Brazil Presidential Election

BRAZIL PRESIDENTIAL ELECTION

24 SEPTEMBER 2018

1 CONTENTS

Overview...... 3 General Elections at Federal and State Level...... 4 Final Stretch...... 5 Important Rules...... 6 Presidential Elections...... 7 Jair Bolsonaro...... 8 Fernando Haddad...... 9 Ciro Gomes...... 10 Geraldo Alckmin...... 11 Marina Silva...... 12 Comparison: Communication Capacity...... 13 Comparison: Political Support...... 14 Comparison: Campaign Strength...... 15 Voter Intention Polls – 2018 ...... 16 Undecided Voter Profile...... 17 Analyzing Past Elections Polls...... 18 Comparison: Growth Potential in the First Round...... 19 Runoff Scenarios...... 20 What to expect if elected...... 21

2 OVERVIEW

Brazil’s 2018 election stands in contrast to those that have taken place since re- conclusions, mostly due to the methodologies used. The data Concordia has democratization. It occurs against the backdrop of twin economic and institutional analyzed points to an unpredictable contest with five candidates capable of crises, the starting point of which is hard to define. Some analysts point to the reaching the runoff. The high degree of political instability suggests that the June 2013 protests, while others place more emphasis on Dilma Rousseff’s margin of error in existing polls is larger than in previous elections. Historical reelection with a weakened political base in the Legislative branch, compounded analysis also suggests that the scenario will only be defined a week ahead of the by the ongoing Car Wash corruption probe. However, 2018 has additional elections (by 1 October). The only consensus among analysts is that the distinguishing characteristics. The current instability can be traced in equal campaign will be intense and prone to twists and turns. Concordia believes that, measures to the role of Rousseff’s Workers Party (symbolized by the arrest of its by a narrow margin, the anti Worker’s Party sentiment will prevail and put push founding leader, former president Lula) and on the outgoing administration of her Bolsonaro’s candidacy over the top, but much can happen before the runoff vote vice president, Michel Temer, who assumed power following her widely contested on 28 October. This race is still “too close to call.” impeachment and has no clear successor in the race. In short, the entire political As far as the Legislative branch and the States are concerned, a plethora of social class is seen as responsible for Brazil’s current misfortune. movements promoting political renewal, joined by some recently founded parties The scenario resembles that of the 1989 election, when 22 candidates ran for (bringing the total to 35), are not expected to resonate substantially to bring about president following the first civil government. But 2018 stands alone in Brazil’s meaningful political reform. The legislation crafted by incumbents that governs the short democratic history given a clear fragmentation of political forces with a system will channel voters toward traditional parties and promote the status-quo. handful of competitive candidates led in the polls by a “lone wolf” (Jair Bolsonaro, The result being a rotation of power in the States among existing political parties. a right-wing populist from a small party). We estimate that, in Congress as well as in most State Assemblies, the large Considering that the economy has just exited a prolonged recessionary cycle and parties (MDB, PSDB and PT) will continue losing seats and in turn will join a is not yet growing, with unemployment at historic highs, there is a palpable and handful of midsized parties to share a new central bloc of power. This movement generalized sense of dissatisfaction. Moreover, voters feel their interests are not toward ever greater fragmentation will make it more difficult for the president-elect adequately reflected by the political establishment, which drives the popularity of to obtain a majority and approve reforms. Even moderate Geraldo Alckmin two ideological extremes (the frontrunner and the Workers Party candidate). Add (PSDB), who boasts about his nine-party coalition, will have difficulties keeping his to this the stabbing of the frontrunner at a recent campaign rally further clouding coalition together. In State Assemblies, there should be a small reduction in the attempts to predict the election. number of parties represented, and no significant changes are expected, providing an easier path for future governors-elect to form majorities. 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 Team Concordia 3 GENERAL ELECTIONS AT FEDERAL AND STATE LEVEL

PRESIDENCY OF NATIONAL STATES THE REPUBLIC CONGRESS

President & 100% of the CHAMBER 2/3 of the SENATE 27 STATES Vice President 513 federal deputies 54 senators will elect governors and state deputies Four-year term Four-year term Eight-year term (1/1/2019 to 31/12/2022) (1/1/2019 to 31/12/2022) (1/1/2019 to 31/12/2026) Four-year term (1/1/2019 to 31/12/2022)

Election will most likely take two Election by a proportional open Majority election, each voter has rounds and the candidate who list system, considering the votes two votes. Two round election (if necessary) obtains the majority (50% + 1) of received by each coalition. the valid votes wins. for governor and proportional open list, considering the votes received by the coalition for state deputies.

