The Business of Governing Brazil

Point of View by Paulo Sotero, director, Brazil Institute, Centerpoint January 2011

Jan 04, 2011

Once discounted as a technocrat and a political puppet of her creator and predecessor Luiz Inacio Lula da Silva, Dilma Rousseff had never occupied elective office before her inauguration as President of Brazil on January 1st. Being the first woman to reach the presidency in Latin America's biggest nation, however, will likely add to her burden of succeeding the most popular Brazilian leader in history.

The business of governing Brazil is first and foremost about putting together and managing a coalition of political parties that span the ideological spectrum and share a voracious appetite for government jobs and public resources.

In such an environment, having the support of two-thirds of Congress, as Rousseff does, may be as much of a curse as a blessing. She has filled about half of the 37-minister cabinet with people already serving under Lula, picked low-profile figures for less important positions, and appointed some well-regarded professionals for key posts—such as Chicago-trained economist Alexandre Tombini as Central Bank Governor.

Wisely, Rousseff assembled an inner cabinet of moderate, competent, and well-regarded advisors to run the government, coordinated under a highly skilled chief of staff, Antonio Palocci.
A strong personality with a famously short temper, Rousseff started to differentiate herself from Lula on foreign policy after the election. A former political prisoner who was tortured in jail, Rousseff has insisted she will not compromise on the defense of human rights. Rousseff has also expressed her interest in developing a closer and more fruitful dialogue with the United States and picked Antonio Patriota, a talented diplomat and former ambassador to the U.S., as foreign minister.

While not a popular move among the other parties of her coalition, Rousseff's immediate challenge is to reduce current public expenditure. Failure to do so will lead inevitably to tighter monetary policy to keep inflation within the target of 4.5 percent. This would slow growth and exacerbate the overvaluation of the currency, thus reducing the international competitiveness of the Brazilian economy.

Other pressing issues include: upgrading the deficient infrastructure of ports, airports, and roads; improving education; and advancing microeconomic reforms, from taxation to customs procedures. Rousseff must also prepare Brazil to host the Soccer World Cup in 2014 and the Summer Olympics in 2016, among other major events, which will keep international attention focused on Brazil.

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