Brazil

Uruguay’s north-eastern neighbour is Brazil, the largest and most powerful country on the South American continent. Although Brazil is the neighbour of all but two South American nations (Chile and Ecuador on the west coast), geography and the Portuguese roots in its history have tended to isolate it from the rest of the continent. Yet there are common Latin American features too, such as the question of the fate of the indigenous Indians; in Brazil, intermarriage has practically submerged them in the multiracial society of European and African origins. In the least approachable recesses of the Amazonian jungle Indian tribes are precariously surviving, threatened by progress, exploitation and the cutting down of the rainforests. There are probably only about 220,000 Indians still inhabiting the frontier regions, who supposedly enjoy government protection.

Until the end of the Brazilian empire in 1889, Brazil, despite its rich mineral resources, was a comparatively backward country relying mainly on the export of coffee. To provide labourers for the coffee plantations, Africans were sold into slavery and transported to Brazil, where slavery was not abolished until 1888. Brazil relied mainly on exporting coffee and importing manufactured and luxury goods to satisfy the small urban middle class and the wealthy plantation owners and merchants until the 1920s; a small industrial sector developed, and the coffee oligarchy dominated politics until the revolution of 1930. The first strong push for industrialisation occurred during the years from 1930 to 1945 when the country was ruled by the authoritarian regime of Brazil’s first outstanding political leader of modern times, Getulio Vargas.

Vargas, brought to power by the army in 1930 against a background of economic crisis, introduced a new authoritarian constitution in 1937 which established what was called the estado novo. The state became supreme in politics, industrial relations and economic management. No parallel social revolution was attempted. Vargas had to maintain the support of a coalition of interests: merchants, industrialists, the landed oligarchy of plantation owners with their ill-paid dependent rural workers, a subsistence peasantry, and urban workers preserved their unequal shares of the national wealth. Strict labour laws controlled the growing numbers of industrial workers. The state nationalised the banks and basic industries, and an iron and steel industry was started. Although by the close of the Second World War Brazil still relied mainly on the export of coffee, the basis for its later industrial growth was laid during the Vargas dictatorship.

That dictatorship came to an end in October 1945, when the army forced him into exile. In the conditions prevailing after the war, with the victory of the Western free world over Nazi tyranny - although Vargas had shrewdly joined the Allied cause in 1942 - Vargas’s authoritarian state was regarded by the army as an embarrassment. The US was now all-powerful in the Western hemisphere. An election was held in December 1945, though only half the electorate was enfranchised; two generals competed for the presidency. The outcome was the formation of a conservative government ardently hostile to communism. In 1950 Vargas entered the next electoral contest and won, but his attempt to create a power base by gaining the support of the workers with wage rises and sympathetic labour legislation soon revealed the limits of Brazil’s constitutional system. He did not last out his term. The right-wing military charged Vargas’s administration with corruption and communist penetration. Driven from office for a second time in 1954, Vargas ended his contest for leadership by committing suicide.

The presidential election of 1955 was won by Juscelino Kubitschek with the popular Joao Goulart, Vargas’s minister of labour, as running mate. Kubitschek campaigned for the defence of democracy and fast economic growth. The army watched to make sure that he did not stray too far to the left, but mounted no military coup, as some urged it to do. In a limited sense it could, therefore, be credited with safeguarding parliamentary government. The military saw it as their patriotic duty to stabilise a guided democracy with a preference for civilian rule. A decade later, elected president again, Goulart attempted to reform the country’s archaic land and tax structures. He also wanted to extend the franchise to the illiterate peasantry to check the power of the rural oligarchies. Frustrated by Congress, Goulart’s policy initiatives grew more radical as he appealed to the left for support, and not only to the industrial workers but to the peasants as well. He now added land expropriation to his reform package. This brought the wrath of the army and opposition down on him.

A conspiracy had been taking shape in 1964 among right-wing army officers and conservative politicians, with urban middle-class support, to stage a coup. It was assured in advance of US goodwill. On 1 April 1964 Goulart was overthrown virtually without a struggle and fled to Uruguay. The military took over. This time they did not hand power back to civilian politicians.

