Understanding Brazil's 2014 Presidential Election

UNDERSTANDING BRAZIL'S 2014 PRESIDENTIAL ELECTION: The parties, candidates and issues that will determine Brazil’s future direction Released June 2014

INTRODUCTION Brazil is making news for many reasons this year.

From the World Cup, to national elections or preparations for the 2016 Rio Olympic Games, each topic presents an opportunity for this beautiful and dynamic country to break free of common stereotypes and become an increasingly understood nation.

Whether it's news stories about delays related to World Cup preparations, or public protests related to living standards, it's clear the international press are reporting on Brazil through a somewhat sensationalist lens. What such stories fail to highlight is that these topics are in a sense elements of an even more important event that takes place this fall for all Brazilians: The 2014 Presidential election.

The World Cup and protest movements are actually just two of nine factors we have identified that will influence the outcome of the election, scheduled to take place on October 5, 2014.

Determining Brazil’s next President and evolved vision for the nation will have a long-lasting impact on Brazilian people, the economy and the country as a marketplace for international companies in particular.

At this moment, one thing is clear: Brazilians want change and require a government and leader strong enough to combat corruption and professionally manage public investments.

As our MSLGROUP teams in Brazil and around the world serve as business and communications counselors for a variety of multinational corporations and foreign governments, the upcoming election is of significant importance. MSLGROUP does not work with the Brazilian government or its political parties, allowing us to focus entirely on advocating in the interest of our clients.

In addition to this report, which focuses on a more fundamental understanding of Brazil’s 2014 election, we will be releasing additional commentary, before and after the election, that will delve deeper into topic-specific implications for the future of the country and economy.

Paulo Andreoli Chairman, MSLGROUP Latin America

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With a GDP of around US$ 2.2 trillion, Brazil is the world's seventh largest economy. On October 5th, 2014, around 143 million Brazilians will head to the polls to elect their new president.

Brazil's Federal Presidential Election Process • The first round of presidential voting is held on the first Sunday in October. Election day is a national holiday • If no candidate receives more than a 50% plus one vote majority, then a run-off or second-round voting is held the last Sunday of October • Voting is compulsory between the ages of 18 and 70, resulting in high voter turnout rates of 85% or more More information on Brazil’s electoral process and history can be found here: http://countrystudies.us/brazil/100.htm

The first round will likely see history repeat itself with three political forces dividing the electorate. With shifting alliances nationally, regionally and locally, the outcome is hard to predict.

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The three main national parties include: •

The current party of President Dilma Rousseff, the Workers’ Party (PT) on the left

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The Brazilian Social Democracy Party (PSDB) on the center left

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The Brazilian Socialist Party (PSB), also on the center left.

Worker’s Party (PT)

Brazilian Social Democracy Party (PSDB)

Brazilian Socialist Party (PSB)

Dilma Rousseff

Aécio Neves

Eduardo Campos

By dividing the electorate between three parties and their candidates, it is almost certain that the presidential election will go to a second round, scheduled for October 26.

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Given the country's immense size, elections in Brazil are a significant undertaking:

27 federal units (26 States and the Federal District) and 5,570 municipal regions on a land mass covering 8.5 million km2 (the fifth largest country in the world by size, similar to China at 9.5 million km2, yet with one sixth of China’s population).

The sheer reach of the electoral process, given the low population density in many parts of the country, is a logistical challenge faced by few democracies of this size.

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Brazil

Brazil's voting system was fully computerized in 1996, and in October 2014 around 22 million voters will be identified using biometric information. These systems mean results can be announced just a few hours after polling stations close. In addition to the presidential elections, voters will also choose 513 federal representatives and one third of the Senate's seats (each state has three senators). Elections will also include a vote for state governors and state representatives.

2014

President Dilma Rousseff (PT) and former President Lula da Silva 2014 will be the first presidential election since 1989 in which former President Luiz InĂĄcio Lula da Silva will not be a direct participant (although many assume he will be operating behind the scenes).

Dilma Rousseff of the Worker's Party (or PT), Brazil's first female president, is seeking reelection having been voted into power in 2010. At that time she won the second round of voting with 56.05% of all valid votes, knocking out JosĂŠ Serra, of the PSDB, who collected 43.95% of all votes.