4 FINAL STRETCH

There are five more debates scheduled before the elections. Bolsonaro’s absence may reduce their interest and limit their influence on voting.

Haddad, due to his position in second place behind Bolsonaro, will be the main target of the other candidates during these debates.

Less than 2 weeks from the first round, observers and candidates alike are hoping for new revelations or events with the power to change current trends.

MON TUE WED THU FRI SAT SUN Important Dates 18/sep Debate Piauí and Poder360/ Youtube 3 4 5 6 7 8 9 20/sep Debate TV Aparecida 10 11 12 13 14 15 16 26/sep Debate SBT/Folha 30/sep Debate TV Record 17 18 19 2020 21 22 23 04/sep Debate Rede Globo and end of the electoral ad on TV

SEPTEMBER 07/oct First round of the elections 24 25 26 27 28 29 3030 11/oct Debate Band 12/oct Return of the electoral ad on TV 1 2 3 44 5 6 7 14/oct Debate TV Gazeta/Estadão 8 9 10 1111 12 13 1414 15/oct Debate RedeTV 17/oct Debate SBT/Folha

15 16 1717 18 19 20 2121 21/oct Debate TV Record OCTOBER 26/oct Debate Rede Globo 26 28 22 23 24 25 26 27 28 28/oct Second round of the elections

5 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 2022.

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.

6 PRESIDENTIAL ELECTIONS

TOP 5 CANDIDATES 5 FACTORS THAT DEFINE THE WINNER

JAIR BOLSONARO (PSL) Vice: Antonio Mourão (PRTB) TV time Coalition: PSL + PRTB Communication Social media 5 TV debates & narrative

FERNANDO HADDAD (PT) 4 Vice: Manuela D’Avila (PCdoB) 3 2 Coalition: PT , PcdoB + PROS Growth potential Voting intentions Rejection rate 1 Performance in polls Appeal to undecideds 0 CIRO GOMES (PDT) Vice: Katia Abreu (PDT) Coalition: PDT + AVANTE

Campaign Political Support GERALDO ALCKMIN (PSDB) Strength Vice: Ana Amélia (PP) Local electoral support Campaign experience State coalitions Coalition: PSDB, PTB, PP, PR, DEM, SD, PPS, PRB + PSD Campaign organization Financing

Decisive point MARINA SILVA (REDE) Strong point Vice: Eduardo Jorge (PV) Not a differential Coalition: REDE + PV *Note: (Political Party) 7 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 ELECTORAL PERFORMANCE votes and has been a member of seven different parties in his 27 years of political life.

A lover of controversy, he has assumed a more moderate tone. He is a strong TV time supporter of the military and has promised to eschew political appointments in Communication Social media favor of competent professionals to promote liberal economic measures. 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." Growth potential Voting intention He has also moderated his tone in recent interviews as Bolsonaro has grown in the polls. Rejection rate Performance in polls Chairs the Military Club and leads the movement of former military officers entering politics. Appeal to undecided On fiscal matters, he favors privatizing state companies and balancing the budget through reduced spending.

Coalition: PSL + PRTB (with only 8 federal deputies and no senators) Bolsonaro has not been able to negotiate broader alliances with the political class. Campaign Strength Political support Campaign experience Local electoral support Main advisors: Campaign organization State platforms Paulo Guedes: Should become Finance Minister, likely with broader powers magnified Financing 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. Advantages: Adept communicator that knows how to harness popular dissatisfaction with the political class (there are clear parallels with the strategy Onyx Lorenzoni: Prominent campaign manager and responsible for negotiations with adopted by President Trump in the US) other members of congress. Weaknesses: Campaign with no TV time and no representation across much of the Others: Sen. Magno Malta (PR), Dep. Mandetta (DEM), Dep. Eder Mauro (PSD), Dep. country. Absence from debates and public events after being stabbed can hurt down Major Olimpio (SD), Francischini e Luciano Bivar (PSL) and General Augusto Heleno. the stretch. 8 FERNANDO HADDAD (PT)

Fernando Haddad is a professor and politician from São Paulo. He has always been linked to the Worker’s party (PT). ELECTORAL PERFORMANCE 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. TV time Communication Social Media He favors progressive causes and this would be reflected in his potential Debates & Narrative government. Nonetheless, he will have limited control over political negotiations or the PT’s governance model.

