Brazil: Beyond Soccer and Samba

For decades  Brazil  as a nation had  some set images, associated with it.  It  was a land of  soccer crazy people, and a country that  seemed to produce great soccer players  off an assembly line.  To many up North America, it  was the place, where you went for the sun, the sand, the surf and the sin. Movies like Blame it on Rio, Wild Orchid, reinforced the image of Brazil being the place, where you went to get laid, and for wild pleasures.  And of  course the carnival, the samba and yeah it was the nation populated with those sexy Latina females.  Beyond all that soccer and samba image, there were however some other  not too pleasant  realities.  Rio De Janeiro for all it’s picturesque images  and carnival, had some of the most notorious slums, notably the Ciadad E Deus(  City of God).  Income disparity  was widespread in Brazil, with  the favelas( slums), sprouting in every  major city.  Of  course the slum dwellers in the favelas, were still better off  compared to their counterparts  in the countryside, many  of  whom just managed to eke out a living.   Corruption  was notorious,  and  scandals  involving the political, business elite  were routing.

The  fact was for a major period of  time  since it’s  independence in 1822, Brazil  was  seen as the country that never really lived up to it’s potential or promise.  And  a vast potential it was,  the largest  nation in Latin America, you could place Paraguay, Uruguay, Venezuela, Ecuador, Peru in it, and there would still be space left.  It  is the world’s 5th largest  nation,  and with over 192  million people, who call it home, the 5th  most  populated.  But  yet  for a long period of  time,   Brazil had been in the news  for  more  unpleasant  news, a  failing economy, high  inflation,  growing levels of  poverty  and  notorious corruption.   And  the  fact  that  Brazil  was wholly dependent  on  US,  for  it’s  economy, to the extent  that  whenever  the US sneezed,  it  caught  a cold.

Caetes  is a small non descript town  located in the state of  Pernambuco, in the North  Eastern  corner of  Brazil, traditionally one of  it’s  more backward  regions.   It  was also the place  where  Luiz  Inacio  Lula Da Silva, the 35th  President of  Brazil  better known as Lula  was born in 1945, one of  the  8 children,  of  a poor  family.  Matter  of  fact   Lula’s  early childhood,  seems  straight  out of  a Charles Dickens  novel.  Born into poverty,  his  family  broke up, after  his  father  was found  living with another  woman.  His  mother  raised  Lula  along with his siblings in the backroom of a  small bar in  Sao  Paulo.  With little or no formal  education  due to  poverty,  Lula,  did   work as a shoe shiner, street vendor  and  at 14 yrs of  age,  he  joined  a factory as a lathe operator.  It  was the period,  when  Brazil  was under the rule  of  the  military  junta, and  Lula  joined the labor  union, as a  member.  His  organizing and leadership skills, saw him  rise up the ranks  quickly,  soon becoming a president  for  the Steel Workers Union in Brazil’s  highly  industrialized  cities  of   San  Bernardo  and Diadema. He  was also  jailed  by the military junta, when he succesfully pulled off  major strikes.

The bitter  experiences with the military junta,  the  trade union struggles  in  Brazil’s  highly  industrialized ABC region, named  after the cities  of  Santo Andre, Sao Bernardo and Sao Caetano,  all of them  in turn part of the Greater Sao Paulo Region.   This  region  was what saw the birthplace  of  Brazil’s  labor  movement,  that started primarily as a protest against  the military junta,  and then morphed  into  a full fledged political movement.  In 1980, the Workers Party  or  the Partido dos Trabalhadores  was launched  from here in 1980,  primarily by a loose coalition of  left wing intellectuals,  trade unionists  and  Catholics  believing  in liberation theology, Lula  was one of the founders  of  the  political  movement.   Their  major  campaign,  was to have a President  who would be elected directly  by popular vote,  instead of  being  imposed  by the  House of  Congress, which they saw as a sham. Lula  was one of  the   persons, who played a  major role in getting the President  elected by popular vote, and  after 29 years, 1989,  saw the President being  elected  by  a popular vote for the first time.