During the early years of the generals’ rule, repression had not yet taken its more extreme forms. A facade of parliamentary government was maintained. Then a new constitution in 1967, which curtailed political rights, prompted leftwing urban and rural guerrillas to resort to arms, but they never secured a mass following. Their only spectacular success was the kidnapping of the US ambassador in 1969. From 1968 to 1973 the military junta reacted with ferocity. The torture and murder of opponents became common and widespread, and the repressive security apparatus survived the defeat of the guerrillas. The various attempts made by the generals to enlist broader support and a more acceptable constitutional image all failed. Internal opposition, strikes and, particularly, the condemnation of the most radical Catholic Church in Latin America wore down the generals’ desire to accept the responsibility of ruling Brazil. They handed the government back to civilian rule in 1985. It was no coincidence that this was done at a time of severe and prolonged economic crisis. And the military in the 1990s had not abandoned their role of intervening when they judged it to be necessary.

The Brazilian economy had expanded spectacularly since the Second World War, transforming the country into a modern industrial giant. Coffee no longer dominates and amounts to only about 10 per cent of total exports. By 1981 Petrobas, the huge oil and chemical state industrial complex, was the largest corporation in Brazil by far. Modern technology is represented in the armaments and aircraft industries, which export to the rest of the world. The multinational oil companies have established themselves, while Ford, General Motors and Volkswagen have developed an efficient motor industry. Foreign industry and private investment, and the large bank loans required, were attracted by the availability of cheap and plentiful local labour, which showed itself eminently capable of being trained; no less attractive were the repression of labour and the comparative freedom from strikes, as well as the political stability which the generals’ police state seemed to guarantee. Thus the unhappy link was established between capitalism, foreign penetration and repression which so powerfully fuels anti-Western, particularly anti-North American, sentiment among the masses.

The Brazilian economy achieved rapid growth but it also had to weather periods of austerity and retrenchment when forced development produced high inflation and severe balance-of-payments crises. After the Vargas period, the next phase of spectacular growth was kickstarted by the ambitious economic plan masterminded by President Juscelino Kubitschek in the 1950s. It was he who decided to construct the brand new capital of Brasilia as an expression of the country’s unity, confidence and ultra-modernity, but his boom, based on attracting foreign investment, had to be followed by another period of austerity. Under the generals a new boom began in 1968. It was checked but not stopped by the tripling of oil prices in 1973-4. Foreign bankers, flush with Middle Eastern oil money, poured it into Brazil which, accordingly, accumulated the largest foreign debt in the world.

Brazil had already become predominantly urban before the 1950s, but the urban workers did not share in their country’s wealth. Their real wages, which had been rising in the 1950s, fell again after 1960; many workers received no more than the minimum wage, which during these two decades almost halved. This, in turn, provided the profits for an industrial and technical elite and allowed Brazil to enjoy spectacular growth rates. By 1981 the cycle of growth had come to a full stop. The economy in the 1980s was overshadowed by the need to service the foreign debts and, despite a successful industrial sector, the Brazilian government could not devote to social and welfare programmes the resources so desperately needed by the poor. The crippling constraints this imposed on the Brazilian economy created that vicious circle of social deprivation and political instability characteristic of so much of the South American continent.

As elsewhere in Latin America, the civilian administration of President Jose Sarney in 1986 introduced a harsh austerity programme; inflation was halted for a time, but the plan collapsed and inflation was back at 800 per cent in 1987. Apart from the state of the economy, the burning question was whether Brazil would become some sort of democracy by virtue of the new constitution. When this was promulgated in October 1988, the president was allowed wide-ranging powers and the armed forces were given the ambiguous responsibility of maintaining ‘constitutional order’. In other respects the repressive rule of the previous military dictators was repudiated. The new constitution guaranteed basic civil rights, including the right of workers to strike as well as freedom of speech and the freedom of the press. Another restructuring plan for the economy to beat rampant inflation was launched in January 1989. President Sarney’s obvious failures led to his defeat in the presidential elections that November. A more positive aspect of his administration was that it took the first steps towards protecting the Amazon rainforests, whose despoliation had aroused international concern.

In March 1990 the new president, Fernando Collor de Mello, was inaugurated. Mello promised to transform Brazil’s economic chaos. A stylish 40-year-old, he vowed to help the underdogs, the ‘shirtless ones’, and to end the mismanagement and corruption of the years of the generals and President Sarney.

