CHRIS WOOD January 19 1987


CHRIS WOOD January 19 1987



It is an hour past midnight. A tropic moon hangs over the shoulder of Corcovado, and its colossal statue of Christ, whose outstretched arms have embraced Rio de Janeiro’s skyline since 1931. But under the corrugated roof of the Escola da Samba Salguiero, candles flicker in a makeshift shrine to Odesce, jungle god of Brazil’s voodoolike religion, Umbanda. From one end of a dance floor the size of a hockey rink 30 drummers pound out a sinuous samba. Overhead, red and white plastic streamers flutter in the heat. Below, 2,000 sweating bodies in every shade from white to mahogany follow the torrid, hypnotic beat.

The scene is repeated each Saturday night in some four dozen Rio samba clubs. To a visitor, the dance halls are beguiling mirrors of Brazil’s happiest

qualities: an irrepressible optimism, a latent mysticism which colors the country’s prevailing Catholicism, and a smouldering sexual energy. And indeed, Brazil’s 137 million people have much to celebrate as the southern summer reaches its peak this month. With a generation of military rule behind them, their first freely elected congress in 26 years is about to frame a new constitution that should prevent any reversion to dictatorship.

Reforms: At the same time, the country’s fast-growing economy is preparing to overtake Canada’s to become the world’s eighth largest. Economic reforms inaugurated in February, 1986, have raised incomes for many Brazilians by close to half. Inflation, once a galloping 450 per cent, has been throttled back to a more manageable

50 per cent. The Gross National Product has increased by eight per cent in the past year, compared with Canada’s less than two per cent. Indeed, the upbeat national mood prevails even though, for many Brazilians, the political and economic resurgence is still no more substantial than the tinsel on the floats of Rio’s annual Carnival. But Brazilians have seldom allowed bad news or caution to restrain their often flamboyant national dreams. And now they have cause to believe that their country—best-known for its coffee, soccer and the bronzed bodies on Rio’s famous Ipanema beach—may emerge as the world’s next major economic power.

Revival: Leading the country’s revival, the cautiously progressive 57year-old president, José Sarney, faces a major economic challenge: how to repay Brazil’s $103-billion (U.S.) foreign debt—the largest in the develop-

ing world—without compromising his commitment to raise the living standards of the two-thirds of Brazilians whose family incomes are less than $2,200 a year.

But while tackling that and other economic problems, Sarney must tread carefully between powerful forces on the right and left. The 276,000-member armed forces still play a major role in the nation’s politics, despite the formal handing over of power in 1985. Generals occupying key cabinet posts, with offices down the hall from Sarney’s own in the presidential palace, wield an effective veto over measures they consider too radical. In that context, the 559-member congress will begin in February to frame a new constitution, haunted by the knowledge that seven previous constitutions led only to dictatorship.

But risk taking is nothing new to Sarney and the people of Brazil, whose

national ambitions have often struggled to match the heroic scale of their geography. Their country, which won its independence from Portugal in 1822, covers 3.4 million square miles— a territory larger than the continental United States. It occupies nearly half the continent, sweeping 4,300 km from the Atlantic and the parched states of the northeast across the vast wetlands of the Amazon River to the borders of Colombia, Peru and Bolivia. But despite a series of economic booms built on sugar, coffee and rubber, it remained an economic bit player in world terms until the 1950s. Then, with the establishment of its first auto plant by Volkswagen AG in mid-decade, followed by the dedication of a new national capital, Brasilia, in 1960, the country entered a growth spurt.

Contrasts: Still, modern Brazil presents a study in jarring contrasts. In Sào Paulo, a bustling, polluted city of 15 million people, computerized banking machines share the sidewalks with the distorted bodies of cripples, placed on display by family members to beg from passers-by. In Rio, the campfires of the homeless flicker beneath bridges. More families have a television set than possess running water, and Brazil’s O Globo television network—the world’s fourth most profitable after the American Big Three—penetrates the deepest reaches of the Amazonian rain forest where some Indian tribes have yet to make their first contact with civilization. “We are two countries,” declared Rio-based social scientist Speridào Faissol, “a developed country of 50 million, inside an undeveloped country of 90 million.”

