Democracy and the Future (from 1985 onwards)

Democracy began with José Sarney, who until 1984 had supported the military regime. During his mandate rampant inflation increased Brazil’s foreign debt to almost US$115 billion in 1990. His government was not only marked by the return to democracy, but also by a serious economic crisis and several accusations of corruption. He created the Plano Cruzado in an attempt to stabilize the currency, but the initiative failed. In 1985, direct elections were held for the office of mayor in the state capitals, and in 1986 elections were held for the National Constitutional Assembly, which approved a New Constitution on October 5, 1988.

The first direct presidential election in a democratic system took place in 1989. Supported by the media, Fernando Collor de Mello defeated his opponent Luiz Inácio Lula da Silva and became president. He began his mandate by freezing all checking and savings accounts nationwide. He also presented an ambitious economic program, the Plano Collor. Collor implemented various measures to contain inflation and open up the Brazilian economy, but things didn’t improve much and the recession worsened.

Several political scandals and accusations of a serious corruption scheme by his brother resulted in the impeachment of Collor in 1992. Large political demonstrations forced Collor from office. A Parliamentary Inquiry Commission investigated the president and in 1994 the Federal Senate suspended his political rights for 8 years. In 2006, Collor returned to the Brazilian Congress as Senator of Alagoas.

Collor’s vice-president, Itamar Franco, took office in 1992 and governed until 1995. The new president established an image of competency and integrity and nominated senator Fernando Henrique Cardoso as his minister of finance. In 1994, the Plano Real was created in another attempt to stabilize the currency. This successful endeavor improved Brazil’s economy and brought an end to the inflation crisis. Fernando Henrique Cardoso was nominated as the official candidate to succeed Itamar Franco and was elected president in October of 1994, taking office on January 1st, 1995.

Fernando Henrique Cardoso’s main platform was political stability and the continuation of the Plano Real. His government approved several major privatization initiatives. The most noteworthy privatization was that of mining company Vale do Rio Doce, in 1997, much criticized because of the low selling price and Brazil’s loss of sovereignty over its iron ore reserves. Today, Vale is the largest private company in the country with an international reputation and an efficient corporate administration.
Throughout the mid-1990s the Brazilian economy continued to grow. The currency remained stable, inflation was low, foreign investment increased significantly and the number of Brazilians living below the poverty line decreased 5%.

Fernando Henrique Cardoso was reelected in 1998, defeating Lula for the second time. At the end of his second mandate, the president had achieved solid progress in numerous areas. Infant mortality had decreased, the number of children enrolled in school had increased and access to water, sewerage and telephone services had gone up.

In 2000, government approved the Law for Fiscal Responsibility, introducing stricter guidelines for government spending. The Bolsa Escola (subsidy for low-income families) was created, as well as numerous other social programs to assist the low-income population. The creation of special lines of credits for educational institutions increased private investment in higher education.

The government was able to stabilize the economy and attract new foreign investments, but it didn’t complete much needed tax, welfare and social reforms, required to stimulate the growth of Brazil. To maintain economic stability and stave off a fiscal crisis, caused by large external and internal debts, Cardoso’s administration implemented several constitutional reforms. The government also brought an end to the monopoly of certain sectors, such as oil, telecommunications, natural gas and cabotage shipping.

During this period of slow economic growth, unemployment rates increased from 4% to 8% between 1994 and 2002. The end of his second mandate was tarnished by suspicions of corruption and a major energy crisis, known as the “Black-out Scandal”.
This crisis was caused by inadequate planning and a lack of investments in the generation and distribution of energy, aggravated by a severe drought, resulting in energy rationing and a disgruntled population. Cardoso’s mandate ended in 2003 with the election of Luiz Inácio Lula da Silva.

The 20th century was marked by major changes in Brazil and the rest of the world. It was an era of world wars and the atomic bomb, the car, the plane, space travel, electronic inventions, transplant surgery, cloning and the internet. It was also an era that saw the end of colonial empires, the internationalization of the economy, a growing cultural sector and rights for women and minorities. The history of this century can be interpreted as a conflict between liberal democracy and totalitarian dictatorship.
Brazil lived 20 years under military rule and was governed by six different constitutions. We underwent one of the fastest urbanizations in modern history. In 1950, almost 70% of the population lived in rural areas. By the end of the 20th century only 20% remained. Between 1901 and 2000, the population grew from 17 million to 170 million, Gross Domestic Product multiplied 100 times, life expectancy jumped from 33 years in 1910 to 65 years in the 1990s. However, we are still pursuing our goal of a more equal distribution of wealth to decrease poverty and social exclusion.