Vice: Manuela D’Ávila (PCdoB) Voting intention Growth Potential Well-known politician from Rio Grande do Sul, she has been the most popular federal Performance in polls deputy in her state every time she has run. She began in politics at age 23 in 2004 and Rejection Rate despite her age has robust parliamentary experience. Appeal to undecideds 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. Coalition: PT / PCdoB / PROS (82 Deputies and 11 Senators) Campaign Strength Political Support If elected, he may manage to attract other parties beyond those of the traditional left. Experience in campaigns Local electoral support Main advisors: Campaign organization State coalitions Financing 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. Advantages: Ability to attract much of Lula’s electorate; a powerful and efficient party Rui Falcão: Campaign coordinator, very close to Lula. Former PT party president, is machine with extensive election expertise. running for federal deputy in São Paulo. Weaknesses: Has never run for national office; unknown by a large part of the national Party leadership: At first, Haddad will struggle to distance himself from PT’s leadership, electorate; suffered crushing defeat in his last election for mayor of São Paulo in 2016. such as Gleisi Hoffman, Jacques Wagner, Paulo Teixeira and Lula. 9 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 ELECTORAL PERFORMANCE the mayor of Fortaleza, governor of Ceará and Finance Minister. Has switched parties six times and last held public office in 2014. In his third presidential campaign, he is selling himself as a left-wing alternative TV time to the PT. He is a competent public speaker famous for his short temper. Communication Social Media He is known for centralizing power and his employment-focused development TV Debates & Narrative agenda that favors industrial labor.

Vice: Kátia Abreu (PDT) Growth potential Voting intention 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 Rejection rate Performance in polls Dilma’s second term. Appeal to undecideds 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. 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 Political support negotiate alliances with center-left parties. But it would be easier to achieve this in the second Campaign Strength round. Campaign Experience Local electoral support Campaign organization State coalitions Main advisors: Financing 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 Advantages: Gets his ideas across, has been doing well in debates and has the investigations for corruption, Ciro would appoint him as minister “in a heartbeat”. potential to gather more support from the center-left. Mauro Benevides Filho: Economist from the Federal University of Ceará and would be Weaknesses: Weak coalition, rejected by the Market with his VP and Carlos Lupi responsible for economic policy. Likely to be appointed Finance Minister. shrouded in controversy.

10 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 TV time Paulo’s government in the election and is the current president of the PSDB. Communication Social media TV debates & narrative 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.

Vice: Ana Amélia Lemos (PP) Growth potential Voting intention Senator from Rio Grande do Sul since 2011, she represents a conservative electorate and Rejection rate Performance in polls has close ties with agribusiness. Appeal to undecideds She is a leading female voice in stark opposition against the PT. In the Senate, she has been a recognized leader in healthcare policy.

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 Campaign Strength Political support the Congress, with 53% of the Chamber and 46% of the Senate. Campaign experience Local political support Main advisors: Campaign organization State coalitions Financing 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. Senator Tasso Jereissati: Campaign coordinator and a senior leader of the PSDB; a politician and businessman. Advantages: Experienced in political campaigns, he has the most TV campaign Luiz Felipe D’Ávila: Was expected to run for the governor of São Paulo; a political time and the support of the PSDB political establishment. scientist expected to hold a high profile office in the government. Weakness: Lack of charisma and a clear narrative that energizes the electorate in a Duarte Nogueira: Mayor of Ribeirão Preto and federal deputy for 4 terms; one of changed environment; his moderate stance has not resonated with voters. Alckmin’s top supporters in São Paulo’s PSDB leadership. 11 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. TV time Along the campaign, she has espoused centrist policies while vehemently Communication Social media denouncing PT corruption. However, her falling numbers suggest that TV debates & narrative many of her voters are shifting support to Ciro or Haddad under the assumption that they have a better chance of defeating Bolsonaro.

Vice: Eduardo Jorge (PV) Growth potential Voting intention A doctor by training, Jorge was one of the founders of PT and was elected federal deputy Rejection rate Performance in polls for the first time in 1986. He is known for supporting controversial positions such as Appeal to undecideds 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.

