BRAZILIAN ELECTIONS 4 OCTOBER 2018

Transcription

1 BRAZILIAN ELECTIONS 4 OCTOBER

2 CONTENTS Home Stretch...3 Updated voter intention polls....4 Runoff forecast...5 Overview...6 Important Rules...8 Presidential Elections...9 Jair Bolsonaro...10 Fernando Haddad...11 Ciro Gomes...12 Geraldo Alckmin...13 Marina Silva...14 Comparison: Communication Capacity...15 Comparison: Political Support...16 Comparison: Campaign Strength...17 Voter Intention Polls Undecided Voter Profile...19 Analyzing Past Elections Polls...20 Comparison: Growth Potential in the First Round...21 Runoff Scenarios...22 What to expect if elected...23 Congressional election analysis..24 Senate Overview...25 Chamber of Deputies Overview..33 2

3 HOME STRETCH It is clear that Bolsonaro and Haddad will face off in the second round. Past elections suggest that dramatic polling changes in the closing days are amplifications of existing polling trends. In other words, polling curves can steepen but do not normally change direction. Currently, surveys do not indicate any trend other than the total collapse of Marina Silva. Therefore, the only potential surprise would be a Bolsonaro victory in the first round. As anticipated in the previous version of this report, undecided voters are migrating proportionately to the various candidates, which helps Bolsonaro maintain his lead. The support Bolsonaro has received from some celebrities and politicians may also convince voters that he is an acceptable mainstream candidate, contrary to the messages conveyed in the mass media over the previous months. In our view, a Bolsonaro victory depends more on him and his actions than on his opponents. The anti-pt sentiment continues to express itself more clearly and comprehensively than the anti-bolsonaro movement in civil society and social media known as # EleNão (#NotHim). His decision to forego the last debate is sound because he has little to gain and would be roundly attacked by all other candidates as the clear frontrunner. He also has a the excuse of following doctors orders as he is still recuperating from surgeries after being stabbed. His primary challenge at the moment is to organize his campaign committee and avoid misleading statements (especially from his running mate). He must also convince voters that he has some key experienced and influential supporters to help him govern on day one. A growing number of current legislators that previously backed Alckmin are publicly shifting their support to Bolsonaro as his chances for victory have strengthened. This has calmed financial markets and demonstrates that Bolsonaro may have a window of opportunity in the first 100 days to approve significant reforms. In the most likely second round scenario, Bolsonaro is expected to aggressively attack the PT s record and legacy to galvanize growing anti-pt sentiment, mainly by focusing on corruption scandals. Haddad has peaked in all surveys at levels, reflecting historical support for PT. Faced with a less controversial opponent than Bolsonaro, it would be difficult for any PT candidate to surpass this level in the wake of the Petrobras corruption scandal and the constant controversies surrounding illicit campaign contributions. In the second round, Haddad will have the venerable PT electoral machine at his disposal, which is professional and highly experienced. He will also likely enjoy the support of Ciro Gomes while Marina may avoid the mistake she made backing Aécio in Unlike Bolsonaro, the missteps of prominent PT members (e.g.: Dirceu's recent speech) have less repercussion and should have limited impact. His challenge is to find a new narrative that goes beyond the confirmation that he has the support of Lula and would strictly follow the policy direction of the PT leader. The latest polls indicate that his rejection has increased in direct proportion to his approval rate and that his performance in the second round will depend on adopting a new narrative and any momentum that Ciro, Marina and Alckmin voters can generate. In our assessment, the prevailing sentiment of these voters in the second round will be to ensure that the PT does not return to power rather than a direct endorsement of Bolsonaro. 3

4 VOTER INTENTION POLLS Evolution of Voter Intention 2018 stimulated responses % Jair Bolsonaro Fernando Haddad Geraldo Alckmin Ciro Gomes Marina Silva Outros Brancos e Nulos Não Sabe 4

5 RUNOFF FORECAST % DATAFOLHA Sep 14-Sep 20-Sep 28-Sep 2-Oct Bolsonaro Haddad BNI % IBOPE 11-Sep 18-Sep 24-Sep 26-Sep 1-Oct 3-Oct Bolsonaro Haddad BNI % IPESPE / XP Aug 5-Sep 12-Sep 19-Sep 26-Sep Bolsonaro Haddad BNI % FSB / BTG 16-Sep 23-Sep 30-Sep Bolsonaro Haddad BNI

6 OVERVIEW Brazil s 2018 election stands in contrast to those that have taken place since redemocratization. It occurs against the backdrop of twin economic and institutional crises, the starting point of which is hard to define. Some analysts point to the June 2013 protests, while others place more emphasis on Dilma Rousseff s reelection with a weakened political base in the Legislative branch, compounded by the ongoing Car Wash corruption probe. However, 2018 has additional distinguishing characteristics. The current instability can be traced in equal measures to the role of Rousseff s Workers Party (symbolized by the arrest of its founding leader, former president Lula) and on the outgoing administration of her vice president, Michel Temer, who assumed power following her widely contested impeachment and has no clear successor in the race. In short, the entire political class is seen as responsible for Brazil s current misfortune. The scenario resembles that of the 1989 election, when 22 candidates ran for president following the first civil government. But 2018 stands alone in Brazil s short democratic history given a clear fragmentation of political forces with a handful of competitive candidates led in the polls by a lone wolf (Jair Bolsonaro, a right-wing populist from a small party). Considering that the economy has just exited a prolonged recessionary cycle and is not yet growing, with unemployment at historic highs, there is a palpable and generalized sense of dissatisfaction. Moreover, voters feel their interests are not adequately reflected by the political establishment, which drives the popularity of two ideological extremes (the frontrunner and the Workers Party candidate). Add to this the stabbing of the frontrunner at a recent campaign rally further clouding attempts to predict the election. Public acknowledgement that this election will in many ways determine country s future has led research institutes to conduct several polls that often draw disparate conclusions, mostly due to the methodologies used. The data Concordia has analyzed points to an unpredictable contest with five candidates capable of reaching the runoff. The high degree of political instability suggests that the margin of error in existing polls is larger than in previous elections. Historical analysis also suggests that the scenario will only be defined a week ahead of the elections (by 1 October). The only consensus among analysts is that the campaign will be intense and prone to twists and turns. Concordia believes that, by a narrow margin, the anti Worker s Party sentiment will prevail and put push Bolsonaro s candidacy over the top, but much can happen before the runoff vote on 28 October. This race is still too close to call. As far as the Legislative branch and the States are concerned, a plethora of social movements promoting political renewal, joined by some recently founded parties (bringing the total to 35), are not expected to resonate substantially to bring about meaningful political reform. The legislation crafted by incumbents that governs the system will channel voters toward traditional parties and promote the status-quo. The result being a rotation of power in the States among existing political parties. We estimate that, in Congress as well as in most State Assemblies, the large parties (MDB, PSDB and PT) will continue losing seats and in turn will join a handful of midsized parties to share a new central bloc of power. This movement toward ever greater fragmentation will make it more difficult for the president-elect to obtain a majority and approve reforms. Even moderate Geraldo Alckmin (PSDB), who boasts about his nine-party coalition, will have difficulties keeping his coalition together. In State Assemblies, there should be a small reduction in the number of parties represented, and no significant changes are expected, providing an easier path for future governors-elect to form majorities. Team Concordia 6

