Large challenges loom for Brazil's president-elect Bolsonaro

Published 10-29-2018

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RIO DE JANEIRO (AP) - Brazil's President-elect Jair Bolsonaro signaled Monday his administration would make tackling the country's budget-crushing pension system a top priority, doubling down on a campaign promise that made him the choice of the business community despite frequently saying he doesn't understand the economy.

The tough-talking former army captain cruised to a 10-point victory Sunday by capitalizing on widespread frustration in Latin America's largest economy, which has fallen on hard times less than a decade after being a darling of investors among emerging markets.

Bolsonaro's victory moved Brazil, the world's fourth-largest democracy, sharply to the right after four consecutive elections in which candidates from the left-leaning Workers' Party won.

Perhaps more than belief in Bolsonaro himself, his victory represents a widespread rejection of the Workers' Party, which was at the center of a massive corruption investigation and oversaw both Brazil's boom and its bust.

Like other right-leaning leaders who have risen to power around the globe, Bolsonaro, who takes office Jan. 1, built his popularity on a mixture of often outrageous comments and hard-line positions, but he consolidated his lead by promising to enact market-friendly reforms.

In the end, many outside his base in Brazil accepted the bargain he offered: Swallow his more extreme views and his crude way of expressing them in exchange for economic policies they hoped would put Brazil on the path to recovery.

But many warned that his policies on crime, his expected reliance on military officers as advisers and his frequent disparaging of blacks, minority groups such as gays and Brazil's institutions could undermine the country's young democracy.

In a sign of the challenges ahead, the hashtag EleNaoEMeuPresidente - HeIsNotMyPresident in Portuguese - was the top trending topic on Twitter in Brazil on Monday morning.

In the face of what's expected to be stiff resistance, Bolsonaro will have to move quickly to reassure international investors that he's up to the job of righting Brazil's finances.

A looming $34 billion deficit in 2019 has economists warning that without drastic spending cuts or substantial tax increases the country is only a year or two away from a full-blown crisis, which could include run-away inflation and soaring borrowing costs.

"The fiscal situation is so dire that the market needs some kind of signal," said Matthew Taylor, an associate professor at American University

But many warned that his policies on crime, his expected reliance on military officers as advisers and his frequent disparaging of blacks, minority groups such as gays and Brazil's institutions could undermine the country's young democracy.

In a sign of the challenges ahead, the hashtag EleNaoEMeuPresidente - HeIsNotMyPresident in Portuguese - was the top trending topic on Twitter in Brazil on Monday morning.

In the face of what's expected to be stiff resistance, Bolsonaro will have to move quickly to reassure international investors that he's up to the job of righting Brazil's finances.

A looming $34 billion deficit in 2019 has economists warning that without drastic spending cuts or substantial tax increases the country is only a year or two away from a full-blown crisis, which could include run-away inflation and soaring borrowing costs.

"The fiscal situation is so dire that the market needs some kind of signal," said Matthew Taylor, an associate professor at American University's School of International Service. "I think there's a very short window of opportunity for Boslonaro to put into effect measures that build market confidence."

Reducing the deficit will be especially hard because Brazil has only slowly begun to grow again after a punishing recession in 2015 and 2016, and unemployment remains high.

In the face of this, Bolsonaro has said adviser Paulo Guedes, a University of Chicago-educated economist, would oversee the privatization of many industries and a reform of the pension system.

"The first big item: pensions. We need a pension reform," Guedes said late Sunday after Bolsonaro's victory, adding that the next item would be selling off state companies to reduce Brazil's debt and associated interest payments.

"It is not reasonable that Brazil spends $100 billion every year on debt interest payments," he said.

Congressman Onyx Lorenzoni, tapped to be Bolsonaro's ch

In the face of what's expected to be stiff resistance, Bolsonaro will have to move quickly to reassure international investors that he's up to the job of righting Brazil's finances.

A looming $34 billion deficit in 2019 has economists warning that without drastic spending cuts or substantial tax increases the country is only a year or two away from a full-blown crisis, which could include run-away inflation and soaring borrowing costs.

"The fiscal situation is so dire that the market needs some kind of signal," said Matthew Taylor, an associate professor at American University's School of International Service. "I think there's a very short window of opportunity for Boslonaro to put into effect measures that build market confidence."

Reducing the deficit will be especially hard because Brazil has only slowly begun to grow again after a punishing recession in 2015 and 2016, and unemployment remains high.

