Brazil

Article Outline

Introduction; Land and Resources; People and Society; Culture; Economy; Government; History

Transition to Democracy

The battered economy severely discredited the military regime in the eyes of most Brazilians. Furthermore, few saw much need for a military regime, given that the threat of leftist revolution had long since been crushed. In 1984 millions of Brazilians took to the streets demanding immediate direct elections for president.

The government managed to fend off the calls for direct elections by instituting an electoral college, in which congressional delegates and state assembly members voted for the president. However, the massive public demonstrations helped split the government party. Many of the government’s supporters in the electoral college defected and voted with the opposition, defeating the official government candidate for president in 1984. The electoral college instead chose Tancredo Neves, the governor of Minas Gerais, to become Brazil’s first civilian president since 1964. They chose José Sarney as vice president. Sarney, a long time leader of the government party in the Senate, had played a key role in leading government supporters to join the opposition.

Neves, who was 74, fell desperately ill on the eve of his scheduled inauguration in March 1985. When Neves died in late April, before he could assume office, José Sarney was sworn in as president. Sarney immediately faced two momentous problems: the economic crisis and the need to continue the transition to a fully democratic regime by instituting a new constitution that would reestablish democratic institutions.

Inflation in 1985 approached 300 percent, the foreign debt continued to mount, and strikes broke out across the country as workers demanded higher wages. In a drastic effort to stabilize the economy, Sarney introduced the Cruzado Plan in February 1986. The plan froze prices and wages and it brought Sarney to the peak of his popularity when inflation ground to a standstill for a few months. Unfortunately, when the government unfroze prices and wages at the end of 1986, inflation exploded again. Interest payments on the foreign debt gobbled up nearly all of the country’s huge trade surplus, draining the economy of badly needed capital. The government incurred large deficits in public spending, and foreign banks refused to extend new loans until the government implemented an economic austerity program.

The Collor Administration

The election of Fernando Collor de Mello in late 1989, and his inauguration in March 1990, marked the completion of the long and difficult process of abertura. Finally, Brazilians had the opportunity to elect their president directly through the ballot box rather than having one imposed by a small clique of generals. More than 80 million Brazilians voted in the presidential election, the vast majority for the first time. In his first two years in office Collor implemented an economic program that brought inflation down, but failed to contain it. More important, he began to drastically curtail the state’s role in the Brazilian economy and to dismantle protectionist trade policies.

The great hopes millions of Brazilians had for the Collor presidency soon disappeared as the economic program failed to halt extremely high inflation rates, which reached a peak of more than 1,500 percent in 1991. A corruption scandal also badly damaged the government. In 1992 legislative investigations uncovered an influence-peddling scheme that involved hundreds of millions of dollars, much of it going to Collor. In December 1992 the Congress impeached Collor and swore in his vice president, Itamar Franco, to serve out the last two years of Collor’s term.

The Cardoso Presidency

President Franco paved the way for the election of his successor, Fernando Henrique Cardoso. One of Latin America’s most prominent intellectual figures, Cardoso was trained as a political sociologist at the University of São Paulo in the late 1950s and early 1960s. A former member of the Communist Party, Cardoso spent part of the 1960s and 1970s in exile. During the late 1970s he entered politics, eventually becoming a senator from the state of São Paulo and an unsuccessful mayoral candidate for the city.

Franco chose Cardoso as his finance minister in 1993 in yet another effort to combat runaway inflation and the debt crisis. Cardoso and a team of advisers put together the Real Plan. This plan created a new currency, the real, in 1994 and put into place a series of measures to reduce inflation without wage or price freezes. Inflation dropped from a rate of 45 to 50 percent per month in early 1994 to a rate of about 1 to 2 percent per month over the next two years, giving Brazilians their lowest inflation rates in decades.

The success of the plan made Cardoso a national hero and the leading contender for the presidency. Cardoso forged a coalition of his Brazilian Social Democratic Party (PSDB), the conservative Liberal Front Party (PFL), and several other parties. The former Communist convinced the business community and conservatives that his views had evolved, and were close enough to theirs to gain their support. With nearly 55 percent of the total vote in the 1994 elections, Cardoso scored the most impressive electoral victory in 40 years.