Coalition: REDE + PV (6 federal deputies, 1 senator) Campaign strength Political support She has had difficulty negotiating political alliances. Campaign experience Local political support Campaign organization State coalitions Main advisors: Financing 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 Advantages: She has electoral recall in the range of 15% and her moderate Environment and is a long-time friend and adviser. posture can attract undecideds and people tired of political polarization. Deputy Miro Teixeira (RJ-REDE): An experienced federal deputy, Miro is a candidate for Weaknesses: Inability to create compelling anti-PT and anti-Bolsonaro narrative, the senate and a member of the Marina campaign committee. hurt by demonstrating indecision in countless moments of the campaign.

12 COMPARISON: COMMUNICATION CAPACITY

TV Time Bolsonaro has almost no TV time, but is charismatic and says what voters want to hear. He has the largest number of Internet x TV Facebook followers and several impact videos made by supporters. His distance from street rallies and internal misalignments amongst campaign advisors have damaged his 27% Media IBOPE/CNI Paraná Polls communication capacity in recent weeks. 44% TV 62% 37% 1% Haddad has the second most TV time and a social media advantage thanks to the PT machine. The emotional appeal of Internet News 33% 3% 6% Lula’s imprisonment has the potential to win over voters. 43% Social Media / However, he missed over half of the TV debates and interviews 19% 26% blogs while Lula’s candidacy was being challenged in the courts. Newspapers 17% 6% Alckmin Haddad Ciro has charisma and uses catchphrases that capture voter Ciro Marina Radio 17% 4% attention and generate spontaneous media and memes. But his performance in debates has been lackluster thus far, and his TV Bolsonaro Others time is minimal.

Alckmin has 44% of the total allocated TV time and enough Social Media Followers 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.

13 COMPARISON: POLITICAL SUPPORT

STATE PLATFORMS POTENTIAL SUPPORTERS – MAYORS¹ (%)

2% Marina 0%

0% Bolsonaro 1%

39% Alckmin 14%

0% Ciro Gomes 6% Coalition Party 2% A state is considered a platform for a Haddad Alckimin (PSDB) 5% candidate in cases where the current Haddad (PT) 0% 5% 10% 15% 20% 25% 30% 35% 40% governor or front-runner is the most influential Ciro Gomes (PDT) political figure in the territory. In states with no Divided scenario defined political leader, state platforms are POTENTIAL SUPPORTERS – COUNCILMEN¹ (%) Undefined indicated as Divided or Undefined. 3% Marina 0%

1% The political support analysis allows a better understanding of the national reach of each campaign, Bolsonaro reinforcing TV spots, rallies and other campaign actions: 2%

40% • Alckmin is the candidate with the largest (potential) reach in the country, having the largest number Alckmin 9% 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 0% Ciro Gomes Center-West are supporting Bolsonaro. 7% Coalition Party 3% • PT remains strong in the Northeast, with the support of well-liked governors and leading candidates Haddad in the region. The party maintains a large number of mayors and councilmen in the region. 5% • Ciro Gomes is also strong in the Northeast, but will struggle against the PT in the region and has 0% 5% 10% 15% 20% 25% 30% 35% 40% scattered support in the North.

• Bolsonaro and Marina do not have state platforms and their local support bases are weak if ¹ Percentage of total councilmen and mayors in Brazil members of a party or coalition. compared to the other candidates. Source: TSE Stats (accessed in August 2018). 14 COMPARISON: CAMPAIGN STRENGTH

CAMPAIGN EXPERIENCE CAMPAIGN ORGANIZATION • Haddad’s campaign committee is the most Weighting of each criterion: organized, and the one with higher number of Bolsonaro collaborators. Elected: W4 • Alckmin’s committee comes in second place, and he Marina Presidential campaigns: W2 has the support of allied parties. Majority campaigns: W2 Ciro • Ciro and Marina’s campaigns are also well Proportional campaigns: W1 Haddad organized and they have collaborators in different areas, but with less resources. Alckmin • Bolsonaro’s committee is small, less organized and is struggling with internal alignment; his strength lies 0 10 20 30 40 50 on spontaneous mobilizations in different cities. Elected Presidential Majority voting Proportional voting