In the face of this, Bolsonaro has said adviser Paulo Guedes, a University of Chicago-educated economist, would oversee the privatization of many industries and a reform of the pension system.

"The first big item: pensions. We need a pension reform," Guedes said late Sunday after Bolsonaro's victory, adding that the next item would be selling off state companies to reduce Brazil's debt and associated interest payments.

"It is not reasonable that Brazil spends $100 billion every year on debt interest payments," he said.

Congressman Onyx Lorenzoni, tapped to be Bolsonaro's chief-of-staff, said Monday the administration would submit a pension reform proposal early next year.

Attempts to reform the bloated pension system have failed repeatedly and will again be met with opposition over everything from the retirement age - currently many retire in their early 50s- to who gets excluded from reforms. Bolsonaro has said he wants to exclude military personnel and police from any reduction in benefits.

Bolsonaro must also address many other issues with no easy solutions: high unemployment, increasing crime in a nation that is already the world leader in total homicides, and deep divisions after years of political turmoil and a punishing election campaign marred by violence. Bolsonaro himself was stabbed and almost died while campaigning in early September.

The rise of Bolsonaro, who cast himself as a political outsider despite a 27-year career in Congress parallels the resurgence of the far-right in Europe and elsewhere. But his extreme messages were rendered more palatable by a perfect storm in Brazil: widespread anger at the political class after years of corruption, a sluggish economic recovery and a surge in violence that has many Brazilians worried about their future.

Many are furious with the Workers' Party for its role in a graft scheme involving billions of dollars in bribes paid to politicians via inflated construction contracts.

Bolsonaro's challenger, Fernando Haddad of the Workers' Party, struggled to build momentum with his promise of a return to the boom times by investing in health and education and reducing poverty. It didn't help that Haddad's mentor, former President Luiz Inacio da Silva, is serving a 12-year prison sentence for a corruption conviction.

In his first address as president-elect, Bolsonaro promised to defend the constitution and unite a bitterly divided populace. At the same time, Haddad vowed to mount a vigorous opposition and civil rights groups warned against a rollback of civil liberties.

That juxtaposition underscores that the political acrimony is far from over.

In a blistering op-ed Monday in the Washington Post, former Brazilian President Fernando Henrique Cardoso said democracy was at risk and called on his countrymen to reflect on "How did the unthinkable happen?"

"This political crisis does not end with yesterday's election," he wrote. "Without rebuilding trust, how can the economy recover, employment rebound and social policies expand? This must be the agenda for the immediate future."

Bolsonaro's candidacy raised serious concerns that he would roll back civil rights and weaken institutions. Many have pointed to his sometimes extreme rhetoric as a sign that he may marginalize women, gays, blacks and other minority groups that have only recently begun to achieve some measure of inclusion in Brazilian society.

He has praised police who kill criminals during operations and argued they should be decorated, not criminally tried. He has repeatedly said he would pull Brazil from the Paris agreement on climate change, though he backed off that slightly this week, and promised to cut environmental regulations to make Brazil friendlier to international investors.

He often took to Twitter to lambast the rival Workers' Party, going so far as to say its members should be shot and "leftist reds" run out of Brazil, speech many said made the candidate "extreme right."

Within minutes of his victory, international rights groups began expressing concerns.

The International Women's Health Coalition warned that Bolsonaro's "hateful rhetoric ... will further erode women's rights in Brazil." Steve Schwartzman of the Environmental Defense Fund warned his environment policies would be "dangerous to the planet."

Still, some Brazilians expressed hope for a future with Bolsonaro at the helm of government.

"We have endured so many crises, so many robberies in this country and finally the PT (Workers Party) was defeated, and we expect with Bolsonaro in power, that Brazil can go in a new direction and to start to prosper," said Leonardo de Sousa, a 35-year-old receptionist in Rio de Janeiro.

____

DiLorenzo reported from Sao Paulo. Associated Press reporter Beatrice Christofaro and AP video journalist Yesica Fisch in Rio de Janeiro contributed to this report.