7 GENERAL ELECTIONS AT FEDERAL AND STATE LEVEL PRESIDENCY OF THE REPUBLIC NATIONAL CONGRESS STATES President & Vice President Four-year term 1/1/2019 to 31/12/ % of the CHAMBER 513 federal deputies Four-year term 1/1/2019 to 31/12/2022 2/3 of the SENATE 54 senators Eight-year term 1/1/2019 to 31/12/ STATES will elect governors and state deputies Four-year term 1/1/2019 to 31/12/2022 Election will most likely take two rounds and the candidate who obtains the majority (50% + 1) of the valid votes wins. Election by a proportional open list system, considering the votes received by each coalition. Majority election, each voter has two votes. Two round election (if necessary) for governor and proportional open list, considering the votes received by the coalition for state deputies. 7

8 IMPORTANT RULES As there has already been an assassination attempt on the frontrunner, and the second place candidate died in the late stages of the 2014 election, it is important to note the rules that apply in the event of death, resignation or withdrawal between today and the end of the presidential term in There is some legal uncertainty regarding what happens if the winning candidate dies after final election results (runoff) are published but before the inauguration. In our opinion, the thesis of confirmation of the running mate should prevail. 8

9 PRESIDENTIAL ELECTIONS TOP 5 CANDIDATES 5 FACTORS THAT DEFINE THE WINNER JAIR BOLSONARO (PSL) Vice: Antonio Mourão (PRTB) Coalition: PSL + PRTB Communication 5 TV time Social media TV debates & narrative FERNANDO HADDAD (PT) Vice: Manuela D Avila (PCdoB) 4 3 Coalition: PT, PcdoB + PROS CIRO GOMES (PDT) Vice: Katia Abreu (PDT) Growth potential Rejection rate Appeal to undecideds Voting intentions Performance in polls Coalition: PDT + AVANTE GERALDO ALCKMIN (PSDB) Vice: Ana Amélia (PP) Coalition: PSDB, PTB, PP, PR, DEM, SD, PPS, PRB + PSD Campaign Strength Campaign experience Campaign organization Financing Political Support Local electoral support State coalitions Decisive point MARINA SILVA (REDE) Vice: Eduardo Jorge (PV) Strong point Not a differential Coalition: REDE + PV *Note: (Political Party) 9

10 JAIR BOLSONARO (PSL) Jair Bolsonaro is a former army captain who sells himself as a political outsider despite serving his seventh consecutive term as a federal deputy. He was the most voted deputy of Rio de Janeiro state in 2014 with 465,000 votes and has been a member of seven different parties in his 27 years of political life. ELECTORAL PERFORMANCE A lover of controversy, he has assumed a more moderate tone. He is a strong supporter of the military and has promised to eschew political appointments in favor of competent professionals to promote liberal economic measures. Communication TV time Social media TV Debates & narrative Vice: Antonio Hamilton Mourão (PRTB) Army Reserve General Mourão is a conservative provocateur. On several occasions he has stated that "only the armed forces could reestablish order in a country of corrupt politicians." He has also moderated his tone in recent interviews as Bolsonaro has grown in the polls. Chairs the Military Club and leads the movement of former military officers entering politics. On fiscal matters, he favors privatizing state companies and balancing the budget through reduced spending. Growth potential Rejection rate Appeal to undecided Voting intention Performance in polls Coalition: PSL + PRTB (with only 8 federal deputies and no senators) Bolsonaro has not been able to negotiate broader alliances with the political class. Main advisors: Paulo Guedes: Should become Finance Minister, likely with broader powers magnified by the merger of other ministries. An avowed neoliberal, he will need to surround himself with strong advisors to manage day to day economic policies. His quick temper calls into question his ability to carry out political negotiations. Onyx Lorenzoni: Prominent campaign manager and responsible for negotiations with other members of congress. Others: Sen. Magno Malta (PR), Dep. Mandetta (DEM), Dep. Eder Mauro (PSD), Dep. Major Olimpio (SD), Francischini e Luciano Bivar (PSL) and General Augusto Heleno. Campaign Strength Campaign experience Campaign organization Financing Political support Local electoral support State platforms Advantages: Adept communicator that knows how to harness popular dissatisfaction with the political class (there are clear parallels with the strategy adopted by President Trump in the US) Weaknesses: Campaign with no TV time and no representation across much of the country. Absence from debates and public events after being stabbed can hurt down the stretch. 10

