Brazil has been much in the news these days, and not in a good way. It’s the epicenter of the horrific Zika plague, its economy is reeling, corruption is out of control, and President Dilma Rousseff is facing impeachment. All this as Rio de Janeiro prepares to host the Olympics this August. The country’s cup runneth over.
Just a few years ago Brazil was a feel good story. Its economy was soaring at a rate to rival China’s. Its charismatic president, Luiz Inacio “Lula” da Silva, was among the most popular leaders anywhere, a rags-to-riches phenomenon. In 2014, when the Council on Foreign Relations chose its “Great Decisions” topics for the next year, one was “Brazil in Metamorphosis.”
Unfortunately, the country has slipped back into its cocoon. The Samba music has stopped. Instead of being on a roll, Brazil is mired in an awful slump. Or as Frank Sinatra put it, riding high in April, shot down in May.
What sort of country is this anyway?
More than coffee, beaches and soccer
Any analysis of Brazil should start with its sheer size. It’s larger than the continental United States. Several of its 22 states are bigger than France. The Amazon basin, itself vaster than Western Europe, has 20 percent of the world’s supply of fresh water and untold numbers of plants and wild life not found anywhere else.
Brazil is about half of the South American continent, sharing a border with ten countries. Only Russia and China, with 14 each, have more neighbors. Brazil is the world’s fifth most populous country, with about 200 million people. Just over half identify themselves as black or non-white, making Brazil the world’s second largest black population, trailing only Nigeria. Brazil has more Catholics than any other country (though Evangelicals have made significant inroads in recent years).
One Brazilian city, Sao Paulo, is among the largest metropolises in the world, with more than 20 million people. In recognition that Sao Paulo is the economic hub of the continent, more than 400 of our Fortune 500 companies have set up offices there. Its stock exchange is the third largest in the world.
Brazil has a top ten economy with an annual gross domestic product (GDP) a little over $2 trillion, about the same as Russia’s. It has the world’s best soccer players and some pretty good music too (Antonio Carlos Jobim’s “The Girl From Ipanema,” for example.) It is also among the world’s leaders in the export of commodities like coffee, sugar, beef, soybeans, rice, and corn. The mixed, full service economy also makes airplanes, cars, appliances and computers. With some 75 million Internet users, Brazil ranks 4th in the world in that category. Large deposits of oil discovered off the coast from Rio make Brazil an emerging oil power, as well.
Brazil spends only about 1.5 percent of its GDP on the military. This compares with about 4 percent for the United States. In absolute terms, Brazil’s military budget is about $30 billion versus our $600 billion (not counting our war expenditures).
A lot like us
Brazil is a large, multiethnic, multiracial democracy—like our own country. The President is both head of state and government, as in our own system. Brazil, however, has dozens of political parties, with 21 of them represented in Congress at last count. Multi-party coalition governments are the norm.
Brazilians call Rio de Janeiro, their former capital, the “Cidade Maravilhosa,” or “marvelous city,” because of its stunning physical beauty. Followers of the Olympics will see ample reason to back the raves. But Rio also has a serious problem with violence, especially in the drug-ridden favelas clinging to the hillsides overlooking the city and Guanabara Bay. Trying to make these areas safe and presentable for the coming games is a truly daunting challenge.
Lula’s rise
Lula was sworn in as President in January of 2003. Over the next eight years the country made dramatic economic gains, lifted tens of millions of citizens out of poverty, reduced the misery index, and vigorously pressed Brazil’s claim for a permanent seat on the UN Security Council (A body still configured as it was at its inception in 1945, thus short changing emerging powers such as India and Brazil).
Under Lula, Brazil joined with Russia, India and China to form the BRIC, a group that quickly established itself as a global force, especially on economic issues.
Brazilians have long seen themselves as a major country, not some banana republic. And they aren’t alone. More than a half century ago, one of America’s greatest statesmen, George Kennan, described Brazil as among those “monster countries” whose size and resources make them critical to the future of the world.
Cynics traditionally countered that sure, Brazil was the country of the future—and always would be. You heard far fewer such voices during Lula’s 2003-2011 reign as the Brazilian economy raced ahead and the country began flexing its muscles. The Economist put on its cover the iconic statue of Jesus Christ that soars on the Corcovado mountaintop over Rio de Janeiro. This was about the time Brazil’s “metamorphosis” was chosen as a Great Decisions topic.
Lula himself literally climbed from the favelas to the Planalto Palace, Brazil’s White House. He’s from a huge family and lived for a time in the backroom of a bar. He couldn’t read until he was 10 years ago and received little formal education.
A lather operator and union organizer who helped found the Workers Party (PT), Lula won the presidency in 2002 on his 4th try. On taking office, he dedicated himself to reducing hunger and poverty, saying he’d attack the problem with “a heart the size of Brazil.” He’d consider his presidency a success, he added, only if he could ensure each Brazilian gets three square meals a day.
To back up that pledge he quickly launched or strengthened programs like “Bolsa Familia” (family purse) and “Zero Fome” (no hunger).