Back in 2010, Rousseff enjoyed the support of 10 smaller parties with varying ideologies. This alliance will not be in place this time around, because new parties have been created in recent years (such as the PSD, Pros and Solidarity parties) and some support has been lost to the Brazilian Socialist Party (PSB) candidate.

Most support for the PT during the past four years has come from the center-right Brazilian Democratic Movement Party (PMDB), guaranteeing attorney Michel Temer the post of

vice-president. He is considered a skilled politician who has a good relationship with members of the opposition. To achieve a majority from her parliamentary base, Rousseff distributed ministerial positions to parties from the left, center and right of the political spectrum. This is likely to continue this year. Additionally President Rousseff will clearly have significant support from major figures in her own party. Former President Lula has promised to accompany her on the campaign trail and to appear on TV programs leading up to the election.

Michel Temer (PMDB) Vice-President

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In spite of not being a PT member from the outset - having joined the party only in 2000 after leaving the Democratic Labor Party (PDT) - President Rousseff has never had to face opposition from her own party. This fact is mainly due to her militant left-wing past, which began during her late teens.

She was imprisoned by the military dictatorship from 1970 to 1972. After her release, she graduated with a degree in Economics and began to work in public administration for the southern state of Rio Grande do Sul. She joined the government in 2003 as the Energy Minister in former President Lula’s first term of office and in 2005 was made Lula’s

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Chief of Staff, after a corruption scandal - the Mesalão - brought down key government figures including the then Chief of Staff, José Dirceu. She is of Bulgarian heritage and has a discreet, personal style. Up until her election she had never been involved in corruption cases, which contributed to her victory in 2010, along with the backing of President Lula. President Rousseff is divorced and has a daughter and one granddaughter.

Opposition

Aécio Neves (PSDB)

Eduardo Campos (PSB)

The main opposition candidate is economist Aécio Neves, who is 54 and the grandson of former president Tancredo Neves. He is a member of the PSDB and was the governor of Minas Gerais state from 2003 to 2010 (Brazil's second-largest electoral college), a federal representative and former president of the Federal Congress. He is currently a Senator. He has solid support from his home state and has always remained steadfastly opposed to the PT. In 2010, he was able to help elect his successor as governor of Minas Gerais.

However, he is not particularly popular in São Paulo, Brazil’s largest electoral state. He is likely to look to São Paulo when choosing a vicepresident in an attempt to boost his candidacy, an approach supported by former president Fernando Henrique Cardoso, the PSDB's strongest supporter. Support will also come from the Democrat Party (DEM) on the right and the Popular Socialist Party (PPS), a moderate left party.

The newcomer in this 2014 campaign is Eduardo Campos (PSB), who stood down as governor of Pernambuco State to stand as a presidential candidate. He is the youngest candidate at 48 and supported the federal government, which was run by the PT, until last year. He is the grandson of Miguel Arraes, a radical leftist leader exiled during the military dictatorship, but has a milder approach to politics. Minister for Science and Technology between 2004 and 2005 in the first Lula administration, he was subsequently elected state governor of Pernambuco in 2006 and then easily re-elected with the former president's support.

Campos is a believer in development and has always pushed for federal funding for his own state.

Not well-known outside Pernambuco, his trump card is his candidate for vice-president, Marina Silva, a former PT senator and Minister of the Environment during the Lula administration, who is well-known internationally for her sustainability credentials.

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Marina Silva, Former Senator Silva’s personal story contributes to her political following and support. She grew up as one of eleven children in a community of poor rubber tappers in the remote western state of Acre. Lacking any formal education and orphaned at age 16, she moved to Rio Branco, the state capital, where she received a Catholic education and worked as a maid. She graduated from university at 26 and became increasingly active promoting workers’ rights and environmental issues.

Marina Silva originally planned to stand as a presidential candidate, attempting to create a new party named Rede (“Network” in Brazilian Portuguese), to support her candidacy. She needed 492,000 signatures from voters in order to gain ratification for the new party from the TSE (Superior Electoral Tribunal). However, only 442,500 signatures were accepted – less than the minimum number required by law – and as a result she decided to throw her support behind Campos.