11 FERNANDO HADDAD (PT) Fernando Haddad is a professor and politician from São Paulo. He has always been linked to the Worker s party (PT). Former mayor of São Paulo and Lula s Minister of Education, he was chosen as the PT candidate once Lula was barred from running because he represents a new face within the party, without any involvement in the Car Wash investigations. He favors progressive causes and this would be reflected in his potential government. Nonetheless, he will have limited control over political negotiations or the PT s governance model. ELECTORAL PERFORMANCE Communication TV time Social Media Debates & Narrative Vice: Manuela D Ávila (PCdoB) Well-known politician from Rio Grande do Sul, she has been the most popular federal deputy in her state every time she has run. She began in politics at age 23 in 2004 and despite her age has robust parliamentary experience. Before joining the PT coalition, she was her party s choice to run for president. Like Haddad, she also promotes a progressive agenda and favors tax reform based largely on raising taxes on the wealthy. Growth Potential Rejection Rate Appeal to undecideds Voting intention Performance in polls Coalition: PT / PCdoB / PROS (82 Deputies and 11 Senators) If elected, he may manage to attract other parties beyond those of the traditional left. Main advisors: Emidio de Souza: A campaign coordinator and trusted confidant. Former secretary in Haddad s São Paulo City administration and member of the PT s National Board. Chico Macena: Replaced Berzoini as campaign treasurer on Haddad s request. He was responsible for political coordination within Haddad s administration in São Paulo. Rui Falcão: Campaign coordinator, very close to Lula. Former PT party president, is running for federal deputy in São Paulo. Party leadership: At first, Haddad will struggle to distance himself from PT s leadership, such as Gleisi Hoffman, Jacques Wagner, Paulo Teixeira and Lula. Campaign Strength Experience in campaigns Campaign organization Financing Political Support Local electoral support State coalitions Advantages: Ability to attract much of Lula s electorate; a powerful and efficient party machine with extensive election expertise. Weaknesses: Has never run for national office; unknown by a large part of the national electorate; suffered crushing defeat in his last election for mayor of São Paulo in

12 CIRO GOMES (PDT) Ciro Gomes is a trained lawyer and experienced politician that has held many public positions over his 35-year political career. Previous offices include the mayor of Fortaleza, governor of Ceará and Finance Minister. Has switched parties six times and last held public office in ELECTORAL PERFORMANCE In his third presidential campaign, he is selling himself as a left-wing alternative to the PT. He is a competent public speaker famous for his short temper. He is known for centralizing power and his employment-focused development agenda that favors industrial labor. Communication TV time Social Media TV Debates & Narrative Vice: Kátia Abreu (PDT) Psychologist by training and ruralist in practice, Kátia is a conservative politician who was once president of the National Agriculture Confederation and Minister of Agriculture during Dilma s second term. His choice as VP shows Ciro s difficulty in forging political alliances, given that Abreu is from his own party and does not enhance his electoral appeal. Growth potential Rejection rate Appeal to undecideds Voting intention Performance in polls Coalition: PDT + Avante (24 federal deputies and 3 senators) His explosive behavior and the PT s decision to run their own candidate made it difficult to negotiate alliances with center-left parties. But it would be easier to achieve this in the second round. Main advisors: Cid Gomes: Former politician and Ciro s brother and main ally, he is a leading campaign coordinator. Carlos Lupi: PDT party president and general campaign coordinator. Despite pending investigations for corruption, Ciro would appoint him as minister in a heartbeat. Mauro Benevides Filho: Economist from the Federal University of Ceará and would be responsible for economic policy. Likely to be appointed Finance Minister. Campaign Strength Campaign Experience Campaign organization Financing Political support Local electoral support State coalitions Advantages: Gets his ideas across, has been doing well in debates and has the potential to gather more support from the center-left. Weaknesses: Weak coalition, rejected by the Market with his VP and Carlos Lupi shrouded in controversy. 12

13 GERALDO ALCKMIN (PSDB) Geraldo Alckmin is a traditional politician from São Paulo known as a moderate and for his ability to negotiate broad coalitions. ELECTORAL PERFORMANCE Has had a successful career in politics, rising from city council of to serving as governor of São Paulo for 14 years. He touts his achievements leading São Paulo s government in the election and is the current president of the PSDB. He is the preferred candidate of a the financial sector and the political class. However, his well structured party apparatus and leading amount of TV time has not been enough to overcome his lack of charisma in such a polarized election. Communication TV time Social media TV debates & narrative Vice: Ana Amélia Lemos (PP) Senator from Rio Grande do Sul since 2011, she represents a conservative electorate and has close ties with agribusiness. She is a leading female voice in stark opposition against the PT. In the Senate, she has been a recognized leader in healthcare policy. Growth potential Rejection rate Appeal to undecideds Voting intention Performance in polls Coalition: PSDB / PTB / PP / PR / DEM / SD / PPS / PRB / PSD He has formed a broad coalition, which would give him a majority in the current formation of the Congress, with 53% of the Chamber and 46% of the Senate. Main advisors: Pérsio Arida: Economist, academic and banker, was an architect of the Real Plan, and is the first choice to lead liberal reforms in the Finance Ministry. Campaign Strength Campaign experience Campaign organization Financing Political support Local political support State coalitions Senator Tasso Jereissati: Campaign coordinator and a senior leader of the PSDB; a politician and businessman. Luiz Felipe D Ávila: Was expected to run for the governor of São Paulo; a political scientist expected to hold a high profile office in the government. Duarte Nogueira: Mayor of Ribeirão Preto and federal deputy for 4 terms; one of Alckmin s top supporters in São Paulo s PSDB leadership. Advantages: Experienced in political campaigns, he has the most TV campaign time and the support of the PSDB political establishment. Weakness: Lack of charisma and a clear narrative that energizes the electorate in a changed environment; his moderate stance has not resonated with voters. 13

