What to expect from Jair Bolsonaro?

Jair Bolsonaro was courting controversy long before he launched his successful bid for Brazil’s presidency. The far-right former army captain, for years a secondary figure in the Lower House, has been strongly criticized for his very conservative points about women, homosexuals and Afro-descendants.

He has praised the country’s former military government and attacked political correctness. His comments deeply divided voters and, while some expressed a dislike for him, others felt he was the outsider needed to tackle rampant crime and rough up the establishment. This desire for change helped propel him to a victory on the eighth election since the 1998 Constitution, which reestablished the democratic system. Bolsonaro won 55% of the vote and will assume on 1 January.

Mr. Bolsonaro has been dubbed Trump of the Tropics by the Brazilian media. Like the American president, he uses the social platforms to announce ideas and initiatives. These digital channels were fundamental to make him known throughout Brazil in the last two years and to move his name ahead in all electoral polls very quickly.

Social networks are now used by him to announce future decisions and even names of his cabinet, as well as publicizing possible controversial moves such as an eventual exit from Brazil of the Paris Agreement on global warming and a supposed change from the Brazilian embassy from Tel Aviv to Jerusalem.

With a populist discourse, he won support by promising to jail crooked politicians and make it easier for police to shoot drug traffickers. He also focused on last Brazilian economy reports to build his speech.

A failing economy is one of his favorite’s subjects: in the worst recession in its history, GDP per person shrank by 10% in 2014-16 and has yet to recover. The unemployment rate is 12%. The whiff of elite self-dealing and corruption is another grievance. The interlocking investigations known as Lava Jato (Car Wash) have discredited the entire political class. Scores of politicians are under investigation. Michel Temer, who became Brazil’s president in 2016 after his predecessor, Dilma Rousseff, was impeached on unrelated charges, has avoided trial by the Supreme Court (STF) only because congress voted to spare him. Luiz Inácio Lula da Silva, another former president, was jailed for corruption and disqualified from running in the election.

While there is no doubt about a political turnaround he will bring, the names already announced to his office are on the one hand predictable and on the other hand startling.

Paulo Guedes, an economist at the so-called Chicago school where he studied, has been accompanying Bolsonaro since the beginning of presidential campaign and has always been mentioned by the candidate as a “superminister” of the economy.

Guedes advocates a rapid privatization of state-owned companies and deep social security reform as part of a fiscal effort to take back on track the government bills, this way neutralizing the present deficit.

The option for another super ministry to lead Justice and Public Security was a surprise. The future president appointed the judge Sérgio Moro, whose sentences put in jail powerful politicians (including former president Luiz Inácio Lula da Silva) and influent businessmen. Sérgio Moro had his work applauded to the right, center and even (albeit partially) to the left of the national political spectrum and became a national symbol in the fight against corruption.

In addition to a large number of politicians from different backgrounds elected in October, Bolsonaro will count in the House and the Senate with three large support pillars: the politicians linked to the agribusiness sector; the ones connected to groups that defend the expansion of the carrying of firearms; and numerous strongly linked to different conservative religious branches.

Jair Bolsonaro will begin his four-year term (subject to renewal for the same period in general elections of 2022) with great political force.

This favors him on the one hand but also offers an extra challenge: to respond with practical and successful actions able to fulfil the expectations of voters who gave him the victory due to the failure of previous political leaders to combat the violence of large cities and to improve the quality of public services such as education and health. These voters were tired of traditional names of politicians and elected Bolsonaro in the hope of seeing a rapid change in the national scenario, including the resumption of the economy and the creation of jobs.

Therefore, a delay in showing concrete results in those essential fields can lead to a frustration and reversion of expectations in a relatively short period.

In this context, organizations with interests in Brazil should keep an eye on the following likely possibilities:

  1. New investment opportunities in infrastructure and energy business, sanitation due the privatization process;
  2. Agribusiness could be benefited given to possible relaxation by environmental rules;
  3. New discussions about the future of Mercosur, a free block trade involving Argentina, Brazil, Paraguay and Uruguay. Bolsonaro´s idea is not to defend and protect local industry but to expose businesses to more competition. One proposal is to allow Mercosur members more flexibility to negotiate trade deals outside the four-country customs union. Another aims to reduce the group’s common external tariffs as a way to pressure companies to become more competitive;
  4. It is also very likely that the Bolsonaro government will decrease public financing (with favorable conditions) for projects undertaken by private companies.

The election of Bolsonaro indeed will bring change, which was the premise of his campaign.  As this major economy approaches this transition, it will be important to keep a close watch on how these changes develop and can impact your organization, directly or indirectly.