CAMPAIGN FINANCING TRAVEL SCHEDULE/ RECENT EVENTS

Bolsonaro Bolsonaro Weighting of each criterion: Marina Marina in R$ million Mobilization: W3 Ciro Ciro Key states: W2 Haddad Haddad Variety: W2 Quantity: W1 Alckmin Alckmin 0 5 10 15 20 0 10 20 30 40 50 Key states Variety Quantity Mobilization Alckmin Haddad Ciro Marina Bolsonaro 15 VOTER INTENTION POLLS – 2018

Voting Intention Evolution 2018 – Stimulated answers by Polls Court cancelled Lula’s candidacy 30

Bolsonaro stabbed 28%

16%

15 Percentage 13% 12%

10 10% 9% 7% 5 5%

Jair Bolsonaro Fernando Haddad Geraldo Alckmin Ciro Gomes Marina Silva Others Blank or null Does not know

16 UNDECIDED VOTER PROFILE ? Null Voter (Blank Ballot) Does not know*

Average*: 13% (11% for spontaneous answers) Average*: 6% of total voters (30% for spontaneous answers)

Age: 22% in each age group over 25 years-old Age: 65% are over 45 years-old

Income: similar to the general voter profile (small bias Income: 75% earn up to 2 times the minimum wage towards smaller incomes) Region: 37% live in the Northeast and 34% in the Southeast Region: similar to the general voter profile (small bias towards Southeast) Gender: 73% are female

Gender: 66% of undecided voters 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 Datafolha polls 17 ANALYZING PREVIOUS ELECTION POLLS

Voting intention 1989 - Datafolha Voting intention 2014 - Datafolha 45 45 40 40 35 35 30 30

% 25 25 % 20 20 15 15 10 10 5 5 0 0 Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data Data 24/abr 04/jun 02/jul 20/ago 24/set 08/out 19/out 03/nov 07/nov 10/nov 15/nov 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 OutrosOthers BrancosBlank Votes e Nulos NãoUndecided Sabe OutrosOthers BrancosBlank eVotes Nulos NãoUndecided Sabe

• Since the return to democracy, only two elections were similar to the 2018 elections in terms of political polarization: 1989 and 2014.

• All other presidential elections (1994-2010) 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.

18 COMPARISON: GROWTH POTENTIAL IN 1ST ROUND

Rejection rates over time Bolsonaro has the lowest growth potential due to a high 50 absolute rejection rate, specifically among the poorest (up to 2 times the minimum wage), Northeast and female audiences. 40 This demographic represents the average Lula voter, and is the profile of the majority of undecideds. 30

20 Marina is the candidate who, despite her high rejection rate (2nd place overall), does not have a specific demographic indicator- 10 only a slightly more significant rate in terms of gender. This means she has limited growth potential given that she does not 0 have a captive electorate. In the event that any candidate Bolsonaro Alckmin Marina Ciro Haddad stumbles, these votes would migrate to other candidates. IBOPE 20.08 Datafolha 22.08 Datafolha 10.09 IBOPE 11.09 DATAFOLHA 14.09 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 Rejection by demographic Marina's. In this sense, he could gain votes as an alternative to Income Gender Age Region the Bolsonaro/Haddad polarization – due to "useful vote" Candidate reasoning. High Low High High Low High Low Ciro has significant growth potential because he has the lowest Between 16 Bolsonaro Poorest Richest Female 55 and older Northeast South rate of absolute rejection among all candidates, which goes with and 24 his support among the poorest and women. His voter profile Marina Balanced Male Balanced Balanced mirrors that of Lula's and the undecideds, so he is competing directly with Haddad for this group. Alckmin Balanced Male Balanced - South Haddad’s voter profile is similar to Ciro’s, but with the caveat of Between 16 Ciro Richest Poorest Male - Balanced and 24 having better support in the populous Northeastern region, Lula's electoral stronghold. Given that the Northeast voter profile Between 16 Haddad Richest Poorest Male 60 and older Southeast Northeast coincides with that of the undecideds, he has the greatest and 24 growth potential of all candidates. RUNOFF SCENARIOS

From opinion polls and runoff scenarios, we can reach the Haddad Ciro Marina Bolsonaro Alckmin following conclusions:

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

*Average of the last 6 polls (DataFolha (x2), Ibope, Ipespe, FSB e MDA) **Research institutions 20 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. 21 SÃO PAULO BRASÍLIA

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