's social and economic agenda. The Brazilian Congress is extremely splintered, with over 30 different parties holding seats in the lower house. This assortment of political differences has traditionally made it extremely difficult for any ruling president to enact major social legislation. That said, security policies, such as the federal intervention decree enacted by Temer in February, are much easier to pass through Congress; the lower house decided in favor of this move in a resounding 340-72 vote. Bolsonaro is expected to struggle to get major social reform passed through Congress, even though he will likely emerge with a majority coalition in January. President Temer has been unable to pass a comprehensive pension reform bill, despite it being a centerpiece of his efforts to combat the country's bloated public debt burden.

Bolsonaro, like Temer before him, will likely fail to implement a noteworthy, yet highly unpopular, deficit-reducing pension bill.When seeking constitutional amendments such as social security reform, Bolsonaro will need support from at least 60 percent of legislators in Congress. This means that he will inevitably concede to demands of centrist members. With both chambers of Congress extremely fragmented, any resulting legislation will likely be a watered-down version of the originally proposed bill. The president-elect will also need to tread lightly to avoid major backlash from vested interests, such as the military, that advocate for a favorable pension system. Ultimately, the expected legislative powerlessness is emblematic of the political framework in Brazil, with multiple parties and candidates possessing veto power and the ability to frustrate lawmaking.

The scale of protest movements and civil unrest will likely depend significantly on how Brazil's economic landscape emerges in the next few years. Brazil has the largest gross debt-to-GDP ratio among emerging markets; according to data by the International Monetary Fund, this debt is only likely to increase in the next few years. For an economy displaying tepid signs of growth following Brazil's emergence from a historic recession, public dissatisfaction may mount in the face of plans for further austerity and stagnation. Nonetheless, as positive signs from reactionary stocks have demonstrated, investor excitement favors a positive economic outlook.

 

Lava Jato Continues

Corruption will likely remain a prominent fixture in Brazilian politics during Bolsonaro's presidency and continue to define levels of civil disobedience and unrest, especially if those close to Bolsonaro become implicated. Bolsonaro's anti-corruption rhetoric was undermined in the days leading up to the election by allegations of campaign finance violations. The alleged violations, involving payments by pro-Bolsonaro businesses to help spread anti-PT propaganda, surfaced in the days leading up to Oct. 28. Also, Bolsonaro's chief economic advisor, Paulo Guedes, is facing fraud allegations involving state-run company pension funds. These allegations did not harm Bolsonaro's image during the campaign; however, if those close to Bolsonaro are charged with malfeasance following his inauguration in January, his public approval will likely fall.

Corruption investigations will likely continue to implicate many of Brazil's political and judicial class. Operation Lava Jato (Car Wash) and other subsequent corruption probes that began in 2014 have incriminated scores of politicians and businesspeople in a continentwide corruption scandal. Many political figures have been charged in cases involving alleged bribes, most notably by the construction conglomerate Odebrecht, for favorable contracts.

 

Conclusion

Anti- and pro-Bolsonaro sentiment will continue to be a dominant feature in the dialogue between politicians and the public. An increase in violence, protests, and civil unrest is likely. Despite this, a possible short-term reduction in violent crime rates may also occur following the implementation of the president-elect's heavy-handed security strategy. Ultimately, Bolsonaro's ability to enact economic and social reform will also determine the levels of crime and public dissatisfaction during his presidency, as the success or failure of such reforms will likely determine the country's long-term economic health. Either way, Bolsonaro's victory is likely to further polarize public discourse in Brazil.