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Supporters gather outside the residence of presidential candidate Jair Bolsonaro in anticipation of his victory speech, in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018. Brazil's Supreme Electoral Tribunal declared the far-right congressman the next president of Latin America's biggest country. (AP Photo/Leo Correa) - The Associated Press


A supporter of Jair Bolsonaro salutes during a celebration in front of his residence after he was declared the winner of the election runoff, in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018 . Bolsonaro, a brash far-right congressman who has waxed nostalgic for Brazil's old military dictatorship, won the presidency of Latin America's largest nation Sunday as voters looked past warnings that the former army captain would erode democracy and embraced a chance for radical change after years of turmoil. (AP Photo/Leo Correa) - The Associated Press


A supporter of Jair Bolsonaro cries tears of joy after he was declared the winner of the election runoff, during a celebration in front of his residence in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018 . Bolsonaro, a brash far-right congressman who has waxed nostalgic for Brazil's old military dictatorship, won the presidency of Latin America's largest nation Sunday as voters looked past warnings that the former army captain would erode democracy and embraced a chance for radical change after years of turmoil. (AP Photo/Silvia Izquierdo) - The Associated Press


Jair Bolsonaro, presidential candidate with the Social Liberal Party, waves after voting in the presidential runoff election in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018. Bolsonaro is running against leftist candidate Fernando Haddad of the Workers' Party. (AP Photo/Silvia izquierdo) - The Associated Press


Flanked by his wife Ana Estela, left, and running mate Manuela d'Avila, Workers' Party presidential candidate Fernando Haddad delivers his concession speech, in Sao Paulo, Brazil, Sunday, Oct. 28, 2018. Brazil's Supreme Electoral Tribunal declared far-right congressman Jair Bolsonaro the next president of Latin America's biggest country. (AP Photo/Andre Penner) - The Associated Press


A supporter of presidential candidate Jair Bolsonaro poses for a photo with an oversized, fake rifle, as she celebrates the election runoff results in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018. Brazil's Supreme Electoral Tribunal declared the far-right congressman the next president of Latin America's biggest country. (AP Photo/Silvia Izquierdo) - The Associated Press


A supporter of Workers' Party presidential candidate Fernando Haddad embraces a fellow distraught supporter, after learning that rival Jair Bolsonaro was declared the winner in the presidential runoff election, in Sao Paulo, Brazil, Sunday, Oct. 28, 2018. Addressing supporters in Sao Paulo, Haddad did not concede or even mention Bolsonaro by name. Instead, his speech was a promise to resist. (AP Photo/Nelson Antoine) - The Associated Press


Supporters of presidential front-runner Jair Bolsonaro sing the national anthem outside his residence in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018, during the country's presidential runoff election. Brazilian voters decide who will next lead the world's fifth-largest country, the left-leaning Fernando Haddad of the Workers' Party, or far-right rival Jair Bolsonaro of the Social Liberal Party. (AP Photo/Silvia Izquierdo) - The Associated Press


Supporters of Jair Bolsonaro celebrate in front of his residence in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018. The far-right congressman took a commanding lead in the race for Brazil's presidency, as voters apparently looked past warnings that the brash former army captain would erode democracy and embraced a chance for radical change after years of turmoil. (AP Photo/Leo Correa) - The Associated Press


A supporter of presidential front-runner Jair Bolsonaro wears a headband supporting his candidate as he waits with others for election results outside the National Congress in Brasilia, Brazil, Sunday, Oct. 28, 2018. Brazilian voters decide who will next lead the world's fifth-largest country, the left-leaning Fernando Haddad of the Workers' Party, or far-right rival Bolsonaro of the Social Liberal Party. (AP Photo/Eraldo Peres) - The Associated Press


A woman, donning the Workers' Party official colror celebrates after voting in the presidential runoff election in Sao Paulo, Brazil, Sunday, Oct. 28, 2018. Brazilian voters decide who will next lead the world's fifth-largest country, the left-leaning Fernando Haddad of the Workers' Party, or far-right rival Jair Bolsonaro of the Social Liberal Party. (AP Photo/Nelson Antoine) - The Associated Press


Supporters of Brazilian presidential candidate Jair Bolsonaro cheer as they gather outside his residence in Rio de Janeiro, Brazil, Sunday, Oct. 28, 2018, during the country's presidential runoff election. Brazilians on Sunday were weighing their hunger for radical change against fears that Bolsonaro, the presidential front-runner, could threaten democracy as they cast ballots in the culmination of a bitter campaign that split many families and was frequently marred by violence. (AP Photo/Leo Correa) - The Associated Press


Workers' Party presidential candidate Fernando Haddad holds a Brazilian flag after casting his vote in the presidential election in Sao Paulo, Brazil, Sunday, Oct. 28, 2018. Brazilian voters decide Sunday who will next lead the world's fifth-largest country, the left-leaning Haddad or far-right rival Jair Bolsonaro. (AP Photo/Nelson Antoine) - The Associated Press