There was much controversy around her new party’s rejected registration, as tens of thousands of signatures were invalidated at the last moment and some claim this was an effort by the PT party to derail Silva’s political challenge.

In 2010, Marina Silva stood as a candidate for the Green Party and obtained 19.3% of the vote in the first round of the presidential election. This was considered a success for a first attempt at the presidency, but she lagged far behind in the subsequent battle for one of two spots in the second round.

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In theory, any of the 32 parties registered with the TSE could name a presidential candidate, as in previous elections. However, as many parties do not have much in the way of support or infrastructure in every state, their results are marginal and they have little impact on the elections. They are referred to as the "dwarf" parties. The most powerful of these is the far left Socialism and Liberty Party (PSOL), made up of former members of the PT. It appeals to university students and is likely to put forward Randolfe Rodrigues, from Amapá State, as a candidate for Senator, although he is almost unknown to voters nationally.

The other parties could put forward "folkloric" candidates or candidates willing to use the free air time on TV as a platform for future elections.

POLITICS IN BRAZIL

According to the latest presidential election opinion poll of likely votors released by Ibope Inteligencia on May 22nd, President Rousseff had 40% (up from 37% in April), Aécio 20% (up from 14%), and Campos 11% (up from 6%).

points compared with December 2013. He believes that political and economic instability may force President Rousseff’s approval rating down even further over the coming months.

Another recent survey also discovered that around 76% of voters said they want some sort of change.

This number is strikingly close to the response to a similar question asked in 2002, when Fernando Henrique Cardoso (president from 1995-2002) and Luiz Inácio Lula da Silva were vying for the presidency. At that time, 72% of those interviewed also wanted to see change, which was reflected in the result of the election. Political scientist Alberto Carlos Almeida, author of the books A Cabeça do Brasileiro (Mind of the Brazilian) and A Cabeça do Eleitor (Mind of the Voter), says Brazil is in an atypical situation, which he refers to as "political limbo." He also believes that the electoral outlook is uncertain. The analyst referred to figures from the Ibope Research Institute released in February 2014, citing a 39% approval rating for the president, down four percentage (*Vote defined as individuals who are eligible and said they intended to vote on election day.)

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Since the end of March, Dilma's image as an austere and responsible administrator has come under attack after events which took place in 2006 (when she was chairman of the board at Petrobras) recently came to light. In 2006, Petrobras acquired an oil refinery from Astra Oil in Pasadena, Texas USA, with authorization from Dilma.

Petrobras paid USD 360 million (USD 190 million for 50% of the stock and USD 170 million for oil inventories) which was significantly more than the USD 42.5 million Astra Oil had paid the year before for the entire refinery. This figure rose further as the years went by. This was due to a grave error in not noticing a Put Option clause, with mandatory payment for the remaining 50% of the company if the shareholders ended up in litigation, which is what happened in 2008.

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In 2012, the US courts ruled that Petrobras should pay Astra Oil an additional USD 820.5 million, increasing Petrobras' total cost to USD 1.18 billion.

Since the outset, President Rousseff has always denied knowledge of the Put Option clause, but documents revealed by Wikileaks in April this year revealed that the President was supplied with all the necessary information about the contract by the White House. Disclosure of this transaction further undermined the President's relationship with Congress, which now has two active investigations exploring possible criminal activities at Petrobras.

Climate of Uncertainty

Second Round 2014 Voting

A critic of the PT administration, Marco Antonio Villa is a historian and professor at the Federal University of São Carlos and shares his thoughts about the current climate of uncertainty.

Marco Antonio Villa believes that the election will go to a second round between President Rousseff and Neves. He believes that Neves is likely to attract support from Campos, but has doubts about Marina Silva’s position on this support. If Neves wins, Villa believes he will focus mainly on the economy and to reduce the public deficit.

Abroad, he is likely to change Brazil's approach to other Mercosur countries and take a less political and ideological line. However, no analyst has risked forecasting a victory for Campos, who has the least probability, of the three candidates, to win.

