Understanding Brazil's 2014 Presidential Election: The Parties Candidates and Issues That Will Determine Brazil’s Future Direction

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

03
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

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.
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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
Brazil's Federal Presidential Election Process
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.
04

05
The three main national parties include:
Dilma Rousseff
Worker’s Party (PT)
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.
Eduardo Campos
Brazilian
Socialist Party (PSB)
Aécio Neves
Brazilian Social
Democracy Party (PSDB)
• The current party of President Dilma Rousseff, the Workers’ Party (PT) on the left
• The Brazilian Social Democracy Party (PSDB) on the center left
• The Brazilian Socialist Party (PSB), also on the center left.
Image Credits: Valentina Petrov / Shutterstock.com, blogdajoice.com, fotospublicas.s3.amazonaws.com

06
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
2
8.5 million km (the fifth largest country in the world by size,
2
similar to China at 9.5 million km , 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.

Brazil
2014
07
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.
Dilma Rousseff of the Worker's Party (or PT),
Brazil's first female president, is seeking re-
election 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 José 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.
2014 will be the first presidential election since 1989
in which former President Luiz Inácio Lula da Silva
will not be a direct participant (although many
assume he will be operating behind the scenes).
Michel Temer (PMDB) Vice-President
President Dilma Rousseff (PT) and former President Lula da Silva
Image Credits: cratonoticias.wordpress.com, riotimesonline.com

08
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
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.
Image Credit: Gil C / Shutterstock.com

09
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 vice-
president 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.
Opposition
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.
Eduardo Campos (PSB)Aécio Neves (PSDB)
Image Credit: blogdajoice.com, federasul.com.br

10
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.
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.
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.
Marina Silva, Former Senator
Image Credit: development.thinkaboutit.eu/

11
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%).
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
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.
(*Vote defined as individuals who are eligible and said
they intended to vote on election day.)

12
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.
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.

13
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.
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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.
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.
Climate of Uncertainty Second Round 2014 Voting

14
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.
Parliamentary Base Alliances of Convenience
New Parties
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.
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.

15
Big Block
State Elections
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).
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
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.
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.
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.
Image Credit: development.thinkaboutit.eu/

16
A LOOK BACK AT PAST ELECTIONS
After a 25-year gap during the military dictatorship
and José 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.
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.

17
Political Maneuvering
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.
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).
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% 1998
8.94% 1999,
12.53% 2002,
in to
in hitting
in the election year.
José Serra ( PSDB)
Fernando Henrique Cardoso (PSDB)
Image Credits: wikipedia, pt.wikipedia.org/

18
The Monthly Payment Scandal: "Mensalão"
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.
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.
José Dirceu (PT) José Genoino (PT)
Image Credits: wikipedia.com, www.forte.jor.br

19
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.
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.
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
1. The Economy :
HIGH IMPACT
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 state-
owned companies are expected to be quite volatile
from now until the elections.

20
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.
2. Family Benefit :
HIGH IMPACT
3. World Cup :
MID-LEVEL IMPACT
Image Credit: SPOT_MuralEventoDaPompeia

21
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
São 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.
4. Lula Factor :
MEDIUM IMPACT
5. Public Demonstrations :
MEDIUM TO HIGH IMPACT
Image Credit: Will Rodrigues / Shutterstock.com

22
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.
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 ex-
education 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."
6. Free Party Political
Broadcasts : HIGH IMPACT
7. Monthly Payments
Scandal : LOW IMPACT
Image Credit: SPOT_MuralEventoDaPompeia

23
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.
8. Debates :
MID-LEVEL IMPACT
9. Party Alliances :
NO IMPACT
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.

24
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
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
Magalhães Pinto (1909-1996), a politician and
banker who ran against Tancredo Neves (Aécio'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."

MSLGROUP Latin America contact:
Josh Shapiro
josh.shapiro@mslgroup.com
About MSLGROUP
MSLGROUP in Latin America
MSLGROUP Brazil
MSLGROUP is Publicis Groupe’s strategic communications and engagement group, advisors in all aspects of
communications: from consumer PR to financial communications, public affairs, reputation management, crisis
communications, experiential marketing and events. We have more than 3,500 communications consultants across more
than 100 offices worldwide. In 2013, The Holmes Report recognized MSLGROUP as the “Best Corporate Consultancy in
the World.”
MSLGROUP has been active in Latin America for more than 25 years and has developed into a network of both
MSLGROUP owned operations and long-term affiliate partnerships. Today our Latin America team includes more than
150 MSLGROUP staff across four offices, plus partner offices in 20 additional countries across Central America, South
America and the Caribbean. From our regional hub based in São Paulo, Brazil, MSLGROUP Latin America supports a
variety of clients on global, regional and local communications programs.
Founded more than 20 years ago, MSLGROUP’s Brazil team has supported both national and international companies as
they entered into and developed across Brazil. Today, MSLGROUP Brazil includes three agencies that operate as distinct
businesses, while collaborating in certain areas like tools and training: MSLGROUP Andreoli, MSLGROUP Espalhe and
MSLGROUP Publicis Consultants.

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