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article imageThe neoliberal putting credibility into Brazil far-righter's rise

By Mauricio RABUFFETTI (AFP)     Oct 8, 2018 in Politics

Part of the appeal lifting a controversial far-right candidate, Jair Bolsonaro, toward Brazil's presidency is a US-educated neoliberal economist who will likely be put in charge of the Latin American giant's finances in case of election victory.

Paulo Guedes, 69, is Bolsonaro's financial guru, lending him credibility in an area crucial to the future of Brazil, the world's eighth-biggest economy which is struggling after exiting its worst-ever recession.

Initially educated in Brazil, Guedes got his doctorate -- and economic philosophy -- from the University of Chicago, a spawning ground for modern economic liberalism that espouses deregulation and low taxes.

His credentials are bolstered by professorships in top universities, running a business school, helping found equity firms and starting a free-market think tank.

His joining Bolsonaro, who throughout his 27 years in congress had backed a protectionist economic stance in Brazil, surprised many.

But Bolsonaro breezily waved aside his about-turn, telling the Globo newspaper: "In truth, I know nothing about the economy."

Guedes told the Folha de Sao Paulo newspaper in January that "the last person who knew about it (the economy) was Dilma (Rousseff)," a former leftist president impeached and ousted two years ago for financial wrongdoing. "She sank the country," Guedes said.

If Bolsonaro wins an October 28 run-off against Fernando Haddad, an ex-mayor of Sao Paulo who is from Rousseff's Workers Party, Guedes is tipped to be put in charge of a finance "superministry" merging the economy, industry, trade, investment and planning portfolios.

- Tensions and challenges -

Sporting gray hair and fine spectacles, Guedes is the man Bolsonaro would rely on to lift Brazil and its 210 million inhabitants out of a malaise that lingers after the 2014-2016 recession.

Unemployment is stuck at 12 percent, inflation is rising, growth -- already fragile -- has stalled, and public debt is forecast to explode from 77 percent of GDP to 140 percent in 2030 on its current trajectory according to the World Bank.

Guedes' proposed remedy is straight out of the neoliberal economic handbook: "Reduce public debt by 20 percent through privatizations and disposals."

That will likely run into headwinds in a country where much of the population is attached to public services and where market-leading companies such as oil group Petrobras and electricity supplier Eletrobras would be in the red without government support.

Another challenge is the overly generous pension system. Guedes' idea is to put in place a parallel private system like one used in Chile, where Guedes was a professor in the 1980s, during the Pinochet dictatorship.

The Guedes-Bolsonaro partnership, however, is not free from tensions.

In September the economic advisor spoke to business leaders about the possibility of bringing back an unpopular tax on financial transactions to replace five others taxes, but he was hastily reined in by Bolsonaro.

"The president, that will be me. I spoke with him. He admitted it was a mistake. He wants to reduce the number of taxes," Bolsonaro told a radio interviewer days before the Sunday's first-round election.

"We'll have a minister, sure. But above him there will be a commander-in-chief, and that commander-in-chief is called Jair Bolsonaro," he said.

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