• According to the professor, the political winds were blowing in favor of Fernando Henrique Cardoso in 1994 and 1998, particularly because of the Real Plan to strengthen Brazil’s currency.

• 2002 saw a sea change after a number of problems arose during his second term, especially after 2000.

• Villa has noted that in the 2006 elections, Lula managed to distance himself from the "monthly payment scandal," known locally as the “Mensalão,” and built the “Lulism” brand. The professor claims that since then, the PT has been hostage to Lula.

• 2010 was a euphoric year for the Lula camp with GDP rising 7.5% (the previous year GDP had shrunk by 0.3%).

• The situation in 2014 is entirely different and there is a real possibility of change.

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Parliamentary Base

When President Rousseff was sworn into office, she inherited the solid base built up by her predecessor comprised of 10 parties – PT, PMDB, PDT, PCdoB, PSB, PR, PRB, PTN, PSC and PTC – which gave her a large majority in the House: 402 votes against just 111 for the opposition. The Senate was in a similar situation, with a majority of 49 allied Senators out of a total 81.

In exchange for these alliances, the government distributed a number of ministerial portfolios and other positions to parties aligned with the PT, regardless of their idealogy. This resulted in a bloated structure of 24 ministries, as well as 10 secretariats and five ministerial level bodies linked to the president's executive office. These positions were distributed among parties ranging from the far right to the far left, with little attention paid to the actual political ideologies involved. The parties in the strongest positions, the PT and the PMDB, hold the more strategic ministries, such as the Treasury, Justice, Executive Office, Mines and Energy, and Social Security.

The wide range of alliances has created a more robust and stable relationship in the legislature. It was required to guarantee as much free air time as possible for political broadcasts on TV and radio – TV and radio broadcasters are forced to set aside a certain amount of time for party political propaganda – which begin on August 19 and continue until a couple of days prior to the election.

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Alliances of Convenience Unlike other countries where the political party system is more consolidated and hierarchical, party political alliances in Brazil are based to a much greater extent on regional political convenience rather than pragmatic ideological considerations. As such, the PMDB may work with President Dilma on the federal elections while joining up with an opposition party like the PSDB for specific state elections. The Brazilian political party system also allows politicians to switch parties while in office, which may end up weakening or strengthening certain groups. One example is the conservative party Democratas (DEM), which began the legislature with 43 federal representatives but currently has just 26. PSDB began 2011 with 53 representatives in Parliament but will end 2014 with just 43.

New Parties In addition to the customary game of musical chairs by political parties, three new parties have been created since 2011. The most important was the Social Democratic Party (PSD), a center-right party set up by the former mayor of São Paulo, Gilberto Kassab, which can be considered a perfect example of how malleable Brazilian politics can be. He is likely to be a candidate for the São Paulo state governor's position (running against the PT) while supporting Rousseff’s candidacy for President. He is currently supported by 53 Parliamentary representatives of all political hues.

Solidarity (SDD) is another new party which is chaired by union leader and federal representative Paulo Pereira da Silva, who was previously a member of the Democratic Labor Party (PDT), and is represented by 22 federal representatives. The SDD has already announced its support for Neves's candidacy, but is not overtly opposing Rousseff’s current administration.

The final member of this trio of new parties is the center-right Republican Party for Social Order (PROS), whose leaders include the governor of Ceará state, Cid Gomes, and his brother Ciro Gomes, a former government minister and former presidential candidate. In the House of Representatives, the PROS lineup alongside the PP and they jointly command a group of 59 representatives (20 from PROS and 39 from PP).

barriers to derail bill that the federal government was supporting, like the Civil Rights Framework for the Internet (which was approved after lengthy discussions and a number of concessions), and creating a Parliamentary Commission of Inquiry to investigate irregularities at Petrobras.

In the media, some political analysts opined that the PMDB would support President Rousseff, despite the current situation, because the cost of walking away is too high. The PMBD is likely to be a member of the presidential election alliance but will allow the party's state organizations to make their own arrangements.

