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What’s next for Brazilian politics?

What’s next for Brazilian politics?

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Many were relieved by the events in Congress on March 25th: after seemingly endless delays, Brazil's controversial "Internet Constitution" was finally adopted, meaning that the House of Representatives is now free to move on and discuss other policies - something it had been unable to do since the end of last year due to the bill's special "urgency" regime that blocked the legislative agenda until it was voted on.

We'll leave it to others - and there have been legions of pundits around the world who have spilled ink on the matter - to analyze the bill's benefits. Suffice to say that after an acrimonious process pitting Telcos vs. Internet companies and two major parties in the ruling coalition against each other, the bill is a compromise that everyone can live with: net neutrality is guaranteed, and controversial local data hosting rules (inserted at the 11th hour as a reaction to the NSA spying scandal) have been avoided.

The question now is what happens next in terms of policy-making? And true to Brazil's tradition of telenovelas, the answer is: more drama

  • First, there is the small matter that the Internet bill must now be passed through the Senate, and there is still a risk that it will be amended and further delayed there
  • Second, the dispute between the PT party and its main government ally, the PMDB, over how to share power after Dilma's likely reelection as President this year, is far from over. Representative Eduardo Cunha, leader of the PMDB in the lower house and affectionately dubbed by his own as Frank Underwood from the wildly popular House of Cards TV series, has vowed to fight Dilma on every bill in the pipeline in order to pressure her into giving his party bigger concessions
  • Third, ?Congress is due to discuss the formation of a special commission in charge of investigating alleged corruption at Petrobras which occurred when Dilma was chairing its board

In short: there is very little hope that anything of substance will be achieved? in Congress before the Presidential elections in October 2014. This is obviously typical of an election year, but in the current social climate, it could prove explosive. The government made many promises of reform after the major protests that occurred during the Confederations Cup in June last year, but has yet to deliver. Against that backdrop, it would be brave for anyone to predict that the World Cup won't also be marred by a new wave of mass demonstrations.

That doesn't mean there's no other option than to watch the political novela unfold from the sidelines: whoever wins the elections will be faced with major economic and fiscal challenges, exemplified by S&P's decision to downgrade the country's investment status a few days ago. Now's the time to plan for the arrival of the new administration, identify likely policy priorities in your sector, and determine how to capitalize on them quickly once government is back to business as usual.

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