The Situation — On October 28, Brazil will hold run off elections for the Presidency of Brazil, with two candidates: Jair Bolsonaro and Fernando Haddad.
Jair recently missed the needed votes to secure his election and avoid having a runoff election by a few percentage points. However, the final vote will take place later this month. Jair is the more conservative candidate, while Fernando is the left-leaning candidate. Bolsonaro is often compared to Donald Trump, with his often politically incorrect remarks, as well as baffling many political experts on his rise in popularity.
Background — There have been a few large corruption scandals in the past few years. Starting with President Lula in 2014, in which the Brazilian President was removed for corruption. His successor, Dilma Rousseff was impeached following another scandal, somewhat related to the corruption scandal of President Lula. Former President Lula is currently in jail, and is not eligible to run.
Brazil is the largest country in South America by GDP, the largest exporter of coffee in the world, and also has recently had one of the worst murder rates in the world. They have an unstable socialist Venezuela to the north, and have been plagued by several scandals at the highest levels from corrupt politicians. It is in this situation which Bolsonaro has risen unexpectedly to the lead the polls for the Presidency. He has advocated for looser gun laws to combat crime, and has even been reported to be entertaining the military removal, along with the United States and the Venezuelan government.
Who is Jair Bolsonaro? — Jair Bolsonaro is the right-leaning conservative candidate for Brazil. Jair is a former Army Captain, and gained popularity with the public when he first gave an interview with a magazine called Veja (a weekly news magazine published and distributed from Sao Paulo). In this interview he voiced displeasure at the wages for military officials, and after this interview he was active in politics. He has at times praised the military dictatorship of Brazil from 1964 to 1985.
Recently, he was stabbed at a rally and has missed the last leg of his campaign, due to his injuries. He is now the leading contender for the Presidency of Brazil, and if he does take the presidency he will be another candidate who many have compared to the victory of Donald Trump in the United States.
Analysis — The country of Brazil is not only suffering from record murder rates, but also high unemployment from the younger generation, and rampant political corruption. Many of the frustrations of the Brazilians are because of the same rhetoric from the same political candidates who have failed to stem crime and who themselves are ever more embroiled in corruption scandals. Brazilians have shown the politicians that they are willing to try a candidate that no one expected to win and has a way of speaking without any sort of political correctness.
The region is seeing a lot of instability, due not only to the unpredictability of Brazil, but also what is going on with Venezuela. Venezuela has the highest inflation rate in the world, and the people are starving, which has led to friction between Brazil and Venezuela as the border has been ordered sealed by a Brazilian Judge. Later in August 2018, Brazil sent troops to secure the border and the people fleeing the dire conditions in Venezuela have been accused of committing crime in those areas. That could have influenced the rural areas in those regions to start to turn to a candidate they believe will correct or deal with this issue.
What to Watch — Watch for the election on October 28, 2018, for the Presidency of Brazil. This will be a big day for the country, the region, and will have further repercussions throughout the world and possibly some commodity prices. Recently the Brazilian Real has strengthened against the dollar possibly indicating more strengthening to come if investors are predicting that the currency will strengthen if Bolsonaro becomes elected.
Bolsonaro has been compared to Donald Trump, and the similarities do not end there. Recently Bolsonaro’s son was spotted in New York City with Steve Bannon, and Bannon has recently joined the Bolsonaro team.
There have also been hints that Bolsonaro is in favor of a regime change in Venezuela, and considering that the two share a mutual campaign advisor it would not be a far-fetched idea that both Trump and a potential Bolsonaro administration would be in favor of considering a possible military intervention in Venezuela. There have been reports that a possible intervention in Venezuela was possible. However, most countries in South America are opposed to an intervention by military means. Though, considering a former Brazilian Army Captain is now most likely going to be in charge of Brazil, that option may seem to be closer to a possibility.
Commentary — Brazilian Real may strengthen against the dollar if corruption is tackled in Latin America’s largest economy. Major commodities such as coffee, soybeans, oil, and sugar may make price changes because of this and because Brazil, in particular, produces so much of these commodities.
Brazil is the largest exporter of coffee in the world, third biggest exporter of iron ore, and is a major exporter of oranges, soybeans, sugar, and oil. Any change in this country should be closely watched and monitored. Taming corruption would go a long way in restoring faith in the Brazilian economy. However, this all depends on what Bolsonaro does as president.
They are the worlds 13th largest exporter of oil and if they pressure the United States to change the regime in Venezuela, this could possibly open up more oil resources.