MercoPress. South Atlantic News Agency

Dilma with Lula da Silva's magic, re-elected in rich-poor divided Brazil

Rousseff owed her victory to overwhelming support from the roughly 40% of Brazilians who live in households earning less than 700 dollars a month.

Brazil's President Dilma Rousseff supported by the decisive campaigning of Lula da Silva, narrowly won re-election on Sunday after convincing voters that the record on poverty reduction in the last twelve years was more important than a recent economic slump.

 After one of the closest, most divisive campaigns in Brazil in decades, Rousseff won 51.6% of votes in a runoff against centrist opposition leader Aecio Neves, who won 48.4% with more than 99% of the votes tallied.

Voting was peaceful and Brazil's robust democracy is free of the political violence that mars some other countries in Latin America.

Yet, at a time when the economy is facing deep challenges, Ideli Salvatti, one of Rousseff's top ministers, said the government would seek to lead “a national reconciliation process given how tight the result was.”

“We have to calm our hearts down first and then get back to work tomorrow,” she told reporters.

The result means another four years in power for the Workers' Party, which since 2003 has virtually transformed Brazil - lifting 40 million from poverty, reducing unemployment to record lows and making big inroads against hunger in what remains one of the world's most unequal countries.

However the economy has slowed dramatically under Rousseff's heavy-handed and often unpredictable policies, making Brazil's glory days of robust growth last decade an ever-more distant memory.

Numerous corruption scandals, high inflation and frustration over poor public services like health care tempted many to consider a switch to Neves' more pro-business agenda.

Yet Rousseff and her supporters spent the campaign warning voters, especially the poor, that a vote for the PSDB would mean a return to the less compassionate, more unequal Brazil of the 1990s - an argument that Neves rigorously denied, but ultimately prevailed anyway.

Investors have generally disliked Rousseff's interventionist management of state-run companies and other sectors of the economy, and Brazil's financial markets plummeted last week when polls showed she was likely to win a second term. They could see another selloff on Monday.

With 200 million people and a gross domestic product of some 2 trillion dollars, Brazil is Latin America's largest economy and its most populous country.

By re-electing Rousseff, it will remain on a middle ground between more populist governments in Venezuela and Argentina, and the freer-trading, faster-growing countries on the Pacific coast that include Colombia and Chile.

Rousseff owed her victory to overwhelming support from the roughly 40% of Brazilians who live in households earning less than 700 dollars a month. They have benefited from the Workers' Party's rollout of a program that pays a small monthly stipend to one in four Brazilian families, as well as federal housing programs, government-sponsored vocational schools and an expansion of credit to the working class.

And the other great factor has been former president Lula da Silva who is identified by the population as the great social transformer of Brazil in his eight years in office (2002/2010) and the political mentor of Dilma Rousseff who lacks charisma, does not impregnate crowds of enthusiasm and is a rather bossy technocrat.

But Lula da Silva has repeatedly told the electorate that he has chosen her to continue with his achievements, and people trust him.

This despite the fact that the economy slipped into a recession earlier this year, and ratings agencies have warned that a credit downgrade is possible unless Rousseff makes hefty spending cuts to correct deficits that have mushroomed in recent months.

Her aides have said she will try to win back the confidence of financial markets by announcing a more pragmatic finance minister for her second term, although many investors worry that Rousseff will continue to call most of the shots herself.

The election was one of the most dramatic since full democracy returned to Brazil in 1989. One candidate was killed in a plane crash in August, and his replacement then soared into the lead in opinion polls, only to fade in the final days before the first round of voting on Oct. 5.