President-elect of the far right of Brazil prepares trips to the United States and Chile

RIO DE JANEIRO (Reuters) – Jair Bolsonaro, a former right-wing army captain who won the Brazilian presidential election with a comfortable margin, got the approval of US President Donald Trump and began planning visits to Washington and a conservative ally in Chile.

Bolsonaro, who at the beginning of his legislative career said he was "in favor" of dictatorships and demanded the dissolution of Congress, promised Sunday to respect democratic principles while retaining a copy of the country's Constitution.

Trump said he had an "excellent call" congratulating Bolsonaro and tweeted about their project to "work closely on trade, the military and everything else!"

Investors were quick to celebrate Bolsonaro's victory, shifting Brazil's benchmark Bovespa to an all-time high early in the session before turning negative after traders posted profits after a strong rise this month.

Markets have jumped since Bolsonaro's rise, as it pledged to quickly fill Brazil's stinging budget deficit and privatize state-owned companies, but investors said the extra gains would depend on the clarity of the results.

His election however alarmed critics around the world, considering his defense of the 1964-1985 Brazilian military dictatorship, his willingness to brush aside left-wing political opponents and his history of derogatory comments about homosexuals, women and men. the minorities.

The victory of Bolsonaro brings the Brazilian army back to the center of the political scene after three decades spent in the barracks after the return of the country to a civilian regime. Several retired generals will serve as ministers and close advisers.

"You are all my witnesses that this government will defend the constitution, freedom and God," Bolsonaro said in a live video on Facebook, in his first comments after his victory.

The future chief of staff of the president-elect told Reuters that his first international trip would be to Chile, one of South America's neighbors having swung to the right during the last elections, and hoped to surrender to the states. United States shortly thereafter.

Trump's declared admirer, Bolsonaro also promised to realign Brazil with more advanced economies, such as the United States, by reshaping diplomatic priorities after nearly fifteen years of left-wing government.

The former 63-year-old paratrooper joined a list of right-wing populist personalities to win elections in recent years, such as Trump, Philippine President Rodrigo Duterte and Hungarian Prime Minister Viktor Orban.

Trump's friendly appeal points to closer political ties between the two largest economies in the Americas – both now led by conservative populists promising to overthrow the political establishment.

Politician at the State University of Rio de Janeiro, Mauricio Santoro has expressed concern that Brazil will not soon dispel the tense and sometimes violent atmosphere surrounding the polarization campaign.

"It's a worrying scenario. It is possible that even with his victory, we could witness a new wave of violence among Bolsonaro supporters against those who supported his opponent, "said Santoro.

Bolsonaro supporters carried out physical attacks and organized online harassment campaigns just before Sunday's vote, targeting in particular journalists, according to a report by Abraji, an investigative journalism group.

Bolsonaro himself was stabbed in the abdomen at a rally last month and will have to undergo surgery in mid-December to remove a colostomy bag before being able to travel to Santiago and Washington.

EASY WINNER

Bolsonaro won 55% of the vote in a second round against the leftist candidate Fernando Haddad of the Workers Party (PT), which got 45%, according to the TSE Electoral Authority.

The rise of the ardent legislator was motivated by the rejection of the leftist PT, which ruled Brazil for 13 of the last 15 years, and which had been ousted two years ago in the midst of a severe recession and a scandal of political corruption.

Thousands of Bolsonaro supporters applauded and set fireworks outside his home in the Barra de Tijuca waterfront district of Rio de Janeiro when he announced his victory. .

"I do not adopt Bolsonaro and I do not know if he will rule well, but we are hopeful. People want to get out of the PT, they can not fight corruption anymore, "said Tatiana Cunha, a 39-year-old systems analyst in the midst of loud celebrations.

Investors applauded the rise of Bolsonaro, relieved that he could keep the PT safe from power and hoped to carry out the tax reforms proposed by his guru of the orthodox economy.

Brazil's benchmark, Bovespa, rose to 3%, reaching a record level of opening, preceded by stocks of state-owned companies and leading companies, before retreating.

The Brazilian currency, the real, has gained about 10% against the dollar this month and interest rate futures have tightened significantly as a result of improving Bolsonaro's outlook.

Investors were particularly encouraged by the choice of Paulo Guedes, an economist and investment banker educated at the University of Chicago, as future Minister of the Economy.

Guedes, which wants to privatize a large number of state-owned companies, said on Sunday that the new government would try to erase the Brazilian budget deficit in one year, simplify and reduce taxes and create 10 million jobs by reducing Social charges. New rules will boost investment in infrastructure, he told reporters.

Nevertheless, Fitch Ratings on Monday stressed the "major fiscal challenges" that the Bolsonaro team was facing, low growth and a huge budget deficit leaving little room for maneuver.

"The exact details of how his administration intends to achieve its goals are limited," wrote Fitch analysts, led by Shelly Shetty. "Lack of fiscal space, high unemployment and sluggish economic recovery will likely limit economic policy options."

Onyx Lorenzoni, a member of Congress whom Bolsonaro has appointed as chief of staff, told reporters that Guedes would be responsible for structuring relations between the government and an independent and autonomous central bank with objectives.

Asked about the Brazilian currency, Mr Lorenzoni said Mr Bolsonaro would offer companies more predictability, but ruled out an exchange rate target. Lorenzoni reiterated his view that the reform efforts of the Brazilian pension system should wait until next year.

In another interview with Reuters, he said the president-elect would meet Guedes and other members of his team on Tuesday. He will oversee the transition between Rio this week and fly to the capital Brasilia next week, Lorenzoni added.

At the same time, Bolsonaro representatives will start meeting with President Michel Temer's team to begin work before the inauguration of January 1st.

Retired General Augusto Heleno, who is expected to become Defense Minister, told reporters that Bolsonaro had a positive view of a $ 4.75 billion joint venture between Boeing Co and Brazilian planner Embraer SA. He said the Temer government could approve the deal before leaving.