Inaugurated on January 1, 1995, President Cardoso forged a majority coalition in Congress that passed fundamental legislative reforms during his first two years in office. This legislation on federal expenditures dramatically reduced government involvement in the economy. The government privatized major state enterprises, broke up the government-controlled telecommunications monopoly, and eliminated restrictions limiting the amount of money foreign corporations could invest in Brazil. The government also reduced expenditures in a number of social security programs and eliminated job security among civil servants in an attempt to reduce government expenditures.

Cardoso also worked to reduce tensions between landowners and the homeless squatters, who occupied large unproductive estates in the countryside. With 1 percent of the population owning 45 percent of the land in 1995, Brazil had the most unequal land distribution pattern in Latin America. Conflicts over land use and ownership led to a number of violent confrontations in 1995 and 1996 in which more than 40 people were shot and killed by Brazilian police. In 1995 Cardoso signed a presidential decree that took possession of just over 100,000 hectares (250,000 acres) of land from large, private estates and reallocated it to more than 3,600 poor families.

In 1996 Cardoso signed a decree that allowed non-Native Americans to appeal land allocation decisions made by Brazil’s Indian Affairs Bureau. Cardoso’s decree allowed regional governments, private companies, and individuals to challenge indigenous land claims in certain areas of the country, primarily in the Amazon region of northern Brazil. The law was widely condemned by human rights, Native American, and religious organizations.

Economic Crisis and Reelection

Largely because of Cardoso’s popularity and his success in revitalizing the economy, Brazil’s legislature passed a constitutional amendment in 1997 allowing the president to run for a second term in office. Later in the year, however, Brazil’s economy was shaken following a collapse in Asian stock markets. The resulting financial crisis affected stock markets in many developing economies. Reacting to the crisis, Brazil’s government introduced an austerity program that reduced federal spending and temporarily restored foreign confidence in the economy. The economy received a second jolt in 1998 after the government of Russia defaulted on its foreign debts. Fearing that the economic crisis might spread through Latin America, investors began withdrawing their money from Brazil. Cardoso began negotiating an economic bailout with foreign lenders through the International Monetary Fund (IMF), an international agency designed to stabilize the world economy.

Even though the economy had taken a turn for the worse, Cardoso won election to a second four-year term in 1998. The following month, the IMF and Brazil announced a $41.5-billion loan package to protect Brazil’s economy. In return, Cardoso agreed to introduce legislation designed to cut back on government spending and to restructure Brazil’s taxation and social security systems. In 1999 the government devalued the national currency, the real, by 8 percent against the U.S. dollar. (Devaluation involves lowering the value of a nation’s currency in relation to foreign currencies.) Financial experts hoped the devaluation would put the economy on a more secure footing by lowering the cost of Brazilian products in overseas markets, making exports more attractive and increasing the flow of cash into Brazil.

The Da Silva Presidency

In the 2002 presidential election, Cardoso could not run for reelection because of term limits. The Workers’ Party candidate Luis Inacio Lula da Silva, widely known as Lula, won the election. He was the first working-class president to be elected in Brazil; the nation’s presidents have traditionally come from the military or a small, wealthy elite. Da Silva was also the first leftist candidate to be elected president in Brazil. (The last time a leftist leader became president was in 1961 but that leader, João Goulart, had been elected vice president. He succeeded to the presidency on the resignation of the president, Jânio Quadros.) During his campaign, da Silva promised to institute social reforms for the poor and working class, to create more jobs, and to raise salaries.

In his first term da Silva followed through on many of his campaign promises. He succeeded in improving the economy, raising living standards and reducing inflation. His party, however, was plagued with corruption scandals, including charges of illegal campaign financing. In the 2006 presidential election da Silva failed to win a majority in the first round of balloting. In the October runoff, however, he was easily elected to a second term with more than 60 percent of the vote.

The history section of this article was contributed by Marshall C. Eakin. The remainder of the article was contributed by John Philip Dickenson.

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Transition to Democracy

The Collor Administration

The Cardoso Presidency

Economic Crisis and Reelection

The Da Silva Presidency