File this under "financial crisis factors in progress"
Gomes upsets Brazil election predictions
Fri Jul 26, 3:49 PM ET
By PETER MUELLO, Associated Press Writer
RIO DE JANEIRO, Brazil - Brazil's currency is plunging, investors are skittish, and there's growing talk of a possible Argentina-style debt default. For some analysts, the cause of the alarm is "Ciro risk."
The sudden rise of Ciro Gomes as a top presidential contender has upset early expectations of a second-round runoff between the government-backed candidate Jose Serra and former labor leader Luiz Inacio Lula da Silva. If no one candidate wins a majority of the vote, the top two candidates face off in a runoff election Oct. 6
Gomes, of the center-left People's Socialist Party, has rocketed past Serra into second place in polls, meaning the market-friendly Serra might not make it to the second round.
"Ciro is the new factor," said Harold de Britto, a political analyst with Goes e Associados in Brasilia, the capital. "He's not just a bubble. He has consolidated his position and, alongside Lula, adds a new degree of uncertainty."
A new survey published Friday by the Ibope polling institute showed Lula holding steady with 33 percent of the vote, followed by Gomes with 26 percent and Serra with 13 percent. The poll also showed that Gomes was the only candidate who would beat Lula in a runoff.
Ibope questioned 2,000 voters across the country between July 21 and 23 and gave the margin of error as 2.2 percent.
The prospect that the opposition will take power in Latin America's largest country has accelerated a demand for dollars that pushed the real below three to the dollar this week, the lowest since Brazil adopted the currency amid an anti-inflation plan in 1994.
There also is concern about the government's ability to pay its huge domestic debt, now nearly 60 percent of the country's Gross Domestic Product. A Bear Stearns economist said this week that Brazil could be forced into a debt moratorium no matter who wins in October.
Gomes has done little to calm markets. A Harvard-educated former state governor and ex-finance minister, Gomes has softened rhetoric about renegotiating the foreign debt but remains an outspoken critic of the austere economic policy adopted by President Fernando Henrique Cardoso over the past eight years.
"His discourse is not at all comforting for investors," said Britto. "His economic proposals are aggressive."
Actually, it's not too clear where Gomes stands. His support for tax reform and pension cuts suggest frugality, but his proposals for subsidized public credit and an end to government privatizations could increase the state's role in the economy.
His political backing is equally ambiguous. His "Labor Front" includes parties from the right and left, and Cardoso has hinted that old-time right-wing power brokers are really calling the shots.
Still, Gomes is expected to benefit from recent government-decreed price hikes for gasoline, cooking gas and utilities that could turn voters away from Cardoso and Serra.
Gomes also has the lowest rejection rating of any candidate — only 23 percent of Brazilians said they wouldn't vote for him, Ibope said. His boyish good looks and media savvy will likely make him a formidable foe when TV debates begin next month, and his girlfriend — popular TV actress Patricia Pillar — is a major campaign asset.
"There still are two months to go, and Serra has resources," said Britto. "But his chances of winning the election have diminished sharply." |
