Samba superpower
Brazil certainly has key advantages over the other so-called ‘BRICs’ — the fast-paced middle-income countries which, some say, will rival America, Europe and Japan in economic terms by the middle of this century.
India is distracted by its hostile nuclear neighbours and blighted by domestic terrorism and various insurgencies. China is a dictatorship where human rights and fundamental freedoms are unfamiliar concepts. Russia’s economy is almost entirely dependent on oil, gas and arms exports; foreign investments are far from secure.
Brazil’s strengths include the world’s largest fresh water supplies, the largest tropical forests, land so fertile that in some places farmers manage three harvests a year, and huge mineral wealth.
The country is also blessed with vast energy supplies: the power of the Amazon is being harnessed using hydroelectric dams. Further, many of Brazil’s cars and trucks use cheap, low-pollution ethanol derived from sugarcane, pointing to its embrace of alternative energy sources. That Brazil will host the 2014 World Cup and the 2016 Olympics only seems to confirm Brazil’s ‘coming-out’ party.
Could the South American giant be on the verge of world power status? That is the persuasive argument made by Larry Rohter, the New York Times’ South America bureau chief based in Rio de Janeiro from 1999 to 2007, in this timely book which fills a major gap in the market on a country too often seen only through the lens of the beautiful game and its beautiful women.
How things have changed. When Rohter, then an aspiring China scholar, first arrived in Brazil in the early 1970s, he saw a country on an unenviable path in the throes of a military dictatorship. ‘Wanted’ posters of young, long-haired ‘terrorists’ adorned the walls of the airport when he landed. The media was heavily censored.
The economy was in shambles too. Brazil’s debt to the International Monetary Fund (IMF) and other international lenders was spiralling. Inflation was out of control.
Those with longer memories will recall, however, that Brazil has known the good times before. In the mid-20th century Brazil seemed to have found a formula for stimulating growth and enjoyed what appeared to be an economic miracle. At one point its economy grew faster than that of any other big country bar Japan and South Korea.
That growth relied on a state-led development model, financed with foreign debt within a semi-closed economy. But growth also brought inflation which crippled Brazil until the mid-1990s and still accounts for some odd characteristics, such as the country’s painfully high interest rates and its disinclination to save. All the same, the military-induced “miracle” persuaded Brazilians that the state knew best, at least in the economic sphere, and even the subsequent mess has not quite persuaded them otherwise.
When this development model broke down amid the oil shocks of the 1970s, Brazil was left without the growth but with horrendous inflation and lots of foreign debt. There followed two volatile decades, when Brazil was being likened to African countries, not the east Asian tigers. Many of the country’s current problems, including crime and poor education and healthcare, either date from that period or were exacerbated by it. Between 1990 and 1995 inflation averaged 764% a year.
Brazil’s return to sunny days came in 1994 when a team of economists under Fernando Henrique Cardoso, then the finance minister and latterly president, introduced a new currency, the real. Within a year the Real Plan had managed to curb price rises. In 1999 the exchange-rate peg was abandoned, the currency was allowed to float, and the central bank was told to target inflation.
The result? Having vanquished the staggering inflation that long plagued the country in the mid-1990s, Brazil has finally become a predictable country, where governments have maintained economic policies over the past 16 years, generating confidence and foreign investment.
Several caveats have to be entered, however. First, Brazil’s newly-elected and first female president, Dilma Rousseff, former chief of staff of the wildly popular Lula, has never held elective office before. It remains to be seen if she will have Lula’s negotiating skill or whether she will instead be dragged to the left by her Workers’ Party which could become over-confident.
Second, government spending is already growing faster than the economy as a whole, and much of that spending goes on a bloated bureaucracy while the education system and infrastructure still lag behind those of China or South Korea. The average educational level of Brazil’s young people is rising but is still only around eight years.
Third, complacency poses a threat. While the Chinese and Indians worry incessantly about their education, science and technology sectors not expanding as fast as other countries, Rohter reports that Brazilians exhibit none of the same constructive paranoia. That drive towards constant improvement is absent.
By and large, Rohter remains sanguine, at least in the first half of his book. He tempers that confidence in later chapters which present a more complicated picture. He paints a fairly damning portrait of Brazil’s stewardship of the Amazonian rainforest and the country’s highly dysfunctional political system. Bureaucracy, corruption and a tremendous social debt still have the potential to squander Brazil’s substantial gains, potentially returning the country to those boom-and-bust cycles.
In addition to probing its deep culture of corruption and clientelism, Rohter also criticises Brazil’s cheery self-promotion as a ‘racial democracy’. About half of Brazil’s 200 million people claim African blood. But economic and political power still rests firmly with those of European lineage.
The biggest topic Rohter skips is a serious discussion of the drug-war-fuelled violence and the carnage in Brazilian slums. These are issues that still dominate international perceptions of the country and merit analysis. City of God, the dizzying 2003 portrait of bloodshed in Rio’s favelas, is arguably the most iconic film about Brazil, but in discussing the movie Rohter focuses on its artistic innovation rather than the violence still prominent in many Brazilians’ lives.
Overall, though, Rohter does a fine job of summing up the country’s history and idiosyncrasies. Brazil’s courtship of democracy, economic growth and low inflation is not new. But it has never before sustained all three at the same time. One hopes that it can.
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