14 MARINA SILVA (REDE) Marina Silva is from the remote and impoverished state of Acre. The daughter of rubber tappers, she is known for her environmental advocacy. ELECTORAL PERFORMANCE Now in her third presidential bid, Marina was Brazil s youngest senator in 1994 and led the Ministry of Environment for 6 years in Lula s government. Along the campaign, she has espoused centrist policies while vehemently denouncing PT corruption. However, her falling numbers suggest that many of her voters are shifting support to Ciro or Haddad under the assumption that they have a better chance of defeating Bolsonaro. Communication TV time Social media TV debates & narrative Vice: Eduardo Jorge (PV) A doctor by training, Jorge was one of the founders of PT and was elected federal deputy for the first time in He is known for supporting controversial positions such as legalizing abortion and marijuana. He is a vocal critic of corruption and the status quo. Marina s choice of VP corroborates the theory that she will only choose politicians untouched by corruption, but shows a general lack of political reach. Growth potential Rejection rate Appeal to undecideds Voting intention Performance in polls Coalition: REDE + PV (6 federal deputies, 1 senator) She has had difficulty negotiating political alliances. Main advisors: Eduardo Giannetti and André Lara Resende are responsible for the campaign's economic platform. Both are respected intellectuals with a liberal bent, softened by the ideas of center-left. However, neither of them would likely be named Finance Minister. João Paulo Capobianco: Campaign coordinator, worked with Marina in the Ministry of Environment and is a long-time friend and adviser. Deputy Miro Teixeira (RJ-REDE): An experienced federal deputy, Miro is a candidate for the senate and a member of the Marina campaign committee. Campaign strength Campaign experience Campaign organization Financing Political support Local political support State coalitions Advantages: She has electoral recall in the range of 15% and her moderate posture can attract undecideds and people tired of political polarization. Weaknesses: Inability to create compelling anti-pt and anti-bolsonaro narrative, hurt by demonstrating indecision in countless moments of the campaign. 14

15 COMPARISON: COMMUNICATION CAPACITY TV Time 27% Internet x TV Media IBOPE/CNI Paraná Polls Bolsonaro has almost no TV time, but is charismatic and says what voters want to hear. He has the largest number of Facebook followers and several impact videos made by supporters. His distance from street rallies and internal misalignments amongst campaign advisors have damaged his communication capacity in recent weeks. 1% 3% 6% 19% 44% TV 62% 37% Internet News 33% Social Media / blogs 26% 43% Haddad has the second most TV time and a social media advantage thanks to the PT machine. The emotional appeal of Lula s imprisonment has the potential to win over voters. However, he missed over half of the TV debates and interviews while Lula s candidacy was being challenged in the courts. Alckmin Ciro Bolsonaro Haddad Marina Others Newspapers 17% 6% Radio 17% 4% Ciro has charisma and uses catchphrases that capture voter attention and generate spontaneous media and memes. But his performance in debates has been lackluster thus far, and his TV time is minimal. Social Media Followers Alckmin has 44% of the total allocated TV time and enough money to create quality content. However, his campaign lacks a convincing narrative, focused on criticizing the frontrunner, with more charisma and better messaging (Bolsonaro). In debates he is the sole representative on the right and as such is a constant target and remains defensive. Marina has the smallest communication capacity due to her lack of TV time, has a complex narrative and is uninspiring in debates and interviews. On the other hand, she has the second largest number of followers and is supported by an Academy award-winning director. 15

16 COMPARISON: POLITICAL SUPPORT STATE PLATFORMS POTENTIAL SUPPORTERS MAYORS¹ (%) Marina Bolsonaro 2% 0% 0% 1% Alckmin 14% 39% Alckimin (PSDB) Haddad (PT) Ciro Gomes (PDT) Divided scenario Undefined A state is considered a platform for a candidate in cases where the current governor or front-runner is the most influential political figure in the territory. In states with no defined political leader, state platforms are indicated as Divided or Undefined. 0% Ciro Gomes 6% Coalition Party 2% Haddad 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 3% Marina 0% POTENTIAL SUPPORTERS COUNCILMEN¹ (%) The political support analysis allows a better understanding of the national reach of each campaign, reinforcing TV spots, rallies and other campaign actions: Bolsonaro 1% 2% Alckmin is the candidate with the largest (potential) reach in the country, having the largest number of elected PSDB councilmen and mayors, as well as from his coalition. However, there are indications that many of those in the Northeast, are supporting Lula, and others in the South and Center-West are supporting Bolsonaro. PT remains strong in the Northeast, with the support of well-liked governors and leading candidates in the region. The party maintains a large number of mayors and councilmen in the region. Ciro Gomes is also strong in the Northeast, but will struggle against the PT in the region and has scattered support in the North. Bolsonaro and Marina do not have state platforms and their local support bases are weak if compared to the other candidates. 40% Alckmin 9% 0% Ciro Gomes 7% Coalition Party 3% Haddad 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% ¹ Percentage of total councilmen and mayors in Brazil members of a party or coalition. Source: TSE Stats (accessed in August 2018). 16

17 COMPARISON: CAMPAIGN STRENGTH CAMPAIGN EXPERIENCE CAMPAIGN ORGANIZATION Bolsonaro Marina Ciro Haddad Alckmin Weighting of each criterion: Elected: W4 Presidential campaigns: W2 Majority campaigns: W2 Proportional campaigns: W1 Haddad s campaign committee is the most organized, and the one with higher number of collaborators. Alckmin s committee comes in second place, and he has the support of allied parties. Ciro and Marina s campaigns are also well organized and they have collaborators in different areas, but with less resources. Bolsonaro s committee is small, less organized and is struggling with internal alignment; his strength lies on spontaneous mobilizations in different cities. Elected Presidential Majority voting Proportional voting CAMPAIGN FINANCING TRAVEL SCHEDULE/ RECENT EVENTS Bolsonaro Marina Ciro Haddad Alckmin in R$ million Weighting of each criterion: Mobilization: W3 Key states: W2 Variety: W2 Quantity: W1 Bolsonaro Marina Ciro Haddad Alckmin Key states Variety Quantity Mobilization Alckmin Haddad Ciro Marina Bolsonaro 17

18 UNDECIDED VOTER PROFILE Null Voter (Blank Ballot) Average*: 13% (11% for spontaneous answers) Age: 22% in each age group over 25 years-old Income: similar to the general voter profile (small bias towards smaller incomes) Region: similar to the general voter profile (small bias towards Southeast) Gender: 66% of undecided voters are female Does not know* Average*: 6% of total voters (30% for spontaneous answers) Age: 65% are over 45 years-old Income: 75% earn up to 2 times the minimum wage Region: 37% live in the Northeast and 34% in the Southeast Gender: 73% are female? Bolsonaro is the candidate whose supporter profile differs the most from that of undecided voters. As such, he would likely benefit the most from a higher number of blank ballots Theoretically, Haddad is the candidate who could most benefit from these voters, followed by Ciro, because of their higher acceptance among women, the oldest voters and people in the Northeastern region. It is difficult to predict how many voters will cast a blank or null ballots, but the current figure is 4% higher than the number of blank and null votes in the first round of the 2014 election. If on the one hand, the protest vote is likely to play a major role in these elections, this could be at least partially hindered by increased polarization. *Based on the last four IBOPE and folha polls 18

