Dilma Rousseff must now pull together a deeply divided Brazil

Dilma Rousseff has narrowly won re-election to the presidency of Brazil, capturing 51.6% to her rival’s 48.4% in a second round run-off election. Now, as her second term begins, she faces the challenge of governing a nation that is more divided than ever.

This election was Brazil’s tightest for 25 years, as both Rousseff and her challenger Aécio Neves converged on a common set of commitments: to continue with social inclusion, reinvigorate the economy, control inflation, and invest in infrastructure, education, health, public transportation and public security.

Neves drew on his past as a governor of Minas Gerais state to argue that he could do more to restore credibility to economic policy, reduce federal spending, and raise levels of investment. Dilma countered that if Neves were elected, Brazilian workers would soon face rising unemployment, falling wages, and reduced social services.

Ultimately, Dilma won in the impoverished north and north-east of the country, while Neves had the edge in the centre-west, the south, and the populous and urbanised south-east.

The way we were

The election was, in part, a referendum on 12 years of rule by Rousseff’s Workers’ Party (Partido dos Trabalhadores, or PT). Founded in 1980 as a new party of the left committed to working-class mobilisation, participatory democracy and structural economic change, the PT played a big part in ending Brazil’s military regime of 1964-85 and in constructing a new democracy.

The party won its first presidential election in 2002, and its candidate, former trade union leader Luíz Inacio “Lula” da Silva, was president for two terms from 2003 to 2010. Lula turned the PT into a social democratic party, merging economic orthodoxy (fiscal prudence, inflation targeting and a floating exchange rate) with strategies to redistribute wealth: job creation, increases in the minimum wage, investment in social programmes (especially basic income, credit for small farmers, and housing) and expansion of technical and university education.

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In this period, poverty declined significantly, and so did income inequality; the so-called “Class C” – people living in families making from R$1,000 (£252) to R$4,000 (£1,008) a month – swelled to become a majority of the population.

In Lula’s second term, the government moved away from liberal economic policies, defending sectors of Brazilian industry through subsidised credit, tax breaks, and national content laws. The government also used tax breaks and other incentives to boost consumption, while the expansion of consumer credit increased the size of the domestic market.

Lula ended his second term with popular approval close to 80% and chose Rousseff to follow him. But even as his handpicked successor, she was able to maintain neither Lula’s level of popularity nor his economic record.

Downward turn

Dilma, whom Lula presented to the Brazilian public as a competent administrator, turned out to be an aloof and centralising micro-manager who disdained contact with Congress and interest groups and whose speeches were delivered in dour and charmless technocrat-speak. This stirred discontent within her own party, as well as in the opposition ranks.

Meanwhile, growth averaged only about 1.5% between 2011 and 2014, slowing to close to zero this year. Widespread protests during the 2013 Confederations Cup, revealed public anger at overspending on the World Cup, government corruption, and the poor quality of public services – as well as alienation from political representatives and political parties.

The impact of these difficult years showed in the second round results: despite winning the presidency for the fourth time in a row, this was not a particularly good election for the PT.

The party lost 18 seats in the lower house of Congress (though it remains the largest party) and one seat in the Senate (where it is the second-largest bloc). Congress as a whole has become more conservative and more fragmented, its 22 parties swelling to 28. The PT did win five governorships, but only one of them, Neves’s state of Minas Gerais, is in the populous and wealthy south-east.

That means the centrist PMDB, a party committed to almost nothing except supporting the government in exchange for patronage, will once again be Dilma’s most important – and most problematic – political partner.

The PT’s base, meanwhile, is clearly no longer the solid coalition it once was. It seems that Class C people, while they benefit considerably from PT policies, are not automatically aligned with the party. The PT’s collectivist project may also be less alluring to today’s young Brazilians, many of whom are far more sceptical about politics in general than their counterparts in the 1990s and 2000s were.

Keeping them happy

The tone of the election was highly acerbic, Rousseff’s margin of victory was small and Brazil is clearly deeply polarised. Business and investors are increasingly suspicious of her government and are impatient for any signal of a move back to economic orthodoxy – for example, a more market-friendly minister of finance.

Most of the national media, especially the rightwing Veja magazine, remain hostile to PT governance. And São Paulo, the industrial heartland and most populous state of Brazil, rejected the president by a margin of almost two to one.

It is unclear how Rousseff will handle what some commentators are calling her “third round”: the task of governing the hostile segment of the country that rejected her at the polls.

Her acceptance speech was an attempt to reach out to those who did not vote for her, but she knows she cannot afford to alienate her weary base any further. The PT’s metamorphosis into the dominant party of a new establishment sits badly with its core supporters, particularly with those who began their political lives as ideologically committed, oppositional militants (as, indeed, did Dilma herself).

By all accounts, 2015 will be a difficult year for the president. It remains to be seen whether 2014 is the beginning of the end of the political cycle of PT dominance at the federal level, or a step towards another election victory in 2018 – and whether Rousseff can pull together a country whose politics and society are increasingly divided.