Alex Melchiore

September 6th, 2016

Dr. Tait Chirenje
Brazil: The Troubled Rise of a Global Power Reflection
Chapter 7: From Disorder to Progress Under Cardoso
Brazil was a very sad nation in more ways than one. In 1991 everyone was fed up with
the dictatorships and the formation of the New Republic. During this time the politicians tried to
really push for a change, they wanted to push for democracy. Many tasks were still to be
accomplished: tear down the remains of the dictatorship, conquer the serious social issues, set up
an effective democratic government, and the most strenuous: halt the spread of inflation. This
step was the hardest to combat and had to be handled cautiously (Reid 117-118).
The government was not off to a promising start. The first president had passed before
taking office, his successor was impeached, the vice presidents would be in office for longer than
the presidents, and the issue of inflation continued to climb. Jose Sarney was sworn in as
President whose main objective was to ratify the constitution that had been set in 1967 to make it
more conducive to a democratic nation. Before he passed, Neves had reached an agreement with
the military that the edits to the constitution would be drawn up by Congress. One major
complaint about the original constitution is that according to Ives Gandra Martins is that it
would not fit in the GDP. The first edit attempt in 1988 was a big improvement that spelled out
more clearly individual rights and freedoms each citizen had, it abolished literate requirements in
order to vote and lowered the voting age to sixteen, as well as expand the welfare state. One of
the big edits was that it respected the native lands that belonged to the Indians and made sure that
those lands remain un-encroached by modern society. Overall this first attempt at an edit was
dissatisfying to many due to the accusations that it was too conservative and anti-liberal. Even
Sarney argued that it would leave the country un-governable. This attempt was refuted and the
government went back to the drawing board (Reid 119-122).
The government still pushed to resolve social issues, especially in the poorer regions of
the country. This included the republic of Alagoas where the local sugar production had suffered
quite the decline and social and political violence was unfortunately very common. Many
citizens were un-employed; the infant mortality rate was higher than any other region (125 in
100,000 births) and many citizens illiterate (over 65%). It was clear that this region needed help
both socially and politically but that did not happen under the rule of the newly elected governor:
Arnon de Mello who only continued the political corruption and did benefit the republic at all.
His second son Fernando Collor de Mello would end up taking over as governor. Collor had used
the media of the time period to gain popularity and get journalists talking about him. The next
election Collor took advantage of the opportunity to run for the presidency and ended up winning
in 1989. This was the first big Brazilian election in which over 70 percent of the citizens casted
votes (82 million citizens). This was the first direct election in over forty years and the citizens
still did not vote for politicians that wanted to bring democracy back (Reid 122-126).

Now it was Collors turn to attempt an anti-inflation plan. He had two important steps:
opening foreign trade and cut the fiscal deficit of 8 percent GDP and start trimming the
developmental state through the use of privatization. Unfortunately, corruption was still
prevalent in office after his financial advisor had raised over $160 million from places like
construction companies and banks. With over $60 million left over, it was proven that Collor
used it for personal expenses. To cover up this scandal, he threatened many journalists to keep
them from digging far into his corruption scandals. Needless to say his economic plans failed and
Brazil was still in desperate need of a stable economy (Reid 127-129).
Brazil took a long time to get their economy back on track because their inflation was so
out of sorts without any organization. There were still many plans that were tried which seemed
to work at first in bringing inflation down to zero (or very close to it) but no thanks to planning,
the lids quickly flew off and inflation quickly rose back up. This all changed when Fernando
Cardoso took office and started a whole economy reform. This plan came in three stages: coming
up with a new currency called real, cut the fiscal deficit of around 8 percent GDP (as with
previous plans), and involve a virtual currency which would allow the de-indexing of the
economy without actually harming the economy. This new plan was flawed because the currency
had changed names five times and was still adding to the inflation However Cardoso was starting
to get somewhere in improving the government by first turning back the states rule of the
economy, he pushed for privatization and also got Congress to end monopolies of oil, gas,
merchant shipping, and telecoms. He was not able to combat the inflation the way he had
combated other governmental issues for some time. Brazil was still relying on the exchange rate
to halt inflation. His first term did not end well economically as financial turbulence kept halting
his progress (Reid 129-133).
To make matters worse, Brazil had felt the effects of the 2007-2008 world financial crash
would halt an economic recovery for a few years. Cardoso was also in the middle of political
controversy over an amendment that would allow him to keep running for re-election (governors
and mayors included) for two consecutive terms. He felt that four years was not enough to do a
reform which was beneficial to his campaign seeing that he was re-elected. Still facing financial
issues, over $50 billion had left the country because devaluation was rising which scared off
many investors. It was not until the new plan of floating currency, inflation targeting, and fiscal
surplus was implemented that Cardoso finally got the economy stable and allowed faster
growing. Cardoso was also working very hard on social policies to majorly improve education
and health-care, he was able to raise the salaries for teachers which lead to more citizens
receiving higher quality educations than in years past (especially in the poorer sections of the
country). He was also able to increase health spending by 34 percent over his duration in office.
Though he still faced issues such as unemployment rates rising and tax burdening, his term was
still looked at as a bitter-sweet after a lot of trial and tribulation that helped the Brazil
government rise as a world power (Reid 136-137).
This chapter provided some keen insight on the many trials and tribulations that Brazil
went through with political issues, especially economic. Once the corrupt republic remanence
had left, it allowed Brazil to start off in the right direction to get back on a fast-track to a growing

economic power. It is a shame that Brazil had gone through so much change in leadership that
could only improve so much until the circumstances and corruption changed. Many of the plans
to reduce inflation seemed like good ideas at the time but were never carried out properly which
ultimately lead to their collapse. After learning more about Cardoso and how his term, though
plagued, still ended very successfully to restore faith in Brazil as a world power.

Source

Reid, M. (2014). Brazil: The troubled rise of a global power.