19 VOTER INTENTION POLLS Evolution of Voter Intention 2018 stimulated responses % Jair Bolsonaro Fernando Haddad Geraldo Alckmin Ciro Gomes Marina Silva Outros Brancos e Nulos Não Sabe 19

20 ANALYZING PREVIOUS ELECTION POLLS Voting intention folha Voting intention folha % 25 % /abr 04/jun 02/jul 20/ago 24/set 08/out 19/out 03/nov 07/nov 10/nov 15/nov 0 09/mai 06/jun 02/jul 17/jul 18/ago 29/ago 03/set 19/set 26/set 02/out 04/out Fernando Collor Leonel Brizola Lula Dilma Rousseff Aécio Neves Marina Silva Outros Others Brancos Blank Votes e Nulos Não Undecided Sabe Outros Others Brancos Blanke Votes Nulos Não Undecided Sabe Since the return to democracy, only two elections were similar to the 2018 elections in terms of political polarization: 1989 and All other presidential elections ( ) were a race between the two contenders with the highest voting intentions in the first round or, in 1994 and 1998 that was decided in the first round. In polarized scenarios like this one, history shows that the leader in voting intentions in the first round has a tendency to lead the race throughout the entire campaign and win it. The definition of the second candidate to advance to the runoff stage, however, is usually defined in a tight battle between the second and third place candidates in the polls, with polling numbers only showing accuracy as to the final result a few days before the first round (5 days in 1989 and 2 days in 2014). In more stable years, the contest was between the two best placed candidates, with a certain runoff ballot before the start of TV campaigning, which started 3 months before election day. In all of these instances, the leader in voting intentions since the outset of the race reached the Presidency (being reelected in half of the cases). It is possible for a candidate to peak twice in voting intentions; lose traction and then regain votes throughout the campaign. This happened with Collor, Dilma and FHC. But Marina Silva seems to be an exception to this rule since she peaked in polls three weeks before the election and did not recover in 2014; she has already peaked and showing no signs of recovery. 20

21 COMPARISON: GROWTH POTENTIAL IN 1 ST ROUND Rejection rates over time Bolsonaro has the lowest growth potential due to a high absolute rejection rate, specifically among the poorest (up to 2 times the minimum wage), Northeast and female audiences. This demographic represents the average Lula voter, and is the profile of the majority of undecideds Candidate Bolsonaro Alckmin Marina Ciro Haddad IBOPE folha folha IBOPE DATAFOLHA Rejection by demographic Income Gender Age Region High Low High High Low High Low Bolsonaro Poorest Richest Female Between 16 and and older Northeast South Marina Balanced Male Balanced Balanced Alckmin Balanced Male Balanced - South Ciro Richest Poorest Male - Haddad Richest Poorest Male 60 and older Between 16 and 24 Between 16 and 24 Southeast Balanced Northeast Marina is the candidate who, despite her high rejection rate (2 nd place overall), does not have a specific demographic indicatoronly a slightly more significant rate in terms of gender. This means she has limited growth potential given that she does not have a captive electorate. In the event that any candidate stumbles, these votes would migrate to other candidates. Alckmin s voter profile is similar to Marina s, in that those who reject him cannot be identified as a cohesive demographic group. However, his absolute rejection rate is lower than Marina's. In this sense, he could gain votes as an alternative to the Bolsonaro/Haddad polarization due to "useful vote" reasoning. Ciro has significant growth potential because he has the lowest rate of absolute rejection among all candidates, which goes with his support among the poorest and women. His voter profile mirrors that of Lula's and the undecideds, so he is competing directly with Haddad for this group. Haddad s voter profile is similar to Ciro s, but with the caveat of having better support in the populous Northeastern region, Lula's electoral stronghold. Given that the Northeast voter profile coincides with that of the undecideds, he has the greatest growth potential of all candidates.

22 RUNOFF SCENARIOS From opinion polls and runoff scenarios, we can reach the following conclusions: Haddad Ciro Marina Bolsonaro Alckmin 1. Instability remains high and there is no clear favorite to win the elections. 2. There are discrepancies between polls from different research institutes. 3. Ciro Gomes has the best runoff performance but its chances of getting that far are diminishing. 4. Bolsonaro is gaining favor and closing the gap with other candidates. 5. Polls indicate that Bolsonaro and Haddad will compete in the runoff. 6. Only Ciro and Haddad will likely support one another in a runoff. Haddad Ciro Marina Bolsonaro Alckmin Ciro TIE Bolsonaro Alckmin V:45% P:27% V:39% P:34% Ciro Ciro TIE Ciro Average* C: 42% x H: 28% Average* C: 42% x H: 28% V:45% P:27% V:45% P:27% B:41% H:40% V:44% P:32% V:45% P:38% V:44% P:32% M:43% B:39% Alckmin V:40% CiroP:32% V:40% Alckmin P:34% A:39% M:36% TIE V:45% P:38% TIE Ciro Bolsonaro Alckmin Average* H: 36% x M: 34% TIE Ciro Bolsonaro Average* B: 41% x H: 39% Average* A: 36% x H: 32% Average* V:39% P:34% C: 44% x M: 27% Average* C: 42% x B: 38% Average* C: 39% x A: 31% Average* H: 36% x M: 34% Average* C: 44% x M: 27% Average* B: 41% x M: 36% Average* A: 35% x M: 32% FSB** B: 46% x H: 38% Ibope** C: 40% x B: 39% Average* B: 41% x M: 36% M:43% B:39% Average* B: 39% x A: 37% Average* A: 36% x H: 32% Average* C: 39% x A: 31% Average* A: 35% x M: 32% Bolsonaro FSB** B: 43% x A: 36% *Average of the last 6 polls (Folha (x2), Ibope, Ipespe, FSB e MDA) **Research institutions 22