The arrival of the 21st century coincided with the 500th anniversary of the discovery of Brazil. One of the major challenges for developing countries was how to function in a setting where knowledge and technology play a decisive role in each country’s autonomy. New developments in production methods and tools made some raw materials completely obsolete, and a major part of the labor force had been replaced by machines and computers. Inserted in a global context, Brazil initiated the political and commercial revitalization of the Mercosul, strengthening and expanding relationships with its South American neighbors, increasing integration in the region. Brazil began to represent its interests in international trade agreements, from the Free Trade Area of the Americas (FTAA) to the World Trade Organization (WTO). The Brazilian government assumed the undisputed leadership role on the continent, promoting a humanistic foreign policy based on equal rights.

The beginning of the 21st century was marked by the presidency of Lula, leader of the Workers Party (PT). Following three consecutive defeats, he won the 2002 elections in the second round, defeating José Serra, the candidate of the Brazilian Social Democracy Party (PSDB). For the first time, Brazil had elected a leftist government and a president who had personally experienced poverty. In his election campaign, Lula promised to repay Brazil’s international debts, implement land reforms, support the landless peasants, eradicate hunger in Brazil and renounce corruption and political favoritisms.

During his mandate, Lula proved to be more conservative and maintained the administrative model of the previous government. The economy remained stable, with low inflation rates, a large drop in foreign debts and incentives for micro-credit loans.
According to the Brazilian Institute for Statistics (IBGE), unemployment decreased between 2003 and 2006, and the number of formally employed workers increased. In 2004, the poverty rate had dropped with 8%, compared to 2003.

The president increased minimum wage several times, but also increased the pension fund deficit. Lula’s greatest achievements are the various programs for low income populations. The Bolsa Família program, a revised version of Fernando Henrique’s Bolsa Escola, was expanded. Today, around 11 million poor families with a monthly income of R$137 or less per person, benefit from this subsidy. At first, this program was highly criticized for not making mandatory school attendance a prerequisite for the subsidy, but it was soon lauded for its scope.

Denouncements by Roberto Jefferson, an elected representative of the Brazilian Workers Party (PTB), involved in a pay-off scheme, revealed major political scandals. This crisis led to several other crises as the media exposed various levels of corruption in government. Several ministers resigned and some were expelled from office. The media exposed lavish spending with government credit cards, revealing the misappropriation of government funds. Nevertheless, Lula maintained a high approval rating and managed to get reelected by forming coalitions with 15 other parties.

Lula’s second mandate is marked by the production of Bio Diesel, the discovery of new oil fields, the exploration of oil found in the pre-salt layer and strong international relationships.

Brazil began to conquer its place on the world stage, building relationships with large nations. Today, Brazil is seen as a major partner in sustainable development. The country has an excellent reputation on the stock market and attracts significant foreign investments.

The Government created a major infrastructure development program, the Program for Accelerated Growth (PAC); major projects include the construction of public housing and infrastructure in the favelas of Rio de Janeiro. Brazil also lived through a serious crisis in the senate; its president, José Sarney, was accused of major corruption. The resignation of the minister of Environment, Marina da Silva, a founding member and activist of the PT party, made international headlines. She joined the Green Party (PV) and is running in the 2010 presidential elections against Lula’s candidate, Dilma Roussef. Roussef was elected president of Brazil in the second round of the 2010 elections with more than 56% of the votes.

This government is also severely criticized for its large bureaucracy and high spending. High taxes and convoluted red-tape still impede the growth of small and medium-sized businesses.

Today we have numerous political parties and their ideals and goals often overlap. There is no well-defined left or right, which causes a fierce exchange between parties and numerous coalitions. However, everything points to Brazil becoming a more transparent country. We now have more information about government irregularities and can fight for changes. Despite all these challenges, we have established a solid democracy, with a population that plays an increasingly active role and is aware of its problems. Brazil came out of the financial crisis stronger than ever and is still a country of the future. We found a comfortable position on the world stage and many believe in our growth. Now we have to achieve this future and transform it into a promising and fair reality for our people.

Related Issues:

• Discovery and Colonization (1500 – 1808)
• Independence and Empire (1808 – 1889)
• The Old Republic (1889 – 1930)
• Vargas, JK, Quadros and Jango (1930 – 1964)
• Military Dictatorship (1964 – 1985)
• Dilma Rousseff and the plans for the future of Brazil