Entrepreneurs withdraw confidence from Bolsonaro

Sao Paulo The new President Luiz Inácio Lula da Silva is cleaning things up. 700 suspects are located after the storming of Brazil’s government district by radical supporters of ex-president Jair Bolsonaro in custody, arrest warrants have been issued against the chief of the national military police and the chief of security of the capital Brasilia.

Could Bolsonaro try to mobilize his supporters again? The financial markets have already given their answer: no sign of panic. The stock market has been growing for days, there have been no foreign exchange outflows. And this despite the fact that at times over the weekend it looked as if a coup was looming in Latin America’s largest economy. Also the ex-president’s recent announcement that he would return home early from Floridanobody seems to interpret this as an alarm signal.

The increasing radicalism of Bolsonaro’s supporters has led to a paradoxical effect: Business and investors are closing ranks behind Socialist President Lula – whom many still considered unelectable during the election campaign two months ago. The leading Brazilian associations of industry, banks and many sectors unanimously condemned the violent actions in the capital Brasilia.

Take Klaus Friedrich Hepp as an example: The entrepreneur manages the Brazilian subsidiary of the medium-sized German Vulkan Group in the interior of the state of São Paulo. Before the election, Hepp had expressed skepticism about Lula’s economic skills in an interview with the Handelsblatt. He trusted Bolsonaro to run the economy. The medium-sized company employs around 250 people and supplies the Latin American industry with clutches, brakes and backstops for industrial drives.

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Lula’s past corruption affairs put him off. But after the elections and the riots over the weekend, he asked himself: “Am I wrong? Isn’t Lula the lesser evil after all?” He said he was disappointed by Bolsonaro’s irresponsible behavior after the elections and the absurd month-long vigils of his supporters.

Bolsonaro no longer acceptable

The riots have now finally proven that Bolsonaro “is not even remotely acceptable as a political alternative for Brazil”. Anyone who still stands by Bolsonaro today is an extremist. There is now a real chance for a right-centre majority without Bolsonaro. Lula reacted calmly after the coup attempt.

Bolsonaro supporters storm the convention center

According to official figures, around 3,000 people were involved in the attack.

(Photo: dpa)

Hepp now sees an opportunity for a social consensus that will stabilize democracy. “The events of the weekend may increase political stability,” he says. “This may Brazil make it more attractive to foreign investors.”

>> Read here: After storming government quarters, President Lula distrusts the military

Detlef Dralle is also relieved about the latest developments. Bolsonaro is now finally discredited, says the head of the High Low-successor HTB, a construction group belonging to the Zech Group in Bremen. “He has now lost all moderates who voted for Bolsonaro.” No entrepreneur will publicly support Bolsonaro anymore.

Nevertheless, he fears a deterrent effect on medium-sized companies who actually now want to invest in Brazil – the Brazil skeptics in the company headquarters have now received a boost. However, Dralle himself does not expect any problems for his company: HTB is currently involved in 23 airport projects, and the group is already helping to build six airports.


Tenders for infrastructure projects such as roads, rails or even airports will continue to exist under the socialist Lula. It is becoming more difficult for private companies to invest in state-dominated sectors such as oil and gas, water and sewage. As the Brazilian Managing Director of Hamburger Helm AG, which sells crop protection products in Brazil, Sebastian Lueth knows one of Bolsonaro’s supporters particularly well: the farmers.

Lula wins the peasants over with a personality

The majority of Brazilian farmers voted for the right-wing populist. In the riots, too, entrepreneurs from agriculture together with freight forwarders are said to have played a dominant role. The powerful association of soybean producers Aprosoja and the conservative agricultural association CNA could not bring themselves to condemn the riots by Wednesday.

>> Read here: US politicians are calling for Bolsonaro’s expulsion to Brazil

Nevertheless: Lueth notes in his discussions with customers that Bolsonaro’s formerly ardent supporters have now calmed down: “I hardly hear from anyone that he mourns Bolsonaro.” Farmers in Brazil are traditionally conservative, but do not expect much from the state. They are successful, despite the government. The industry was even positively surprised by the selection of the Ministers for Agriculture. Lula has appointed a prominent farmer representative in Carlos Fávaro.

In other areas of the economy, too, Lula is currently trying to gain the sympathy of companies through personnel decisions. In the first few weeks after the election, managers and investors were disappointed by Lula’s plans for the economy – and in principle still are: Lula wants to put the state back at the center of the economy.


Growing deficits are to be financed with debt. In terms of industrial policy, the government wants to revitalize sectors such as oil and gas, which has previously failed and resulted in a gigantic corruption scandal.
But Lula also reacted pragmatically to the economy and took into account the concerns of investors. After the first negative reactions, Lula placed two conservative ministers at the side of left-wing Finance Minister Fernando Haddad: former presidential candidate Simone Tebet will take over the planning ministry, while four-time governor of São Paulo and Lula’s vice-president Geraldo Alckmin will head the industry ministry.

“establish consensus”

After the events of the weekend, Lula cannot afford to pursue radical policies just for his supporters, says medium-sized company Hepp. “He now has to create a consensus.” Emerging markets investor Mark Mobius takes a similar view: “I think the result isn’t that bad,” said Mobius, who has been investing in Brazil for many years. “Lula can now get more attention to unite people.”

The risk agency Moody’s also remains cautiously optimistic. “Political tensions and polarization will remain a challenge for the new government,” says Samar Maziad, Sovereign Risk Analyst. “But we now expect broad economic and institutional stability.”

More: Storming the government district: What the chaos in Brazil means for the country’s economy

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