Brazil 501

Contemporary Review, July, 2001 by Joaquina Pires-O'Brien

BRAZIL has entered the twenty-first century amid a national identity crisis, just as it celebrates the fifth centenary of its discovery. Brazil's crisis is not simply a matter of the current economic difficulties nor is it due to the long absence of a World Cup win. It is a self-defeating belief that things can only get worse because in the past nothing ever worked properly. Such determinism is caused by the prolonged uncertainty regarding the national ethos and where Brazil stands in the global context. Brazil's national identity crisis can be personified by a mischievous Janus that beckons both the future and the past at the same time. Should Brazil follow the path of the Asian tigers or dwindle within itself whilst whinging for commiseration?

The greatest leap into the future took place in 1992, when Brazil finally opened its market and lifted most of the existing barriers to importation. This move conveyed a positive message to the rest of the world and resulted in attracting vast amounts of foreian investments. Meanwhile, state companies were privatized and the national ownership requirement was removed from formerly closed sectors of the economy. Borders between neighbouring countries were opened and a regional trade market created. However, the most fundamental change is the undergoing programme of reforms which began in 1995 with the objective to correct the existing impediments to economic growth. Although the reforms still have a long way to go they have already achieved important results such as making the Brazilian institutions more transparent and those responsible for them fully accountable.

It is obvious that the building of a modern state requires people with the right education and training. This is no longer a problem as Brazil is now benefiting from investments made in post-graduation training in the last two decades. President Fernando Cardoso is a worldly scholar and a polyglot and his cabinet is formed by officials whose CVs reveal many PhDs and MBAs obtained in universities in the United States and Europe, and who also have experience in global companies and international institutions. A growing number of Brazilians now choose to finish off their education in Harvard, Yale, Chicago, Stanford, London, Frankfurt and Zurich. Many Brazilians working in the areas of business and finance have passed through major global banks, finance and consulting companies such as Arthur Andersen, McKinsey, Goldman Sachs and Merryll Lynch. Due to the falling of the immigration barriers for skilled workers, an increasing number of Brazilians now work in engineering firms and internet companies in the United States and Europe. In Brazil, 10 per cent of the population has access to a computer. About 14 million Brazilians already have access to the internet and the number of new internet connections is growing steadily.

Given a choice between having running hot water or no water at all, Brazilians would certainly prefer the first. Indeed, in the last decade the consumption of electrical goods in Brazil has grown steadily, what is compatible with the 4% increase in the consumption of electricity during the same period. Given that the supply of electricity in the same period grew by only 3%, under normal conditions there was already a shortage of 8000 MW in supply. The recent lack of rain has kept low the levels of Brazil's hydro-electric dams, worsening the energy shortage. At first the government announced that heavy fines were going to be imposed for over-consumption of electricity in the home, although it later decided to postpone the rationing in fear that the measure would trigger panic which could de-stabilize the economy. Hoping to score against the neo-liberal government of President Cardoso, Brazil's left-wingers blame the energy crisis on privatization. The flaw of this accusation lies in the fact that most of the e nergy companies in Brazil are still state-owned. There is a solution to the energy problem, which is to use gas-fired power stations, taking advantage of the huge gas reserves found in Bolivia and other areas of Latin America. Perhaps the current crisis will spring-board the building of such stations by the private sector. In the meantime Brazilians will have to economize on the use of electricity or put up with staggering black-outs.

Although many Brazilians have chosen modernity, there are also many reactionnaires who have opted for the past rather than the future. The other face of Brazil is the backwardness of those who preach the return of a closed economy, re-nationalization, the moratorium of paying the foreign debt and the super nanny state. It was the unrealistic expectations of the Utopian ideologues that led to the over-generous but distorted welfare state stipulated by the 1988 Constitution, which eventually caused the gigantic deficit that today chokes the economy.

Both the far-left and the emerging far-right fiercely oppose the reforms and blame neo-liberalism for the country's economic hardships. Two points are worth making on this subject. The first is that President Cardoso is not a liberal but a social-democrat, as his reformist endeavours in the pursuit of social change reveal. The second point is that Brazil, like the rest of Latin America, is nowhere near the true, classical liberalism characterized by the policy of minimum interference from the State on personal choices of individuals.