Mello began his presidency with the most radical austerity measures of any Latin American reformer by freezing 80 per cent of all but the smallest financial assets for eighteen months. He slimmed down the large bureaucracy and vowed to move towards a free-market economy, dismantling Brazil’s high tariffs and exposing the featherbedded state industries. The result in his first few months was unemployment and recession. By the summer of 1990 he had to ease up on some of his draconian measures and inflation began to rise once more. The economic future also depended on a favourable settlement with foreign creditors to ease the payments on Brazil’s huge debt. A preliminary agreement was reached in 1991. Mello’s determination to stop the despoliation of the Amazon and to protect the few Indian peoples still left won world approval. It only slowed and did not halt the advancing destruction. Brazil was also chosen for the Earth Summit, a conference intended to protect the environment but which achieved little.

Brazil dominates the economy of southern Latin America: Mercosur, the regional economic free trade area, was founded in 1990 by Brazil, Argentina, Paraguay and Uruguay; in 1996 Chile became an associate member. Trade between them has risen fivefold. A decade after the end of military rule much had been achieved in Brazil. It has opened its trade to the world: in the mid-1990s its Gross Domestic Product was three-quarters that of China, whose population is seven and a half times larger. But the functioning of democratic government has been far from smooth. In December 1992 President Fernando de Mello was forced from office surrounded by scandal. His successor Itamar Franco inherited an economy whose currency had collapsed, with hyperinflation exceeding 1,000 per cent. Fernando Henrique Cardoso, appointed minister of finance, began the task of economic reform. In 1995 he was elected president following his success in opening the market and subduing inflation. But Brazil’s problems of protecting the rainforests, saving the indigenous peoples, and providing for the teeming millions of poor crowded into shacks lacking sanitation, remained as urgent as ever at the end of the 1990s. The low educational standards of the children of the poor hinder progress throughout Latin America. In Brazil more than 2.5 million children receive no schooling and those who do average less than six school years. The disparity between the north and the south of the Western hemisphere remained extreme despite progress as the twentieth century came to a close.

During the course of Cardoso’s two presidential administrations not surprisingly Brazil’s ills were not all mastered, especially the high crime and murder rate, but as the longest serving democratically elected president he achieved some progress, the most important through his securing a ‘fiscal responsibility law’ which imposed discipline on local state and central spending and so curbed inflation. In social reforms the housing and education took pride of place; nearly all the children gaining access to primary schools. A programme of land reform settled on the 600,000 landless peasant families. Yet, underemployment and unemployment remained high in 2003, not far off one in five. Brazil’s finances remain parlous though saved from default in August 2002 by a $30 billion loan from the International Monetary Fund, the Brazilian administration promising to abide by its fiscal conditions. Public sector debt had risen from 30 per cent in 1994 to 56 per cent of the GDP in 2002 and foreign debt absorbed 90 per cent of Brazil’s export earnings. Reforms of pensions and taxations, and the rooting out of corruption remained essential if the extreme disparity between wealth and poverty was to be tackled. Cordoso could not offer himself again and his chosen successor was defeated by the charismatic Lula da Silva and his Worker’s Party.

This was Luiz Inacio Lula da Silva’s fourth election campaign. He was born in the poorest section of society and rose from shoeshine boy to fiery union leader and presidential candidate. Once a socialist radical, by 2003 he presented a more pragmatic moderate image, no longer the nightmare of foreign investors whose support is indispensible for Brazil’s economy. Lula da Silva set out to show that contemporary ‘liberal socialism’ can work with the market and capitalism for the benefit of all the people, while promoting public services. In place of class conflict he promised a ‘social pact’, the working together of all sides of industry. The big new idea was to bring together politicians, unions, business and non-government organisations in a Council of Economic and Social Development to discuss reforms before they were submitted to Congress. Hailed by Brazil’s 50 million poor as a saviour, Lula da Silva promised a new spurt of growth and widespread reforms, all amid a continuing world economic slowdown in 2003.

What will he be able to achieve? The gap between promise and reality may prove too wide. His mission, the eradication of poverty and improving on the gross disparity of wealth, was expressed in his inaugural speech on 1 January 2003 with his vision of Brazil leaping into the developed world of prosperity, justice and equality and providing every Brazilian with three square meals a day.

For the present, Antonio Palocci, his minister of finance followed a prudent course. But should Lula’s efforts fail to bring the results his supporters aspire to and the mood threatens to turn against his policies, will the radical reappear?