State Elections

Big Block

According to historian Marco Antonio Villa, the situation at the state level seems easier to read in Sao Paulo, where current governor Geraldo Alckmin (PSDB) will probably be elected, more because he faces weak opponents than for any merit of his own. The same could be said of Minas Gerais, with the possible election of former Governor Antonio Anastasia, from the PSDB, who stepped down in April to focus on Aécio Neves' campaign. In Pernambuco, Campos, the former state governor and presidential candidate, is likely to push through his chosen successor.

In February, based on this patchwork of alliances, there was a "rebellion" in the House of Representatives. This exemplifies what happens when government allies are unhappy or feel that their demands are not being given due consideration. The Brazilian Democratic Movement Party (PMDB) was the driving force behind an informal group of dissatisfied allies, nicknamed the "big block," who began putting up

However, everything is in play in Rio de Janeiro, because the former state governor Sergio Cabral (PMDB) has had quite a turbulent time, and the same can be said for Bahia, the state currently run

by Jaques Wagner (PT). The current governor of Río Grande do Sul, Tarso Genro (PT) has a real chance of taking the elections into the second round.

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A LOOK BACK AT PAST ELECTIONS

After a 25-year gap during the military dictatorship and JosĂŠ Sarney's transitional civil government, Brazil held its first direct presidential elections in 1989, with a second-round victory for Fernando Collor de Mello over Lula. This concluded a transition that began in 1982 with elections for state governments, which also encompassed elections for mayors of Brazil's state capitals in 1985. After Collor took office, Brazil found itself navigating through stormy waters due to the overall lack of economic control. Brazilians saw their savings accounts confiscated and corruption scandals cropped up, leading to major demonstrations in Brazil's biggest cities. These demonstrations were peaceful and no major incidents were recorded. Impeachment proceedings were initiated and President Collor was forced to step down from office, resigning on the eve of his trial, at which point vice-president Itamar Franco took office.

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Real Plan With just two years left in office, President Franco focused his efforts on containing the very high level of inflation and in 1994, he announced the Real Plan, adopting a new currency with a return to parity with the dollar.

As the economy stabilized, the then Minister of the Treasury, Fernando Henrique Cardoso, saw an opportunity to run for the presidency alongside conservative vice presidential candidate Marco Maciel (DEM). The PSDB/DEM alliance won the 1994 presidential election against Lula in the first round. The PT made a strategic error by not supporting the Real Plan, which was supported by a majority of Brazilians.

Political Maneuvering It was at this point that the PT took advantage of the situation to become more pragmatic and amenable to alliances with parties which, up until then, it had viewed as "enemies." PT leaders offered the vice-presidency to businessman José Alencar, a member of the center-right Liberal Party (PL). After three attempts, Lula managed to win the election against his opponent, Jose Serra (PSDB). After taking power, he expanded his political alliances, bringing on board the Brazilian Workers’ Party (PTB).

Fernando Henrique Cardoso (PSDB) Based on the electoral legislation in place at the time, Cardoso would have served as president for five years. However, in a controversial Congressional maneuver, including accusations of "vote buying," President Cardoso changed the rules and created the possibility of re-election for an additional four-year term.

President Cardoso’s first administration is remembered for stabilizing the economy and the currency, reducing inflation, initiating privatization and reopening the door to foreign investment, based on a fictitious foreign-exchange parity. In 1998, President Cardoso faced Lula once again, and won in the first round.

The following years saw some of the initial platforms on which the Real Plan was based (like forced foreign-exchange parity between the Real and the US dollar) start to deteriorate and President Cardoso begin to lose popularity.

José Serra ( PSDB)

The government lost control of part of the economy following a speculative attack on the Real in 1999, which significantly devalued the currency. Interest rates rose to historically high levels and inflation jumped from

1.78% in 1998 to 8.94% in 1999, hitting 12.53% in 2002, the election year.