President Sarney himself noted recently that “Brazil lives in a paradox” of wealth and starvation within the same borders. And economic tensions undoubtedly raise the galloping crime rates in Brazil’s overcrowded cities (page 24). Sarney has promised to narrow the gulf between rich and poor to avoid “setting fire to the powder keg.” But he faces entrenched resistance from a conservative establishment with close ties to the military.

Protest: Indeed, the military displayed its strength briefly last month when Brazil’s two largest trade union confederations threatened to paralyse industry and public utilities with a general strike in protest over a round of tax increases. Minutes before midnight on Dec. 11, army tanks took up positions at subway stations and a government-owned steel plant in Rio, while in Säo Paulo crash-helmeted shock troops of the mounted military police were massed in back streets throughout the city. Partly due to the intervention of the military, the 24hour strike failed to stop the govern-

ment from announcing a fresh round of tax increases a few days later. Still, that show of armed force was mild indeed compared with the days of military rule when—provoked by a spate of kidnappings of foreign diplomats by left-wing extremists—the generals in 1969 launched a countercampaign of right-wing terrorism. In the ensuing six years an estimated 450 people died at the hands of rightwing death squads and Brazil’s military torturers became infamous.

Explicit: But despite the return to democracy and several victims’ gruesomely explicit accounts, the military has largely succeeded in evading accountability for its excesses. In fact, most Brazilians seem anxious to put the period behind them. Elias Sirkis, a former student revolutionary, is among those who raised no objection to the 1985 amnesty for servicemen accused of torture. Said Sirkis, now a successful screenwriter: “I don’t

see any advantage in wanting to try them now.” But journalist Bernardo Kucinski, who claims that his sister was kidnapped by the secret police in April, 1974, and has not been seen since, disagreed. “We went through great suffering,” he said. “The fact that Brazil, even today, doesn’t find it necessary to investigate is another kind of suffering.”

Brazil’s new civilian president has seldom strayed far from the military’s preferred line. Indeed, until mid-1984 Sarney led the pro-military faction in the tightly controlled congress, and he only became president because of a historic accident: when the military relinquished power, opposition leader Tancredo Neves, head of the Democratic Movement of Brazil Party (PMDB), recruited Sarney as his running mate in a bid for conservative support. Neves won the presidential vote but suffered a heart attack on the eve of his inauguration, dying a month later. And it was his death that thrust Sarney unexpectedly into the presidency on March 15, 1985.

Sensitive: Since then, Sarney has reshuffled the cabinet he inherited from Neves into a more conservative lineup. He dropped several PMDB democrats and kept at least two uniformed officers in the sensitive posts of army minister and minister in charge of the National Intelligence Service. Declared Brasilia politi-

cal scientist David Fleischer: “The military basically retained control.” Still, most observers say that the military role in Brazilian political life is diminishing. “I don’t see any possibility of a return to dictatorship, ” said the former left-wing activist Sirkis.

Sarney’s challenge now is to free his presidency from the influence of the military without being limited in turn

by the congress, in which his partners of the PMDB won 303 seats in last November’s elections. Next month, when the senate and chamber of deputies begin drafting Brazil’s latest constitution, Sarney’s influence will be tested by one PMDB proposal which would reduce his term in office, currently due

to run until 1991. For their part, the generals are determined to preserve the military’s right to intervene in political life. But all factions agree on one overriding point—that if Brazil’s fragile New Republic is to survive, the government must reduce the gap between the country’s seven million wealthiest and its 82 million poor.

That gap is glaringly evident in the

glittering night spots and septic shantytowns of Säo Paulo, Brazil’s largest city and its industrial heart. For the well-heeled, the city bears out its frequent comparison to midtown Manhattan. At the curb in front of Massimo’s, a favorite haunt of Säo Paulo’s moneyed, the heavy lustre of gold gleams from fashionable necklines. The foyer is paved with polished pink marble. The menu is northern Italian with a Brazilian twist: Massimo’s pasta and mango flambé have been praised by international reviewers. By Canadian standards, however, the prices are not extreme: the bill for a single dinner seldom tops 800 cruzados—$40.