It worked magically, in part because Lula insisted that the money go mainly to the woman in the house. He knew how things worked in those slums. Thanks to these specific programs for the working poor, as well as generally sound economic fundamentals, Brazil prospered. It was seen as finally achieving its place in the sun, and at home Lula’s favorability ratings reached the stratosphere (More than 80 percent on leaving office). Naturally, Brazil’s have nots saw him as a workingman who identified with their plight.
Dilma’s fall
The woman who succeeded him, Dilma Rousseff, had been his chief of staff as well as a fellow PT member Active in the political underground, she’d been imprisoned and tortured by the generals who ran Brazil in the 60s, 70s and early 80s. In office decades later as Brazil’s first female president, she continued most of Lula’s policies but without his charisma, magic touch or plain luck. As world conditions worsened, Brazil’s economy slowed and then stalled. Corruption, always a problem, exploded in multiple scandals. (An American ambassador once got in hot water for saying corruption was endemic in Brazil. He wasn’t wrong, just undiplomatic).
When Lula secured Brazil the right to host two major world sporting events—the 2014 soccer World Cup and the 2016 summer Olympics—it was seen as validation of Brazil’s status as a significant power. But this triumph backfired on Dilma when economic woes prompted Brazilians to take to the streets in major cities demanding bread not circuses. The protests exposed deep underlying social and economic tensions.
It did not help the national mood that Brazil got trounced by Germany in the semi-finals of the 2014 World Cup. That was a bitter pill to swallow for a country where soccer is like a religion and Brazil’s five world titles are a source of immense national pride.
In going for the Olympic gold, Brazil declared it was ready for prime time. But to many citizens scratching out an existence on the sugar plantations in the northeast or in the favelas on the fringes of big cities, spending billions for sporting venues was wrongheaded and infuriating.
Despite the impressive program under Lula, millions of Brazilians continue to live in dirt poor conditions alongside fabulous riches. The classic sociological study of the country was titled, “The Mansions and the Shanties.” The contrast between rich and poor remains acute today.
Dilma won reelection in 2014 largely thanks to big majorities in the poorer areas of the country. But soon more and bigger scandals undercut her popularity even in those regions. By late 2015 her national approval rating was in single digits, a dizzying fall from grace for her and the Workers Party.
In particular, massive corruption in the huge state oil company, Petrobras, threatened Dilma directly, since she headed the firm’s board of directors under Lula and it funneled big sums to her 2010 election campaign. The corruption/bribery scandal is called, “Lava Jato,” or car wash, a reference fans of the HBO hit “Breaking Bad” might appreciate.
Petrobras was eventually reduced to junk bond status, a devastating blow for the number one company in South America. The company’s stock dropped $70 billion in paper worth in a year.
The “real,” Brazil’s currency, lost 23 percent of its value in a year as investors put their money elsewhere. Inflation reached eight percent, the highest level in the decade since the PT won office. Jobs disappeared as well; official unemployment was up to 5.9 percent this spring. An economic downturn in China, which has edged out the United States as Brazil’s biggest trading partner, greatly reduced demand for Brazilian commodities.
Dilma, responded to the economic doldrums by admitting some policy errors in her first term, offering multiple reforms and promising a crackdown on corruption. None of this arrested her fall. Her political coalition began to fray and then fell apart when members of the centrist “Brazilian Democratic Movement Party” (PMDB), quit her government over the widening corruption investigations (and personal ambition).
This spring the lower house of Congress voted two to one to impeach Dilma, and the Senate by an even larger margin agreed to hear the case. By law, Dilma was suspended for six months while the matter proceeds. She is not charged with specific crimes but with manipulating federal budget figures to make them look rosier during her 2014 reelection campaign. Some observers saw these votes more as a referendum on Dilma’s leadership than legal grounds for impeachment. She calls the action against her a coup d’état. She continues to reside in the Planalto Palace while Vice President Michel Temer—a member of her coalition but from another party, the PMDB—runs the country.
Lula had long been seen as a potential candidate again in 2018 (the law bars more than two consecutive terms). But he’s 70 now, was a smoker for 40 years, and was diagnosed with throat cancer a few years ago. He and his family have also been tainted by the barrage of scandals, making a return to power unlikely.
Now what?
Much of the wind has gone out of the country’s sails at the moment. The decade-long boom was great, but it’s so over. The economy is stuttering and stalling; with less money available for welfare programs, social unrest will only increase, particularly as the widely popular move to push Dilma aside fails to produce quick economic improvements.
Longer range, though, the country’s prospects remain very good. Brazil has great natural resources and human capital. It is a vibrant culture and established democracy with a big economy. It is the natural leader of the region and clearly well positioned to play a significant role in world affairs.
It has a lot of work to do to fulfill that destiny. Rooting out corruption, or at least reducing it to tolerable levels, is one essential and formidable task. Another is to bridge what the Economist calls the “yawning inequalities” that continue to exist between rich and poor, despite the notable progress made during the Lula years.
Our own Constitution talks about progress toward a more perfect union. Like us, Brazil will continue to move in that direction, but unsteadily, by fits and starts, with setbacks and detours along the way. Brazil may someday achieve its metamorphosis, but reports that it had already done so were greatly exaggerated.
Dick Virden is a retired Foreign Service Officer who served two tours in Brazil, the second of those as Deputy Chief of Mission in Brasilia, from 2002 to 2004.