Brazil – The Transition to Democracy, 1983-2003

Brazil – The Transition to Democracy, 1983-2003 “The New Republic”

Sarney & the Military • Transition to democracy and civilian rule was a gradual process. • The military continued to influence the decision –making on all major issues. • Little progress was made to solve the social and economic problems of Brazil

Land Reform • Major Obstacle was the wealthy landowners • Hire former military for private militias

External Constraints • Foreign Debt = 120 billion (1990) • The drain of the foreign exchange negatively impacted social and economic reform. • Choice between paying the interest or supporting development.

Stabilization Program – Plan Cruzado • Freeze wages, prices, and rents • Replace monetary unit (cruzerio to cruzado) • Devaluations of goods • Closings or mergers of state companies • Increases in postal rates, utilities, fuel, and sugar

New Democratic Constitution of 1988 • Rejection of all the late military regime had stood for • Basic civil rights were guaranteed • Granted worker’s right to strike and collective bargaining • Promised protection of the indigenous culture and habitat • This was a sharp swing to the LEFT.

Fernando Collor de Mello • Elected president in 1989 • Critical of corruption • Campaign promised to reduce the bureaucracy, attract foreign capital, and institute a free market economy.

Collor’s Econ Policy • Conformed to the most traditional IMF recipes for economic solvency. • Reduction of gov spending and services, halt wage increases, end collective bargaining, and privatize state enterprises. • This causes production to decrease, layoffs to increase, and numerous bankruptcies among companies.

Land Problem Continues • Violent Clashes between great landowners and small farmers • Rent-a-killer agencies • The Collorgov did little to protect peasant leaders or punish their assassins.

Devastating Effects for Collor • Many unions went on strike • 1992 - Collor resigns to avoid impeachment on the grounds of personal corruption.

Itamar Franco • Collor’s vice president is named acting president • There is conflict between his cabinet’s “social sector” and its “economic sector” • Leaned toward the neoliberal on econ reforms (Fernando Cardoso – economic reform team leader)

The 1994 Election • Promised to be the most important election in Brazil’s history • Cardoso’s “viable left” vs Lula’s “utopian left” • Cardoso’s trump card was his new economic stabilization plan, the “Real Plan” • Got the support of moderates and conservatives to win decisively

Cardoso Faces Problems • Extraordinary vulnerability to global economic changes • The grossly inequitable distribution of land (<3% of pop owned >60% of the land). Lead to the Landless People’s Movement (MST). • Widespread poverty (nearly half of the pop lived in poverty)

Politically Divided • His blend of neoliberal, market-centered policies, and state-supported social services made Cardoso an elusive target for political enemies. • Won reelection in 1998 (slightly >50%) • Highest income inequality in L.A., but his populist rhetoric and a divided political opposition ensured repeated electoral success.

Lula da Silva’s Turn (2002) • 2002 – Argentinean market collapses and causes a reduction in foreign investment and demand for exports in the region. • Broke with neoliberal economic model • Suspended the privatization program • Sought to unite a broader coalition of leftist parties (Liberals – Communists)

Volvo: a case study • Why Brazil? • What are the mutual benefits? • How has it impacted the city / community?

Brazil – The Transition to Democracy, 1983-2003