Lula’s  first brush with electoral politics was in 1989, when he ran for the post of  President,  as a PT candidate,  his strident  Leftist  ideology and  advocating  of  Land reforms, however  did not go down too well with the electorate , and  a right wing leaning  Fernando Color De Mello,  was elected as President.  During the 90’s  Lula, lost twice in 1994 and 1998,  to Henrique  Cardoso,  a Social Democrat  leader, who played  a major  role  in the stabilization of the real.   The 90’s  was the period, when  Brazil,  was  coming  to terms with stabilization  of  it’s economy,  after decades  of  rampant  inflation,  and  the   Social Democrats  held  sway  with their  fiscal prudence policies.  It is  important to note that  both  Fernando  Color De Mello  and  Henrique Cardoso, between 1995 and 2002,  presided  over one of  the most  critical phases  in Brazil’s  economy,  the  denationalization  of   many  public sector  firms.  Steel  manufacturer  Acesita,  the state owned  Telecom  firm Telebras, the mining giant Vale,   all  were privatized their  monopoly broken up.  While the public  debt  shot up,  the  most significant  achievement  of  the Cardoso  era  was bringing down the inflation rate, from an average  of  31% in 1994 to just around  7% in 1997.  While  Cardoso,  was greatly  respected abroad,  at  home he faced strong  opposition to  his  liberal policies,  a factor that went against him.

Lula  capitalized on the discontent  with Cardoso’s  liberal  economic  policies, also for  the fact  that  he  went for an image makeover,  discarding  his  Che Guevera T-Shirts  and  rebel image,  to  a more  media  friendly  image, to win the 2002  elections.  The  result  was however  met with  concern by investors,   businessmen, banks,  who  feared  a Chavez  style  Government  in Brazil,  considering  Lula’s  Leftist  ideology.  However  power  at  times does  seem to  have an effect  of  diluting  the  ideology, and it  did  seem  the same  with  Lula too.  One  of  the first  appointments  he  made  was  Antonio  Palocci,  a former  Trotsykist, turned  moderate,  as  Finance  Minister.  The  other  important  appointment  Lula  made  was  however  much significant,  it  was Henrique  Meirelles  as  head of  Brazilian  Central Bank.  It  was significant,  considering  that  Meirelles  was everything  that  Lula  was not  politically and economically.  He  was   politically  a centrist,  was CEO  of  Boston Bank  and  a market  economist.  This is precisely  the kind of  political  sagacity  and  wide vision  that  has been missing  from the  Indian political leadership  for  quite  some  time.

One  more  important  point to note, instead  of  indulging  in  a game  of  political  one  upmanship  with the previous  regime,  Lula,  carried  forward  the  task  of  the  previous  regime  in renewing all  agreements  with  IMF.Is  there  a lesson here for  our  political leadership,  somewhere?    By  late 2005, Brazil  paid  off  all it’s  debts   to  IMF,  two years  ahead  of   schedule, a major  step  forward  for  a country,  that  was  more  often  in the  news  for  it’s  inflation  and   debt.    By 2005,  Lula  had gained  the confidence  of  the  investors  and the market,  not  seen  too much as a doctrinaire  Leftist.  An  interesting  trend  in fact,  all over  South  America, barring  Hugo Chavez  in Venezuela,  where  leaders   with  a pronounced  Leftist  ideology, began  to  adjust  according  to the market  realities.  It  was not just  Lula  in Brazil,  Kirchner  in  Argentina,  Bachelet in Chile,  all  doctrinaire  Leftists when they attained power,  tempering their  ideology to  the realities.

Lula’s   moderated  approach  extended  to other  areas too, notably  infrastructure development  in Brazil.  Once  a strident  critic  of   privatization,  Lula  came up  with  the Growth  Acceleration Program,  a public private  partnership,  that  would  promote investments  in infrastructure,  construction,  sanitation and  energy,  an ambitious one,considering  Brazil’s  size and scale.  What however  has proved  to be  Lula’s  major  achievement  and one  that  has made  a critical  difference  to Brazil,  has  been  the  two social  welfare programs, Fome  Zero( Zero  Hunger)  and Bolsa  Familia( Family Allowance).     Like   India,  hunger and extreme poverty  have been a major problem in Brazil for long.   Fome  Zero  was not  exactly  Lula’s  brainchild  though  he  improved upon it, it  was  first started by  his  predecessor  Cardoso,  in  a series  of  projects.  What  worked  for Fome Zero,  though  was a smart  mix  of  populism and pragmatism,  that  ranges  from  direct  financial  aid  to the poorest  families,  to  more  pragmatic  measures, creating  water cisterns in Brazil’s  arid Sertao  region,  low cost  restaurants  that  provided employment to the poor  as  well as extending  micro credit.

“This concept has always been controversial in Brazil. In other countries it is not this way, but in Brazil there has always been resistance. When I was in college they (the opponents to the concept of money transfers) used to say: ‘the first thing the poor will do with the money is to get themselves drunk’. Later on, it was no longer getting drunk that people talked about; they would say the money transferred would be used by the poor to buy a battery radio. They assumed that people with less education would not use their money wisely.”