23 WHAT TO EXPECT IF ELECTED Bolsonaro should adopt a similar strategy to Trump and try to fulfill some of his campaign pledges early in his term. However, many promises require congressional approval and lack consensus. At the same time, we believe he would maintain the more conciliatory tone he has adopted in the final months of the campaign. Already there are signs of approximation with some leaders of the center parties, which would provide a window of opportunity to approve reforms and controversial projects in the first months of his term. One of the dangers, for example, would be to reintroduce a financial transactions tax if the negotiation to create a national VAT fails. His biggest challenge will be to overcome amateurism and attract competent people to head key ministries. Haddad has also given signs that, at least in the economic field, he must adopt more orthodox measures. However, there will be pressure from the party and part of its support base not to re-establish fiscal balance and reverse several of the policies adopted by the Temer government (e.g.: liberalization of labor laws). In the event of extreme radicalization, there is a possibility that the military would attempt to respond in some fashion. However, this is not our base scenario. If the PT manages to maintain the size of its coalition in the Chamber, Haddad will probably seek and negotiate to form a minimal support base in Congress, reducing the temptation of radicalization. Ciro must use his political experience to set up a ministerial team that will guarantee him a majority in Congress. His biggest challenge will be to avoid criticism that he is reverting to business as usual and aligning with the same politicians as the Temer or Dilma government. In economic policy he could be more adventurous than Haddad in pushing leftist policies in line with his philosophies on national development. He would favor the industrial sector and block any attempts to privatize state-owned companies. Alckmin will most likely use much of his political capital in the early months of his government to try to approve pension reform. Although he now has the formal support of the center and a likely simple majority in the Chamber of Deputies, he may face the same opposition and betrayal experienced by Temer from within his own coalition. Corruption investigations are expected to be a distraction, but they would not lead to a political crisis since they could not lead to impeachment on legal grounds. However, unlike the state government, he will face frequent crises of all kinds, such as a possible increase in strikes and demonstrations. Marina should have no difficulty in setting up a cabinet of notables, for example, she would maintain the same economic team that now occupies the Ministries of Finance and Planning. Despite stating that she wants to discuss pension reform calmly, her top economic advisers know urgent action is needed in the first months of the administration. While environmental advocacy is her flagship platform, we do not expect drastic measures in this area, such as suspending the granting of environmental licenses. Her greatest difficulty will be to negotiate with Congress. Her theory of governing with the good of each party will hardly work with the Congress that will be (re) elected in October. 23

24 CONGRESSIONAL ELECTIONS ANALYSIS 100% CHAMBER OF DEPUTIES 513 federal deputies 4-year Term 01/01/ /12/2022 2/3 SENATE 54 senators 8-year Term 01/01/ /12/

25 SENATE OVERVIEW In these elections, two thirds of the Senate (54 seats) are in play. In addition, among the 27 senators with terms expiring in 2022, 18 (66.5%) are running for other offices elections - 16 for state governor, one for president (Alvaro Dias) and one for vice president (Katia Abreu). This means that there is a potential turnover of up to 85% of the Senate (alternates take the place of those winning other offices who s terms expire in 2022). However, our estimates indicate that only 4 senators will win governorships, and the total turnover is expected to approximately 44% (36 seats). We estimate that of the 54 senators, 24 will win re-election, representing a re-election rate of 44% 1, which is high by historical standards. The average re-election rate over the last 5 elections was 25%, reaching a low point of 15% in However, among the potential 36 new senators, only 7 from outside the traditional political parties that have wielded state and federal legislative power. In other words, the expected "real renewal" is only 8.6% of the Senate. There is still a reasonable degree of uncertainty in relation to 21 of the 54 seats, which are concentrated in 12 states, and only in Goais and Roraima states are the races wide open without any definition (i.e.: according to current information, Romero Jucá has still not secured re-election). In general, we expect few changes in the composition of the Senate, either on the basis of party or thematic caucuses. We expect the re-election of the current Senate president, Eunício Oliveira, as well as the majority of other current leaders. 1. Total renewal rate is the number of new senators after the elections vis a vis the 81 senators sitting before the elections. The re-election rate is equivalent to the number of re-elected senators versus the number of seats in contention. The electoral success rate in re-election would be the number of senators re-elected, divided by the number of senators seeking re-election, which should reach 75% in

26 WHAT IS AT STAKE IN THE SENATE 36 (44%) new senators 45 (56%) same senators 8 senators will probably not be re-elected and leave the Senate 24 senators will probably be re-elected and remain in the Senate 14 candidates are running for federal and/or state government positions, but are likely to lose and remain in the Senate 22 opted not to run for re-election and will leave the Senate 9 are not running for any elective position and will certainly remain in the Senate 4 are running for governor and will likely win and leave the Senate 2/3 with mandate ending this year 1/3 with mandate up to

27 SENATE PARTY CAUCUSES FORECAST BEFORE (2018) FORECAST (2019) MDB (-2) PODE (0) PR (-1) PTC (0) PSC (+2) PPS (0) PSDB (-2) DEM (0) PTB (0) Sem Partido (0) PV (+1) PRP (+1) PT (0) PSD (+1) PDT (+1) REDE (+1) PROS (-1) PSL (+1) PP (-2) PSB (+1) PRB (-2) PCdoB (0) PHS (+1) 27