Rare: But to Francisco Assis Nascimento, 33, a resident of the Säo Paulo favela, or shantytown, of Villa Nove Jaguare, that is more than a week’s pay: as a stonemason, he takes home 604 cruzados, or $30.20, 5 each Friday after social security deductions. For

Assis and his wife, Marie Lourdes, 43, and their two daughters, dinner in their dim two-room barraco is usually black beans and rice, occasionally augmented with stringy chicken. “It has been over a month since I bought meat, two kilos of ribs,” Marie Nascimento said. Cigarettes, even at six cruzados (30 cents) for a pack of 20, are a rare indulgence. At that, Sào Paulo’s estimated one million favela dwellers are better off than the three to four million recent migrants from the drought-stricken northeast who are crowded in slum corticos — filthy boarding houses.

Doomed: With two-thirds of Brazilians among the have-nots, past attempts at democracy have been doomed to fail. Political scientist Helio Jaguaribe, an adviser to President Sarney, describes Brazil’s political history as “a vicious cycle” in which “democracy produces economic demands that society cannot meet in the short term.” Said Jaguaribe: “Those demands produce panic in the middle classes, who see their perks—their apartment, their Volkswagen—being threatened, and end up calling on the military to intervene to stave off communism.” It was just such fears that led to Brazil’s last descent into dictatorship in 1964.

Once in office, Sarney moved dramatically to break the cycle by inventive economic reforms. Eleven months ago he announced the Cruzado Plan to confront inflation running at 450 per cent a year. Sarney froze prices and replaced the debased cruzeiro with a new currency unit, the cruzado, worth 1,000 cruzeiros. He also abolished indexing, the process by which wages kept pace with inflation. In his most daring move—and to compensate for the abolition of indexing —Sarney raised the wages of every Brazilian by eight per cent. In the first month of the Cruzado Plan, inflation plunged to near zero. But, armed with new spending power, consumers set off an unprecedented buying spree, and as demand soared, factories added shifts to increase output, creating new jobs. By late last year, economists estimated that the Cruzado Plan had stimulated real income gains of up to 30 per cent for the poorest-paid workers.

Lineups: But the euphoria was short-lived. By mid-August the buying spree was producing recurrent shortages. And while Finance Minister Dilson Funaro boasted that millions of Brazilian families were able to afford beef for the first time, butchers’ counters were bare, with lineups forming whenever meat became briefly available. Meanwhile, car plants were forced to cut production when suppliers refused to provide parts at prices frozen by the government. And by De-

cember an ominous indicator of hidden inflation had reappeared: interest rates on instalment-plan purchases were at 350 per cent.

Alarming: Other trends were even more alarming. Businesses, unsure when price controls would be lifted, froze investment plans.

Surging demand at home left fewer Brazilian goods for export, and by fall foreign exchange earnings had plunged to barely $100 million (U.S.) from the $1 billion a month needed to service the country’s bloated international debt. As the grim economic implications became evident, investors fled the Säo Paulo Stock Exchange, cutting $47 billion from the value of companies traded on the exchange between April and November. Declared exchange president Eduardo Levy: “They [Sarney and Funaro] sold a fantasy that did not exist. Everybody thought there was a free lunch. They’ve realized there is not.”

Indeed, only days after the PMDB’s November sweep of congressional elections demonstrated wide public support for the Cruzado Plan, Sarney and Funaro began dismantling some of its key components. Tax increases added 60 per cent to the price of gasoline and 80 per cent to the cost of new cars, in an attempt to slow down runaway consumerism and refill a drained national treasury. Early in December the government loosened price controls on manufactured goods, then on milk and medicines. Finally, just before Christmas, in an admission that inflation was back, Finance Minister Funaro allowed lenders again to index interest rates to changes in retail prices.

Reversals: The stunning reversals abruptly ended the honeymoon Sarney and his PMDB partners had enjoyed with voters. Last month’s one-day general strike in protest against the new moves won the support of moderate labor groups as well as the left wing, and succeeded in closing 80 per cent of Säo Paulo’s heavy industry. And Sarney’s personal approval rating fell from 90 per cent at the height of the Cruzado Plan’s success to a bare 54 per cent in early December.

The sudden slump in their popularity comes at a crucial time for Sarney and his government. This week Brazil was due to enter delicate negotiations with the Paris Club of major govern-

ment lenders to reschedule its foreign debt payments. The Brazilians want those payments, now running at $12 billion (U.S.) a year, cut by half, freeing the remainder for new investments in health, education and economic growth. Declared Sarney: “Brazil will

not pay its foreign debt with recession, unemployment or hunger.” Brazil’s creditors include the Canadian government, as well as Canada’s Big Five chartered banks, who are owed a total of $5 billion (page 26).