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The Monthly Payment Scandal: "Mensalão"

José Dirceu (PT)

José Genoino (PT)

In 2005, the biggest corruption scandal in Lula's administration exploded. Known as the "monthly payment scheme," it brought down some of the main leaders of the PT and its allied parties. The scandal involved buying votes from Congressmen and misappropriating public funds as part of a scheme that included a number of banks and advertising agencies. Those dragged into the scandal include people like José Dirceu, the head of the President's executive office and a possible successor to Lula; former PT chairman José Genoino; congressmen Roberto Jefferson (PTB) and Valdemar da Costa Neto (PR), both government allies. Lula's popularity plummeted during the initial months of the scandal, but started to recover in the following year as the government implemented a number of populist policies, like Family Benefit, which distributes income to people living in extreme poverty. As a result, President Lula managed to win re-election against Geraldo Alckmin (PSDB), who enjoyed significant support in São Paulo, but was completely unknown in the north and northeast states of the country, which is the PT's main electoral base.

As President Lula's popularity rose, he faced a few political difficulties during his second term and recommended that Dilma Rousseff, previously Minister of Mines and Energy and the President's Executive Office, be nominated as his successor.

While the "PT monthly payments" trial progressed, the opposition also found itself embroiled in corruption scandals in the Federal District. This had a massive impact on the political ambitions of Governor José Roberto Arruda (DEM), who had been a potential presidential candidate in 2010. At the same time, it was reported that the "PT monthly payments" scandal had originated at the end of the 1990s, and involved former governor Eduardo Azeredo (PSDB) and the same people who stood accused of running the more recent operations.

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Although not personally connected with any of the people involved in the monthly payment scandal, Rousseff was criticized by those of a more conservative ideology because of her clandestine militancy during the dictatorship. However, as both economic and social issues started to turn in their favor, Rousseff and vice-presidential candidate Michel Temer easily won the election in the second round, beating José Serra, whose popularity was shrinking.

9 ELECTION ISSUES TO UNDERSTAND AND MONITOR As in any election, there are issues which may have a greater or lesser effect when voters go to the polls. James Carville, the US political operative, created one of the most universal phrases on what decides an election when he said, "It's the economy, stupid." He was right, but little did he know that in Brazil, with all of its characteristic quirks, certain issues run even deeper.

1. The Economy : HIGH IMPACT

Economic performance does not have the impact one would expect on Brazilian elections. It is very different from mature economies, like the USA, where negative stock market figures, investment banking insurer bankruptcies, high real estate prices, lower growth and falling incomes have a direct effect on how citizens vote. Here, a slowing GDP (2.3% in 2013 and a forecast of 1.5% in 2014) is more likely to affect the election if it is linked to other events, such as a possible electricity crisis (with blackouts), water shortages (because of the drought and lack of investment) and rising unemployment. The first two issues mentioned above are on the government's emergency agenda.

discomfort if the protests become violent. The increasing risk of energy rationing – which played in part in the downfall of then President Fernando Henrique Cardoso in 2002 – and water rationing will affect voters. Amorim concludes that possible problems on the job market would also be a contributing factor.

President Rousseff is considered an interventionist, who deliberately gets involved in running structural sectors of the economy oil, energy and finance. Her approach has had a number of repercussions for state-owned companies in all three areas, one of which was a spectacular drop in corporate profits at the end of last year. Capital markets have reacted badly, with heady speculation on the stock market. The best example of this came on March 19 and 20, on the eve of Ibope's most recent opinion poll. There were rumors that President Rousseff was losing popularity that were not confirmed until after the Datafolha survey results were announced in April, but suspicion was high enough to see the stock of three major state-owned companies rise significantly for the first time in 2014: Petrobras was up 7.8%, Eletrobrás rose 10% and Banco do Brasil gained 10%, in just two days. Shares in stateowned companies are expected to be quite volatile from now until the elections.

Economist Ricardo Amorim, a partner at Ricam Consultoria, says the results of the elections are much more uncertain than opinion polls suggest, especially if we look at specific domestic issues.