28 CHANGES IN PARTIES SEATS AND LEADERS Party Current Caucus Minimum Caucus Maximum Caucus CC Forecast Balance MDB PSDB PT PSD PSB PODE DEM PDT PP PR REDE PSC PTB PHS PCdoB PPS PRP PSL PV No Party PTC PSOL SD PRB PROS In general, we do not expect significant changes to the level of political fragmentation in the Senate. The three parties with the largest caucuses (MDB, PT and PSDB) may lose a few chairs, but keep key leadership positions. Among these, it is worth highlighting that MDB will likely maintain its hegemony in the Senate and, as a consequence, senators Eunício Oliveira or Renan Calheiros will be the Senate s Chairman. MDB will also likely keep the chairmanship of the Constitutional Affairs Committee. PT s and PSDB s strength is linked to the presidential election, in the sense that whoever is allied to the winning candidate will maintain a certain influence in the Senate. As a consequence one of the two parties will preside over the Economic Activities Committee or the Science and Technology Committee; PSD will probably keep the other one. The number of parties with representation will likely increase from 17 to 20. This fact, together with the relative party fragmentation, indicates the maintenance of the status quo. Many of the Senate leaders will be reelected, such as Eunício Oliveira, Renan Calheiros, Jorge Viana, Eduardo Braga, Ricardo Ferraço, Edson Lobão, Paulo Paim, Ciro Nogueira, Cassio Cunha Lima and Jader Barbalho. Along these lines, it is noteworthy that none of the current presidential coalitions has obtained the quorum of absolute majority (41) or the 3/5 majority (49) the latter being necessary for approving constitutional amendments. 28

29 MAIN CHANGES IN THE STATES It is likely that 23 out of the 27 Brazilian states will elect new senators. Fifteen states are likely to elect only one new senator (59%); 5 states are to elect two new ones (19%); 3 states will elect all new senators (11%); and 4 states will not change any of the existing ones (11%). Goiás, Minas Gerais and Rio Grande do Norte will elect all new senators: the senators with mandates ending this year will likely not be reelected, and those with mandates until 2022 (Caiado, Anastasia and Fátima Bezerra) will most probably be elected governors in their states. On the other hand, Espírito Santo, Amazonas, Pará and Roraima will reelect all senators. The most uncertain scenario is in Roraima, where there is a fierce competition between the three main candidates (Romero Jucá, Ângelo Portela and Mecias de Jesus). In São Paulo, José Serra is the only senator who will maintain his mandate until By contrast, the South region tends to renew only 3 out of its 9 senators (33%); and the Northeast 9 out of 27 (44%). 29

30 MAIN CHANGES IN THEMATIC CAUCUSES Caucuses Current 2019 Variation Public Security Education Evangelical Environment Healthcare Human Rights Science & Technology Unionists Business Agriculture & Livestock The main reason for the expected reduction in the Agriculture & Livestock and Business caucuses is that 6 of their current representatives are unlikely to be re-elected, as well as many others running for other offices. The significant increase in the Public Security caucus reflects the increased relevance of this issue for the public. The Evangelical caucus tends to double in size at the Senate, as a result of the religion s relevance and the increase in conservatism within the political scenario a trend that was already present in the Chamber of Deputies in the last elections. The remaining caucuses, many not as coherent or formally established, will probably not undergo as many changes; the few alterations that could happen are a consequence of the higher degree of party fragmentation, which also leads to a weakening of the Centrão. 30

31 MICRODATA SENATE No Renewal 1 Senator Renewal AM Senator Eduardo Braga Vanessa Grazziontin Omar Aziz Party MDB PCdoB PSD AC Jorge Viana Sergio Petecão Gladson Cameli PT PSD PP Mailza Gomes PP AL Renan Calheiros Benedito de Lira Fernando Collor MDB PP PTC Rodrigo Cunha PSDB ES Senator Rose de Freitas Magno Malta Party PODE PR AP Davi Alcolumbre João Capiberibe Randolfe DEM PSB REDE Janete Capiberibe PSB CE Eunício Oliveria Tasso Jereissati José Pimentel MDB PSDB PT Cid Gomes PDT Ricardo Ferraço PSDB PA Senator Jader Barbalho Flexa Ribeiro Paulo Rocha Senator Party MDB PSDB PT Party DF PB Cristovam Buarque Hélio José Reguffe PPS PROS Sem Leila do Vôlei PSB José Maranhão Raimundo Lira Cássio Cunha Lima MDB PSD PSDB Veneziano PSB MA PE Edison Lobão João Alberto Souza Roberto Rocha MDB MDB PSDB Sarney Filho PV Bezerra Coelho Humberto Costa Armando Monteiro MDB PT PTB Jarbas Vasconcelos MDB RR Roméro Jucá Ângela Portela Telmário Mota MDB PDT PTB PI Elmano Ferrer Ciro Nogueira Regina Sousa PODE PP PT Wilson Martins PSB PR Roberto Requião Gleisi Hoffman Álvaro Dias MDB PT PODE Oriovisto Guimarães PODE 31

32 MICRODATA SENATE 1 Senator Renewal 2 Senators Renewal Complete Renewal Current Senator Partido New Senator Party RS Ana Amélia Lasier Martins Paulo Paim PP PSD PT José Fogaça MDB BA Roberto Mnuiz PP Jaques Wagner PT Lídice da Mata PSB Irmão Lázaro PSC Otto Alencar PSD - - GO Ronaldo Caiado DEM Luiz Carlos MDB Wilder Morais DEM Jorge Kajuru PRP Lúcia Vânia PSB Vanderlan PSDB RO Valdir Raupp Acir Gurgacz Ivo Cassol MDB PDT PP Confúcio Moura MDB MS Simone Tebet MDB - - Waldemir Moka MDB Zeca do PT PT Pedro Chaves PRB Nelsinho Trad PTB MG Current Senator Partido New Senator Party Zeze Perrella MDB Dilma Rousseff PT Aécio Neves PSDB Rodrigo Pacheco DEM Antonio Anastasia PSDB Alexandre Silveira PSD SC Dário Berger Dalírio Beber Paulo Bauer MDB PSDB PSDB Esperidião Amim DEM MT José Medeiros PODE Jayme Campos DEM Rodrigo Palma PR Nilson Leitão PSDB Wellington Fagundes PR - - RN Current Senator Partido New Senator Party José Agripino DEM Capitão Styvenson REDE Garibaldi Filho MDB Zenaide Maia PHS SE Maria do Carmo Antonio Carlos Vala. Eduardo Amorim DEM PSB PSDB André Moura PSC RJ Romário PODE - - Eduardo Lopes PRB Flávio Bolsonaro PSL Lindbergh Farias PT Cesar Maia DEM Fátima Bezerra PT Jean-Paul Prates PT TO Katia Abreu Vicentinho Alves Ataídes Oliveira PDT PR PSDB Irajá Abreu PSD SP Airton Sandoval MDB Eduardo Suplicy PT Marta Suplicy MDB Mara Gabrilli PSDB José Serra PSDB