Both sides have strong reasons to reach a settlement. Brazil badly needs foreign investment to create the 1.5 million new jobs a year demanded by a

young and growing population, even before addressing the ominous gap between rich and poor. Investment in the country, once running at $1.5 billion (U.S.) a year, slowed considerably as banks froze new credits and is unlikely to rally without a debt rescheduling deal. But the creditors recognize that Brazil could shake the Western banking system to its foundations if it endorsed the moratorium on debt payments demanded by some PMDB members. Observed Paulo Rabello de Castro, senior editor of Rio’s influential business review Conjunturo Económico: “It’s like a duel where both guys have the chance to shoot at the same time. And afterwards both wind up dead.”

Orgy: As the country prepared to stage its annual Carnival in March —when Rio enjoys a five-day orgy of music, dancing and costume parades—Brazilians indulged in the national tendency to ignore the bad and dream of the better life. The essence of that tendency is captured in a verse from one of last year’s Carnival songs: “You must find in imagination what you lack in your wallet.” Said Rev. Eugene Charbonneau, a Canadian-born priest and sociologist who has taught social studies at Säo Paulo’s Santa Cruz College for more than three decades: “At Carnival, everyone dresses like kings, queens and princesses. It is a huge dream, but in Brazil everyone dreams.”

It may be that tendency to dream and to gloss over problems which leads many Brazilians to close their eyes to social ills such as the racism in their society. The population is made up of native Indians, whites from Europe and the descendants of blacks originally imported as slaves, plus more than a million relatively new arrivals from Japan. “Racism is illegal in Brazil,” Sarney said recently, and although that may be true in a legal sense the statistics paint a different picture. Forty per cent of Brazil’s 63 million blacks have less than a single year of schooling. Blacks earn significantly less than whites in comparable jobs. And whites, who number slightly more than half the population, hold all but three of the 548 seats in congress. For black Säo Paulo university professor Milton Santos, the depth of discrimination in Brazil became evident when

he was elbowed out of his job as a state planner, jailed, then forced to leave the country following the 1964 military takeover. Santos, who earned an international reputation for research on urban poverty while teaching at France’s famed Sorbonne university before returning to Brazil, told Maclean's: “The fight against racism is only beginning in Brazil.”

Resources: Although Brazil has yet to address its social problems with sufficient vigor, the same cannot be said of the way it is exploiting its impressive national resources. The country’s vast Amazon forest (page 28) sits over some of the world’s largest gold deposits. Oil, recently discovered in the north, adds to offshore natural gas reserves already being tapped off Rio de Janeiro. A typical mineral lode is at Carajás in northeastern Brazil, where several large hills contain a 500-year supply of 80-percent-pure iron ore, the biggest iron ore reserve in the world. Brazil’s economy is growing twice as fast as Canada’s. Indeed, this year Canada’s national economic performance will probably fall behind Brazil’s for the first time. And while Canada’s aeronautics industry struggles to find markets, Brazil’s stateowned aircraft maker, Embraer, has led the country’s high-technology exports with sales to Britain’s Royal Air Force, among others. Meanwhile, Brazil is the only country outside the United States and Japan able to supply more than half its own market for computers from its own manufacturers.

Brazil’s emergence as a world economic power has implications well beyond its borders. Canada’s embattled mining and forest industries face mounting competition from such mines as Carajás and the fast-growing pines of the Amazon. And already Brazilian industry is challenging the United States in areas as diverse as arms sales and computers. Brazil is winning friends among Third World countries with its no-strings-attached sales of aircraft and military transports, worth $3 billion last year. And the country has resisted U.S. demands that it relax quota protection of its computer market. Declared political scientist Fleischer: “The United States and Brazil are on a collision course.” Stunning: But on the teeming dance floors of the Escola da Samba Salguiero and the other samba clubs of Rio, the dancers seem to have little interest in such weighty matters. “I live for samba,” said Laura Arduini, a stunningly statuesque grandmother. She quickly and laughingly amended that to include the other Brazilian passions of “futbol and sex.” Then she swept off to dance to Brazil’s own rhythm.