Bolsa  Familia  however  has turned  out to be  the major  game  changer in Brazil,  again a  mix of  populism and pragmatism,  pretty much  Lula’s  own brainchild.   On the  populist  side,  the program  enables  direct cash transfers to low  income  families,  using  a Citizen  Card, that  enables them to have their own accounts, draw money.   In  a way this has  reduced  corruption to an extent, with cash  reaching the beneficiaries  directly, avoiding the leakages.  While  on one hand,  short term  poverty is seen to be combated  with  unconditional  cash transfers,   the program  seeks  to  fight  poverty  in the long run with  a more  conditional  cash transfer.  While  the program  has  had it’s  critics, many  of  whom  see  it  as a  welfare program  designed  to make people lazy,    the  results  have  been  positive,  a 20% drop  in inequality  and  a  significant  decrease  in  poverty levels.  It  is  interesting  to  see what  some people  have to say about  it.  As  Paul Wolfowitz, former  President  of  World Bank  states.

“Bolsa Familia has already become a highly praised model of effective social policy. Countries around the world are drawing lessons from Brazil’s experience and are trying to produce the same results for their own people.”

One  significant  endorsement  comes  from Renata Nacimento, heir to a multi billion dollar Camargo Correa group.

I travel a lot around Brazil and see many places where the average monthly income is BRL 50 (approximately US$ 26.32). In these places the Bolsa Familia comes in and adds an extra BRL 58. It makes all the difference in the world and adds a lot for the needy population. What is more important is that it promotes a virtuous circle. If there is more money in circulation, the local market heats up, the purchasing power is increased and the effects spread throughout the whole economy.

What  Brazil  has  been doing  is a  mixture  of  policies  that  both  feed  fish  to the poor,  as  well as  giving them the skills to  go fishing.  It  may have it’s own drawbacks, may  not  work  in  every place,  but  that is  the mix  of  populism and pragmatism,  that  would  be playing a  major  role.

Under Lula, Brazil became the world’s eighth-largest economy, more than 20 million people rose out of acute poverty and Rio de Janeiro was awarded the 2016 Summer Olympics, the first time the Games will be held in South America- Washington Post.

Brazil  winning the rights  to host the  2014  World Cup  and the 2016  Summer  Olympics,  was  taken  as  a proof  of  it’s  having  arrived  on the world  stage.  And yes  the tag  of  the  4th  largest  economy in the world, beating  out  UK  recently.  More  important  though,  is  another  key  area  where  Lula  has played a  major  role,  that has been  in Brazil’s  foreign  policy.    For  long  seen  as the   Latin American giant, that  has  not  yet  woken  up,  Brazil  has  begun to  assert  itself,  in a foreign  policy  that has been  independent  of   external  factors, guided  solely by pragmatism.  What  Lula has done  is  placing  Brazil  in the lead, with issues  related to  South America, both  between the nations  themselves  and the rest  of  the world.  This has  seen  Brazil  play  mediator, and  reducing  the regional tensions between  Colombia, Venezuela and Ecuador,  with  Lula  playing the key role.     One  significant  achievement  has  been the role Brazil played  in  Iran’s nuclear  program,  ignoring  US pressure,   along  with  Erdogan of  Turkey, Lula  played the other critical role  in  ensuring the supply of  uranium,  after  Western sanctions.

Somethings  have not  changed  much  in Brazil,  soccer  still  continues to be as popular  as ever, Rio  is  still the world’s  party  capital,  Samba  is  as much part of  the average  Brazilian’s  life.  And  inspite  of  Lula’s    efforts( or rather the lack of  it),  corruption  continues to be endemic  to  Brazil,  with  scandals  regularly  claiming  political leaders,  and  it’s  political system  is  one of  the most  corrupt  in the world.   And  while  Brazil  has  made  significant  advances  in fighting  poverty  and  inequality,  it  does  remain  a major  problem,  notably  with  the  indigenous  tribes.   What  is  however clear,  that  Brazil  has been shaking  off  it’s  underperformer  tag,  and  is  slowly  waking up  to it’s true potential.  As  Lula  had  put  it  “Earlier  when the US  sneezed  we got pneumonia, now  when the US  sneezes, we too sneeze”.    While  Lula  does  deserve  credit,  it  is  important  to note  that  he built  on  the  economic  policies  of  his  predecessors,  and  did not  go for the option  of  throwing  out  the  baby with the bathwater.   While  many bored  Americans  still go to Brazil  to get laid, have fun, beyond  that fun, frolic  image, is a nation,  waking  up  to it’s  potential  and  slowly rising as  an economic  and  political  power  of  it’s own.