33 CHAMBER OF DEPUTIES OVERVIEW In the Chamber of Deputies, we expect that the largest parties will continue to lose space and elect less deputies, possibly with the exception of the PT, which made an effort to attract enough votes to at least maintain their current representation. Simultaneously, medium-sized parties (PP, PR, DEM, PSD, PRB, etc.) have also invested a good portion of their electoral funds in the re-election of their deputies and could maintain, or even marginally increase, their representation. If this were to happen, the Chamber could have 6 parties with approximately 45 seats each, followed by other 4 parties with almost 30 chairs each as of This phenomenon would mean that forming a majority in Congress will be more difficult, and will require gathering seven out of the ten medium-sized parties in order to have a simple majority. Concordia also foresees less coherence, and thus further weakening within parties. We do not expect a rupture because many parliamentarians still rely heavily in party funds, which are controlled by party leaders, but we believe many of the newcomers may vote more independently. The main leaderships present in the mandates might be re-elected and keep control of the main permanent commissions and Steering Committee. However, Rodrigo Maia s re-election is not guaranteed given the turbulence in the presidential election. In a Bolsonaro or Haddad scenario, there will likely be more competition for the top post. In a Bolsonaro scenario, parties with more leftist tendencies will probably unite to form the opposition (PT, PDT, PSB, PSOL, PCdoB and REDE) with around 130 and 140 deputies, or one fourth of the Chamber. 33

34 MAIN CHANGES IN THEMATIC CAUCUSES Caucuses Current 2019 Variation Public Security Education Evangelical Environment Healthcare Human Rights Science & Technology Unionists Business Agriculture & Livestock The main reason for the speculated reduction of the Agriculture & Livestock and Business caucuses is the expectation that 6 of their representatives will not be re-elected, besides that many are running for other offices. The significant increase in the Public Security caucus reflects the rise of this topic s relevance to public opinion. The Evangelical caucus could double in size in the Senate, as a result of an increase in the movement s societal role and in conservatism within the political scenario a tendency that was already present in the Chamber of Deputies in the last elections. The rest of the caucuses, many not as coherent or formally established as the ones previously mentioned, will not likely see as many changes; the few alterations that could happen are a consequence of the higher degree of party fragmentation, which also leads to a weakening of Centrão. 34

35 MAIN CHANGES IN PARTIES PARTIDO BANCADA ELEITA (Jan 2015) BANCADA ATUAL (Out 2018) VARIAÇÃO ( ) ESTIMATIVA BANCADA (Eleitos em 2018) VARIAÇÃO (Jan Jan 2019) PT MDB* PSDB PP PSD PR DEM PSB PRB PDT PTB PSL SD PROS NOVO PPS PSC PSOL PODE/PTN PCdoB PV REDE PTdoB/AVANTE PHS PRTB PEN/PATRI PRP PMN DC PTC PPL In general, we estimate that larger parties (PT, MDB and PSDB) will keep losing strength and will join a group of 10 medium-sized parties in Chamber of Deputies. Among these three parties, the PT might be the less affected because of its strategy to focus on electing federal deputies instead of senators and state governors. PSDB, in turn, will be more affected because of the damage caused by Operation Car Wash and because of the growth of competing parties such as NOVO in the southeast and PSL in the south. The other medium-sized parties (many within the Centrão) are likely to maintain their seats due to the extensive use of party funds and additional local support in specific states. The parties that will grow the most in comparison to the 2014 elections are DEM, PSL and entrant NOVO. We expect from the latter a respectable showing as a function of the money they have raised and because of its organization and communication capacity. The fragmentation index is likely to remain stable, with 2 parties (PT and MDB) holding 10% of the Chamber seats, and the 10 larger parties collectively controlling 75% of the Chamber. Moreover, there should be a small decline in the number of parties, from 31 to 26. *Part of MDB caucus is not in office because they are occupying positions in Temer s cabinet. This is why the party caucus is smaller after January

36 LEADERSHIP AND CONTROL OVER COMMITTEES Because of the considerable influence that leaders exert over their respective parties and because of the structure of partisan election funding, we expect that most party leaders to be reelected. Federal deputies that will retain position in the Chamber CAPADR CCJ CSSF CME CDEICS CDC CFT CCTCI - Rodrigo Maia - Aguinaldo Ribeiro - Lelo Coimbra - Paulo Pimenta - José Guimarães - Baleia Rossi - José Rocha - Jovair Arantes - Celso Russomano - Orlando Silva - Tadeu Alencar - Fabio Ramalho - André Fufuca - Giacobo - Arthur Maia - Weverton Rocha - Julio Delgado - Jose Carlos Aleluia - Pauderney Avelino We do not take as a given Rodrigo Maia s re-election as Chamber president because of the realignment of congressional forces. In relation to the standing committees, it is highly probable that the same parties maintain control of the presidency and the composition of the 8 most important committees, listed on the left 36

37 RELATIONSHIP WITH THE NEW PRESIDENT Both candidates will face the same dilemmas faced by former presidents and caused by Brazil s presidential system and, thus, will have difficulties forming a majority in Congress and keeping it tight. Bolsonaro may have more support in the first 100 days than Haddad because the opposition against Haddad and the Workers Party will likely be larger than the one against Bolsonaro. Under Bolsonaro, many congressmen may opt to remain independent and adopt a more pragmatic approach when voting important bills, at least in the beginning of the new government. We estimated below the support that each one would be able to negotiate in the beginning of the term. 280 federal deputies (55%) 240 federal deputies (46%) 308 are needed to amend the Constitution 308 are needed to amend the Constitution 38 senators (47%) 49 are needed to amend the Constitution 42 senators (52%) 49 are needed to amend the Constitution 37

38 SÃO PAULO BRASÍLIA Avenida Faria Lima, th floor São Paulo Centro Empresarial Brasil 21 SHS B Quadra 6 Conjunto A Bloco A Sala Brasília 38