The likelihood of further protests during the World Cup, which is being held just three months prior to the elections, could cause the government serious

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2. Family Benefit : HIGH IMPACT

3. World Cup : MID-LEVEL IMPACT

This is a federal government welfare program which distributes between 70 BRL (USD 30) and 200 BRL (USD 90) per month (depending on the number of children) to families living in extreme poverty. Launched in 2003, it has so far benefited around 36 million people, principally in the north and northeast regions of the country. Although criticized by the opposition, not a single candidate proposed ending the program in either the 2006 or 2010 elections because of its widespread popularity. According to political analysts, this is the PT's trump card. Campos and Neves are expected to face difficulties reaching out to poorer voters. Historian Marco Antonio Villa said that if there is any likelihood that Neves and President Rousseff are to face off in a second round of voting, there may be rumors during the campaign that the family benefit program will be eliminated, which will consequently have repercussions among poorer voters.

Brazil is expected to practically come to a standstill during the World Cup and many host cities are considering if they should declare public holidays on the days that Brazil plays matches.

Nobody is sure how the World Cup will impact the elections. In 2002, Brazil won the competition for the fifth time, but this did not help boost the PSDB presidential candidate's popularity. In 2006, Brazil was eliminated before the semifinals, but frustration with the loss was not reflected in the polls.

However, the 2014 World Cup brings with it a number of specific issues. First, it is being held in Brazil and many people are upset about the high cost of hosting the event, which has diverted investment away from essential sectors such as education, health, transport and infrastructure.

Political scientist Alberto Carlos Almeida said that if Brazil exits the tournament early, this could have an impact on the elections, potentially leaving behind the sensation that Brazil organized the party, but everyone else had all the fun.

Brazil is also preparing for the 2016 Rio Olympic Games, which is also frequently in the news for schedule delays and cost overruns.

Image Credit: SPOT_MuralEventoDaPompeia

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4. Lula Factor : MEDIUM IMPACT

5. Public Demonstrations : MEDIUM TO HIGH IMPACT

In 2010, Lula presented Rousseff to the country and was directly responsible for her being elected.

Two years later, he nominated Education Minister Fernando Haddad as a candidate for the mayor of SĂŁo Paulo, and was also successful. At the end of 2011, he was diagnosed with cancer of the larynx and was forced to cut back on his political activities.

Although he is still popular, Lula is likely to have less influence than in 2010. However, it is widely acknowledged now that he still has a relatively strong following in the electorate. According to Datafolha's most recent survey, 37% of interviewees said they would vote for a candidate supported by the former president, compared with 35% who would not vote for any candidate he supports. Despite these figures, Alberto Almeida believes that people will vote for Rousseff in 2014 more for her personal qualities rather than any direct association with the former president.

In June of last year, Brazil's major cities saw a number of demonstrations directed at politicians who were vigorously criticized, causing alarm and debate across the country. The demonstrations were fueled by a wide range of concerns, with people protesting against the lack of healthcare, transportation, education and against political corruption. The protests took place at the same time as FIFA’s Confederations Cup. There were clashes with the police around the stadiums of the six host cities, however none of the matches were disrupted. President Rousseff was booed during the opening game and decided to not attend the final. The federal and state governments reinforced policing to ensure public order and prevent more serious consequences. There were no serious injuries or deaths during the demonstrations.

There is some expectation that further demonstrations will be held during the World Cup and they will have a greater or lesser impact on voters depending on how widespread and popular they are. There is a consensus that the three months between the World Cup and the presidential elections will be a chance to cool off and any demonstrations that do occur are unlikely to have a decisive impact on the vote. Additionally, some believe that any demonstrations held during the World Cup will not be as big as those which occurred in June. Furthermore, there is no "surprise factor" because the government's intelligence services have been forewarned.

Image Credit: Will Rodrigues / Shutterstock.com

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6. Free Party Political Broadcasts : HIGH IMPACT

All candidates are allowed unpaid airtime on TV and radio for political party purposes. The amount of exposure each party receives depends on the number of representatives it has in Congress. This increases the importance of political party coalitions. In other words, the larger the coalition, the more free airtime it will have on TV and radio for political campaign broadcasting. This does not necessarily guarantee a good result. In 1989, the then PMDB candidate Ulysses Guimarães had the most free airtime, but finished the election in sixth place. Today, the most important factor affecting political broadcasts is how creative can marketing managers be in finding new ways to directly interact with voters.

