Elections in Brazil: a win for Rousseff, and China

Now that president Dilma Rousseff has won re-election, Chinese investment in Brazilian energy and agriculture looks set to keep booming

It’s become a cliché to liken this Brazilian election to a telenovela. Yet it does seem a fitting analogy for a campaign season that saw one of the candidates die in a plane crash and his vice-presidential candidate — environmentalist Marina Silva — then soar in the polls, only to come down equally suddenly after some of the most negative attack ads in the country’s political history. Pro-business candidate Aécio Neves and incumbent Dilma Rousseff were neck-and-neck going into Sunday’s second round, but in the end, Rousseff claimed victory, albeit by a slim margin.

Of all the candidates, the one with the most dramatic story was Silva, who would have been Brazil’s first black president. The daughter of rubber tappers in the Amazon, illiterate until age 16, she rose through the ranks in Luiz Inácio Lula da Silva’s Workers’ Party (PT) to become his minister of the environment. However, she differed with her party on several key issues, including the building of massive hydroelectric dams in the Amazon region — a major part of the PT’s platform for energy independence. In the current election, she was the running mate of PSB candidate Eduardo Campos, whose sudden passing thrust her into the spotlight.

After Silva was defeated in the first round of elections on October 5, it looked to her supporters as though their hopes of a more environmentally friendly, progressive Brazil were dashed. Worse yet, to many, she shot back at the PT’s negative campaigning by publicly endorsing Neves, a pro-business governor from Brazil’s wealthy, white south.

Neves and Rousseff, who was chief of staff under Lula and has carried forward his policies in her three years as president, faced off in the second round. In the end, slightly more than half of Brazilians preferred the status quo, and Rousseff claimed victory with 51.6% of valid votes.

So what will Rousseff’s win mean for the environment, and for Brazil’s relationship with its number one trading partner, China?

Closer trade relationship

Naturally, hanging on to the incumbent signals that Brazil is likely to continue on its current course. Rousseff recently signed more than 50 energy, finance and industry accords with Chinese president Xi Jinping, in which China agreed to provide US$7.5 billion in financing for mining company Vale, the world’s largest exporter of iron ore. Commodities like ore, soy and oil make up the bulk of the US$28 billion worth of goods Brazil has exported to China this year.

“China’s two main strategic concerns are energy security and food security,” a senior Brazilian official told Reuters. “Brazil is an ideal partner on both counts.

The financing, from a combination of China’s Eximbank and the Bank of China, will be used to buy ships and equipment from Chinese companies. China also agreed to purchase 60 passenger jets from Brazilian airplane manufacturer Embraer.

Xi was in the country after a BRICS (Brazil, Russia, India, China, and South Africa) summit in Fortaleza, Brazil, which created the US$100-billion BRICS Development Bank, to be based in Shanghai. The bank is expected to fund infrastructure projects, and has been billed as an alternative to Western-dominated financial institutions like the World Bank and IMF.

Brazil’s subpar infrastructure is a major area of focus for the Chinese. Earlier this month, China Construction Bank acquired a nearly 75% stake in Brazil’s Banco Industrial e Comercial SA. One project that has been proposed is a railway from the Atlantic coast of Brazil through the Andes mountains all the way to Peru’s Pacific coast. China likes this because it would decrease the cost of shipping grain from Brazil by US$30 a tonne.

Three Gorges in the Amazon

Rousseff was in charge of the Ministry of Mines and Energy under Lula, and Brazil’s hydroelectric expansion in recent years has been at her direction.

Belo Monte, in the Brazilian Amazon, will be the third-largest hydroelectric dam in the world. Controversy about failure to consult with indigenous tribes and ribeirinhos (river-dwellers) in the region, in addition to lack of environmental planning, has led to lawsuits and intermittent work stoppages. But construction remains ongoing, with China’s State Grid Corporation signing an agreement with Brazil’s Eletrobras utility to build high-voltage transmission lines.

Meanwhile, China Three Gorges Corporation has signed a partnership with Brazilian utilities to bid for a new dam project on the Tapajós River. Christian Poirier of Amazon Watch says that in the same region the company is planning to open up hydrovias — water highways — to ship soy. The auction has been postponed until next year, however, due to unanswered questions relating to indigenous rights.

“China sees electricity from Brazil’s Amazon dams as part of a supply chain delivering energy-intensive aluminum and steel directly from a region rich in these resources,” Poirier says.

Philip Fearnside, a researcher at the Manaus-based National Institute for Amazonian Research (INPA), has found that the rapid rise in exports of soy and beef products to China are two of the major drivers of Amazonian deforestation in Brazil. And not only is it fuelling deforestation, but Chinese demand is helping to loosen Brazil’s environmental-protection laws, a process shepherded by pro-agribusiness ruralista senators like Katia Abreu. Rousseff made a campaign video supporting Abreu.

A win for Aécio Neves would likely have weakened environmental protections still further. Neves’ pro-market policies would have picked up the pace of trade, loosening environmental and rights-based restrictions on trade with China.

Fearnside has pointed out that money earned from trade with China “is strengthening Brazilian agribusiness interests, with profound effects on domestic politics that are reflected in legislative and administrative changes weakening environmental protection.”

However, one positive possibility, as Poirier of Amazon Watch notes, is that China could use its economic and technological might to invest in the solar power industry. During this summer’s World Cup, Yingli Solar was prominently advertised in Brazilian stadiums.

Still, Marina Silva was the only candidate with a record of successfully fighting deforestation. As Poirier said, she could have “confounded the Chinese designs for the Amazon’s rivers by introducing a modicum of respect for human rights and environmental protection so lacking in Dilma’s administration.”

But after the first round, that picture faded away. Now that this telenovela is over, it may ultimately be Brazil’s forests, rivers and those who depend on them for survival who have lost — and the country’s primary trading partner who has come out ahead.