This past Sunday, incumbent Dilma Rousseff defeated Aécio Neves in Brazil’s presidential runoff election, thus guaranteeing a fourth consecutive term in office for the Workers’ Party (PT). Her slim margin of victory (just over three percentage points) made this the closest presidential election in the country’s modern history, but it was also the sixth consecutive election fought between the PT and the Brazilian Social Democratic Party (PSDB), which led Brazil in the 1990s.

The PT-PSDB duopoly, firmly in place since the Plano Real stabilization programme in 1994, has provided Brazil with unprecedented political stability. At the same time, it has made it difficult for new actors to gain a foothold in national politics: Marina Silva of the Socialist Party (PSB) failed spectacularly in her bid to establish a third force this year.

Another problem generated by the duopoly is that it oversimplifies Brazilian politics to a competition between two recent legacies. The legacy of the PSDB’s Fernando Henrique Cardoso (1995-2002) was macroeconomic stability, and the legacy of the PT’s Luiz Inácio Lula da Silva (2003-10) was social inclusion. Pointing to resurgent inflation, Neves ran on the Cardoso legacy of sound economic management; pointing to recent social change, Rousseff ran on the Lula legacy of pro-poor policies.

Although this style of campaigning provided useful informational shortcuts to voters, at times it seemed as if Cardoso and Lula were on the ballot themselves. Televised debates verged on shouting matches and were woefully devoid of programmatic details. At a time when Brazil faces a host of policy challenges — anaemic growth, rising prices, creaking infrastructure, corruption scandals, and an alarming credit bubble — this was the most backward-looking presidential campaign in recent memory.

Although both Rousseff and Neves called for national unity in the wake of the close result, there is no doubt that Brazil is a house divided. Since 2006, presidential elections have been characterized by strong regional and class cleavages. The more modern south and southeast regions voted solidly for Neves, while the poor northeast supported Rousseff by a margin of three to one.

Support for Rousseff in any given state or city was closely linked to the percentage of the local population receiving Bolsa Família, the popular conditional cash transfer policy introduced by the Lula government. Meanwhile, firms and investors showed their clear preference for Neves: every increase by Rousseff in pre-election polls led to drops in share prices and increased demand for dollars. Although Neves carried only 12 of Brazil’s 27 states, these 12 states are responsible for 62 per cent of Brazil’s GDP. In her second term, Rousseff will be making course corrections to her economic policy in the clear knowledge that the private sector, especially in the influential state of São Paulo, largely opposed her re-election.

…but the Opposition Advances in Congress

Rousseff will also have to contend with the most complex Congress of modern times. Of Brazil’s 32 registered parties, some 28 will be represented in the 2015-18 legislature, the highest number ever recorded. The largest party, the PT, will control only 14 per cent of the seats in the Chamber of Deputies. Both the PT and its principal coalition partner, the Brazilian Democratic Movement Party (PMDB), lost ground in comparison to their performance in 2010. This means that the ruling coalition in 2015 will likely be reduced from two-third to three-fifths of the lower house, making it more difficult for Rousseff to approve constitutional amendments.

With a larger opposition bloc in Congress and a slim majority in the popular vote, Rousseff’s authority is clearly reduced. Unlike her predecessor Lula, she has only modest prestige and authority within the ruling PT, making it very unlikely that she will be able to promote an unchallenged successor from within the party ranks. Given that she cannot seek a third term, she runs the risk of facing early lame duck status. PT luminaries are already floating the name of Lula, now 69 years old, as the party’s possible candidate for 2018. To avoid sliding into irrelevance, Rousseff will need to name her new economic team (she is expected to make changes at the finance ministry and the central bank) as soon as possible, and to seize the legislative agenda in 2015.

The Path to Political Reform

A major item on Rousseff’s agenda will be political reform. Since the current constitution was introduced in 1988, every successive president has announced major proposals for changing the electoral system and the rules for campaign finance, with a few to reducing corruption and increasing accountability. Almost all of these proposals have died a slow death in Congress, so Rousseff is already advocating a plebiscite in order to preempt the expected foot-dragging by the political class.

One item that will certainly merit attention is the issue of re-election. Consecutive re-election of executives (presidents, governors and mayors) was introduced in 1997 and has revolutionized Brazilian politics. Some 65 per cent of mayors and 70 per cent of governors who attempt re-election are successful, and this has also been true of 100 per cent of presidents (Cardoso, Lula, and now Rousseff). In the past century, there has been only one other instance of three consecutive re-elected presidents in a democracy (Clinton, Bush and Obama in the US).

An end to immediate re-election was a key demand of both Aécio Neves and Marina Silva during the campaign. If Rousseff is sincere about political reform, she may set into motion the repeal of a rule that has greatly benefited her party.