Jair Bolsonaro's election win has galvanised the markets with promises of a liberal agenda and a new era of Brazilian growth, but managing partners at some of the country's top law firms say his first moves will be crucial if he is to deliver on this pledge.
Despite all the controversy surrounding his rise, far-right former army captain won 55% of the vote in Sunday's elections and will become Brazil's next president on 1 January. "It is the end of an awful period," says TozziniFreire Advogados' CEO and head of litigation Fernando Serec. "We have been in a terrible governmental limbo and the election is the epilogue of a horrendous transitional period and sets a different mood in the country."
The end of President Michel Temer's unpopular government has got many lawyers excited. Temer's economic reforms were hamstrung by political scandals, but expectations are high now the country has a president who was democratically chosen by the electorate.
Moreover, Bolsonaro's economic agenda, which is built on the credibility of his advisor Paulo Guedes, is very pro-business. The prospect of reforms covering everything from social security and tax to the privatisation of state-owned companies and governmental spending cuts may create major opportunities for the private sector. "I say this without adding any value judgment and without any certainty that this is going to work out, but our clients are saying: 'be prepared,'" says Pinheiro Neto Advogados' managing partner, Alexandre Bertoldi. "This is because they are gearing up to move on with a massive backload of deals and projects that have been put on hold for a long time."
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados' managing partner José Eduardo Carneiro Queiroz reports a similar mood. "There are so many things that were waiting to happen which may come together now," he says.
Queiroz adds that the infrastructure deficit is one of the most important issues and there will be opportunities for projects and concessions involving roads, railways and ports.
Some of the projects that may materialise under Bolsonaro are critical. Queiroz underscores the need for sanitation works that can "bring incredible benefits to the population" and which are now likely be developed. Mattos Filho also expects electricity projects and renewables to take off.
The same holds true for agribusiness. "Brazil has a great history of agribusiness and it is the only place in the world which has the capacity to triple its production area," Queiroz says.
Whether these projects and concessions come to market will depend on Bolsonaro's next moves, agree managing partners. "The aim to provide more efficiency to the state and to reduce bureaucracy is very positive and there is broad market optimism, but we need to see how things develop now," says Machado Meyer Advogados' managing partner, Tito Amaral. Bolsonaro's ministerial nominations will provide a clue about his intentions, he adds.
The business community will not be kept waiting for long. In the coming days, the president-elect should also announce new heads for Brazil's public banks and is expected to reveal changes to key state-owned companies, including Petrobras.
In the meantime, there is likely to be some speculation over whether Bolsonaro is the economical liberal he claimed to be during the election campaign. His views as a lawmaker were in line with many of those in the army, which has long argued that strategic companies should be controlled by the state. However, managing partners hope Bolsonaro, who has said he knows nothing about economics, will keep his promise and defer to his advisors. "The first signs have been positive," Amaral says. "In his first interview after the election, Paulo Guedes reaffirmed the elected government's commitment to social security reform and to government spending control," he notes.
Ricardo Veirano, head of Veirano Advogados, strikes a similar tone. "I am cautiously optimistic," he says. "There is a long way between stating one's willingness and finally executing what was planned, but there is a window of opportunity and these initial moments will be crucial for him to gather support."
Regardless of whether Bolsonaro is a market liberal or not, Brazil's notoriously fragmented congress may put the brakes on serious economic reform. While many lawmakers have ridden to victory on Bolsonaro's coattails, he must secure a broad alliance to pass his bills.
Mattos Filho's Queiroz is one of those who thinks congress may be an issue. "The government can promote some initiatives by itself, but it has to obtain legislative support for important matters such as social security reforms," he says.
Queiroz also notes that while old politicians were replaced by a new generation of lawmakers, the legislature is even more fragmented than before and even Brazil's major parties can't form a majority.
Economic credibility and political support are not the only considerations for a successful presidency. Bolsonaro must ensure social stability after rising to power through controversial and divisive rhetoric. He has declared his admiration for the generals who governed the country during the dictatorship period, which lasted from 1964 to 1985. This included dedicating his vote for President Dilma Rousseff's impeachment to the memory of Carlos Alberto Brilhante Ustra, a deceased colonel accused of the widespread torture of leftists during the dictatorship.
Bolsonaro's extremist opinions are not limited to praising Brazil's former dictators. He has also expressed homophobic and misogynistic views and frequently criticises criminal suspects' access to basic human rights. Together with his strong support for the military, some are concerned his presidency will polarise Brazil, making it more difficult to govern.
Still, many in the legal community believe Bolsonaro's more radical views will not have a big influence during his presidency. "Our society has gone a long way in terms of promoting diversity and inclusion and the views of a group will not be able to roll back these achievements," says Mattos Filho's Queiroz. He says the international media, which has been critical of Bolsonaro's victory, will realise his rise is no more concerning than other recent developments, such as the Brexit vote in the UK, Donald Trump's election in the US and the rise of Marine Le Pen's party in France.
Democratic institutions may also keep Bolsonaro's extremist views in check. "We have been through an impeachment recently and other important crises during our 30 years of democracy," notes Queiroz. "These institutions have shown resilience and the judiciary remains independent," he says.
Courting the business community and generating economic growth may also reduce the prospect of civil unease. "Investors look for a safe place to put their money and perhaps Brazil can offer this option by adopting a pro-business agenda," notes Demarest Advogados' head, Paulo Rocha. "It is hard to say if his personal views will have an influence, but we hope social and economic progress will continue nevertheless," he says, adding that Bolsonaro is enjoying a political "honeymoon."
Several top lawyers also believe Bolsonaro has already distanced himself from some of his most controversial views during the campaign and expressed less extremist opinions following his victory. Pinheiro Neto's Bertoldi hopes Bolsonaro will continue with this more inclusive rhetoric and make the best of the favourable mood surrounding him. "If he can follow the rules and implement good policies from the beginning, the scenario might become pretty positive," he says. "The biggest fear was that Brazil would become hard to govern, locked into a polarised environment, but today the sensation is that despite challenges, there will be minimal conditions to pass reforms and establish a productive environment."
Veirano's managing partner also liked the tone Bolsonaro took during his first public appearances after the election, but strikes a cautious stance. "We have to be vigilant with our democracy and with the rule of law, so it is time to adopt a vigilant spirit, albeit a disarmed one," he says. "We need to see how things will develop and judge the government for its acts and not for what a parcel of the population fears might happen. There is no plan B, we all live in the same country and whatever happens will affect us all."