According to a recent Ibope survey, 76% of Brazilians prefer political broadcasts on TV, making political campaigns sophisticated marketing tools that are now being further reinforced by the Internet and social media. The free broadcasts will run from August 19 until October 2. Political analysts see these broadcasts as the cornerstone of electoral advertising.

Image Credit: SPOT_MuralEventoDaPompeia

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7. Monthly Payments Scandal : LOW IMPACT The arrest and incarceration of well-known people accused of running the "monthly payments scandal" is unlikely to have an impact, according to political scientists. If the presidential elections had been held in 2012, when the Mensalão trial began, it would probably have had a different result. The sentences handed out to the more significant of those accused had huge repercussions in the national media, as well as overseas. However, there were no real effects on the municipal elections held that year. The PT’s candidate, the exeducation minister, Fernando Haddad, became mayor of São Paulo, Brazil’s largest and most populous city, after to claim the beating José Serra, who Rousseff also beat the presidency in 2010.

After appeals were made and lost by those condemned in the trial, prison sentences have been in force since November 2013. Political scientist Alberto Almeida said that as far as Brazilians are concerned, the fact that those involved were sent to prison belongs in the past. In general, Brazilians think "all politicians are thieves."

8. Debates : MID-LEVEL IMPACT

9. Party Alliances : NO IMPACT

Elections in many countries hinge on debates where political candidates buckle under the pressure and make a mistake. During the mayoral elections for Sao Paulo in 1985, the then candidate Fernando Henrique Cardoso was asked if he believed in God. He He botched the answer, projecting an image of himself as an atheist. His adversaries took advantage of this to alienate the more conservative voters.

Based on data from past elections, voters do not appear to prioritize the makeup of party coalitions.

The two main reasons are the ideological weaknesses of the parties, more concerned about creating arrangements that will provide them with certain advantages, and voters' ignorance of political rules, which means that they are more often influenced by the candidates themselves rather than their parties. Only the more ideological voters are likely to complain about an unsuitable alliance and they are too few in number to change the result of an election.

A few political journalists who moderate debates debates have criticized the current model used for presidential debates, which significantly restricts the candidates. During the first round of elections, the debates are not particularly relevant because much weaker candidates, with little chance of winning, are present. The very strict debating rules make it difficult for candidates to debate their ideas with one another. The debates may become more important if there is a second round of elections, however the candidates' advisors tell them to minimize risk.

However, the debates are an excellent opportunity to offer voters more insight into what each candidate represents. A chronic problem for debates is the time they are broadcast, always after 10 PM, which means that working-class people, who are generally low-income, do not get to watch them.

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IN SUMMARY

The political situation in Brazil is unpredictable.

It's difficult to forecast a possible winner for the presidential election. However, there is a consensus that regardless of who wins, there will be no drastic changes in Brazil's international relations.

Brazil's relationship with some South American countries might be affected, according to a recent article featuring Neves. These proposed changes, which are common in the run-up to elections, are critical of Brazil's current attitude towards diplomacy, which is considered excessively benevolent to governments in more left-leaning countries. Last year, President Rousseff was criticized by the opposition for partnering with President Raul Castro to build a port in Cuba. Their criticism was based more on ideological issues than the practicality or feasibility of the construction project itself. Despite Brazil's current position, the country is not expected to follow the path of Bolivia, Ecuador and Venezuela.

Political analysts do not believe there will be any major changes, especially given the track record of the three main candidates, who are not risk-takers.

A potential Neves administration is expected to focus more on rebuilding support for the markets and in the business community. Campos is expected to do the same, but to a lesser degree. As

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does President Rousseff, who is under criticism by the Brazilian business community and will have to rebuild her relationship with domestic and international investors.

The air of uncertainty makes it difficult to predict the results of the election at present, and however the situation evolves by October, both the current administration and the opposition will have a chance to win.

This situation is reminiscent of a phrase from MagalhĂŁes Pinto (1909-1996), a politician and banker who ran against Tancredo Neves (AĂŠcio's grandfather) in Minas Gerais, when he was asked to describe politics: "Politics is like the clouds. You look at them and they look like one thing. Look again and they have already changed."

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